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EXHIBIT 10.1
AMENDED AND RESTATED CHANGE IN CONTROL
EMPLOYMENT SECURITY
AGREEMENT
This Amended
and Restated Change in Control Employment Security Agreement is
entered into effective as of the 24th day of September, 2007, by
and between E-Z-EM, Inc., a Delaware corporation (the
“Employer”) and Anthony A. Lombardo (the
“Executive”).
WITNESSETH:
Whereas, the
Executive is currently employed by the Employer as its President
& CEO;
Whereas, in
order to provide certain security to the Executive in connection
with the Executive’s employment with the Employer, the
Employer and the Executive entered into an Employment Security
Agreement as of April 3, 2001 (the “Agreement”), which
the parties wish to amend and restate;
Now,
therefore, in consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties agree that the
Agreement is hereby amended and restated in its entirety to read as
follows:
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1. |
Benefits Upon Termination of Employment |
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If, at any time during the Twenty-Four (24) month period
following a Change in Control, (i) the employment of the Executive
with the Employer is terminated by the Employer for any reason
other than Good Cause, or (ii) the Executive terminates his
employment with the Employer for Good Reason within one year after
the expiration of the 30 day cure period referred to in Section
5(f)(C) below (any employment termination described in the
foregoing clause (i) or (ii) during the 24 month period following a
Change in Control being hereafter sometimes referred to as a
“Compensable Termination”), the following provisions
will apply. The following provisions will also apply to any
termination of the employment of the Executive by the Employer
without Good Cause or by the Executive for Good Reason which is
covered by and occurs within the applicable time period
contemplated by Section 4(b) below, and to any termination of
employment by the Executive for Good Reason under the circumstances
described in Section 8 below (and any such termination of the
Executive’s employment covered by Section 4(b) or Section 8
shall be included within the term “Compensable
Termination”). |
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(a) |
On the tenth day after the date of termination, the Employer
shall pay the Executive a lump sum payment equal to the Severance
Amount. |
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(b) |
On the tenth day after the date of termination, the Employer
shall pay the Executive his annual incentive award for the fiscal
year of the Employer preceding the fiscal year of the Employer in
which the Compensable Termination occurs, if unpaid at the time of
the Compensable Termination, the amount of such annual incentive
award to be determined in accordance with the annual incentive plan
that was in effect for such preceding fiscal year. |
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(c) |
On the tenth day after the date of termination, the Employer
shall pay Executive a prorated annual incentive award for the
fiscal year of the Employer in which the Compensable Termination
occurs, such prorated annual incentive award to be determined by
multiplying the Average Historical Incentive Award (as defined
in paragraph 5(b) below) by a fraction the numerator of which shall
be the number of days elapsed in such fiscal year through (and
including) the date on which the Compensable Termination occurs and
the denominator of which shall be the number 365. |
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(d) |
The Executive shall receive any and all other benefits to which
the Executive may be entitled following termination of employment
under the terms of any incentive plans and retirement plans in
which he participated prior to termination of employment. The
amount, form and time of payment shall be determined by the terms
of such plans and the Executive’s employment shall be deemed
to have terminated by reason of retirement under each such plan
except the qualified retirement plan (401(k) plan). ! |
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(e) |
The Executive’s medical plan coverage will continue at
the same level of coverage and benefits (including dependent
coverage, if any) in effect at the time of the Change in Control,
until the earlier of (i) eighteen (18) months after the Compensable
Termination, or (ii) the time when the Executive obtains comparable
coverage through a new employer. These benefits will continue with
the same employee cost in effect immediately prior to the Change in
Control. This provision is intended to comply with the requirements
of “COBRA” continuation coverage. This continuation
coverage is deemed to commence upon termination. |
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(f) |
On the tenth day after the date of termination, the Executive
shall be paid all earned but unpaid or unused vacation pay at the
time of termination. He shall not be entitled to payments for
vacation periods he would have earned had his employment continued
after the date on which the Compensable Termination occurred. In
addition, except as otherwise provided herein, the Executive shall
not be entitled to any fringe benefits including the use of a
company automobile. |
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(g) |
On the tenth day after the date of termination, the Executive
will be paid a lump sum cash payment equal to the unvested portion
of his 401(k) plan balance. If payment is made under this
subparagraph 1(g) and the 401(k) plan balance is subsequently
vested, the Executive shall immediately repay the amount paid under
this subparagraph 1(g). |
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(h) |
During the one year period after the Compensable Termination
the Executive will be entitled to outplacement assistance provided
by a nationally recognized outplacement company selected by the
Employer with a total cost of not more than Fifteen (15%) percent
of Executive’s Base Salary. |
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Any termination of employment by the Executive for Good Reason
pursuant to the first sentence of this Section 1 or Section 4(b)
below is intended to qualify as an “involuntary separation
from service” within the meaning of Treasury Regulation
section 1.409A-1(n)(2), and the provisions of this Agreement shall
be administered and construed accordingly. Any provision of this
Agreement that cannot be so administered and construed shall to
that extent be disregarded. |
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(a) |
The payments and benefits to be paid or provided to or with
respect to the Executive pursuant to this Agreement shall not be
reduced by the amount of any claim of the Employer against the
Executive. |
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(b) |
Except as otherwise provided in subparagraph 1(e) above, no
payment or benefits to be paid or provided to or with respect to
the Executive pursuant to this Agreement shall be reduced by any
amount the Executive may earn or receive from employment with
another employer or from any other source. However, amounts payable
and benefits being provided pursuant to this Agreement shall be in
lieu of any severance pay and severance benefits to which the
Executive may be entitled under Section 4.5(a) and (d) of his
employment agreement dated as of June 27, 2007 (the
“Employment Agreement”) with respect to the Compensable
Termination which gives rise to payments pursuant to this
Agreement. |
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(c) |
In the event that the Executive would, except for this
sentence, be subject to a tax pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended, (the “Code”)
or any successor provision that may be in effect, as a result of
“parachute payments” (as that term is defined in
Section 280G(b)(2)(A) of the Code) made pursuant to this Agreement
and/or any other agreement, plan, program or arrangement, or a
deduction would not be allowed to the Employer for all or any part
of such payments by reason of Section 280G(a) of the Code, or any
successor provision that may be in effect, such payments/benefits
due under this Agreement shall be reduced to reduce the aggregate
“present value” (as that term is defined in Section
280G(d)(4) of the Code) of such payments to $100 less than an
amount equal to three times the Executive’s “base
amount” (as that term is defined in Section 280G(b)(3) and
(d)(1) and (2) of the Code) to the end that the Executive is not
subject to tax pursuant to Section 4999 and no deduction is
disallowed by reason of Section 280G(a). However, the preceding
sentence shall not apply (i.e., no payments/benefits due under this
Agreement shall be reduced) if reducing the payments/benefits due
under this Agreement would yield Executive more than $10,000 less
of the aforementioned parachute payments after taxes (including,
without limitation, all federal, state and local income taxes and
excise taxes) than not reducing such payments/benefits. |
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(i) |
Subject to the provisions of paragraph 2(c) above and
subparagraph 2(c)(ii) below, all determinations required to be made
under this paragraph 2, including whether or not payments to be
made under this Agreement or |
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otherwise would be considered parachute payments and whether
and when payments/benefits due under this Agreement are to be
reduced pursuant to paragraph 2(c) above and the assumptions to be
utilized in arriving at such determination, shall be made by
Deloitte & Touche or its successor (the “Accounting
Firm”) which shall provide detailed supporting calculations
both to the Employer and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a
parachute payment, or such earlier time as is requested by the
Employer. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting
the “change in ownership or effective control” or
“change in the ownership of a substantial portion of
assets” (within the meaning of Code Section 280G(b)(2)(A))
that gives rise to the Excise Tax, or for any reason is unable or
unwilling to serve as the Accounting Firm hereunder, the Executive
shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the
Employer. Any determination by the Accounting Firm hereunder shall
be binding upon the Employer and the Executive. |
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(ii) |
The Executive shall notify the Employer in writing of any claim
by the Internal Revenue Service that, if successful, would require
the reduction of payments/benefits due under this Agreement
pursuant to the first sentence of paragraph 2(c) above. Such
notification shall be given as soon as practicable but no later
than ten business days after Executive receives written notice of
such claim and shall apprise the Employer of the nature of such
claim and the date on which such claim is requested to be
paid. |
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If the Executive dies after a Compensable Termination, all
amounts payable hereunder to the Executive and unpaid at the time
of his death shall be paid to his surviving spouse or if no spouse
survives him, to his estate. |
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4. |
Termination for Good Cause or Without Good
Reason |
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(a) |
Except as otherwise provided in paragraph 4(b) or elsewhere
herein, the Employer shall have no further obligation to the
Executive, his spouse, or his estate under this Agreement, except
for earned but unpaid Base Salary through the date of termination,
benefits to which he may be entitled under the terms of any
incentive plan or retirement plan, and accrued vacation pay if the
employment of the Executive with the Employer is terminated (i) by
the Employer for Good Cause at any time, (ii) for any reason prior
to a Change in Control, (iii) for any reason more than twenty four
(24) months following a Change in Control, (iv) by the voluntary
action of the Executive without Good Reason, or (v) by reason of
the Executive’s death or disability (within the |
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meaning of the Employer’s disability benefit plan) before
a Compensable Termination occurs. |
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(b) |
If a Change in Control occurs and within six months prior to
the date on which the Change in Control occurs, (i) the
Executive’s employment with the Employer is terminated by the
Employer without Good Cause, or (ii) one of the Good Reason
conditions described in Section 5(f)(i) through 5(f)(iv) below
occurs, and if it is reasonably demonstrated by the Executive that
such termination of employment by the Employer or Good Reason
condition (A) occurred at the request of a third party who has
taken steps reasonably calculated to effect the Change in Control,
or (B) otherwise arose in connection with or in anticipation of the
Change in Control, then for purposes of this Agreement (including
without limitation for purposes of the first sentence of Section 1)
such termination of employment by the Employer without Good Cause
or Good Reason condition shall be deemed to have occurred
immediately following the Change in Control and the Executive may
satisfy the Good Reason notice requirement of Section 5(f)(B) below
by giving the notice required thereby at any time before the Change
in Control occurs or within 90 days thereafter and, if the Employer
fails to remedy the Good Reason condition within 30 days after the
Executive provides such written notice, the Executive may terminate
his employment for such Good Reason within one year after the
expiration of that 30 day cure period. |
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For the purposes of this Agreement: |
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(a) |
“Affiliate” shall have the meaning set forth in the
Securities Exchange Act of 1934, as amended. |
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(b) |
“Average Historical Incentive Award” means the
average annual incentive award (including any deferred incentive
award) awarded to the Executive during the three year period
immediately preceding the date on which a Change in Control
occurs. |
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(c) |
“Base Salary” shall mean the highest annual rate of
base salary paid to the Executive from the date of this Agreement
until Termination. |
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(d) |
“Change in Control” shall be deemed to occur if and
when any of the following events occur: |
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i. |
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The acquisition, directly or indirectly by an entity, person or
group (including all Affiliates of such entity, person or group)
other than the Employer or a Related Party as defined in clause
5(d)(ii) below, of beneficial ownership, as that term is defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended,
of capital stock of the |
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Employer entitled to exercise fifty (50%) percent or more of
the outstanding voting power of all capital stock of the
Employer. |
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