GREATBATCH, INC.
CHANGE OF CONTROL AGREEMENT
AGREEMENT by and between Greatbatch, Inc. a Delaware
corporation (the "Company" or "GB"), and ______________________ (the
"Executive"), dated as of the ______ day of _____________________, 2006.
The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below). The Board believes it is imperative to (1) diminish the
inevitable distraction of the Executive by virtue of the personal uncertainties
and risks created by a pending or threatened Change of Control; (2) encourage
the Executive's full attention and dedication to the Company currently and in
the event of any threatened or pending Change of Control; (3) to enable the
Executive, without being influenced by the uncertainties of the Executive's own
situation, to assess and advise the Company whether proposals concerning any
potential change of control of the Company are in the best interests of the
Company and its shareholders and to take other action regarding these proposals
as the Company might determine appropriate; and (4) provide the Executive with
compensation and benefits arrangements on a Change of Control that ensure that
the compensation and benefits expectations of the Executive will be satisfied
and that are competitive with those of other corporations. Therefore, to
accomplish these objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions
(a) An "Affiliate" of, or a Person "Affiliated" with,
a Specified Person, means a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under current control
with, the Person specified.
(b) "Effective Date" means the first date during the
Change of Control Period on which a Change of Control occurs; provided that the
Executive is employed by the Company on that date. If the Executive's employment
with the Company is terminated or the Executive ceases to be an officer of the
Company at any time within 6 months prior to the date on which a Change of
Control occurs, then "Effective Date" means the date immediately prior to the
date of such termination of employment or cessation of status as an officer.
(c) "Change of Control Period" means the period
beginning on the effective date of this Agreement, (as noted in the first 3
lines at the top of this page) and ending on the third anniversary of that date.
However, beginning on the first anniversary of that date, and on each successive
anniversary of that date (the first and each successive anniversary each is
referred to as a "Renewal Date"), the Change of Control Period will be
automatically extended so it terminates 36 months from the Renewal Date, unless,
at least 60 days prior to that Renewal Date, the Company notifies the Executive
that the Change of Control Period will not be so extended.
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(d) "Company" means, collectively, the Company and
its Subsidiaries except for purposes of Section 2 or where the context clearly
requires otherwise.
(e) "Person" has the meaning given that term in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") but excluding any Person described in and satisfying the
conditions of Rule 13d-1(b)(1) of Section 13.
(f) "Subsidiary" means any corporation, limited
liability company, partnership or other entity that is an Affiliate of the
Company.
2. Change of Control.
"Change of Control" means:
(a) Any acquisition or series of acquisitions by any
Person other than the Company, any of the subsidiaries of the Company , any
employee benefit plan of the Company, or any of their subsidiaries, or any
Person holding common shares of the Company for or pursuant to the terms of such
employee benefit plan, that results in that Person becoming the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of either the then
outstanding shares of the common stock of the Company ("Outstanding Company
Common Stock") or the combined voting power of the Company's then outstanding
securities entitled to then vote generally in the election of directors of the
Company ("Outstanding Company Voting Securities"), except that any such
acquisition of Outstanding Company Common Stock or Outstanding Company Voting
Securities will not constitute a Change of Control while such Person does not
exercise the voting power of its Outstanding Company Common Stock or otherwise
exercise control with respect to any matter concerning or affecting the Company,
or Outstanding Company Voting Securities, and promptly sells, transfers, assigns
or otherwise disposes of that number of shares of Outstanding Company Common
Stock necessary to reduce its beneficial ownership (as defined in Rule 13d-3
under the Exchange Act) of the Outstanding Company Common Stock to below 20%.
(b) During any period not longer than 24 consecutive
months, individuals who at the beginning of such period constitute the Board
cease to constitute at least a majority of the Board , unless the election, or
the nomination for election by the Company's stockholders, of each new Board
member was approved by a vote of at least 3/4ths of the Board members then still
in office who were Board members at the beginning of such period (including for
these purposes, new members whose election or nomination was so approved).
(c) Approval by the stockholders of the Company of
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(i) a dissolution or liquidation of the Company,
(ii) a sale of 50% or more of the assets of the
Company, taken as a whole (with the stock or other ownership interests of the
Company in any of its Subsidiaries constituting assets of the Company for this
purpose) to a Person that is not an Affiliate of the Company (for purposes of
this paragraph "sale" means any change of ownership), or
(iii) an agreement to merge or consolidate or
otherwise reorganize, with or into one or more Persons that are not Affiliates
of the Company, as a result of which less than 50% of the outstanding voting
securities of the surviving or resulting entity immediately after any such
merger, consolidation or reorganization are, or will be, owned, directly or
indirectly, by stockholders of the Company immediately before such merger,
consolidation or reorganization (assuming for purposes of such determination
that there is no change in the record ownership of the Company's securities from
the record date for such approval until such merger, consolidation or
reorganization and that such record owners hold no securities of the other
parties to such merger, consolidation or reorganization), but including in such
determination any securities of the other parties to such merger, consolidation
or reorganization held by Affiliates of the Company.
3. Employment Period. The Company hereby agrees to continue
the Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company, for the period commencing on the Effective Date and
ending at the end of the 24th month following the Effective Date (the
"Employment Period").
4. Terms of Employment
(a) Position and Duties.
(i) During the Employment Period, (A) the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period immediately
preceding the Effective Date and (B) the Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any office or location less than 35 miles from such location.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as these activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that, to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of these activities (or the conduct of activities
similar in nature and scope) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
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(b) Compensation.
(i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"), paid at a
biweekly rate, at least equal to the highest annualized (for any fiscal year
consisting of less than 12 full months or with respect to which the Executive
has been employed by the Company for less than 12 full months) base salary paid
or payable, including any Annual Base Salary that has been earned but deferred,
to the Executive by the Company for any of the three fiscal years immediately
preceding the fiscal year in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed at least annually
and shall be increased at any time and from time to time as shall be
substantially consistent with increases in base salary generally awarded in the
ordinary course of business to other peer executives of the Company. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase, and the term Annual Base Salary shall refer
to the Annual Base Salary as so increased.
(ii) Annual Bonus. The Executive shall be awarded,
for each fiscal year during the Employment Period, an annual bonus (the "Annual
Bonus") in cash at least equal to the higher of (A) the average annualized (for
any fiscal year consisting of less than 12 full months or with respect to which
the Executive has been employed by the Company for less than 12 full months)
bonus paid or payable, including any Annual Base Salary that has been earned but
deferred, for three fiscal years immediately preceding the fiscal year in which
the Effective Date occurs, or (B) if the annual bonus paid for the fiscal year
immediately preceding the fiscal year in which the Effective Date occurs was
based upon a formula or plan in which the Executive participated, then such
Annual Bonus shall be at least equal to the bonus which would be payable based
on such formula or plan had the Executive's participation and level of
participation remained in effect following the Effective Date. Each Annual Bonus
shall be paid no later than the end of the third month of the fiscal year next
following the fiscal year for which the Annual Bonus is awarded, unless the
Executive elects to defer receipt of the Annual Bonus. The Annual Bonus may be,
but is not limited to, the bonus payable under the Company's Short Term
Incentive Plan ("STIC") or any similar bonus or incentive program then in
effect.
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(iii) Incentive, Savings and Retirement Plans. The
Executive shall be entitled to participate during the Employment Period in all
incentive, savings and retirement plans, practices, policies and programs
generally applicable to other peer executives of the Company, but in no event
shall such plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and special
incentive opportunities), savings opportunities and retirement benefits
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company for the Executive under such plans,
practices, policies and programs as in effect at any time during the 120-day
period immediately preceding the Effective Date. Incentive programs include, but
are not limited to, the GB Long Term Incentive Plan.
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent generally applicable to
other peer executives of the Company, but in no event shall such plans,
practices, policies and programs provide benefits less favorable, in the
aggregate, than the most favorable of such plans, practices, policies and
programs in effect for the Executive and the Executive's family at any time
during the 120-day period immediately preceding the Effective Date.
(v) Business Expenses. During the Employment
Period, the Executive shall be entitled to receive prompt reimbursement for all
reasonable business expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of the Company in effect for
the Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect at any time
thereafter generally with respect to other peer executives of the Company.
(vi) Fringe Benefits. During the Employment
Period, the Executive shall be entitled to fringe benefits in accordance with
the most favorable plans, practices, programs and policies of the Company in
effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect at any time after generally with respect to other peer executives of the
Company.
(vii) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to personal secretarial
and other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided at any time after generally with respect
to other peer executives of the Company.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect at any
time after that generally with respect to other peer executives of the Company.
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(ix) Substitution of Nonqualified Benefits. If the
continued provision of benefits to the Executive under any employee benefit plan
of the Company at the level required by this Section 4(b) would cause such
employee benefit plan to violate any minimum coverage, nondiscrimination or
other requirement of any provision of the Internal Revenue Code of 1986, as
amended (the "Code") or the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or would not be readily provided under any third-party
agreement of the Company that provides for such benefits, the Company may
provide the closest possible economic equivalent of such benefit in the form of
a nonqualified plan or additional compensation.
5. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability (as defined below)
of the Executive has occurred during the Employment Period, it may give to the
Executive written notice of its intent to terminate the Executive's employment.
The Executive's employment with the Company shall terminate effective on the
30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. "Disability" means the absence of the Executive from the Executive's
duties with the Company on a full-time basis for 180 consecutive business days
as a result of incapacity due to mental or physical illness which is determined
to be total and permanent. Any question as to the date of or the existence,
extent or potentiality of disability of the Executive on which the Executive and
the Company cannot agree shall be determined by a qualified independent
physician jointly selected by the Executive and the Company (or if the Executive
is unable to make such a selection, it shall be made by an adult member of the
Executive's immediate family). The determination of such physician, made in
writing to the Company and to the Executive, shall be final and conclusive.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for "Cause." "Cause" means a material
breach by the Executive of this Agreement, gross negligence or willful
misconduct in the performance of the Executive's duties, dishonesty to the
Company, or the commission of a felony that results in a conviction in a court
of law. The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the Executive a
copy of the resolution duly adopted by the affirmative vote of not less than
3/4ths of the entire membership of the Board at a meeting of the Board called
and held for such purpose (after reasonable notice is provided to the Executive
and the Executive is given an opportunity, together with counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in this section, and specifying the
particulars in detail.
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(c) Good Reason. The Executive's employment may be
terminated during the Employment Period by the Executive for "Good Reason." For
purposes of this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any
responsibilities or duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 4(a), or any
other action by the Company that results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and that is remedied
by the Company promptly after receipt of written notice given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 4(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and that is remedied by the
Company promptly after receipt of written notice given by the Executive;
(iii) the Company requiring the Executive to be based
at any office or location other than that described in Section 4(a)(i),
requiring the Executive to travel away from the Executive's office in the course
of discharging responsibilities or duties in a manner that is inappropriate for
the performance of the Executive's duties and that is significantly more
frequent (in terms of either consecutive days or aggregate days in any calendar
year) than was required prior to the Change of Control;
(iv) any purported termination by the Company of the
Executive's employment other than as expressly permitted by this Agreement; or
(v) any failure by any successor to the Company to
comply with and satisfy Section 14(c), provided that such successor has received
at least ten days prior written notice from the Company or the Executive of the
requirements of Section 14(c).
For the purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company
for Cause or by the Executive for Good Reason shall be communicated by "Notice
of Termination" to the other party. A "Notice of Termination" means notice that
(i) indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which shall be not more than 15 days after the
giving of such notice). The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstances that contributes to a
showing of Good Reason or Cause, as the case may be, shall not waive any right
of the Executive or the Company or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive's or the
Company's rights.
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(e) Date of Termination. "Date of Termination" means the
date of receipt of the Notice of Termination or any later date specified in the
Notice, provided, however, that (i) if the Executive's employment is terminated
by the Company other than for Cause or Disability, the Date of Termination means
the date on which the Company notifies the Executive of such termination, and
(ii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination means the date of death of the Executive or
the Disability Effective Date, respectively.
6. Obligations of the Company upon Termination.
(a) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the following obligations (the
amounts described in clauses (i), (ii), and (iii) are "Accrued Obligations"):
(i) payment of the Executive's Annual Base Salary
through the Date of Termination to the extent not paid,
(ii) payment of the product of (x) the Annual Bonus
paid (and annualized for any fiscal year consisting of less than 12 full months
or for which the Executive has been employed for less than 12 full months) to
the Executive for the most recently completed fiscal year during the Employment
Period, and (y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the denominator of
which is 365, and
(iii) payment of any accrued vacation pay not yet paid.
All Accrued Obligations shall be paid to the Executive's estate or beneficiary,
as applicable, at the option of the Company, either (x) in a lump sum in cash
within 30 days of the Date of Termination or (y) in 12 equal consecutive monthly
installments, with the first installment to be paid within 30 days of the Date
of Termination. Anything in this Agreement to the contrary notwithstanding, the
Executive's family shall be entitled to receive for 24 months benefits (or the
cash equivalent, as described in Section 4(b)(ix)) at least equal to the most
favorable benefits provided generally by the Company to surviving families of
peer executives of the Company under such plans, programs, practices and
policies relating to family death benefits, if any, as in effect generally with
respect to other peer executives and their families at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive and the Executive's family as in effect on the date of the
Executive's death generally with respect to other peer executives of the Company
and their families.
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(b) Disability. If the Executive's employment is terminated
by reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for Accrued Obligations. All Accrued Obligations shall be paid to the
Executive at the option of the Company, either (x) in a lump sum in cash within
30 days of the Date of Termination or (y) in 12 equal consecutive monthly
installments, with the first installment to be paid within 30 days of the Date
of Termination. Anything in this Agreement to the contrary notwithstanding, the
Executive shall be entitled after the Disability Effective Date to receive
disability and other benefits at least equal to the most favorable of those
provided by the Company to disabled peer executives and their families in
accordance with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to other peer executives
and their families at any time during the 30-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter through the Date of Termination
generally with respect to other peer executives of the Company and their
families. If the Executive dies within 24 months of the Disability Effective
Date, the Executive's family shall be entitled to a continuation of benefits as
described in (a), through the period ending no sooner than 24 months after the
Disability Effective Date.
(c) Cause. If the Executive's employment shall be
terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive the Annual Base Salary through the Date of Termination
to the extent unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other than for Accrued
Obligations. In such case, all Accrued Obligations shall be paid to the
Executive at the option of the Company, either (x) in a lump sum within 30 days
of the Date of Termination, or (y) in 12 equal consecutive monthly installments,
with the first installment to be paid within 30 days of the Date of Termination.
(d) Other Termination; Good Reason. If, during the
Employment Period, the Company shall terminate the Executive's employment other
than for Cause or Disability, or the Executive shall terminate employment under
this Agreement for Good Reason:
(i) the Company shall pay to the Executive the
aggregate of the following amounts, such amounts to be payable by the Company in
a lump sum in cash within 30 days of the Date of termination.
A. all Accrued Obligations;
B. two times the sum of the Executive's Annual Base
Salary and the higher of (i) the average annualized (for any fiscal year
consisting of less than 12 full months or with respect to which the Executive
has been employed by the Company for less than 12 full months) bonus paid for
the three fiscal years immediately preceding the fiscal year in which the
Effective Date occurs, or (ii) the targeted annual bonus payable to the
Executive pursuant to the STIC for the fiscal year in which the Date of
Termination occurs or, under any other annual bonus or incentive plan or program
in effect at the time, assuming 100% achievement of the Company performance
factor and 100% achievement of the Executive's personal performance factor;
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C. a separate lump sum supplemental retirement
benefit equal to two times the Company's total contributions to the Retirement
Plan or any other similar plans in effect at the time, for the year preceding
the termination. This payment will be made in cash and will not eliminate the
obligation of the Company to make all scheduled contributions to the Retirement
Plan or similar plans; and
D. an amount equal to that portion, if any, of the
Company's contribution to the Executive's 401(k), savings or other similar
individual account plan that is not vested as of the Date of Termination (the
"Unvested Company Contribution"), plus an amount that, when added to the
Unvested Company Contribution, would be sufficient after Federal, state and
local income taxes (based on the tax returns filed by the Executive most
recently prior to the Date of Termination) to enable the Executive to net an
amount equal to the Unvested Company Contribution; and
(ii) the Company shall pay the Executive up to $25,000
for executive outplacement services utilized by the Executive, on the receipt by
the Company of written receipts or other appropriate documentation;
(iii) for 24 months, or such longer period as any plan,
program, practice or policy may provide, the Company shall continue benefits to
the Executive and, where applicable, the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) if the
Executive's employment had not been terminated, in accordance with the most
favorable plans, programs, practices or policies of the Company generally
applicable to other peer executives and their families during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect at any time after that generally with respect to other peer
executives of the Company and their families (or the cash equivalent, as
described in Section 4(b)(ix)); provided, however, that if the Executive becomes
employed elsewhere during the Employment Period and is thereby afforded
comparable insurance and welfare benefits to those described in Section
4(b)(iv), the Company's obligation to continue providing the Executive with such
benefits shall cease or be correspondingly reduced, as the case may be. For
purposes of determining eligibility of the Executive for retiree benefits
pursuant to such plans, programs, practices and policies, the Executive shall be
considered to have remained employed until the end of the Employment Period and
to have retired on the last day of such period;
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(iv) all outstanding stock options, stock appreciation
rights (SARs), restricted stock and other similar incentive awards held by the
Executive pursuant to any Company stock option, SAR and stock incentive plans
shall immediately become vested (except as hereinafter stated) exercisable, and
freely transferable, as the case may be, as to all or any part of the shares or
awards covered by those plans, with the Executive being able to exercise his or
her stock options, SARs or other awards within a period of 12 months following
the Date of Termination or such longer period as may be permitted under the
plans and the Executive's stock option, SAR or other award agreements.
Notwithstanding the aforementioned, all outstanding stock options, stock
appreciation rights (SARs), restricted stock and other similar incentive awards,
made under the Company's Supplemental Annual Long Term Incentive Plan ("SALT")
shall not immediately vest, unless they have otherwise vested under their own
performance criteria;
(v) the total value of the targeted annual GB Long Term
Incentive Plan award, or any similar long term incentive plan in effect at the
time, scheduled for the year of termination will be converted to a cash payment;
and
(vi) if, in the calendar year immediately preceding the
Date of Termination, the Executive had relocated the Executive's primary
residence from one location (the "Point of Origin") to its location at the Date
of Termination at the request of the Company, then the Company shall reimburse
the Executive in cash within 14 days following receipt of substantiating written
receipts for any relocation expenses actually incurred in the 12 months
immediately following the Date of Termination by the Executive in moving the
Executive's primary residence to any location, to the extent such expenses do
not exceed the cost of relocating the Executive's primary residence to the Point
of Origin. The cost of relocating the Executive's primary residence to the Point
of Origin shall be determined by averaging estimates obtained by the Company in
writing from three reputable moving companies, selected by the Company in good
faith. It shall be the obligation of the Executive to notify the Company in
advance of any such relocation so that such estimates may be obtained.
(e) Deferral of Payments. The Executive may elect, at the
time of signing this Agreement, to defer payments otherwise payable as specified
by the Executive in writing at that time of signing.
7. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or practices
provided by the Company and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may have
under any other agreements with the Company. Amounts that are vested benefits or
that the Executive otherwise is entitled to receive under any plan, policy,
practice or program of the Company at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program,
except as explicitly modified by this Agreement.
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8. Full Settlement; Legal Fees. The Company's obligation to
make the payments provided for in this Agreement and otherwise to perform its
obligations, except as specifically provided otherwise in this Agreement, shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action the Company may have against the Executive or others. The
amounts payable to the Executive will not be subject to any requirement of
mitigation, nor, except as specifically provided otherwise in this Agreement,
will they be offset or otherwise reduced by reason of the Executive's receipt of
compensation from any source other than the Company. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees and expenses
the Executive reasonably may incur, including the costs and expenses of any
arbitration proceeding, as a result of any contest (regardless of the outcome)
by the Executive, the Company or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment), plus in each case interest on any delayed payment at the
applicable Federal rate provided for in Section 7872(f)(2) of the Code; provided
that the Executive's claim is not determined by a court of competent
jurisdiction or an arbitrator to be frivolous or otherwise entirely without
merit.
9. General Release and Waiver. In exchange for the
consideration provided under this Agreement, the Executive agrees to sign a
General Release and Waiver of age and other discrimination claims on a form
provided by the Company at the time of separation.
10. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, if it is determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code because the Payment is considered a "parachute payment"
under Section 280G of the Code, or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect to them) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay Federal income taxes at
the highest applicable marginal rate of Federal income taxation for the calendar
year in which the Gross-Up Payment is to be made, net of the maximum reduction
in Federal income taxes which could be obtained from the deduction of such state
or local taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of adjusted gross income), and to have
otherwise allowable deductions for Federal, state and local income tax purposes
at least equal to those disallowed because of the inclusion of the Gross-Up
Payment in adjusted gross income. Notwithstanding the foregoing provisions of
this Section, if it is determined that the Executive is entitled to a Gross-Up
Payment, but that the present values as of the date of the Change of Control,
determined in accordance with Sections 280G(b)(2)(ii) and 280G(d)(4) of the Code
(the "Present Value"), of the Payments does not exceed 110% of the greatest
Present Value of Payments (the "Safe Harbor Cap") that could be paid to the
Executive such that the receipt would not give rise to any Excise Tax, then no
Gross-Up Payment shall be made to the Executive and the amounts payable to
Executive under this Agreement shall be reduced to the maximum amount that could
be paid to the Executive such that the Present Value of the Payment does not
exceed the Safe Harbor Cap. The reduction of the amounts payable. if applicable,
shall be made by reducing the payments as elected by the Executive. For purposes
of reducing the Payments to the Safe Harbor Cap, only amounts payable under this
Agreement (and no other Payments) shall be reduced. If the reduction of the
amounts payable would not result in a reduction of the Present Value of the
Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall
be reduced pursuant to this provision.
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(b) Subject to the provisions of subsection (c), all
determinations required to be made under this Section 9, including whether and
when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the
assumptions to be used in arriving that such determination, shall be made by a
nationally recognized certified public accounting firm designated by the
Executive (the "Accounting Firm"), which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is required by the Company. If the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
of Control, the Executive shall appoint another nationally recognized accounting
firm to make the determinations required (which accounting firm then shall be
referred to as the Accounting Firm). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section, shall be paid by the Company to the Executive within
five days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding on the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm, it is
possible the Gross-Up Payments will not have been made by the Company that
should have been made ("Underpayment"), consistent with the calculations
required to be made. If the Company exhausts its remedies pursuant to subsection
(c) and the Executive then is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be paid promptly by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than 20 business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is required to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
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(i) give the Company any information reasonably
requested by the Company relating to such claim;
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith
effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this subsection (c),
the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and, at its sole option, may either direct the Executive to pay the
tax claimed and xxx for a refund, or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay such claim and xxx for a
refund, the Company shall advance the amount of such payment to the Executive,
on an interest-free basis and shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties) imposed with respect to such advance or with respect to any imputed
income with respect to such advance, and further provided that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable, and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to subsection (c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of subsection (c))
promptly pay the Company the amount of such refund (together with any interest
paid or credited after applicable taxes). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to subsection (c), a determination
is made that the Executive is not entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid, and the amount of such advance shall offset, to the extent of that
amount, the amount of Gross-Up Payment required to be paid.
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11. Confidential Information; Non-Compete.
(a) The Executive shall hold in a fiduciary capacity for
the benefit of the Company all secret or confidential information, knowledge or
data relating to the Company and their respective businesses, which shall have
been obtained by the Executive during the Executive's employment by the Company
and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without prior written consent of the Company, communicate or divulge
any such information, knowledge or data to anyone other than the Company and
those designated by it. In addition, to the extent that the Executive is a party
to any other agreement relating to non-competition, confidential information,
inventions or similar matters with the Company, the Executive shall continue to
comply with the provisions of such agreements. In addition to the obligations
under this Section, the Executive shall execute any documents relating to the
subject of those sections as required generally by the Company of its executive
officers, and such documents already executed or executed after the effective
date of this Agreement shall thereby become part of this Agreement. Nothing in
this Agreement shall be construed as modifying any provisions of such agreements
or documents. In the case of any inconsistency between such agreements and
documents and this Agreement, the broader provision shall prevail. In no event
shall an asserted violation of the provisions of this Section constitute a basis
for deferring or withholding any amounts otherwise payable to the Executive
under this Agreement, except if the Executive materially breaches this section
or a covenant not to compete or confidentiality provision in any such agreement
or document, that breach shall be considered a material breach of this
Agreement. If the breach occurs after termination of employment, the Executive
shall forfeit a pro rata portion of benefits under Section 6(d). The pro rata
amount in the case of Section 6(d)(i)(A), (C), (D), (ii), (v) and (vi) shall be
determined by multiplying the payments under those paragraphs by a fraction, the
numerator of which is the number of months remaining to the end of the covenant
not to compete or, in the case of a confidentiality agreement that has no term,
36 minus the number of months elapsed from the Executive's termination of
employment to the date of breach, and the denominator of which is the number of
total months in the covenant not to compete, or, in the case of breach of a
confidentiality obligation that has no term, 36. If there are not sufficient
payments remaining to be paid to the Executive under Section 6(d) to cover the
forfeited amount, the Executive agrees to pay promptly to the Company an amount
that, with any amounts otherwise remaining to be paid, constitutes the
forfeiture amount. Section (6)(d)(iii) shall terminate at the date of the
breach. If the breach is determined retroactively, the Executive shall pay
promptly to the Company the amount the Company incurred to provide benefits
after the date of the breach. With respect to Section 6(d)(iv), the Executive
shall not be entitled to any accelerated vesting and exercise after the date of
the breach. If the breach is determined retroactively, the Executive shall pay
promptly to the Company the amount of any value received as a result of that
accelerated vesting and exercise.
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(b) The Executive acknowledges that the Company will
suffer damages incapable of ascertainment if any of the provisions of subsection
(a) are breached and that the Company will be irreparably damaged if the
provisions of subsection (a) are not enforced. Therefore should any dispute
arise with respect to the breach or threatened breach of subsection (a), the
Executive agrees and consents that in addition to any remedies available to the
Company, an injunction or restraining order or other equitable relief may be
issued or ordered by a court of competent jurisdiction restraining any breach or
threatened breach of subsection (a). The Executive agrees not to urge in any
such action that an adequate remedy exists at law.
12. Public Announcements. The Executive shall consult with the
Company before issuing any press release or otherwise making any public
statement with respect to the Company, this Agreement or the transactions
contemplated, and the Executive shall not issue any such press release or make
any such public statement without prior written approval of the Company, except
as may be required by applicable law, rule or regulation or any self regulatory
agency requirements, in which event the Company shall have the right to review
and comment upon any such press release or public statement prior to its
issuance.
13. Arbitration. Any dispute, controversy or claim arising out
of or relating to this Agreement, or any breach thereof, shall be determined and
settled by arbitration to be held in Erie County, New York, pursuant to the
commercial rules of the American Arbitration Association or any successor
organization and before a panel of three arbitrators. Any award rendered shall
be final, conclusive and binding on the parties.
14. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to assume expressly
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean the Company and any
successor to its business or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
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15. Miscellaneous.
(a) All notices and other communications given pursuant to
this Agreement shall be in writing and shall be deemed given only when (a)
delivered by hand, (b) transmitted by telex, telecopier or other form of
electronic transmission (provided that a copy is sent at approximately the same
time by first class mail), or (c) received by the addressee, if sent by
registered or certified mail, return receipt requested, or by Express Mail,
Federal Express or other overnight delivery service, to the appropriate party at
the address given below for such party (or to such other address designated by
the party in writing and delivered to the other party pursuant to this Section).
If to the Executive:
Name
--------------------------------------------------
Address
-----------------------------------------------
Telephone
---------------------------------------------
Facsimile
---------------------------------------------
With a copy to:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
If to the Company:
Greatbatch, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
(Attn: Secretary)
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With a copy to:
Xxxxxxx Xxxx LLP
Xxx X&X Xxxxx, Xxxxx 0000
Xxxxxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Xx., Esq.
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
(b) The Company shall deduct or withhold from salary
payments, and from all other payments made to the Executive pursuant to this
Agreement, all amounts that may be required to be deducted or withheld under any
applicable law now in effect or that may become effective during the term of
this Agreement (including, but not limited to social security contributions and
income tax withholdings).
(c) With respect to any agreement between the Executive
and the Company that provides for terms more favorable than this Agreement (for
example, that the Executive is required to remain employed for fewer months
after a Change of Control than specified in Section 3; that the payment to be
made to the Executive includes a payment for benefits or services not described
in Section 4(b); that the multiplier or method of determining the annual bonus
under Section 6(d)(i)(B) is greater than that in this Agreement; or that the
salary is paid on death for a longer period than specified in Section 6(a)), the
Executive shall be entitled to the more favorable term, payment or benefit,
without the Executive having to choose between the enforcement of either all
this Agreement or all of that other agreement. The more favorable terms of that
other agreement shall be deemed to be part of this Agreement, with respect to
each such more favorable term.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to
principles of conflict of laws. The Executive consents to jurisdiction in New
York and venue in Erie County for purposes of all claims arising under this
Agreement. The captions of this Agreement are not part of the provisions and
shall have no force or effect. Except as specifically referenced in this
Agreement (including agreements referenced in (c) treated as specifically
referenced in this Agreement), no agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter, have been
made by either party that are not expressly set forth in this Agreement. No
provision of this Agreement may be waived, modified or amended, orally or by any
course of conduct, unless such waiver, modification or amendment is set forth in
a written agreement duly executed by the parties or their respective successors
and legal representatives. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. The Executive's or the Company's failure to insist
on strict compliance with any provision in any particular instance shall not be
deemed to be a waiver of that provision or any other provision.
-18-
IN WITNESS WHEREOF, the Executive has set his or her hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above.
GREATBATCH, INC.
By:_______________________________________
Xxxxx X. XxXxxxxx
Xx. Vice President Administration & Secretary
EXECUTIVE__________________________________________
STATE OF NEW YORK)
: SS.
COUNTY OF ERIE )
On this _____ day of _________________, in the year _________,
before me personally came Xxxxx X. XxXxxxxx, to me personally known, who, being
by me duly sworn, did depose and say that deponent resides in the Village of
Williamsville, State of New York; that deponent is the Sr. Vice President,
Administration & Secretary of GREATBATCH, INC., the corporation described in and
which executed the foregoing instrument; and that deponent signed such
instrument by order of the Board of Directors of said corporation.
-------------------------------------
Notary Public
STATE OF NEW YORK
: SS.
COUNTY OF ERIE
On the ________ day of _______________, in the year 2006,
before me, the undersigned, a notary public in and for said state, personally
appeared ________________________, personally known to me or provide to me on
the basis of satisfactory evidence to be the individual whose name is subscribed
to the within instrument and acknowledged to me that he or she executed the same
in his or her capacity, and that by his or her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.
-------------------------------------
Notary Public
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