Exhibit 10.10
LOGICVISION, INC.
CHANGE OF CONTROL SEVERANCE
AGREEMENT
This Change of Control Severance Agreement (this
“Agreement”), is made and entered into effective as of
November 11, 2008 (the “Effective Date”), by and
between James T. Healy (the “Executive”) and
LogicVision, Inc., a Delaware corporation (the
“Company”). Certain capitalized terms used in this
Agreement are defined in Section 1 below.
RECITALS
A.
It is expected that the Company from time to time will consider the
possibility of a Change of Control. The Board of Directors of the
Company (the “Board”) recognizes that such
consideration can be a distraction to the Executive and can cause
the Executive to consider alternative employment
opportunities.
B.
The Board believes that it is in the best interests of the Company
and its shareholders to provide the Executive with an incentive to
continue the Executive’s employment and to maximize the value
of the Company upon a Change of Control for the benefit of its
shareholders.
C.
In recognition of Executive’s service with the Company during
which time Executive’s leadership has been fundamental to the
Company’s development and in order to provide the Executive
with enhanced financial security and sufficient encouragement to
remain with the Company notwithstanding the possibility of a Change
of Control, the Board believes that it is imperative to provide the
Executive with certain severance benefits upon the
Executive’s termination of employment in connection with a
Change of Control.
AGREEMENT
In
consideration of the mutual covenants herein contained and the
continued employment of the Executive by the Company, the parties
agree as follows:
1.
Definition of Terms . The following terms referred to in
this Agreement shall have the following meanings:
(a) Cause .
“Cause” shall mean (i) commission of a felony, an act
involving moral turpitude, or an act constituting common law fraud,
and which has a material adverse effect on the business or affairs
of the Company or its affiliates or stockholders; (ii) intentional
or willful misconduct or refusal to follow the lawful instructions
of the Board; or (iii) intentional breach of Company confidential
information obligations which has an adverse effect on the Company
or its affiliates or stockholders. For these purposes, no act or
failure to act shall be considered “intentional or
willful” unless it is done, or omitted to be done, in bad
faith without a reasonable belief that the action or omission is in
the best interests of the Company.
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(b) Change of Control .
“Change of Control” shall mean the occurrence of any of
the following events:
(i) the approval by the shareholders
of the Company of a plan of complete liquidation or dissolution of
the Company or the closing of a sale or disposition by the Company
of all or substantially all of the Company’s assets, other
than a sale or disposition to a subsidiary of the Company or to an
entity, the voting securities of which are owned by the
stockholders of the Company in substantially the same proportions
as their ownership of the Company’s voting securities
immediately prior to such sale or disposition;
(ii) a merger or consolidation of
the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent directly or indirectly (either by remaining outstanding
or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or
(iii) any “person” (as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becoming the “beneficial
owner” (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing fifty percent
(50%) or more of the total voting power represented by the
Company’s then outstanding voting securities.
Notwithstanding the foregoing, the term
“Change of Control” shall not be deemed to have
occurred if the Company files for bankruptcy protection, or if a
petition for involuntary relief is filed against the
Company.
(c) Involuntary Termination .
“Involuntary Termination” shall mean:
(i) without the Executive’s
express written consent, a material reduction in the
Executive’s authority, duties or responsibilities relative to
the Executive’s authority, duties or responsibilities in
effect immediately prior to the Change of Control provided that no
such material reduction shall be deemed to occur solely by reason
of the Company becoming a subsidiary or division of an acquiring
entity;
(ii) without the Executive’s
express written consent, a material reduction by the Company of the
Executive’s base compensation as in effect immediately prior
to the Change of Control;
(iii) without the Executive’s
express written consent, the relocation of the Executive’s
principal place of employment to a facility or a location more than
fifty (50) miles from the Executive’s current
location;
(iv) any termination of the
Executive by the Company which is not effected for Cause;
or
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(v) the failure of the Company to
obtain the assumption of this Agreement or any other agreement
between the Company and Executive by any successors contemplated in
Section 7 below.
A
termination shall not be considered an “Involuntary
Termination” unless the Executive provides notice to the
Company of the existence of the condition described in subsections
(i), (ii), (iii) or (v) above within ninety (90) days of the
initial existence of such condition, and the Company fails to
remedy the condition within thirty (30) days following the receipt
of such notice.
(d) Termination Date .
“Termination Date” shall mean the effective date of any
notice of termination delivered by one party to the other
hereunder.
2.
Term of Agreement . This Agreement shall terminate upon the
date that all obligations of the parties hereto under this
Agreement have been satisfied.
3.
At-Will Employment . The Company and the Executive
acknowledge that the Executive’s employment is and shall
continue to be at-will, as defined under applicable law.
4.
Severance Benefits .
(a) Involuntary Termination in
Connection with a Change of Control . If the Executive’s
employment with the Company terminates as a result of an
Involuntary Termination on or at any time within three (3) months
before or twelve months (12) months after a Change of Control, and
the Executive signs and does not revoke a standard release of
claims with the Company in a form reasonably acceptable to the
Company, then the Executive shall be entitled to the following
severance benefits (it being understood that no such benefits shall
accrue and be payable (or take effect, as the case may be) unless
and until a Change in Control occurs):
(i) 150% of the Executive’s
annual base salary as in effect as of the Termination Date, less
applicable withholding, payable in a lump sum within thirty (30)
days of the Involuntary Termination or, if later, the Change in
Control;
(ii) 150% of the Executive’s
target bonus plus target commission for the fiscal year in which
the Termination Date occurs, less applicable withholding, payable
in a lump sum within thirty (30) days of the Involuntary
Termination or, if later, the Change in Control;
(iii) acceleration of the vesting
and exercisability of all of the Executive’s options to
acquire common stock of the Company or its successor, or the parent
of either, to the extent outstanding, or of any deferred
compensation into which the Executive’s stock options were
converted upon the Change of Control; and
(iv) reimbursement by the Company of
the group health continuation coverage premiums for the Executive
and the Executive’s eligible dependents under Title X of the
Consolidated Budget Reconciliation Act of 1985, as amended
(“COBRA”) as in effect through the lesser of (x) twelve
(12) months from the date of such termination, (y) the date upon
which the Executive and the Executive’s eligible dependents
become covered under similar plans or (z) the date the Executive no
longer constitutes a “Qualified Beneficiary” (as such
term is defined in Section 4980B(g) of the Code); provided,
however, that the Executive will be solely responsible for electing
such coverage within the required time period; and provided
further, however, that payment of the reimbursement shall not be
made prior to the Change in Control, but shall be deferred and paid
within thirty (30) days after the Change in Control.
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(b) Termination Apart from a
Change of Control . If the Executive’s employment with
the Company terminates other than as a result of an Involuntary
Termination on or within three (3) months before or twelve (12)
months after a Change of Control then the Executive shall not be
entitled to receive severance or other benefits
hereunder.
(c) Accrued Wages and Vacation;
Expenses . Without regard to the reason for, or the timing of,
the Executive’s termination of employment: (i) the Company
shall pay the Executive any unpaid wages due for periods prior to
the Termination Date; (ii) the Company shall pay the Executive all
of the Executive’s accrued and unused vacation through the
Termination Date; and (iii) following submission of proper expense
reports by the Executive, the Company shall reimburse th
