SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
November 13, 2006
Date of Report (Date of earliest event reported)
HIRSCH INTERNATIONAL CORP.
(Exact name of Registrant as specified in its charter)
Delaware 0-23434 11-2230715
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
50 Engineers Road
Hauppauge, New York 11788
(631) 436-7100
(Registrant's telephone number, including area code)
Section 5 CORPORATE GOVERNANCE AND MANAGEMENT
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On November 13, 2006, Paul Gallagher, entered into an employment agreement
with the Company ("the Agreement") to continue his employment as the Company's
President and Chief Executive Officer. The Agreement became effective as of
September 11, 2006, has a term of three (3) years and provides for the payment
of a base annual salary during the first year of the term of Three Hundred
Seventy Five Thousand ($375,000) Dollars; Four Hundred Thousand ($400,000)
Dollars during the second year of the term and Four Hundred Twenty Five Thousand
($425,000) Dollars during the third year of the term. Mr. Gallagher is also
entitled to participate in the Company's employee benefit programs and to
receive bonuses under the Company's annual incentive plan ("Incentive Plan") for
key executive employees.
The Agreement also provides for severance payments to be paid to Mr.
Gallagher should the Agreement be terminated (a) prior to the expiration of its
term due to Mr. Gallagher's death or disability; or (b) prior to or concurrent
with the expiration of the term, the Company fails to offer Mr. Gallagher
employment with the Company as its Chief Executive Officer or Chief Operating
Officer at substantially the same level of base salary, employee benefits and
bonus compensation as set forth in the Agreement. On the triggering of the
severance payment obligation, the Company shall pay Mr. Gallagher his regular
base salary for a period of six months following the occurrence of such event.
In addition, the Company is required to pay Mr. Gallagher a pro rata portion of
the amount, if any, he would have been entitled to receive under the Incentive
Plan established for senior executive officers. In the event the Company
terminates Mr. Gallagher's Employment without "Cause" (as defined in the
Agreement), reduces his compensation, benefits or responsibilities or commits
any other material breach of the provisions of the Agreement and fails to cure
or remedy such breach within thirty (30) days following receipt of written
notice thereof, the Company is required to continue payment of Mr. Gallagher's
base salary for a period of twelve (12) months, or if shorter, for a period from
the date of termination through and including the month of March, 2010.
The Agreement provides that upon the occurance of a Change in Control (as
defined therein) and if within six months thereafter (a) Mr. Gallagher's
employment is terminated other than for death, disability of Cause, or, (b) if
his employment is terminated for Good Reason (as defined therein), then he will
receive an amount equal to his base salary, payable over the succeeding twelve
months in equal monthly installments.
Mr. Gallagher was or will be granted options (the "Options") to purchase up
to 525,000 shares of the Company's Class A Common Stock ("Common Stock")
pursuant to the Company's 2003 Stock Option Plan. 300,000 of the Options have an
exercise price of $2.12 per share and vest as follow:
(a) 100,000 Options vest on the date immediately following the period that
the closing price of the Common Stock remains at or above $2.50 for at least
twenty consecutive trading days;
(b) 100,000 Options vest commencing on the date occurring after September
11, 2007 immediately following the period that the closing price of the Common
Stock remains at or above $3.00 per share for a period of at least twenty (20)
consecutive trading days;
(c) 100,000 Options vest commencing on the date occurring after September
11, 2008 immediately following the period that the closing price of the Common
Stock remains at or above $3.50 per share for a period of at least twenty (20)
consecutive trading days thereafter.
Mr. Gallagher was also granted Options to purchase an additional 75,000 shares
of Common Stock at an exercise price of $2.12 per share. The Company also agreed
to issue Options to purchase 75,000 shares of Common Stock on September 11, 2007
and Options to purchase 75,000 shares of Common Stock on September 11, 2008 at a
strike price equal to the closing price of the Company's Common Stock on each of
those dates.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HIRSCH INTERNATIONAL CORP.
By: s/s Beverly Eichel
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Beverly Eichel
Executive Vice President - Finance
Chief Financial Officer and Secretary
Dated: November 16, 2006