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Exhibit
10.1
TERMINATION
AGREEMENT
Agreement made this 9th day
of July 2008, by and between Excel Technology, Inc. (the
“Company”) a Delaware corporation, and Antoine Dominic,
the President and Chief Executive Officer of the Company (the
“Employee”).
WITNESSETH:
WHEREAS, the Company is
proposing to enter into an Agreement and Plan of Merger (the
“Merger Agreement”) with GSI Group, Inc., a New
Brunswick corporation (“GSI”), and Eagle Acquisition
Corporation, a Delaware corporation and an indirect wholly owned
subsidiary of GSI (“Purchaser”), which provides for a
cash tender offer (the “Offer”) by Purchaser for all of
the outstanding shares of voting stock of the Company
(“Shares”), followed by a merger of Purchaser with and
into the Company, with the Company surviving the merger as an
indirect wholly owned subsidiary of GSI; and
WHEREAS, Employee has an
employment agreement (“Employment Agreement”;
capitalized terms used but not defined herein having the meanings
ascribed thereto in the Employment Agreement) with the Company,
dated the 9 th day
of October, 2006, that (a) expires on October 31, 2008,
and, unless the parties reach a new agreement prior to the
expiration of the Employment Period, automatically renews for one
year periods unless terminated in accordance with its terms or the
parties agree to new terms of employment, and (b) provides
(i) for a salary, currently payable at the rate of $750,000
per annum, (ii) in the event (a) Employee’s
employment is terminated without cause or Employee leaves the
employ of the Company for Good Reason, Employee is entitled to
receive (A) a cash lump sum payment in an amount equal to two
(2) times Employee’s Base Salary, plus an amount equal
to the sum of the bonuses paid or payable by the Company to
Employee for each of the performance periods ending within the two
calendar years immediately preceding the calendar year of
termination of his employment (collectively, the “Severance
Payment” all or a portion of which the Company and Employee
intend to be allocable to the Employee’s agreement not to
compete set forth in Section 6.01 of the Employment Agreement,
and as extended pursuant to Section 4 hereof (the
“Covenant Not to Compete Payment”)), such lump sum
payment to be
made within ten (10) days following
such termination of employment (B) the bonus compensation, to
the extent unpaid, which Employee had earned under the
Company’s Annual Incentive Compensation Plan for Key
Executives (the “Key Executive Bonus Plan”) for
(1) all performance periods that ended before the date of
Employee’s termination of employment (a “Completed
Period Unpaid Bonus”), and (2) the performance period in
which Employee’s employment terminated (a “Partial
Period Unpaid Bonus”), (C) continued medical and dental
benefits for Employee, his spouse and dependents for a period of 60
months following the termination of Employee’s employment on
terms that are no less favorable to Employee, his spouse and
dependents than those in effect immediately before such termination
of employment (the “Medical/Dental Benefits”),
(D) full and immediate vesting of Employee’s outstanding
stock options and shares of restricted stock (“Vesting of
Options/Restricted Stock”), (iii) that in the event of a
Change of Control, Employee is entitled to a payment equal to the
product of (A) 2.99 and (B) Employee’s
“annualized includible compensation” as that term is
defined in Section 280G of the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder (the
“Code”) for the period consisting of the most recent
five (5) taxable years ending before the Change of Control
(the “Change of Control Payment”), (iv) that in
the event it is determined that any payment or distribution made,
or benefit provided (including, without limitation, the
acceleration of any payment, distribution or benefit and the
accelerated exercisability of any stock option), to or for
Employee’s benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of the Employment Agreement or
otherwise (but determined without regard to any additional payments
required under this provision) (a “Payment”) would be
subject to excise tax imposed by Section 4999 of the Code (or
any similar excise tax) or any interest or penalties are incurred
by him with respect to such excise tax (such excise tax, together
with any such interest and penalties, the “Excise
Tax”), Employee shall be entitled to receive from the Company
an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by him of all taxes (including any
Excise Tax, income tax or employment tax and taking into account
any lost or reduced tax deductions on account of such Gross-Up
Payment) imposed upon the Gross-Up Payment and any interest or
penalties imposed with respect to such taxes, Employee retains an
amount from the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments, and (v) for the payment of deferred
compensation (the “Deferred
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Compensation Payment”) six months
following the termination of the Employee’s employment with
the Company for any reason, which provision was superseded by the
terms of a “Deferred Compensation Plan” effective
November 1, 2006 (the “Deferred Compensation
Plan”) and ratified by the Compensation Committee (as defined
herein), providing that the Deferred Compensation Payment will be
made by the Company to the Employee thirty (30) days after a
Change of Control (as defined in Section 1.4 of the Deferred
Compensation Plan); provided, that all such foregoing payments are
subject to applicable withholding taxes; and
WHEREAS, the Employment
Agreement defines (a) Change of Control to mean, among other
things, “the acquisition by any person…of more than 50%
of … the then outstanding shares of common stock of the
Company” and (b) Good Reason to mean, among other
things, “a significant reduction in the scope of the
Employee’s authority, functions, duties, or responsibilities
from that which is contemplated by the Employment Agreement;
and
WHEREAS, (a) the Company
acknowledges and confirms that, as described in Section 7.14
of the Merger Agreement, at the Purchase Time Employee will have
“Good Reason” for terminating his employment with the
Company pursuant to the Employment Agreement, (b) the Employee
has given notice to the Company that he will leave the employ of
the Company for Good Reason contingent upon the occurrence of and
immediately following the Purchase Time, and (c) the Company
further acknowledges and confirms that if Employee voluntarily
terminates his employment with the Company following the Purchase
Time, Employee shall be entitled to receive the payments and
benefits provided in the Employment Agreement upon the termination
by the Employee of his employment with the Company for Good Reason;
and
WHEREAS, upon
Purchaser’s purchase of Shares pursuant to the Offer, by
accepting for payment Shares validly tendered and not withdrawn as
of the expiration date of the Offer, and paying for such Shares in
accordance with the terms of the Offer by depositing the aggregate
purchase price therefor with the Depositary for the Offer (the
“Depositary”), Parent will acquire ownership of a
majority of the total number of then outstanding Shares on a
fully-diluted basis (the date and time of such deposit with the
Depositary being referred to as the “Purchase Time”);
and
WHEREAS, this Agreement is
being entered into by the Company and Employee to (i) implement the
provisions of the Employment Agreement (as superseded by the
Deferred
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Compensation Plan to the extent
described above) which will be applicable, and to set forth the
amount of the payments which Employee and the Company have agreed
will be payable to Employee pursuant to the Employment Agreement
(as superseded by the Deferred Compensation Plan to the extent
described above), upon the termination of Employee’s
employment with the Company for Good Reason immediately following
the Purchase Time, (ii) set forth an amount of the Severance
Payment which, subject to Section 3, the Company and Employee
have initially agreed to designate as the Covenant Not To Compete
Payment, (iii) provide a procedure for adjusting such amount
so designated and for making commensurate adjustments in the
respective amounts of the Severance Payment and the Gross-Up
Payment, (iv) (A) provide for an extension to a
three-year period of the Employee’s non-compete obligations
set forth in Section 6.01 of the Employment Agreement and
(B) set forth the three-year non-solicitation covenant agreed
to by the Employee and (v) provide for the mutual releases set
forth herein; and
WHEREAS, the terms of this
Agreement, the Employment Agreement and the Deferred Compensation
Plan have been approved or ratified by the Compensation Committee
of the Company’s Board of Directors (the “Compensation
Committee”) as an “employment compensation, severance
or other employee benefit arrangement” within the meaning of
Rule 14d-10 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and the Chairman of the
Compensation Committee is authorized to execute this Agreement on
behalf of the Company;
NOW, THEREFORE, in
consideration of the premises, and other good and valuable
consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Termination of
Employment . Contingent upon the occurrence of and immediately
following the Purchase Time, the Employee’s employment with
the Company shall terminate for Good Reason.
2. Payments
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(a) Provided the Employee has
not revoked the Waiver and Release (as defined herein) in
accordance with Section 5(a)(ii), (i) immediately upon
the occurrence of the Purchase Time, the Company shall, subject to
Section 3, pay to the Employee, less any applicable
withholding taxes, (A) the Severance Payment, (B) the
Covenant Not to Compete
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Payment, (C) to the
extent unpaid (x) the Completed Period Unpaid Bonus in respect
of the Company’s fiscal quarter ended June 27, 2008 (the
“Q2 2008 Bonus”), (y) any Completed Period Unpaid
Bonus in respect of the fiscal quarter ended September 26,
2008 if the Purchase Time occurs after September 26, 2008,
calculated as 10% of the Company’s pre-tax book income for
such fiscal quarter, subject to adjustments by the Compensation
Committee consistent with past practice (the “Q3 2008
Bonus”), and (z) any Partial Period Unpaid Bonus, which,
if the Purchase Time occurs prior to September 26, 2008, shall
equal the Q2 2008 Bonus, and if the Purchase Time occurs after
September 26, 2008, shall equal the Q3 2008 Bonus, in either
case pro rated based on the number of days elapsed prior to the
Purchase Time in the fiscal quarter in respect of which such
Partial Period Unpaid Bonus is paid, (D) the Change of Control
Payment and (E) the Gross-Up Payment; and (ii) pay to the
Employee on the thirtieth (30 th ) day after the Purchase Time the Deferred Compensation
Payment, less any applicable withholding taxes. The Company shall
remit to the appropriate taxing authority, at or before the time
required by law to be so remitted, any withholding taxes (including
any social security and Medicare taxes and the Company’s
contribution with respect to such taxes) and excise taxes imposed
by Section 4999 of the Code, or any similar excise tax
applicable to the payments provided for above and to any other
amounts or benefits paid or provided to the Employee pursuant to
this Agreement or the Employment Agreement following the
termination of his employment with the Company (“Withholding
Taxes”). Set forth on Exhibit A which is attached hereto and
made a part hereof, are the payments to be made, subject to
Withholding Taxes and subject to Section 3, with respect to
the Severance Payment, the Covenant Not to Compete Payment, the
Change of
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