Exhibit 4.24
CONTROL DELIVERY SYSTEMS, INC.
SEVERANCE AGREEMENT
AGREEMENT made this 20th day of February, 2004, by and between Xxxxxxx X.
Xxxx ("Executive") and Control Delivery Systems, Inc. (the "Company").
Whereas, the Board of Directors of the Company (the "Board") recognizes
that the possibility of additional layoffs and/or hibernation exists and that
such possibility, and the uncertainty and questions which it may raise among
certain key management personnel, may result in the departure or distraction of
such management personnel to the detriment of the Company and its stockholders;
Whereas, the Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of certain key
members of the Company's management, including Executive, to their duties, to
assist the Board and the Company in maximizing the value of the Company, without
distraction; and
Whereas, the Board wishes to induce Executive and other key members of
management to remain in the employ of the Company and to assure them of fair
severance should the employment of any of them terminate on or before October 7,
2005;
NOW, THEREFORE, in consideration of the premises and the mutual promises, terms
and conditions contained herein, the parties hereto agree as follows:
1. Severance Benefits. If on or before October 7, 2005 the Company terminates
Executive's employment without Cause, or if Executive terminates his or her
employment for Good Reason, the Company will provide severance benefits to
Executive as follows:
a. All of the shares of restricted stock granted to Executive will
automatically and immediately vest upon such termination, including
without limitation the following shares: 14,040 shares of restricted
stock granted on May 28, 2003; 30,046 shares of restricted stock
granted on October 7, 2003; 5,954 shares of restricted stock granted
on October 7, 2003; 10,000 shares of restricted stock granted on
October 7, 2003.
b. All options to purchase Company stock held by Executive will
automatically and immediately vest and become exercisable upon such
termination and remain exercisable for a period of six months
following such termination (or three months in the case of incentive
stock options).
c. The Company will pay to Executive within 30 days of the termination a
lump-sum cash amount equal to the sum of (x) an amount equal to six
months' Base Salary plus (y) a pro-rated portion of the maximum bonus
that would otherwise be payable in the year of termination, if any.
"Base Salary" means Executive's base salary on the date of this
agreement. For purposes of this Agreement, the maximum bonus payable
in any year will be calculated
assuming all bonus targets or formulas for determining the bonus in
such year had been met if Executive and Board had, prior to the
termination of Executive's employment, agreed on such targets or
formulas. If no such targets or formulas have been set as of such
termination date, then the maximum bonus shall be deemed to be the
actual bonus paid to Executive during the preceding fiscal year.
d. The Company will continue for a period of six months from the date of
termination to provide Executive with the following benefits: (1) the
Company's group medical plan, and (2) life insurance arrangements or
disability plan arrangements provided to executive-level employees of
the Company. To the extent that the Company is unable to provide such
benefits to Executive under its existing plans and arrangements, it
will pay Executive cash amounts equal to the cost the Company would
have incurred to provide those benefits.
2. Definitions.
a. "Cause" means only (a) willful malfeasance or gross negligence in the
performance by Executive of his or her duties, resulting in material
harm to the Company, (b) fraud or dishonesty by Executive with respect
to the Company, or (c) Executive's conviction of any felony involving
deception, fraud or moral turpitude. The Company may treat a
termination of Executive's employment as termination for Cause only
after (i) giving Executive written notice of the intention to
terminate for Cause and of his or her right to a hearing by the Board,
(ii) at least 30 days after giving the notice, conducting a hearing by
the Board at which Executive may be represented by counsel, and (iii)
giving Executive 30 days' written notice of the results of the
hearing, which shall require a vote of a majority of the Directors
then in office other than Executive. For purposes of this definition
of Cause, no act or omission shall be considered to have been
"willful" unless it was not in good faith and Executive had knowledge
at the time that the act or omission was not in the best interest of
the Company. Any act or failure to act based on authority given
pursuant to a resolution duly adopted by the Board or based on the
advice of counsel of the Company shall be conclusively presumed to be
done, or omitted to be done, by Executive in good faith and in the
best interest of the Company. Cause shall not include willful failure
due to incapacity resulting from physical or mental illness or any
actual or anticipated failure after Notice of Termination for Good
Reason.
b. "Good Reason" means (i) failure by the Company to maintain Executive
in the position of Vice President, Chief Financial Officer including
holding the title of and serving as Vice President, Chief Financial
Officer of the Company and having responsibility for performing all
duties typically undertaken by such offices or assignment to Executive
of duties materially inconsistent with such positions, (ii) the
diminution in any material respect of Executive's positions or
authority, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the
Company promptly
after receipt of notice thereof given by Executive, (iii) failure by
the Company to provide Executive with Base Salary, benefits and other
compensation (including without limitation bonus and other incentive
compensation) Executive was receiving as of the date of this
Agreement, or (iv) relocation of Executive's principal place of work
to a location more than 30 miles from its current location without
Executive's consent. For purposes of this definition of Good Reason,
"Company" means Control Delivery Systems and any successor of Control
Delivery Systems, provided if any such successor has a parent, then
Company shall mean the ultimate parent corporation.
3. Change of Control. Notwithstanding anything in this Agreement to the
contrary (including without limitation Sections 1, 2 and 11 of this
Agreement), if Executive is eligible for the benefits prescribed in the
Change of Control Agreement between Executive and Company of even date
herewith (the "Change of Control Agreement"), then Executive shall receive
the benefits prescribed in the Change of Control Agreement and will not be
eligible for benefits under this Agreement and the Company will have no
obligation or liability to Executive under this Agreement.
4. Terminability of Employment. This Agreement does not constitute a contract
of employment for a specific term. Employment with the Company is at-will.
The Company may at any time terminate Executive's employment with the
Company with or without notice or Cause.
5. Termination by the Company for Cause or by Executive Without Good Reason.
If the Company terminates Executive's employment for Cause or if Executive
terminates his employment other than for Good Reason, the Company will have
no obligation or liability to Executive under this Agreement.
6. Withholding. All payments required to be made by the Company to Executive
under this Agreement will be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as may be required by
law.
7. Confidentiality, Non-Competition and Exclusivity. Executive further agrees
to abide by all of the terms of the Employee Confidentiality, Proprietary
Rights and Noncompetition Agreement dated as of February 26, 2001
("Confidentiality and Inventions Agreement"). The parties recognize and
agree that should the Company be required to pursue a claim against
Executive under the Confidentiality and Inventions Agreement, the Company
will likely be required to seek injunctive relief as well as damages at
law. Accordingly, Section 8, Arbitration, will not apply to any action by
the Company against Executive under the Confidentiality and Inventions
Agreement.
8. Arbitration. Except as otherwise provided in Section 7, any dispute or
controversy between the parties involving the construction or application
of this Agreement, or any claim arising out of or relating to this
Agreement, or any claim arising out of or relating to Executive's
employment by the Company that is not resolved within ten
days by the parties will be settled by arbitration in Boston,
Massachusetts, in accordance with the rules of the American Arbitration
Association then in effect, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The
Company and Executive agree that the arbitrator(s) will have no authority
to award punitive or exemplary damages or so-called consequential or remote
damages such as damages for emotional distress. Any decision of the
arbitrator(s) will be final and binding upon the parties. Either party may
request that the arbitrator(s) submit written findings of fact and
conclusions of law. The parties agree and understand that they hereby waive
their rights to a jury trial of any dispute or controversy relating to the
matters specified above in this Section.
9. Termination upon Death or Disability. If Executive ceases to be an employee
of the Company as a result of death or disability, the Company will have no
further obligation or liability to Executive under this Agreement. However,
nothing in this Agreement is intended to interfere with the rights of
Executive and his family or beneficiaries under other applicable plans,
policies or arrangements of the Company applicable in the event of death or
disability.
10. Rights of Survivors If Executive dies after becoming entitled to benefits
under Section 1 following termination of employment but before all such
benefits have been provided, all unpaid cash amounts will be paid to the
beneficiary that has been designated by Executive in writing (the
"beneficiary"), or if none, to Executive's estate.
11. Successors. This Agreement will inure to and be binding upon the Company's
successors. The Company will require any successor to all or substantially
all of the business and/or assets of the Company by sale, merger or
consolidation (where the Company is not the surviving corporation), lease
or otherwise, to assume this Agreement. This Agreement is not otherwise
assignable by the Company or the Executive.
12. Amendment or Modification; Waiver. This Agreement may not be amended unless
agreed to in writing by Executive and an expressly authorized officer of
the Company. No waiver by either party of any breach of this Agreement will
be deemed a waiver of a subsequent breach.
13. Controlling Law. This Agreement will be controlled and interpreted pursuant
to Massachusetts law, other than its choice of law principles.
14. Entire Agreement. This Agreement constitutes the entire agreement and
supersedes conflicting terms in all prior agreements and undertakings, both
written and oral, between Executive and the Company with respect to the
subject matter hereof. Except as otherwise set forth herein, the terms and
conditions of all other agreements with Executive, including without
limitation all Restricted Stock Award Agreements,
Stock Option Grant Agreements, the Change of Control Agreement and the
Confidentiality and Inventions Agreement, shall continue in full force and
effect.
15. Notices. Any notices required or permitted to be sent under this Agreement
shall be effective when delivered by hand or mailed by registered or
certified mail, return receipt requested, and addressed as follows:
If to the Company:
Control Delivery Systems, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
If to Executive:
Xxxxxxx X. Xxxx
00 Xxxxxx Xxxx
Xxxxxxx, XX 00000
Either party may change its address for receiving notices by giving notice to
the other party.
16. Release. Notwithstanding anything to the contrary contained in this
Agreement, in order for Executive to be eligible for the severance benefits
to be provided in accordance with this Agreement, Executive must sign (and
not revoke within seven days of signing) a release of claims in the form
attached hereto and marked Exhibit A.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
In witness whereof, the parties hereto have executed this Agreement as of
the date first set forth above.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
CONTROL DELIVERY SYSTEMS, INC.
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Chief Executive Officer &
President
EXHIBIT A
RELEASE OF CLAIMS
FOR AND IN CONSIDERATION OF the benefits to be provided me in connection
with the termination of my employment, as set forth in the Severance Agreement
between me and Control Delivery Systems, Inc. (the "Company") dated as of
February 20, 2004 (the "Agreement"), which benefits are subject to my signing of
this Release of Claims and to which I am not otherwise entitled, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, I, on my own behalf and on behalf of my heirs, executives,
administrators, beneficiaries, representatives and assigns, and all others
connected with me, hereby release and forever discharge the Company, its
subsidiaries and other affiliates and all of their respective past, present and
future officers, directors, trustees, shareholders, employees, agents, general
and limited partners, members, managers, joint venturers, representatives,
successors and assigns, and all others connected with any of them, both
individually and in their official capacities, from any and all causes of
action, rights and claims of any type or description, known or unknown, which I
have had in the past, now have, or might now have, through the date of my
signing of this Release of Claims, in any way resulting from, arising out of or
connected with my employment by the Company or any of its subsidiaries or other
affiliates or the termination of that employment or pursuant to any federal,
state or local law, regulation or other requirement (including without
limitation Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, and the fair employment
practices laws of the state or states in which I have been employed by the
Company or any of the subsidiaries or other affiliates, each as amended from
time to time).
Excluded from the scope of this Release of Claims is (i) any claim arising
under the terms of the Agreement and (ii) any right of indemnification or
contribution that I have pursuant to the Articles of Incorporation or By-Laws of
the Company or any of its subsidiaries or other affiliates.
In signing this Release of Claims, I acknowledge my understanding that I
may not sign it prior to the termination of my employment, but that I may
consider the terms of this Release of Claims for up to twenty-one (21) days (or
such longer period as the Company may specify) from the later of the date my
employment with the Company terminates or the date I receive this Release of
Claims. I also acknowledge that I am advised by the Company and its Affiliates
to seek the advice of an attorney prior to signing this Release of Claims; that
I have had sufficient time to consider this Release of Claims and to consult
with an attorney, if I wished to do so, or to consult with any other person of
my choosing before signing; and that I am signing this Release of Claims
voluntarily and with a full understanding of its terms.
I further acknowledge that, in signing this Release of Claims, I have not
relied on any promises or representations, express or implied, that are not set
forth expressly in the Agreement. I understand that I may revoke this Release of
Claims at any time within seven (7) days of the date of my signing by written
notice to the General Counsel of the
Company and that this Release of Claims will take effect only upon the
expiration of such seven-day revocation period and only if I have not timely
revoked it.
Intending to be legally bound, I have signed this Release of Claims under seal
as of the date written below.
Signature:
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Name (please print):
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Date Signed:
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