19-Jun-2007
Entry into a Material Definitive Agreement, Change in Directors or Principals
Item 1.01 Entry into a Material Definitive Agreement.
On June 15, 2007, the Board of Directors of CoSine Communications, Inc. (the "Company") approved the Company's entering into an agreement, to be effective as of July 1, 2007 (the "Services Agreement"), with SP Corporate Services, LLC ("SP") pursuant to which SP will provide to the Company, on a non-exclusive basis, a full range of executive, financial and administrative support services and personnel, including the services of a Chief Executive Officer, Chief Financial Officer, Secretary, Principal Executive Officer and Principal Accounting Officer, maintenance of the Company's corporate office and records, periodic reviews of transactions in the Company's stock to assist in preservation of the Company's net loss carry-forwards under Section 382 of the Internal Revenue Code, and related executive, financial, accounting and administrative support services (collectively, the "Services"). Under the Services Agreement, the Company will pay SP a flat monthly fee of $17,000 in exchange for the Services. SP will be responsible for compensating and providing all applicable employment benefits to any SP personnel in connection with providing Services under the Services Agreement. The Company shall reimburse SP for reasonable and necessary business expenses of the Company incurred by SP, and the Company will be responsible for payment of fees related to audit, tax, legal, stock transfer, insurance broker, investment advisor and banking services provided to the Company by third party advisors. The Services Agreement has a term of one year and shall automatically renew for successive one year periods unless terminated, on any anniversary date of the Services Agreement, by either party upon not less than 30 days prior written notice to the other. The Services Agreement is also terminable by the Company upon 30 days prior written notice received by SP within 60 days following the death of Terry R. Gibson or his resignation as Chief Executive Officer, Chief Financial Officer or Secretary of the Company. Under the Services Agreement, SP and its personnel will be entitled to the same limitations on liability and indemnity rights available under the Company's charter documents to any other person performing such services for the Company. During fiscal year 2007 to date, the Company has incurred approximately $24,500 per month in performing itself the services which are to be performed by SP under the Services Agreement.
SP is affiliated with Steel Partners II, L.P., the Company's largest stockholder, by virtue of SP's President, Warren Lichtenstein, who is the managing member of Steel Partners, L.L.C., the general partner of Steel Partners II, L.P. SP is a wholly owned subsidiary of Steel Partners Ltd., also controlled by Mr. Lichtenstein.
Item 5.02 Departure of Directors or Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Pursuant to the Services Agreement, Terry R. Gibson, the Company's current Chief Executive Officer, Chief Financial Officer, Secretary, Principal Executive Officer and Principal Accounting Officer, will terminate his employment with the Company, effective June 30, 2007. Under the Services Agreement, Mr. Gibson will continue to serve, at the pleasure of the Board of Directors of the Company but as an employee of SP, as the Company's Chief Executive Officer, Chief Financial Officer, Secretary, Principal Executive Officer and Principal Accounting Officer. SP will be responsible for compensating Mr. Gibson, including providing him with all applicable employment benefits to which he may be entitled, for his serving as Chief Executive Officer, Chief Financial Officer, Secretary, Principal Executive Officer and Principal Accounting Officer of the Company and for any other services he may provide to the Company under the Services Agreement. As a director and officer of the Company and as provided in the Services Agreement, Mr. Gibson will continue to be entitled to the same limitations on liability and indemnity rights available under the Company's charter documents to any other person performing such services for the Company. |
