EXHIBIT 10.8
CHANGE OF CONTROL AGREEMENT
AGREEMENT made as of this 1st day of June 1996, by and between STAODYN, INC., a
Delaware corporation, with its principal offices located at 0000 Xxx Xxxxx
Xxxxxxxxx, Xxxxxxxx, Xxxxxxxx 00000 (hereinafter the "Company"), and XXXX X.
SOUTH, residing at 0 Xxxxxx Xxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter the
"Officer").
1. Definitions. For purposes of this Agreement, the following terms shall have
the meanings set forth below:
(a) For the purposes of this Agreement, a "Change of Control" shall be deemed
to have occurred if (a) any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) other
than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, beneficially owns 50% or more of the
Company's voting common stock; or, (b) at any time during the period of
three consecutive years (not including any period prior to the date
hereof), individuals who at the beginning of such period constitute the
Board (and any new director whose election by the Board or whose
nomination for election by the Company's stockholders were approved by a
vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason
to constitute a majority thereof; or (c) the stockholders of the Company
approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation in which both (i) a
majority of the directors of the surviving entity were directors of the
Company prior to such consolidation or merger; and (ii) which would result
in the voting securities of the Company outstanding immediately prior
thereto continue to represent (either by remaining outstanding or by being
changed into voting securities of the surviving entity) at least 51% of
the combined voting power of the voting securities of the surviving entity
outstanding immediately after such merger or consolidation; or (d) the
stockholders approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(b) "Cause" shall mean the commission by the Officer of any act involving
gross misconduct such as, but not limited to, dishonesty, gross neglect of
duty, frequent unexplained absence from work, or other misconduct
seriously detrimental to the interests of the Company.
(c) "Termination Date" shall mean the date following a Change of Control when
the Officer receives written notice that his employment is Terminated
without Cause or, if later, such other termination date specified in the
written notice.
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(d) "Terminate" shall mean not only a complete termination of employment by
the Company or its successor but also a significant negative change in the
terms of employment with the Company or its successor, including but not
limited to a requirement to relocate or a significant reduction in salary
and benefits.
(e) "Termination Following a Change of Control" shall mean a termination
without Cause by the Company following or in connection with a Change of
Control or a termination by the Officer for "Good Reason" of the Officer's
employment with the Company within two years following a "Change of
Control" (as defined below).
(f) For purposes of this Agreement, "Good Reason" shall include, but not be
limited to, any of the following (without the Officer's express written
consent):
i) the assignment to the Officer by the Company of duties inconsistent
with or a substantial alteration in the nature or status of, the
Officer's responsibilities as in effect immediately prior to a Change
of Control;
ii) a reduction by the Company in the Officer's compensation or benefits
as in effect immediately prior to the date of a Change of Control;
iii) a relocation of the Company's principal offices beyond 30 miles from
the present Longmont, Colorado location, or the Officer's relocation
to any place other than the Longmont, Colorado offices of the
Company, except for reasonably required travel by the Officer on the
Company's business;
iv) any material breach by the Company of any provision of this Agreement
if such material breach has not been cured within thirty (30) days
following written notice of such breach by the Officer to the Company
setting forth with specificity the nature of the breach; or
v) any failure by the Company to obtain the assumption and performance of
the Employment Agreement and this Agreement by any successor (by
merger, consolidation or otherwise) or assign of the Company.
2. Severance Benefits. In the event there is a Termination Following a Change
of Control, the Officer shall be entitled to the following severance benefits
for a period of 12 months after the Termination Date:
(a) Continued base salary in regular biweekly payments, or if so elected by
the Officer, a lump sum payable within 30 days of the Officer's election.
(b) Bonus payable in such amount as would be payable to the Officer had he
been employed by the Company for the full fiscal year during which the
termination occurred, and the Company had achieved Plan performance for
such fiscal year. Such bonus shall be paid in the same manner as elected
by the Officer in (a) above;
(c) Continued medical, dental, life and disability insurance benefits; and
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(d) Continued retirement benefits, including 401(k) plan.
Such benefits shall be identical to the salary, bonus, insurance and
retirement plan benefits to which the Officer was entitled immediately prior
to the Change of Control. During such 12-month period, the Officer shall
continue to be an employee of the Company for purposes of participation in the
plans which provide the benefits described in subsections (c) and (d) above
but shall have no further responsibilities as an employee and shall not be
required or permitted to continue his former duties. Subject to Section 4,
the Officer shall be free to accept other employment during such period, and
there shall be no offset of any employment compensation earned by Officer in
such other employment during such period against payments due the Officer
hereunder, and there shall be no offset in any compensation or benefits
received from such other employment against the continued salary and benefits
set forth above.
3. Stock Option Vesting. In the event of a Termination Following a Change of
Control, all outstanding stock options held by the Officer which are not then
exercisable, shall become exercisable in their entirety, as of the date
immediately preceding the Termination Date.
4. Noncompetition Agreement. Officer acknowledges that the Company has trade
secrets and confidential information, that as President and Chief Executive
Officer he will have access to all such trade secrets and confidential
information and that in performing duties in an executive position for
another company he might necessarily use and divulge such trade secrets and
confidential information. Therefore, in consideration for the severance
benefits set forth above, the Officer agrees that for a period of 12 months
subsequent to the Termination Date, the Officer will not, directly or
indirectly:
(a) Call upon any person or entity which was a customer of the Company
immediately prior to the Termination Date for the purpose of diverting,
taking away the business of, or selling products or services competitive
with significant products or services provided by the Company;
(b) In any manner, misuse or divulge to any person any list of customers,
confidential information or trade secrets of the Company;
(c) Alone or in any capacity solicit or in any manner attempt to solicit or
induce any person or persons employed by the Company within one year prior
to the Termination Date to leave such employment;
(d) Within the United States of America, either as an employee, employer,
consultant, agent principal, partner, more than 5% stockholder, corporate
officer, director, or in any other individual or representative capacity,
engage or participate in any business that is in competition in any
significant manner with any material business conducted by the Company on
the Termination Date.
5. Termination. This Agreement may be terminated only as follows:
(a) by mutual written agreement of the parties;
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(b) upon termination of Officer's employment prior to, and not in connection
with, a Change of Control.
(c) when the Officer attains age 65.
6. Severability. Should a court or other body of competent jurisdiction
determine that any provision of this Agreement is excessive in scope or
otherwise invalid or unenforceable, such provision shall be adjusted rather
than voided, if possible, so that it is enforceable to the maximum extent
possible, and all other provisions of the Agreement shall be deemed valid and
enforceable to the extent possible.
7. Assignment. The parties may assign their economic rights under this
Agreement but shall not assign any personal obligations from this Agreement.
8. Miscellaneous. This Agreement: (a) contains the entire agreement among the
parties regarding the subject matter hereof and supersedes any prior
agreements on this subject between the parties; (b) may not be amended nor
may any rights hereunder be waived except by an instrument in writing signed
by the party sought to be charged with such amendment or waiver; (c) shall be
construed in accordance with, and governed by, the laws of Colorado; and (d)
shall be binding upon and shall inure to the benefit of the parties and their
respective personal representatives and permitted assigns, including, without
limitation, any successor to the business of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
THE OFFICER STAODYN, INC.
/s/ XXXX X. SOUTH [SIGNATURE OF CHAIRMAN OF BOARD APPEARS HERE]
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Xxxx X. South Chairman of the Board
6/19/96 [SIGNATURE OF VP APPEARS HERE]
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Date Vice President - Finance and Administration
Corporate Secretary
June 19, 1996
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Date
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