Note 8 - Severance and Separation Expenses

3 Months Ended

Mar. 31, 2012

Restructuring and Related Activities Disclosure [Text Block]

8. Severance and Separation Expenses

We are subject to indemnification, confidentiality, and three-year non-competition and non-solicitation provisions in connection with the Destron Transaction. The terms of the Destron Transaction also required Joseph J. Grillo, our former chief executive officer, to enter into a three-year non-competition agreement with Allflex. Under the terms of Mr. Grillo’s then existing employment agreement with us, if a change of control occurred and Mr. Grillo resigned within six months of the change of control and provided us a four-month notice of such resignation, Mr. Grillo was entitled to a change of control payment equal to one and a half times both his base salary and bonus, or approximately $1.0 million. The Destron Transaction represented a change of control as defined in the agreement. In addition, due to Allflex’s requirement that Mr. Grillo sign a three year non-competition agreement, we agreed to amend Mr. Grillo’s employment agreement to include an additional payment of one year base salary, or $338 thousand, and make other changes to the terms of payment. The additional one year base salary is payable on the earlier of the second anniversary of the closing date of the Destron Transaction or our winding down if, and only if, Mr. Grillo has not found employment by that time. In addition, if Mr. Grillo secures alternative employment during the third year after the closing of the Destron Transaction, he will be obligated to repay the amount earned during the third year up to the amount he received from us.

Included on the balance sheet at March 31, 2012 and December 31, 2011 are accrued severance expenses of approximately $1.4 million and $1.4 million, respectively, which include the severance and related payments due to Mr. Grillo under the terms of his employment agreement, as amended.  Mr. Grillo’s severance expense was amortized over the four months ending January 31, 2012 and accordingly, we recorded approximately $346 thousand of severance expense during the three months ended March 31, 2012.

As of March 31, 2012, our severance and separation accrual, including amounts reflected in other long-term liabilities, was as follows (in thousands):

	Total
Balance – January 1, 2012	$	1,444
Cash payments		(56	)
Balance – March 31, 2012	$	1,388

In February 2012, approximately $1.0 million was placed in the Grillo Rabbi Trust and such funds will be distributed to Mr. Grillo in August 2012. This amount is reflected on the balance sheet as restricted cash. Of the remaining balance at March 31, 2012, $338 thousand, which is included in other long-term liabilities, is due to Mr. Grillo on the second anniversary of the Destron Transaction or the winding down of the Company as more fully discussed above.