EXHIBIT 10.9
CHANGE OF CONTROL AGREEMENT
AGREEMENT made as of July 1, 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 XXXXXXX X. XXXXXX,
residing at 000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 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 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 an 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/ Xxxxxxx X. Xxxxxx /s/ Xxxx X. South
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Xxxxxxx X. Xxxxxx President
July 17, 1996 7/17/96
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Date Date
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