9.  Commitments and Contingencies

 

Leases

 

Operating leases primarily relate to the lease of the space used for our operations in Eatontown, New Jersey; Mesa, Arizona; Mississauga, Canada; and Amsterdam, Netherlands. Future minimum rental commitments under non-cancellable operating leases are as follows:

 

 

Rent expense for the years ended December 31, 2018, 2017 and 2016 was approximately $496 thousand,  $509 thousand and $455 thousand, respectively.

 

Employment Agreements

 

The Company has entered into employment agreements with its President and Chief Executive Officer, Executive Vice President, Vice President and Chief Information Officer, Vice President New Business Development, Vice President and Chief Financial Officer, and Vice President and Chief Accounting Officer 

 

In the event that the Company’s, President and Chief Executive Officer, employment is terminated for any reason other than for cause, he is entitled to receive severance payments equal to twelve months at the then applicable annual base salary. Additionally, if during the term of his employment and on or within twelve months following a change of control his employment terminates, he is entitled to receive severance payments equal to twenty-four months at the then applicable annual base salary and actual incentive bonus earned in the year prior paid over a twelve-month period.

 

The Company’s Executive Vice President, Vice President and Chief Information Officer, Vice President New Business Development, Vice President and Chief Financial Officer, and Vice President and Chief Accounting Officer are entitled to a severance payment and severance payments, respectively for six months at the then applicable annual base salary if the Company terminates their respective employment for any reason other than for cause.

 

The Executive Vice President and Vice President New Business Development are also entitled to receive continuation of certain employee benefits and their outstanding equity awards become immediately vested if the Company terminates their respective employment for any reason other than for cause.

 

Additionally, in the event that a change of control of the Company occurs (as described in the employment agreement), the Chief Financial Officer’s outstanding equity awards become immediately vested and he is entitled to receive a lump-sum payment equal to 1.0 times his then annual salary and actual incentive bonus earned in the year prior to such change in control.

 

On May 11, 2018, the Company entered into a Separation and Release Agreement (the “Separation Agreement”) with its former Chairman of the Board, President and Chief Executive Officer upon his resignation from the Company. The Separation Agreement supersedes and replaces the Employment Agreement, dated January 12, 2006, between the former Chairman of the Board, President and Chief Executive Officer and the Company. 

 

The former Chairman of the Board, President and Chief Executive Officer is entitled to receive (a) a cash payment of $0.7 million, payable in 12 consecutive, equal monthly installments on the fifteenth day of each month, commencing June 15, 2018; provided that the monthly payments were delayed until the earlier to occur of the former Chairman of the Board, President and Chief Executive Officer death or November 19, 2018 (the “Delay Period”), and upon the expiration of the Delay Period, all payments that were delayed were paid in a lump sum, (b) a one-time, lump sum cash payment of $0.03 million (the former Chairman of the Board, President and Chief Executive Officer then current monthly salary) payable within 30 days after the Separation Date so long as the former Chairman of the Board, President and Chief Executive Officer performed certain transition services to the extent reasonably requested by the Company, which was paid; and (c) payment of accrued vacation equal to $0.04 million, all stock options and stock awards issued to the former Chairman of the Board, President and Chief Executive Officer, consisting solely of 109,084 shares of restricted Common Stock issued under the 2012 Plan, were fully vested and became immediately exercisable and remain exercisable through their original terms.

 

Other

 

As of December 31, 2018, the Company has no standby letters of credit, has no standby repurchase obligations or other commercial commitments. The Company has a line of credit see Note 6 (Credit Facility). Other than employment arrangements and other management compensation arrangements, the Company is not engaged in any transactions with related parties.