Exhibit 10.2
CHANGE IN CONTROL
AGREEMENT
THIS AGREEMENT, dated as of
September 20, 2006, is made by and between Biomet, Inc., an Indiana
corporation (the “ Company ”), and Garry L.
England (the “ Executive ”).
Recitals
A.
The Company considers it essential to the best interests of its
shareholders to foster the continuous employment of certain key
management personnel, including the Executive who is currently
serving as Senior Vice President, Chief Operating Officer, Domestic
Operations, Biomet, Inc.
B.
The Board recognizes that, as is the case with many publicly-held
corporations, the possibility of a Change in Control exists and
that such a possibility, and the uncertainty and questions that it
may raise among management, may result in the departure or
distraction of certain key management personnel to the detriment of
the Company and its shareholders.
C.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of
members of the Company’s management, including the Executive,
to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from, among other
things, the possibility of a Change in Control.
D.
The parties intend that no amount or benefit will be payable under
this Agreement unless both of the following events occur: (i) a
Change in Control occurs; and (ii) the Executive’s employment
with the Company is terminated as provided in this
Agreement.
AGREEMENT
In consideration of the premises and
the mutual covenants and agreements set forth below, the Company
and the Executive agree as follows:
ARTICLE I
Term of Agreement
Section
1.01 Term . The “ Term ” of
this Agreement is the period commencing on the date hereof and
ending on the second anniversary of the date hereof; provided,
however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and
each annual anniversary thereof shall be hereinafter referred to as
the “ Renewal Date ”), unless previously
terminated, the Term shall be automatically extended so as to
terminate two years from such Renewal Date, unless at least 60 days
prior to the Renewal Date the Board shall give notice to the
Executive that the Term not be so extended. Notwithstanding any
notice to the Executive that the Term shall not be extended, if a
Change in Control occurs prior to the expiration of the Term, then
the Term shall be automatically extended so as to expire two years
from the date of such Change in Control.
Section
1.02 Post-Change in Control Employment Period .
Subject to the terms and conditions of this Agreement, 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 first date on which a Change in
Control occurs during the Term and ending on the second anniversary
of such date (the “ Post-CIC Employment Period
”).
ARTICLE II
Termination of Employment
Section
2.01 Death or Disability . The Executive’s
employment shall terminate automatically upon the Executive’s
death during the Term. If the Company determines in good faith that
the Disability (pursuant to the definition of Disability set forth
below) of the Executive has occurred during the Term, it may give
to the Executive written notice in accordance with Article VII of
this Agreement of its intention to terminate the Executive’s
employment. In such event, 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 thirty days
after such receipt, the Executive shall not have returned to
full-time performance of the Executive’s duties. For purposes
of this Agreement, “ Disability ” shall mean 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 a disability pursuant to the Company’s then
existing long term disability plan or, in the absence of such a
plan, a disability determined to be total and permanent by a
physician selected by the Company and acceptable to the Executive
or the Executive’s legal representative.
Section
2.02 Cause . The Company may terminate the
Executive’s employment during the Term for Cause.
Section
2.03 Good Reason . The Executive’s
employment may be terminated by the Executive for Post-CIC Good
Reason.
Section
2.04 Notice of Termination . Any termination by
the Company for Cause, or by the Executive for Post-CIC Good
Reason, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Article VII of this
Agreement. For purposes of this Agreement, a “ Notice of
Termination ” means a written notice which (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. The failure by the Executive or the Company to
set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Post-CIC Good Reason or Cause
shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing
the Executive’s or the Company’s rights
hereunder.
Section
2.05 Date of Termination . “ Date of
Termination ” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the
Executive for Post-CIC Good Reason, the date of receipt of the
Notice of Termination or any later date up to six months thereafter
specified therein, as the case may be, (ii) if the
Executive’s employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such
termination or any later date specified therein within 30 days of
such notice and (iii) if the Executive’s employment is
terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
ARTICLE III
Obligations of the Company Upon Termination
Section
3.01 Post-CIC Good Reason; Other Than for Cause or
Disability . If, during the Post-CIC Employment Period, the
Executive shall terminate employment for Post-CIC Good Reason or
the Company shall terminate the Executive’s employment other
than for Cause or Disability (entitling the Executive to benefits
under the Company’s long-term disability plan, after any
applicable waiting period):
2
(a)
The Company shall pay to the Executive in a lump sum in cash on the
tenth (10) Business Day following the Date of Termination the
aggregate of the following amounts:
(i)
the sum of (1) the Executive’s Annual Base Salary (which for
this purpose shall include any allowance for perquisites that is
paid directly to the Executive) through the end of the fiscal year
containing the Date of Termination; (2) an amount equal to (x) the
higher of the target bonus amount or the bonus actually paid to the
Executive under the Company’s incentive bonus plan (or any
comparable successor plan(s)) for the fiscal year of the Company
prior to the Date of Termination (or the first date on which a
Change in Control occurs, if such date is earlier) or (y) the
target bonus amount payable to the Executive under such plan(s) for
the fiscal year of the Company which contains the Date of
Termination, whichever of (x) or (y) is higher (the “
Target Bonus ”); (3) the total contributions (other
than salary reduction contributions) made by the Company to all
qualified retirement plans on behalf of the Executive through the
end of the fiscal year containing the Date of Termination; (4) the
total car allowance contributions made by the Company to the
Executive through the end of the fiscal year containing the Date of
Termination; and (5) any accrued vacation or other pay not
theretofore paid (the sum of the amounts described in clauses (1),
(2), (3), (4) and (5) are herein referred to as the “
Accrued Obligations ”); and,
(ii)
the amount equal to the product of (1) two and (2) the sum of (w)
the Executive’s Annual Base Salary (which for this purpose
shall include any allowance for perquisites that is paid directly
to the Executive) and (x) the higher of (aa) the Target Bonus and
(bb) the highest annual incentive bonus earned by Executive during
the last two (2) completed fiscal years of the Company immediately
preceding Executive’s Date of Termination (annualized in the
event Executive was not employed by the Company for the whole of
any such fiscal year), with the product of (1) and (2) reduced by
the amounts paid, if any, to the Executive pursuant to any other
contractual arrangement with the Executive or plan providing
coverage to the Executive as a result of such termination; (y) the
total contributions (other than salary reduction contributions)
made by the Company to all qualified retirement plans on behalf of
the Executive for the calendar year immediately preceding the
calendar year in which the Change in Control occurs; and (z) the
total car allowance contributions made by the Company to the
Executive for the calendar year immediately preceding the calendar
year in which the Change in Control occurs.
(b)
The Company shall provide the following benefit payments to the
Executive:
(i)
For a
24-month period after the Date of Termination, the Company will
arrange to provide the Executive with life insurance benefits and
long-term disability benefits substantially similar to those that
the Executive was receiving from the Company immediately prior to
the Date of Termination (or the first date on which a Change in
Control occurs, if such date is earlier). Life insurance benefits
and long-term disability benefits otherwise receivable by the
Executive pursuant to the preceding sentence will be reduced to the
extent comparable benefits are actually received by or made
available to the Executive by any source other than the Company
without greater cost to him than as provided by the Company during
the 24-month period following the Executive’s termination of
employment (and the Executive will report to the Company any such
benefits actually received by or made available to the Executive).
If, as of the Date of Termination, the Company reasonably
determines that the continued life insurance coverage and/or
long-term disability coverage required by this Section 3.01(b) is
not available from the Company’s group insurance carrier,
cannot be procured from another carrier, and cannot be provided on
a self-insured basis without adverse tax consequences to the
Executive or his death beneficiary, then, in lieu of continued life
insurance coverage and/or long-term disability coverage, the
Company will pay the Executive a lump sum payment, in cash, equal
to 24 times the full monthly premium payable to the Company’s
group insurance carrier for comparable coverage for an executive
employee under the Company’s group life insurance plan or
long-term disability plan then in effect.
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(ii)
The Company will offer the Executive and any eligible family
members the opportunity to elect to continue medical and dental
coverage pursuant to the continuation coverage requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“ COBRA ”). The Executive will be responsible
for paying the required monthly premium for that coverage, but the
Company will pay the Executive a lump sum cash stipend equal to 24
times the monthly premium then charged to qualified beneficiaries
for full family COBRA continuation coverage under the
Company’s medical and dental plans, which the Executive may
choose to use for the payment of COBRA premiums. The Company will
pay the stipend to the Executive whether or not the Executive or
anyone in his family elects COBRA continuation coverage, whether or
not the Executive continues COBRA coverage for a full 24 months,
and whether or not the Executive receives health coverage from
another employer while the Executive is receiving COBRA
continuation coverage.
(c)
All outstanding Options will become immediately vested and
exercisable (to the extent not yet vested and exercisable as of the
Date of Termination) and shall remain exercisable until the earlier
of (i) the expiration of the option term or (ii) five (5) years
after the Date of Termination. To the extent not otherwise provided
under the written agreement, if any, evidencing the grant of any
restricted Shares to the Executive, all outstanding Shares that
have been granted to the Executive subject to restrictions that, as
of the Date of Termination, have not yet lapsed will lapse
automatically upon the Date of Termination, and the Executive will
own those Shares free and clear of all such
restrictions.
(d)
For 12 months following the Date of Termination the Company shall,
at its sole expense, reimburse the Executive for the cost (but not
in excess of $25,000 in the aggregate), as
incurred, for outplacement services the scope and provider of which
shall be selected by the Executive in Executive’s sole
discretion.
(e)
To the extent not theretofore paid or provided, the Company shall
timely pay or provide to Executive any other amounts or benefits
required to be paid or provided or which Executive is eligible to
receive under any plan, program, policy, practice, contract or
agreement of the Company (such other amounts and benefits shall be
hereinafter referred to as the “ Other Benefits
”).
Section
3.02 Death . If the Executive’s employment
is terminated by reason of the Executive’s death during the
Term and prior to a Change in Control, this Agreement shall
terminate without further obligations to the Executive’s
legal representatives under this Agreement. Anything in this
Agreement to the contrary notwithstanding, if the Executive’s
death occurs after a Change In Control, then this Section 3.02
shall not apply and the Executive’s estate and/or
beneficiaries shall be entitled to the benefits of Section
3.01.
Section
3.03 Disability . If the Executive’s
employment is terminated by reason of the Executive’s
Disability during the Term, this Agreement shall terminate without
further obligations to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the Executive in a
lump sum in cash on the twentieth (20th) Business Day following the
Date of Termination. The term “Other Benefits” as
utilized in this Section 3.03 shall include, without limitation,
and 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 generally provided by the Company and
its affiliated companies to disabled executives and/or 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 120-day period immediately preceding the Date of
Termination (or the date on which a Change in Control occurs, if
such date is earlier) or, if more favorable to the Executive and/or
the Executive’s family, as in effect at any time thereafter
generally with respect to other peer executives of the Company and
their families.
Section
3.04 Termination in Anticipation of a Change in
Control .
4
(a)
An “ Anticipatory Termination ” occurs if
either
(i)
(1) the Company terminates the Executive’s employment other
than for Cause or Disability prior to the date on which a Change in
Control occurs, (2) it is reasonably demonstrated by the Executive
that such termination of employment (x) was at the request or
instruction of a third party who had taken steps reasonably
calculated to effect a Change in Control or (y) otherwise arose
within six months of, and was in connection with or in anticipation
of, a Change in Control, and (3) a Change in Control occurs,
or
(ii)
(1) during the Term, an event occurs that would have constituted
Post-CIC Good Reason if the date on which a Change in Control
occurs was deemed to be the date immediately prior to the date of
such event and the Executive terminated his employment subsequent
to such event, (2) the Executive can reasonably demonstrate that
such Post-CIC Good Reason event (x) was at the request or
instruction of a third party who had taken steps reasonably
calculated to effect a Change in Control or (y) otherwise arose
within six months of, and was in connection with or in anticipation
of, a Change in Control, and (3) a Change in Control
occurs.
(iii)
For purposes of clauses (i)(1)(y) and (ii)(1)(y) of this Section
3.04(a), it shall be presumed that such event was in connection
with or in anticipation of a Change in Control unless the Company
establishes otherwise by clear and convincing evidence.
(b)
If the Executive has reason to believe that an Anticipatory
Termination may have occurred, he shall provide a notice setting
forth such belief in accordance with Article VII of this Agreement
within 120 days after a Change in Control has occurred. Upon an
Anticipatory Termination, the Executive shall be entitled to (A)
the payments specified in Sections 3.01(a),(d) and (e) (to the
extent not previously paid), (B) the benefits specified in Section
3.01(b) (to the extent not previously provided) (or the after-tax
equivalent thereof to the extent that such benefits have not been
or are not provided in kind), (C) to the extent that the Executive
has outstanding any unexercised stock options and other stock-based
awards, the provisions of Section 3.01(c) shall apply to them, (D)
in respect of any stock options or other stock based awards that
were forfeited by the Executive as a result of his termination of
employment but would have vested had Section 3.01(c) applied, such
awards shall be reinstated (or if not reinstated, the Executive
shall be paid in cash the fair value of such award), and (E)
liquidated damages of $25,000 for penalties associated with the
Anticipatory Termination. For the purposes of this Section 3.04(b),
the Executive’s Date of Termination shall be deemed to be his
last date of employment by the Company.
Section
3.05 Nonexclusivity of Rights . Nothing in this
Agreement shall prevent or limit the Executive’s continuing
or future participation in any plan, program, policy or practice
provided by the Company and for which the Executive may qualify,
nor, subject to Section 8.02, shall anything herein limit or
otherwise affect such rights as the Executive may have under any
contract or agreement with the Company. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice, or program of or any contract or
agreement with the Company at or subsequent to the Date of
Termination shall be payable in accordan
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