GREATBATCH, INC. AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
Exhibit 10.1
AMENDED AND RESTATED
This AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT is by and between Greatbatch, Inc. a
Delaware corporation (the “Company” or “GB”), and (the “Executive”),
and dated as of the day of , 201 .
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.
(d) “Code” means the Internal Revenue Code of 1986, as amended.
(e) “Company” means, collectively, the Company and its Subsidiaries except for purposes of
Section 2 or where the context clearly requires otherwise.
(f) “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.
(g) “Specified Employee” means an employee who is a “specified employee,” as defined in
Section 409A of the Code on the date of his termination of employment.
(h) “Subsidiary” means any corporation, limited liability company, partnership or other entity
that is an Affiliate of the Company.
(i) “Termination of employment,” “separation from service” and terms of similar import mean a
“separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code.
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%.
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(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:
(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.
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(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.
(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 fifteenth day of the third month of the
fiscal year next following the fiscal year for which the Annual Bonus is awarded. 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.
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(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.
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.
(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;
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(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; provided, however, that “Good Reason” shall not be deemed to
exist unless: (A) the Executive has provided a Notice of Termination to the Company of the
existence of one or more of the conditions listed in (i) through (v) above within 90 days after the
initial occurrence of such condition or conditions; and (B) such condition or conditions have not
been cured by the Company within 30 days after receipt of such notice.
(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 in all instances other than Good Reason, in which case it
shall be at least 31 days after and no more than 90 days after the Notice of Termination). 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, 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 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.
(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 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.
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(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 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:
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;
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
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(ii) the Company shall pay the Executive up to $25,000 for executive outplacement services
utilized by the Executive; provided however, that such expenses
shall be paid or reimbursed to the Executive by the Company on a regular, periodic basis no
later than 30 days after presentation by the Executive of a statement or statements prepared by
such counsel in accordance with its customary practices, up to a maximum of $15,000 in the first
year (and up to a maximum of $10,000 in the second year) following the year in which the Executive
has a termination of employment, and further provided that the Executive presents such statement(s)
no later than 30 days prior to the end of the Executive’s taxable year following the year in which
such expenses were incurred;
(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); 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;
(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
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(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.
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.
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; provided,
however, that if the Executive is required to execute, submit and not revoke a release of claims
against the Company in order to receive the payment of benefits hereunder as a result of the terms
of this Agreement and the period in which to execute, submit and not revoke the release begins in a
first taxable year and ends in a second taxable year, any payment to which Executive would be
entitled hereunder will be paid in the second taxable year, but no later than the end of the
payment period specified in this Agreement.
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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 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:
(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
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(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.
(e) Any tax gross up under this Section shall be paid to the Executive no later than the end
of the Executive’s taxable year next following the Executive’s taxable year in which the Executive
remits the related taxes. For purposes of this Agreement, the term “tax gross-up” payment refers
to a payment to reimburse the Executive in an amount equal to all or a designated portion of the
Federal, state, local, or foreign taxes imposed upon the Executive as a result of compensation paid
or made available to the Executive by the Company, including the amount of additional taxes imposed
upon the Executive due to the Company’s payment of the initial taxes on such compensation.
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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.
(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.
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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 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.
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).
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| If to the Executive: | ||||
| If to the Company: | ||||
| Greatbatch, Inc. | ||||
| 00000 Xxxxxx Xxxxx | ||||
| Xxxxxxxx, XX 00000 | ||||
| (Attn: Secretary) |
(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) 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.
16. Section 409A of the Internal Revenue Code.
(a) Notwithstanding anything to the contrary in the foregoing, but to the extent not specified
previously above, if an amount hereunder is subject to, and not exempt from, Section 409A and the
Executive is a Specified Employee on the date of separation from service, the Executive shall not
receive a distribution due to separation from service before the date which is the later of (i)
eighteen (18) months following
_____
[Date of Execution of Amendment & Restatement
of the Agreement] or (ii) six months after the date of separation from service, or, if earlier, the
Executive’s death after separation from service. In the event a distribution must be deferred, the
first payment shall include an amount equal to the
sum of the payments which would have been paid to the Executive but for the payment deferral
mandated pursuant to Section 409A(a)(2)(B)(i) of the Code on the first day of the month following
the mandated deferral period. In no event will the mandatory deferral period extend beyond a death
after separation from service.
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(b) Any reimbursement of expenses or in-kind benefits provided under this Agreement subject
to, and not exempt from, Section 409A of the Code shall be subject to the following additional
rules: (a) any reimbursement of eligible expenses shall be paid as they are incurred (but not
prior to the end of the six-month delay period set forth above, if applicable) and shall always be
paid on or before the last day of the Executive’s taxable year following the taxable year in which
the expenses were incurred; provided that the Executive first provides documentation of such
expenses in reasonable detail not later than sixty (60) days following the end of the calendar year
in which the eligible expenses were incurred; (b) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during any calendar year shall not affect the amount
of expenses eligible for reimbursement, or in-kind benefits to be provided, during any other
calendar year; and (c) the right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit.
(c) To the extent applicable, it is intended that this Agreement and any deferrals of
compensation made hereunder comply with the provisions of Section 409A of the Code. This Agreement
and any deferrals or compensation made hereunder shall be administrated in a manner consistent with
this intent, and any provisions that would cause this Agreement or any benefit hereunder to fail to
satisfy Section 409A shall have no force and effect until amended to comply with Section 409A
(which amendment may be retroactive to the extent permitted by Section 409A). Any reference in
this Agreement to Section 409A will also include any proposed, temporary or final regulations, or
any other guidance, promulgated with respect to Section 409A by the U.S. Department of the Treasury
or the Internal Revenue Service.
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: | ||||
| Name: | ||||
| Title | ||||
| EXECUTIVE: |
||||
- 00 -
XXXXX XX XXX XXXX) |
||
| : SS. | ||
COUNTY OF ERIE |
) | |
On this
_____
day of , in the year , before me personally came
, to me personally known, who, being by me duly sworn, did depose and say that
deponent resides in the , State of New York; that deponent is the
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.
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.
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