AMENDMENT 2008-1 TO THE SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.12(c)
THIS AMENDMENT, dated as of March 6, 2008, between Integra LifeSciences Holdings Corporation,
a Delaware corporation (the “Company”) and Xxxxxx X. Xxxxx (“Executive”).
RECITALS
WHEREAS, the Company and Executive previously entered into the Second Amended and Restated
Employment Agreement, dated as of July 27, 2004, (the “Employment Agreement”), that sets forth the
terms and conditions of Executive’s employment with the Company, including, but not limited to,
severance benefits that will be payable to Executive if he experiences a covered termination;
WHEREAS, as of December 19, 2006, Company and Executive entered into Amendment 2006-1 to the
Employment Agreement (“Amendment 2006-1”) to provide certain severance benefits to Executive in the
event Executive’s employment is terminated by Company for a covered termination in connection with
a Change in Control (as defined in the Employment Agreement);
WHEREAS, the Company and Executive desire to amend the Employment Agreement to comply with the
requirements of section 409A of the Internal Revenue Code of 1986, as amended and the final
regulations issued thereunder; and
WHEREAS, Section 8.6 of the Employment Agreement provides that the Employment Agreement may be
amended pursuant to a written agreement between the Company and Executive.
NOW, THEREFORE, the Company and Executive hereby agree that, effective March ___, 2008, the
Employment Agreement and Amendment 2006-1 shall be amended as follows:
1. Section 3.2(c)(i) of the Employment Agreement is hereby amended in its entirety to read as
follows:
“(i) The Company issued to Executive on the Commencement Date a fully-vested
equity-based signing award bonus in the form of contract stock for 750,000 shares of
the Company’s common stock (the ‘Additional Restricted Units’ and together with
Prior, ‘Restricted Units’) pursuant to the 2003 Plan and the terms and conditions
set forth in the Contract Stock/Restricted Units Agreement, dated as of July 27,
2004, attached as Exhibit C hereto, (the “Restricted Units Agreement”). The
Restricted Units Agreement has subsequently been amended. In the event of any
inconsistency between the terms of this Agreement and the Restricted Units
Agreement, as amended, the Restricted Units Agreement, as amended, shall govern.
The shares underlying the Additional Restricted Units
(the “Additional Unit Shares”) shall be delivered to Executive in accordance with
the terms of the Restricted Units Agreement, as amended.”
2. Section 4.1 of the Employment Agreement is hereby amended in its entirety to read as
follows:
“4.1 Death of Executive. If Executive dies during the Term, Company shall
pay to Executive’s estate within thirty (30) days following Executive’s death
amounts (including Base Salary, bonuses, expense reimbursement, etc.) accrued as of
the date of Executive’s employment termination (all such accrued amounts as of
Executive’s employment termination shall be referred to as “Accrued Obligations”)
and a lump sum equal to one (1) times Executive’s annual rate of Base Salary. In
addition, Company shall pay to Executive’s spouse and eligible dependents for the
period ending on the earlier of (a) the first anniversary of Executive’s death, or
(b) the first month in which Executive’s spouse and/or eligible dependents do not
pay to Company the applicable monthly premium for COBRA insurance coverage under
Company’s group health plan, a monthly cash payment that is equal to the quotient
determined by dividing (x) the aggregate monthly premium cost for “COBRA” family
health coverage under Company’s group health plan, by (y) 0.55. The first monthly
cash payment provided for in the immediately preceding sentence shall be paid within
thirty (30) days following the date of Executive’s death and each monthly payment
thereafter shall be paid on the first business day of each month, commencing with
the second month that follows Executive’s date of death. Upon Executive’s death, all
Stock Options shall immediately vest (to the extent not already vested) and shall be
exercisable until one year following his death, but in no event beyond their
respective original expiration dates. All Additional Unit Shares shall be delivered
to Executive as provided in his Restricted Units Agreement, as amended.”
3. Section 4.2 of the Employment Agreement is hereby amended in its entirety to read as
follows:
“4.2 Disability of Executive. If Executive, in the reasonable opinion of a
qualified physician jointly selected by Company and Executive (or a representative
of Executive) (a “Qualified Physician”), has been materially unable to perform his
duties hereunder for a period of 180 consecutive days by reason of physical or
mental illness or disability (“Disability”), then the Board shall have the right to
terminate Executive’s employment, in accordance with applicable law, upon 30 days’
prior written notice to Executive at any time during the continuation of such
Disability (a “Disability Termination”). Until a Disability Termination, he shall
continue to receive his full Base Salary and other payments and benefits hereunder.
In the event of a Disability Termination, Company shall not thereafter be obligated
to make any further payments to Executive hereunder other than (a) Accrued
Obligations, (b) a lump sum cash payment within thirty (30) days following
Executive’s Date of Termination equal to Executive’s then-current Base Salary that
would have been payable to Executive until December 31, 2009, (c) for a period
ending on the first anniversary of Executive’s Date of Termination, a monthly cash
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payment, payable on the first business day of each month that follows Executive’s
Date of Termination, in an amount equal to the monthly premium cost that Company
would have paid on behalf of Executive to cover Executive under Company’s life
insurance plan if Executive’s employment with Company had not terminated; and (d)
for a period ending on the earlier of (i) the one (1) year anniversary of
Executive’s Date of Termination or (ii) the first month in which Executive does not
pay to Company the applicable monthly premium for COBRA insurance coverage under
Company’s group health plan, a monthly cash payment, payable on the first business
day of each month that follows Executive’s Date of Termination, in an amount equal
to the quotient determined by dividing (x) the aggregate monthly premium cost for
“COBRA” family health coverage under Company’s group health plan, by (y) 0.55.
Notwithstanding the foregoing, if at the time of Executive’s Disability Termination
the Company’s stock is publicly traded and Executive is a ‘specified employee’ (as
such term is defined in section 409A(2)(B)(i) of the Code and its corresponding
regulations), then all cash payments (other than Accrued Obligations) to Executive
pursuant to this Section 4.2 shall not be paid to Executive until as soon as
administratively practicable following the expiration of the six month period
following the date of Executive’s Date of Termination, but not later than the first
Company payroll date that occurs after the end of such six month period. Any
postponed amounts shall be paid to Executive in a lump sum within thirty (30) days
after the date that is six (6) months following Executive’s Date of Termination, and
any amounts payable to Executive after the expiration of such six (6) month period
under this Agreement shall continue to be paid to Executive in accordance with the
terms of this Agreement. If Executive dies during such six-month period and prior
to the payment of the postponed cash amounts hereunder, the amounts withheld on
account of section 409A of the Code shall be paid to the personal representative of
Executive’s estate within thirty (30) days after the date of Executive’s death. If
any of the cash payments payable pursuant to this Section 4.2 are deferred due to
such requirements, there shall be added to such payments interest during the
deferral period at a rate, per annum, equal to the applicable federal short-term
deferral rate (compounded monthly) in effect under section 1274(d) of the Code on
Executive’s Date of Termination. Following December 31, 2009, Executive shall
continue to be entitled to receive long-term disability benefits under the Company’s
long-term disability program in effect at such time to the extent Executive is
eligible to receive such benefits. In the event of a Disability Termination, all
Stock Options shall immediately vest (to the extent not already vested) and shall be
exercisable until one year following the date of termination, but in no event later
than their respective original expiration dates. All Additional Unit Shares shall
be delivered to Executive as provided in his Restricted Units Agreement, as
amended.”
4. Clause (iii) in the second sentence of Section 4.3 of the Employment Agreement is hereby
amended in its entirety to read as follows:
“and the Additional Unit Shares shall be delivered to Executive as provided in his
Restricted Units Agreement, as amended.”
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5. Subsection (a) of Section 4.4 of the Employment Agreement, as amended by Amendment 2006-1,
is hereby amended in its entirety to read as follows:
“(a) Except as provided in Section 6.2 in the event of a Change in Control (as
defined in Section 6.1), if (i) Executive’s employment is terminated by the Company
for any reason other than Cause or the death or Disability Termination of Executive,
or (ii) Executive’s employment is terminated by Executive for Good Reason (as
defined herein), then (A) the Company shall pay to Executive within thirty (30) days
following Executive’s Date of Termination a lump sum cash payment equal to the sum
of (x) the Accrued Obligations and (y) his Base Salary (including the minimum
increases provided therein) during the remainder of the then-current Term, (B) all
Stock Options granted to Executive shall become immediately vested (to the extent
not already vested) on the date of such termination and shall be exercisable through
their original expiration dates, (C) Company shall pay to Executive for the
remaining balance of the Term following Executive’s Date of Termination, a monthly
cash payment, payable on the first business day of each month that follows
Executive’s Date of Termination, in an amount equal to the monthly premium cost that
Company would have paid on behalf of Executive to cover Executive under Company’s
life insurance plan if Executive’s employment with Company had not terminated, and
(D) all Additional Unit Shares shall be delivered to Executive as provided in his
Restricted Units Agreement, as amended. Further, the Company shall pay to
Executive, for the period ending on the earliest of (i) the last day of the Term,
(ii) the date Executive receives equivalent coverage and benefits that do not
include waiting period or pre-existing condition limitations, under the plans and
programs of a subsequent employer (such coverage and benefits to be determined on a
coverage-by-coverage or benefit-by-benefit basis), or (iii) earlier of (A) during
the COBRA continuation period, the first month in which Executive does not pay to
Company the applicable monthly premium for COBRA insurance coverage under Company’s
group health plan, or (B) following the expiration of the COBRA continuation period,
the first month in which Executive does not provide Company with evidence that he is
receiving health insurance coverage from another insurance provider, a monthly cash
payment, payable on the first business day of each month that follows Executive’s
Date of Termination, in an amount equal to the quotient determined by dividing (x)
the aggregate monthly premium cost for “COBRA” family health coverage under
Company’s group health plan, by (y) 0.55. Notwithstanding the foregoing, if at the
time of Executive’s termination the Company’s stock is publicly traded and Executive
is a ‘specified employee’ (as such term is defined in section 409A(2)(B)(i) of the
Code and its corresponding regulations), then all cash payments (other than Accrued
Obligations) to Executive pursuant to this Section 4.4(a) shall not be paid to
Executive until as soon as administratively practicable following the expiration of
the six month period following the date of Executive’s Date of Termination, but not
later than the first Company payroll date that occurs after the end of such six
month period. Any postponed amounts shall be paid to Executive in a lump sum within
thirty (30) days after the date that is six (6) months following Executive’s Date of
Termination, and any amounts payable to Executive after the expiration of such six
(6) month period under this Agreement shall continue to be paid to
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Executive in accordance with the terms of this Agreement. If Executive dies during
such six-month period and prior to the payment of the postponed cash amounts
hereunder, the amounts withheld on account of section 409A of the Code shall be paid
to the personal representative of Executive’s estate within thirty (30) days after
the date of Executive’s death. If any of the cash payments payable pursuant to this
subsection 4.4(a) are deferred due to such requirements, there shall be added to
such payments interest during the deferral period at a rate, per annum, equal to the
applicable federal short-term deferral rate (compounded monthly) in effect under
section 1274(d) of the Code on Executive’s Date of Termination.”
6. Section 5.1 of the Employment Agreement is hereby amended in its entirety to read as
follows:
“5.1 Triggering Events. Unless Executive has been terminated for Cause in
accordance with Section 4.3 hereof or has voluntarily left his employment with the
Company (other than for Good Reason or due to Disability), in each case prior to
December 31, 2009, upon the occurrence of a Change in Control, each Additional
Company Stock Option shall vest (to the extent not already vested) and be
exercisable through its original expiration date and all Additional Unit Shares
shall be distributed to Executive as provided in his Restricted Units Agreement, as
amended. In the event that the delivery of the Additional Unit Shares are not made
on the Change in Control as provided in the Restricted Units Agreement, as amended,
and cash is paid as consideration for the Company’s common stock in the Change in
Control, then the Company, or its successor in the Change in Control, shall deposit
in an irrevocable rabbi trust with a reputable financial institution acceptable to
Executive the cash equivalent of the Additional Unit Shares and such cash equivalent
and any interest or earnings thereon shall be delivered to Executive as set forth in
the Restricted Units Agreement, as amended.”
7. Section 6.2 of the Employment Agreement, as amended by Amendment 2006-1, is hereby amended
in its entirety to read as follows:
“6.2 Termination without Cause or by Executive for Good Reason Related to a
Change in Control. Notwithstanding anything to the contrary set forth in
Section 4.4(a) above, and subject to Executive and the Company executing a mutual
release that is mutually agreeable (provided, however, that Executive shall not be
required to execute such mutual release as a condition to the receipt of the
payments and benefits described below unless the Company also executes such mutual
release), in the event that within 18 months following a Change in Control: (i) the
Company fails to extend this Agreement pursuant to Section 2.1, (ii) Executive
terminates his employment for Good Reason or (iii) Executive’s employment is
terminated by the Company for a reason other than death, Disability Termination or
Cause, then the Company shall:
(a) pay Executive an amount equal to the Accrued Obligations, excluding any
bonus accruals;
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(b) pay Executive a severance amount equal to the sum of (i) 2.99 times the
amount that results from adding Executive’s Base Salary (determined prior to any
reduction that would provide Executive with the right to terminate his employment on
account of Good Reason) as of his last day of active employment to the target bonus
that Executive was eligible to receive in the fiscal year of his termination of
employment, and (ii) a pro ration of the target bonus that Executive was eligible to
receive in the fiscal year of his termination of employment, with such pro ration
determined by multiplying such target bonus amount by a fraction, the numerator of
which is the number of days during which Executive was employed by Company in the
fiscal year of his termination and the denominator of which is 365; except as
provided below, which severance amount shall be paid in a single sum within sixty
(60) days following the Date of Termination;
(c) pay to Executive for the period ending on the later of (i) the end of the
Term of the Agreement or (ii) the first anniversary of Executive’s Date of
Termination, a monthly cash payment, payable on the first business day of each month
that follows Executive’s Date of Termination, in an amount equal to the monthly
premium cost that Company would have paid on behalf of Executive to cover Executive
under Company’s life insurance plan if Executive’s employment with Company had not
terminated;
(d) pay to Executive, for the period ending on the earliest of (i) the later of
(A) the end of the Term of the Agreement or (B) the first anniversary of
Executive’s Date of Termination, (ii) the date Executive receives equivalent
coverage and benefits that do not include waiting period or pre-existing condition
limitations, under the plans and programs of a subsequent employer (such coverage
and benefits to be determined on a coverage-by-coverage or benefit-by-benefit basis)
or (iii) the earlier of (A) during the COBRA continuation period, the first month in
which Executive does not pay to Company the applicable monthly premium for COBRA
insurance coverage under Company’s group health plan, or (B) following the
expiration of the COBRA continuation period, the first month in which Executive does
not provide Company with evidence that he is receiving health insurance coverage
from another insurance provider, a monthly cash payment, payable on the first
business day of each month that follows the Date of Termination, in an amount equal
to the quotient determined by dividing (x) the aggregate monthly premium cost for
“COBRA” family health coverage under Company’s group health plans, by (y) 0.55; and
(e) pay to Executive all reasonable legal fees and expenses incurred by Executive
during his lifetime as a result of such termination of employment (including legal
fees and expenses, if any, incurred by Executive during his lifetime in contesting
or disputing any such termination or in seeking to obtain or enforce any right or
benefit provided to Executive by this Agreement whether by arbitration or
otherwise). The foregoing limitation shall not preclude the Executive’s estate or
heirs from recovering reasonable legal fees (and related expenses) in accordance
with the provisions hereof in the event that Executive’s estate or heirs initiate or
continue any dispute or controversy arising under or in
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connection with this Agreement after Executive’s death; provided, however, that such
reasonable legal fees (and related expenses) are incurred within the six (6)-year
period following the date of Executive’s death. The reimbursement shall be made
within ninety (90) days following the resolution of such contest or dispute (whether
or not appealed), but not later than the end of the calendar year following the year
in which the contest or dispute is resolved, to the extent the Company receives
reasonable written evidence of such fees and expenses.
Notwithstanding the foregoing, if at the time of Executive’s termination the
Company’s stock is publicly traded and Executive is a ‘specified employee’ (as such
term is defined in section 409A(2)(B)(i) of the Code and its corresponding
regulations), then all cash payments (other than Accrued Obligations) to Executive
pursuant to this Section 6.2 shall not be paid to Executive until as soon as
administratively practicable following the expiration of the six-month period
following the Executive’s Date of Termination, but not later than the first Company
payroll date that occurs after the end of such six-month period. Any postponed
amounts shall be paid to Executive in a lump sum within thirty (30) days after the
date that is six (6) months following Executive’s Date of Termination, and any
amounts payable to Executive after the expiration of such six (6) month period under
this Agreement shall continue to be paid to Executive in accordance with the terms
of this Agreement. If Executive dies during such six-month period and prior to the
payment of the postponed cash amounts hereunder, the amounts withheld on account of
section 409A of the Code shall be paid to the personal representative of Executive’s
estate within thirty (30) days after the date of Executive’s death. If any of the
cash payments payable pursuant to this Section 6.2 are deferred due to such
requirements, there shall be added to such payments interest during the deferral
period at a rate, per annum, equal to the applicable federal short-term deferral
rate (compounded monthly) in effect under section 1274(d) of the Code on Executive’s
Date of Termination.”
8. The fourth sentence of subsection (b) of Section 6.3 of the Employment Agreement is hereby
amended in its entirety to read as follows:
“Any Gross-Up Payment, as determined pursuant to this Section 6.3, shall be paid by
Company to Executive within five (5) days of receipt of the Accounting Firm’s
determination, but in any event, not later than the end of Executive’s taxable year
next following Executive’s taxable year in which the related taxes are remitted to
the taxing authority.”
9. The seventh sentence of subsection (b) of Section 6.3 of the Employment Agreement is hereby
amended in its entirety to read as follows:
“In the event that Executive thereafter is required to make a payment of any Excise
Tax (or any additional Excise Tax), the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of Executive within five (5) days of
receipt of the Accounting Firm’s determination, but in any event, not
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later than the end of Executive’s taxable year next following Executive’s taxable
year in which the related taxes are remitted to the taxing authority.”
10. Section 8.1 of the Employment Agreement is hereby amended in its entirety to read as
follows:
“8.1 Arbitration. Any dispute or controversy arising under or in connection
with this Agreement, other than injunctive relief sought under Section 7.4 above,
shall be settled exclusively by arbitration in Princeton, New Jersey, in accordance
with the Commercial Arbitration Rules of the American Arbitration Association then
in effect. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction. Executive shall be entitled to recover from the Company the amount of
his legal fees (and related expenses) incurred by him during his lifetime in excess
of $50,000 in the aggregate in connection with claims or disputes under this
Agreement, any of the respective agreements evidencing the grant of Stock Options,
the Restricted Units and the registration statements provided for in the Prior
Registration Rights Provisions and Exhibit B hereto, unless Executive is
determined by the arbitrator or a court to have acted frivolously or in bad faith
with respect to such claim or dispute. The foregoing limitation shall not preclude
the Executive’s estate or heirs from recovering reasonable legal fees (and related
expenses) in accordance with the provisions hereof in the event that Executive’s
estate or heirs initiate or continue any dispute or controversy arising under or in
connection with this Agreement after Executive’s death; provided, however, that such
reasonable legal fees (and related expenses) are incurred within the six (6)-year
period following the date of Executive’s death. The reimbursement shall be made
within ninety (90) days following the resolution of such contest or dispute (whether
or not appealed), but not later than the end of the calendar year following the year
in which the contest or dispute is resolved, to the extent the Company receives
reasonable written evidence of such fees and expenses.”
11. A new Section 8.15 is hereby added to the Employment Agreement to read in its entirety as
follows:
“8.15 Section 409A.
(a) This Agreement shall be interpreted to avoid any penalty sanctions under
section 409A of the Code. If any payment or benefit cannot be provided or made at
the time specified herein without incurring sanctions under section 409A, then such
benefit or payment shall be provided in full at the earliest time thereafter when
such sanctions will not be imposed. All payments to be made upon a termination of
employment under this Agreement may only be made upon a ‘separation from service’
under section 409A of the Code. For purposes of section 409A of the Code, each
payment made under this Agreement shall be treated as a separate payment. In no
event may Executive, directly or indirectly, designate the calendar year of payment.
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(b) All reimbursements provided under this Agreement shall be made or provided
in accordance with the requirements of section 409A, including, where applicable,
the requirement that (i) any reimbursement is for expenses incurred during
Executive’s lifetime (or during a shorter period of time specified in this
Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar
year may not affect the expenses eligible for reimbursement in any other calendar
year, (iii) the reimbursement of an eligible expense will be made on or before the
last day of the calendar year following the year in which the expense is incurred,
and (iv) the right to reimbursement is not subject to liquidation or exchange for
another benefit.”
12. In all respects not modified by this Amendment 2008-1, the Employment Agreement and
Amendment 2006-1 are hereby ratified and confirmed.
IN WITNESS WHEREOF, Company and Executive agree to the terms of the foregoing Amendment
2008-1, effective as of the date set forth above.
| INTEGRA LIFESCIENCES HOLDINGS CORPORATION |
||||
| By: | /s/ Xxxxxxx Xxxxxx | |||
| Name: | Xxxxxxx Xxxxxx | |||
| Title: | Chairman | |||
| EXECUTIVE |
||||
| /s/ Xxxxxx X. Xxxxx | ||||
| Xxxxxx X. Xxxxx | ||||
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