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Exihibit
10.23
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
Gregory D. Hartman (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, Finance, Chief Financial Officer and Treasurer, 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 ”).
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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.
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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):
(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
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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.
(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.
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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
.
(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
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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 accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by
this Agreement.
Section 3.06 Certain
Additional Payments
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