April 15, 2008 Michael R. Elia South Windsor, CT 06074 Dear Michael:
Exhibit
10.24
April 15,
2008
Xxxxxxx
X. Xxxx
00 Xxxxxx
Xxxx Xxxx
South
Windsor, CT 06074
Dear
Xxxxxxx:
Xxxxxx Scientific, Inc. (the “Company”)
considers it essential to the best interests of its stockholders to xxxxxx the
continuous employment of key management personnel. In this
connection, should the Company face a possible Change in Control (as defined in
Section 2 of this Agreement), such as the acquisition of a substantial share of
the equity or voting securities of the Company, the Board of Directors of the
Company (the “Board”) has determined that it is imperative that it and the
Company be able to rely upon your continued services without concern that you
might be distracted by the personal uncertainties and risks that the possibility
of a Change in Control might entail.
Accordingly, the Board has determined
that appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company's management to their
assigned duties without distraction in the face of potentially disturbing
circumstances that could arise out of a possibility for a Change in Control of
the Company.
In order to induce you to remain in the
employ of the Company and its subsidiaries and in consideration of your
agreement set forth in Section 2(B) hereof, the Company agrees that you shall
receive the severance benefits set forth in this letter agreement (“Agreement”)
in the event your employment with the Company and its subsidiaries is terminated
subsequent to a Change in Control under the circumstances described
below.
1. Term of
Agreement
This Agreement shall commence on the
date hereof and shall continue in effect through April 30, 2008 provided, however,
the term of this Agreement shall automatically be extended for one additional
year commencing on May 1, 2008 and on each May 1 thereafter, unless, not later
than 90 days before end of term, the Company shall have given notice that it
does not wish to extend this Agreement; provided further
that, notwithstanding any such notice by the Company not to extend, if a Change
in Control shall have occurred during the original or any extended term of this
Agreement, this Agreement shall continue in effect for a period of twenty-four
(24) months beyond the expiration of the term in effect immediately before such
Change in Control; provided further
that, notwithstanding anything herein to the contrary, if at any time prior to a
Change in Control you, for whatever reason, cease to be Executive Vice President
and
Chief
Financial Officer of the Company, then this Agreement shall automatically
terminate and, at all times thereafter, shall be null and void and of no further
force and effect and you shall not be entitled to any benefits whatsoever
hereunder.
2. Change in
Control
(A) No
benefits shall be payable hereunder unless there shall have been a Change in
Control of the Company, as set forth below. For purposes of this Agreement a
“Change in Control” of the Company shall mean the occurrence of any one or more
of the following events:
(i) the
Company shall (1) merge or consolidate with or into another corporation or
entity or enter into a share exchange between the Company or stockholders of the
Company and another individual, corporation or other entity and as a result of
such merger, consolidation or share exchange less than fifty percent (50%) of
the outstanding voting securities of the surviving or resulting corporation or
entity shall then be owned in the aggregate by the former stockholders of the
Company; or (2) sell, lease, exchange or otherwise dispose of all or
substantially all of the Company’s property and assets in one transaction or a
series of related transactions to one or more individuals, corporations or other
entities that are not subsidiaries of the Company, assuming that if consummation
of such transaction is subject, at the time of such approval by stockholders, to
the consent of any government or governmental agency, such consent by the
government or governmental agency is obtained (either explicitly or implicitly
by consummation of the transaction);
(ii) the
stockholders of the Company adopt a plan of complete liquidation of the
Company;
(iii) any
“person” (as such term is used in Sections 13(d) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) (other than the Employee,
the Company, any of the Company’s subsidiaries, any employee benefit plan of the
Company and/or one or more of its subsidiaries or any person or entity
organized, appointed or established pursuant to the terms of any such employee
benefit plan) becomes the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of voting securities of the Company representing thirty
percent (30%) or more of the total number of votes eligible to be cast at any
election of directors of the Company; provided, however,
that no Change in Control shall be deemed to have occurred under this
subparagraph (iii) if such "person" becomes a holder of the Company's securities
in one or more transactions initiated or pursued by the Company unless after
such transaction(s) less than fifty percent (50%) of the outstanding voting
securities of the Company shall be owned in the aggregate by the former
stockholders of the Company; or
(iv) as
a result of, or in connection with, any tender offer or exchange offer, share
exchange, merger, consolidation or other business combination, sale, lease,
exchange or other disposition of all or substantially all of the Company’s
assets, a contested election, or any combination of the foregoing transactions,
the persons who are directors of the Company on the date hereof (the “Incumbent
Board”) shall cease to constitute a majority of the Board of Directors of the
Company or any successor to the Company; provided that any
person becoming a director subsequent to the date hereof whose election or
nomination for election by the
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(v) Company’s
stockholders was approved by a vote of at least three-quarters (3/4) of the
directors comprising the Incumbent Board (either by a specific vote or by
approval of a proxy statement of the Company in which such person is named as a
nominee for director without any objection to such nomination) shall be, for
purposes herein, considered as though such person were a member of the Incumbent
Board.
(B) In
exchange for the benefits under this Agreement, you agree that, subject to the
terms and conditions herein, in the event of a potential Change in Control of
the Company occurring after the date hereof, you will not voluntarily terminate
your employment with the Company and its subsidiaries until the earlier of (i)
the date which is six months after the occurrence of such potential Change in
Control of the Company or (ii) the occurrence of a Change in Control of the
Company. If more than one potential Change in Control occurs during
the term of this Agreement, the provisions of the preceding sentence shall be
applicable to each potential Change in Control occurring prior to an actual
Change in Control. For the purposes of this Agreement, a
"potential Change in Control" of the Company shall be deemed to have occurred
if: (i) the Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control; (ii) any person (including the
Company) publicly announces an intention to take or to consider taking actions
which if consummated would constitute a Change in Control; or (iii) the Board
adopts a resolution to the effect that, for purposes of this Agreement, a
potential Change in Control of the Company has occurred.
3. Termination Following Change
in Control. If any of the events
described in Section 2 hereof constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4 hereof
upon the subsequent termination of your employment with the Company and its
subsidiaries during the term of this Agreement and within two (2) years of the
Change in Control, unless such
termination is (x) a result of your death, Disability, or Retirement; (y) by you
for other than Good Reason (as defined in Section 3(A)); or (z) by the Company
or any of its subsidiaries for Cause (as defined in Section
3(C)). The benefits provided in Section 4 shall be in lieu of any
termination, separation, severance or similar benefits under your employment
agreement, if any, or under the Company’s termination, separation, severance or
similar plans or policies, if any (other than benefit plans of the Company which
incidentally provide for benefits in the event of a change in control, as such
term is defined in such plans). If your employment is terminated as a result of
your death, Disability or Retirement, by you for other than Good Reason or by
the Company or any of its subsidiaries for Cause, then you shall not be entitled
to any termination, separation, severance or similar benefits under this
Agreement, and you shall be entitled to benefits under your employment
agreement, if any, and/or under the Company’s termination, separation, severance
or similar plans or policies, if any, only in accordance with the terms of any
such employment agreement, plans and policies.
(A) Good
Reason. You shall be entitled to terminate your employment for Good
Reason. For the purposes of this Agreement, “Good Reason” shall mean
the occurrence, without your express written consent, of any Good Reason
circumstance as detailed below (“Good Reason Circumstance”); provided, however,
that within ninety (90) days of the initial existence of the Good Reason
Circumstance, you must provide a Notice of Termination (as defined below)
setting forth a summary of the facts and circumstances which provide the basis
for termination of your employment with Company and the citing the particular
Good Reason Circumstance, and
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(B) the
Company shall then be provided a period of thirty (30) days by which to remedy
the Good Reason Circumstance. You shall only be entitled to terminate
your employment for Good Reason upon the completion of your providing timely
notice to the Company and the Company subsequently not remedying your stated
Good Reason Circumstance within the thirty-day (30-day)
remedy period. For the purposes of this Agreement, Good Reason shall
mean any of the following Good Reason Circumstances:
(i) a
material diminution in the nature or scope of your authorities, duties or
responsibilities from those applicable to you immediately prior to the date on
which a Change in Control occurs;
(ii) a
reduction in your base annual salary from that provided to you immediately prior
to the date on which a Change in Control occurs;
(iii) a
diminution in your eligibility to participate in compensation plans and employee
benefits and perquisites which provide opportunities to receive overall
compensation and benefits and perquisites from the greater of:
(a) the
opportunities provided by the Company (including its subsidiaries) for
executives with comparable duties; or
(b) the
opportunities under any such plans and perquisites under which you were
participating immediately prior to the date on which a Change in Control
occurs;
(iv) a change
in the location of your principal place of employment by the Company (including
its subsidiaries) by more than fifty (50) miles from the location where you were
principally employed immediately prior to the date on which a Change in Control
occurs;
(v) a
significant increase in the frequency or duration of your business
travel;
(vi) or a
reasonable determination by the Board of Directors of the Company that, as a
result of a Change in Control and a change in circumstances thereafter
significantly affecting your position, you are unable to exercise the
authorities, powers, functions or duties attached to your position immediately
prior to the date on which a Change in Control occurs.
(C) Disability;
Retirement.
(i) For
purposes of this Agreement, “Disability” shall mean permanent and total
disability as such term is defined under Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended (the “Code”). Any question as to the
existence of your Disability upon which you and the Company cannot agree shall
be determined by a qualified independent physician selected by you (or, if you
are unable to make such selection, such selection shall be made by any adult
member of your immediate family or your legal representative) and approved by
the Company, said approval not to be unreasonably withheld. The
determination of such physician shall be made in writing to the Company and to
you and shall be final and conclusive for all purposes of this
Agreement.
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(ii) For
purposes of this Agreement, “Retirement” shall mean your voluntary termination
of employment with the Company at or after the age of 65 in accordance with the
Company's retirement policies (excluding early retirement) generally applicable
to its salaried employees or in accordance with any retirement arrangement
established with your consent with respect to you.
(D) Cause. For
purposes of this Agreement, “Cause” shall mean (a) the willful and continued
failure by you to substantially perform your duties with the Company (other than
any such failure from your incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice of Termination
in the manner provided for in Section 3(D) by you for Good Reason) after written
demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, or (b) the willful engaging by you
in conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of this Section 3(C), no act,
or failure to act, on your part shall be deemed “willful” unless done, or
omitted to be done, by you not in good faith and without reasonable belief that
your action or omission was in the best interest of the
Company. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to you a copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters (3/4) of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice to you and
an opportunity for you, together with your counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board you were guilty of
conduct set forth above in this Section 3(C) and specifying the particulars
thereof.
(E) Any
termination of your employment by the Company or any of its subsidiaries or by
you shall be made by written notice of termination to the other
party. Such “Notice of Termination” shall mean a written document
specifying the provision in this Agreement being relied upon and setting forth a
summary of the facts and circumstances which provide the basis for termination
of your employment. The “Date of Termination” shall be the date of
your “Separation from Service” (as defined under Internal Revenue Code Section
409A).
4. Compensation upon
Termination Following a Change in Control
(A) If
your employment shall be terminated for any reason otherwise than (x) as a
result of your death, Disability or Retirement; (y) by you for other than Good
Reason; or (z) by the Company or any of its subsidiaries for Cause, within two
(2) years following a Change in Control (as defined in Section 2), then, if you
sign a General Release in a form generally acceptable to the Company that
releases the Company and its subsidiaries from any and all claims you may have
against them and certifies your willingness to comply with Sections 6 and 7 of
this Agreement, you shall be entitled to the benefits provided
below:
(i) The
Company or one of its subsidiaries shall pay you, not later than the fifth
business day following the Date of Termination (“Payment Date”), the sum of your
full base salary through the Date of Termination, as earned by you but not yet
paid to you, at the salary level in effect on (x) the Date of Termination or (y)
the day immediately preceding the date of
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(ii) the
Change in Control, whichever is higher (“full base salary”), and your pro rata
share of your annual incentive bonus payment in effect on the Date of
Termination. The Company or one of its subsidiaries shall also pay
you all other amounts to which you are entitled under any compensation plan of
the Company applicable to you, at the time such payments are due; provided,
however, that if such payments are nonqualified deferred compensation (as
defined under Internal Revenue Code Section 409A) and you are a “Specified
Employee” (as defined under Internal Revenue Code Section 409A) as of your date
of Separation From Service, such payments shall not commence prior to the date
six (6) months after the date of your Separation from Service (“Specified
Employee Payment Date”). For purposes of this Section 4 and the other
provisions of this Agreement, “your annual incentive bonus payment in effect on
the Date of Termination” shall mean the target amount of your annual incentive
bonus payment (under the Company’s Annual Incentive Bonus Plan or any successor
plan) for the year in which the Notice of Termination is given. Your
pro rata share of your annual incentive bonus payment in effect on the Date of
Termination shall be that percentage of your annual incentive bonus payment in
effect on the Date of Termination that is equal to the number of days in the
fiscal year completed prior to the Date of Termination divided by
365.
(iii) On the
Payment Date, or if you are a Specified Employee as of your date of Separation
from Service, on the Specified Employee Payment Date, the Company shall also pay
you a severance payment equal to two and one-half (2 and ½) times the sum
of (x) your full base salary and (y) your annual incentive bonus payment in
effect on the Date of Termination.
(iv) The
Company shall cause (x) all unvested stock options or other stock grants held by
you on the Date of Termination immediately to vest and be fully exercisable as
of the Date of Termination, (y) any restrictions on all restricted stock held by
you on the Date of Termination immediately to lapse and all shares of such stock
to fully vest as of the Date of Termination, and (z) any accrued benefit or
deferred arrangement of the Company that you otherwise would become entitled to
if you continued employment with the Company immediately to vest as of the Date
of Termination.
(v) On the
Payment Date, or if you are a Specified Employee as of your date of Separation
from Service, on the Specified Employee Payment Date, the Company shall also pay
you a lump sum cash payment equivalent to 30 monthly payments or, if
less, the number of full monthly payments until you reach age 65, that would
have been paid by the Company for the cost of all life insurance, health
(medical and dental), accidental death and dismemberment, and disability plans
and programs in which you are entitled to participate immediately prior to the
Date of Termination.
There shall be no limit on the amount
of payments due you under Section 4(A) unless, after taking into account all
amounts or benefits you have received or have a right to receive from the
Company which are defined as “Excess Parachute Payments,” within the meaning of
Section 280G of the Internal Revenue Code, or any successor provision thereto,
but for the application of this sentence, then the payments and benefits to be
so paid or provided under this Agreement will be reduced to the minimum extent
necessary (but in no event to less than zero) so that no portion of any such
payment or benefit, as so reduced, constitutes an Excess Parachute Payment;
provided, that the foregoing reduction will be made only if and to the
extent
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that such
reduction would result in an increase in the aggregate payments and benefits to
be provided, determined on an after-tax basis (taking into account the excise
tax imposed pursuant to Section 4999 of the Internal Revenue Code, or any
successor provision thereto, any tax imposed by any comparable provision of
state law, any applicable federal, state, and local income taxes). The
determination of whether any reduction in such payments or benefits to be
provided under this Agreement is required pursuant to the preceding sentence
will be made at the expense of the Company, if requested by you or the Company,
or by the Company’s independent accountants. The fact that your right to
payments or benefits may be reduced by reason of the limitations contained in
this Section 4(B) will not of itself limit or otherwise affect any other of your
rights other than pursuant to this Agreement.
(B) The
Company shall also pay to you all legal fees and expenses, if any, reasonably
incurred by you in connection with seeking to obtain or enforce any right or
benefit provided by this Agreement during the term of this Agreement (including
the extension of the Agreement for reason of a Change in Control as provided in
Section 1) and for two (2) years thereafter; provided, the amount of expenses
eligible for reimbursement during one taxable year will not affect the expenses
eligible for reimbursement in another taxable year.
(C) You shall
not be required to mitigate the amount of any payment provided for in this
Section 4 by seeking other employment or otherwise, nor shall the amount of any
payment or benefit provided for in this Section 4 be reduced by any compensation
earned by you as the result of employment by another employer or by retirement
benefits received after the Date of Termination or otherwise.
5. Successors; Binding
Agreement
(A) The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no succession had taken place. Failure of
the Company to obtain such assumption and agreement within thirty days following
the effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same amount and on the
same terms as you would be entitled hereunder if you had terminated your
employment for Good Reason following a Change in Control, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in
this Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(B) This
Agreement shall inure to the benefit of and be enforceable by your personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while any
amount would still be payable to you hereunder if you had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to your devisee, legatee or other designee or, if
there is no such designee, to your estate.
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(C) Confidential
Information. You shall hold in fiduciary capacity for the
benefit of the Company or its subsidiaries all secret or confidential
information, knowledge or data relating to the Company, the subsidiaries and
their respective businesses, which shall have been obtained during your
employment by the Company or its subsidiary and which shall not be public
knowledge (other than by acts by you or your representatives in violation of
this Agreement). After termination of your employment with the Company or its
subsidiaries, you shall not, without prior written consent of the Company or its
subsidiaries, communicate or divulge any such information, knowledge or data to
anyone other than the Company or its subsidiaries or those designated by
them. The preceding two sentences shall not apply with respect to any
information you are required to disclose pursuant to a valid and effective
subpoena or order issued by a court of competent jurisdiction or with respect to
any information you are reasonably required to disclose in enforcing the terms
of this Agreement. In no event shall an asserted violation of this
Section 6 constitute a basis for deferring or withholding any amounts otherwise
payable to you under this Agreement, nor will any asserted violation of this
Section 6 relieve you of your responsibilities under this
Agreement.
6. Agreement Not to
Compete. You agree that for a period of one year following the
Date of Termination, you will not engage, directly or indirectly, whether as a
principal, agent, distributor, representative, consultant, employee, partner,
stockholder, limited partner or other investor (other than an investment of not
more than two percent (2%) of the stock or equity of any corporation the capital
stock of which is publicly traded) or otherwise, in the same or a substantially
similar business as that conducted and carried on by the Company or any of its
subsidiaries and being directly competitive with the Company or any of its
subsidiaries on the Date of Termination or at any time during such one-year
period.
7. Notice. For
the purpose of this Agreement, notices and all other communications provided for
in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the address set forth on the first page
of this Agreement with respect to the Company and on the signature page with
respect to you, provided that all
notices to the Company shall be directed to the attention of the President of
the Company, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of address
shall be effective only upon receipt.
8. Miscellaneous. No
provision of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in writing and signed by you and
such officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any conditions or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. Further, the validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Connecticut. All references to sections of the Code or Exchange Act
shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local
law.
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9. Employment
Status. This Plan is not, and nothing herein shall be deemed
to create, an employment contract between you and the Company or any of its
subsidiaries. You acknowledge that the rights of the Company remain wholly
intact to change or reduce at any time and from time to time your compensation,
title, responsibilities, location, and all other aspects of the employment
relationship, or to discharge you prior to a Change in Control.
10. Integration. This
Agreement contains the entire agreement of the parties hereto and supersedes all
previous agreements between the parties, written or oral, express or implied,
covering the subject matter hereof.
11. Validity. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
12. Counterparts. This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.
If this letter sets forth our agreement
on the subject matter hereof, kindly sign and return to the Company the enclosed
copy of this letter which will then constitute our agreement on this
subject.
Sincerely,
GERBER SCIENTIFIC, INC.
By: _/s/ Xxxxxxx X.
Xxxxxxx__________
Xxxxxxx X.
Xxxxxxx, Xx.
Senior
Vice President and General Counsel
Agreed to
this 15th day
of April, 2008
By:
_/s/ Xxxxxxx X.
Xxxx__________________________
Xxxxxxx X. Xxxx
Executive Vice President and Chief
Financial Officer
00 Xxxxxx
Xxxx Xxxx
South Windsor, CT 06074
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