CHANGE OF CONTROL SEVERANCE AGREEMENT
Exhibit 10.24
SEVERANCE AGREEMENT
THIS
AGREEMENT is entered into and effective as of September 14, 2007 by and between Xxxx
Xxxxxxx (the “Executive”) and SYNACOR, INC. a Delaware corporation (the “Company”). All terms will
be as defined in this Agreement.
1. Severance
Benefits.
(a) Cash Severance. In the event that the Company experiences a Change
of Control during the Executive’s employment with the Company and the Executive is subject to an
Involuntary Termination in connection with or within twelve (12) months following such Change of
Control, then the Company shall pay the Executive a total amount equal to (a) the Executive’s
annual base salary plus (b) the Executive’s annual target
bonus amount. Such annual base salary
shall be paid at the rate in effect at the time of the termination of employment and in
accordance with the Company’s standard payroll procedures over a twelve-month period, commencing
on the Company’s first regular payroll date following the effective date of the general release
described in Subsection (d) below. Such annual target bonus amount shall be paid, based on the
annual target bonus amount for the year in which the termination
occurs, and in accordance with
the Company’s standard payroll procedures over a twelve-month period, commencing on the Company’s
first regular payroll date following the effective date of the general release described in
Subsection (d) below.
(b) COBRA Premiums. The Executive will receive information about the Executive’s right to
continue his or her group health insurance coverage under the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”) after the effective date of
the Involuntary Termination. In order to
continue the Executive’s coverage, the Executive must timely
file the required election form.
The Company will pay the monthly premium under COBRA for the Executive and, if applicable, the
Executive’s dependents for a twelve-month period following the effective date of the Involuntary
Termination.
(c) Vesting
Acceleration. Vesting acceleration will be governed by the Executive’s stock
purchase agreements with the Company evidencing the restricted shares of the Company’s Common
Stock that have been granted to the Executive.
(d) General Release. Any other provision of this Agreement notwithstanding, Subsections
(a) and (b) above shall not apply unless the Executive (i) has returned all Company property in
the Executive’s possession, (ii) has executed a general release of all claims that the Executive
may have against the Company or persons affiliated with the Company and (iii) has resigned from the
Company’s Board of Directors (the “Board”) or the board of directors of any of the Company’s
subsidiaries, to the extent applicable. The release must be in the form prescribed by the
Company, without alterations. The Company will deliver the form to the
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Executive within 30 days after the Executive’s employment terminates. The Executive must execute
the release within the period set forth in the prescribed form.
(e) Mandatory Deferral of Payments. If the Company determines that the
Executive is a “specified employee” under Section 409A(a)(2)(B)(i) of the Internal Revenue Code of
1986, as amended (the “Code”), when the Executive’s employment terminates, then (i) the payments
under Subsections l(a) and 1(b) above to the extent not exempt from Section 409A of the Code, will
commence on the earliest practicable date that occurs more than six months after the termination of
the Executive’s employment and (ii) the installments that otherwise would have been paid during the
first six months after the termination of the Executive’s employment will be paid in a lump sum on
the first day of the seventh month after the termination of the Executive’s employment.
2. Definitions.
(a) Definition
of “Cause.” For all purposes under this Agreement, “Cause” means: (i) the
Executive’s willful failure substantially to perform his or her duties and responsibilities to the
Company or deliberate violation of a Company policy; (ii) the Executive’s commission of any act of
fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably
expected to result in material injury to the Company; (iii) unauthorized use or disclosure by the
Executive of any proprietary information or trade secrets of the Company or any other party to whom
the Executive owes an obligation of nondisclosure as a result of his or her relationship with the
Company; or (iv) the Executive’s willful breach of any of his or her obligations under any written
agreement or covenant with the Company. The determination as to whether the Executive is being
terminated for Cause shall be made in good faith by the Company and shall be final and binding on
the Executive. The foregoing definition does not in any way limit the Company’s ability to
terminate the Executive’s employment at any time, with or without Cause or notice.
(b) Definition
of “Change of Control.” For all purposes under this Agreement, “Change of
Control” shall mean:
(i) The consummation of any merger or consolidation of the
Company with or into another corporation other than a merger or
consolidation in which the holders of more than 50% of the shares of capital
stock of the Company outstanding immediately prior to such transaction
continue to hold (either by the voting securities remaining outstanding or
by their being converted into voting securities of the surviving entity)
more than 50% of the total voting power represented by the voting securities
of the Company, or such surviving entity, outstanding immediately after such
transaction;
(ii) The sale, transfer or other disposition of all or substantially all of
the Company’s assets;
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(iii) A change in the composition of the Board, as a result of which
fewer than 50% of the incumbent directors are directors who either:
(A) Had been directors of the Company on the date 24 months
prior to the date of such change in the composition of the Board
(the “Original Directors”); or
(B) Were appointed to the Board, or nominated for election
to the Board, with the affirmative votes of at least a majority
of the aggregate of (A) the Original Directors who were in
office at the time of their appointment or nomination and
(B) the directors whose appointment or nomination was previously
approved in a manner consistent with this Paragraph (B); or
(iv) Any transaction as a result of which any person is the “beneficial
owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended), directly or indirectly, of securities of the Company
representing at least 50% of the total voting power represented by the
Company’s then outstanding voting securities. For purposes of this
Subsection (iv), the term “person” shall have the same meaning as when used
in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended, but shall exclude (i) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company and (ii) a
corporation owned directly or indirectly by the stockholders of the Company
in substantially the same proportions as their ownership of the common stock
of the Company.
A transaction shall not constitute a Change of Control if its sole purpose is to change the
state of the Company’s incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Company’s securities immediately
before such transaction.
(c) Definition of “Involuntary Termination.” For all purposes under this
Agreement, “Involuntary Termination” means termination of the Executive’s service to the Company
under the following circumstances: (i) termination without Cause by the Company; or (ii) voluntary
termination by the Executive within 60 days following (A) a material reduction in the Executive’s
job responsibilities, provided that neither a mere change in title alone nor reassignment
following a Change of Control to a position that is substantially similar to the position held
prior to the Change of Control shall constitute a material reduction in job responsibilities; (B)
relocation by the Company of the Executive’s work site to a facility or location more than 50
miles from the Executive’s principal work site for the Company at the time of the Change of
Control; or (C) a reduction in the Executive’s then-current base salary by at least 10%, provided
that an across-the-board reduction in the salary level of all other employees in
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positions similar to the Executive’s by the same percentage amount as part of a general salary
level reduction shall not constitute such a salary reduction. Prior to a voluntary termination as
defined in this Subsection, the Executive must provide the Company with written notice within
fifteen (15) days of the initial existence of (A), (B) or (C) above and the Company will have 30
days after its receipt of such written notice to cure (A),
(B) or (C).
3. Successors.
(a) Company’s
Successors. The Company shall require any successor (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company’s business and/or assets, by an agreement in substance and form
satisfactory to the Executive, to assume this Agreement and to agree expressly to perform this
Agreement in the same manner and to the same extent as the Company would be required to perform it
in the absence of a succession. For all purposes under this Agreement, the term “Company” shall
include any successor to the Company’s business and/or assets or which becomes bound by this
Agreement by operation of law.
(b) Executive’s Successors. This Agreement and all rights of the Executive hereunder
shall inure to the benefit of, and be enforceable by, the Executive’s personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
4. Miscellaneous Provisions.
(a) Other Severance Arrangements. In the event that the Executive is eligible to receive
severance benefits under this Agreement and another agreement between the Executive and the Company
(each, an “Alternative Agreement”), the Executive will be entitled to the severance benefits under
this Agreement or the Alternative Agreement, whichever provides the greatest benefits to the
Executive with respect to each type of severance benefit, such as cash payments, COBRA premiums and
vesting acceleration. In no event shall the Executive be entitled to severance benefits under both
this Agreement and an Alternative Agreement with respect to the same type of severance benefit.
For example, if an event occurred that triggered the severance benefits under this Agreement and
full vesting acceleration under the Executive’s stock option agreement, then the Executive would
still receive the benefits described in Sections l(a) and l(b) of this Agreement and the full
vesting acceleration under the Executive’s stock option agreement. For the avoidance of doubt, if
an event triggered the severance benefits under this Agreement and an Alternative Agreement that
provided for six months of base salary as a severance benefit, then the Executive would be entitled
to the cash payments under Sections 1(a) and 1(b) of this Agreement but not the six
months of base salary under the Alternative Agreement because with respect to cash payments, this
Agreement provided greater benefits.
(b) Notice. Notices and all other communications contemplated by this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered or when mailed by
U.S. registered or certified mail, return receipt requested and postage prepaid or deposited with
Federal Express Corporation, with shipping charges prepaid. In the case of the Executive, mailed
notices shall be addressed to him or her at the home address which
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he or she most recently communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall be directed to the
attention of its Secretary.
(c) Waiver. No provision of this Agreement shall be modified, waived or discharged unless the
modification, waiver or discharge is agreed to in writing and signed by the Executive and by an
authorized officer of the Company (other than the Executive). No waiver by either party of any
breach of, or of compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same condition or
provision at another time.
(d) Withholding Taxes. All payments made under this Agreement shall be subject to reduction to
reflect taxes or other charges required to be withheld by law.
(e) Severability. The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other provision hereof, which
shall remain in full force and effect.
(f) No
Retention Rights. Nothing in this Agreement shall confer upon the Executive any right
to continue in service for any period of specific duration or interfere with or otherwise restrict
in any way the rights of the Company or any subsidiary of the Company or of the Executive, which
rights are hereby expressly reserved by each, to terminate his or her service at any time and for
any reason, with or without Cause.
(g) Choice of Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York (other than their
choice-of-law provisions).
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year first above written.
| /s/ Xxxx Xxxxxxx | ||||
| Xxxx Xxxxxxx | ||||
| SYNACOR, INC. |
||||
| /s/ Xxxxx Xxxxxx | ||||
| Xxxxx Xxxxxx | ||||
| Vice President of Human Resources | ||||
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