RETIREMENT AND CONSULTING AGREEMENT
THIS RETIREMENT AND CONSULTING AGREEMENT (this “ Agreement ”) is made as of March 30, 2007 by and between BIOMET, INC., an Indiana corporation (“ Company ”), and Greg Hartman (“ Executive ”).
WHEREAS, Executive has elected to retire from the Company and to resign all his positions with the Company effective as of March 30, 2007;
WHEREAS, the parties have agreed to resolve certain matters related to Executive’s retirement;
WHEREAS, the Company desires to engage Executive as a consultant on the terms set forth in this Agreement to assist in transitioning certain matters for which Executive was previously responsible; and
WHEREAS, Executive desires to provide such consulting services to the Company on the terms set forth in this Agreement
NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements hereinafter set forth and the mutual benefits to be derived herefrom, Company and Executive hereby agree as follows:
1. Retirement and Resignation . Effective as of March 30, 2007 (the “ Separation Date ”), Executive hereby retires from the Company and, as a consequence, voluntarily resigns his employment with the Company and all of its affiliates, including without limitation Executive’s position as Chief Financial Officer.
2. No Entitlement to Severance . Executive acknowledges and agrees that Executive is not entitled to, and hereby waives any potential entitlement to, any severance or termination benefits that could be payable in connection with his retirement and resignation from employment with the Company. Without limiting the foregoing, Executive hereby agrees that the Severance and Change in Control Agreement dated as of September 20, 2006 by and between Executive and the Company (the “ Severance Agreement ”) is hereby terminated and of no further force or effect. Executive agrees that Executive shall not be entitled to, and hereby waives any potential future entitlement to, any of the benefits or payments described in the Severance Agreement.
3. Treatment of Options . Executive acknowledges that the Company is conducting an investigation (the “ Investigation ”) to determine the extent to which compensatory options previously granted by the Company were granted with an exercise price lower than the fair market value of the Company’s common stock on the applicable date of grant. The Company and Executive hereby agree to the following with respect to options granted to him by the Company.
(a) Previously Exercised Options . Executive shall repay to the Company in accordance with this Section 3(a) the aggregate amount (the “ Discount ”) by which the exercise price of any or all compensatory options granted to Executive by the Company that Executive exercised prior to the date hereof was less than the fair market value of the Company’s common stock on the applicable date of grant of each such option. The Company shall determine the amount of the Discount in good faith and, absent manifest error, the Company’s determination shall be final, binding and conclusive. Executive shall pay the amount of the Discount to the Company promptly after receipt of a written notice from the Company setting out in reasonable detail the calculation of the Discount. Without in any way limiting Executive’s obligation to repay the Discount directly, Executive hereby authorizes the Company to withhold the Discount from any and all amounts otherwise payable to Executive hereunder or otherwise in the event Executive fails to promptly pay the Discount.
(b) Vested Options . Executive agrees that, with respect to all unexercised options previously granted to Executive that are vested and exercisable on the date hereof (the “ Vested Options ”), the Company may, without any further need for Executive’s consent, increase the exercise price of such options to an amount the Company determines in good faith is equal to the fair market value of the Company’s common stock on the date such options were originally granted. Absent manifest error, the Company’s determination of the appropriate exercise price shall be final, binding and conclusive. Executive agrees to execute any document related to such adjustment reasonably requested by the Company. In the event Executive exercises any options described in this Section 3(b) prior to any adjustment contemplated hereby, such options shall be treated in accordance with Section 3(a). Vested Options shall be exercisable after the Separation Date in accordance with their terms, it being agreed that the Vested Options shall remain exercisable until the earlier of (i) the date such Vested Options would otherwise expire (in the absence of Executive’s retirement) or (ii) the three month anniversary of the Separation Date (or, if earlier, the latest date on which such Vested Options may be exercised without incurring any penalty under Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”)).
(c) Remaining Options . Executive acknowledges and agrees that he will not be entitled to, and hereby waives and entitlement he might otherwise have to, accelerated vesting of any unvested options as a consequence of his retirement from the Company. All unexercised options previously granted to Executive that are not described in Section 3(b) shall be terminated and canceled as of Executive’s Separation Date.
4. Release of Claims .
(a) General Release . In consideration of the Company’s obligations hereunder and acceptance of Executive’s retirement and resignation, Executive, Executive’s heirs, successors, and assigns, hereby knowingly and voluntarily release and forever discharge the Company and its subsidiaries and affiliates, together with all of their respective current and former officers, directors, consultants, agents, representatives and employees, and each of their predecessors, successors and assigns (collectively, the “ Releasees ”), from any and all debts, demands, actions, causes of actions, accounts, covenants, contracts, agreements, claims, damages, omissions, promises, and any and all claims and liabilities whatsoever, of every name and nature, known or unknown, suspected or unsuspected, both in law and equity (“ Claims ”),
which Executive ever had, now has, or may hereafter claim to have against the Releasees by reason of any matter, cause or thing whatsoever arising from the beginning of time to the time Executive executes this Agreement (the “ General Release ”). This General Release of Claims shall apply to any Claim of any type, including, without limitation, any and all Claims of any type that Executive may have arising under the common law, under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act (“ADEA”), the Older Workers Benefit Protection Act, the Americans With Disabilities Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act (“ERISA”), the Sarbanes-Oxley Act of 2002 or the California Fair Employment and Housing Act, the California Family Rights Act, or the California Labor Code section 1400 et seq. , each as amended, and any other Federal, state or local statutes, regulations, ordinances or common law, or under any policy, agreement, contract, understanding or promise, written or oral, formal or informal, between any of the Releasees and Executive, and shall further apply, without limitation, to any and all Claims in connection with, related to or arising out of Executive’s employment, or the termination of Executive’s employment, with the Company; provided , however , that this General Release shall not apply to or impair (i) claims for vested benefits (excluding any severance or termination benefits, which are specifically waived hereunder) pursuant to any other Company employee benefit plan, as defined in ERISA, in which Executive were a participant before the Separation Date; (ii) any rights to indemnification Executive may have under the by-laws of the Company or applicable law; or (iii) any claims that may arise from any violation of this Agreement. For the purpose of implementing a full and complete release, Executive understands and agrees that this Agreement is intended to include all claims, if any, which Executive may have and which Executive does not now know or suspect to exist in Executive’s favor against the Company or any of the Releasees and that this Agreement extinguishes those claims.
(b) No Claims . Executive represents and warrants that Executive has not filed any complaints or charges with any court or administrative agency against the Company or any of the Releasees, which have not been dismissed, closed, withdrawn or otherwise terminated on or before the date of this Agreement. Executive further represents and warrants that Executive has not assigned or transferred or attempted to assign or transfer, nor will Executive attempt to assign or transfer, to any person or entity not a party to this Agreement any of this Claims Executive is releasing in this Agreement. Furthermore, by signing this General Release of Claims, Executive represents and agrees that Executive will not be entitled to any personal recovery in any action or proceeding that may be commenced on Executive’s behalf arising out of the matters released hereby.
(c) ADEA/OWBPA Waiver . Executive specifically releases and waives any right or claim against the Company arising out of his employment or his resignation of employment with the Company under the Age Discrimination in Employment Act, as amended, 29 U.S.C. § 621 et seq. (“ ADEA ”) and the Older Workers Benefit Protection Act, 29 U.S.C. § 621 et seq. (“ OWBPA ”) (such release and waiver referred to as the “ Waiver ”). Executive understands and agrees that (i) this Agreement is written in a manner that he understands; (ii) he does not release or waive rights or claims that may arise after he signs this Agreement; (iii) he waives rights and claims he may have had under the OWBPA and the ADEA, but only in exchange for payments and/or benefits in addition to anything of value to which he is already entitled; (iv) Executive has been advised to consult with an attorney before
signing this Agreement; (v) he has twenty-one (21) calendar days (the “ Offer Period ”) from receipt of this Agreement to consider whether to sign it. If Executive signs before the end of the Offer Period, Executive acknowledges that his decision to do so was knowing, voluntary, and not induced by fraud, misrepresentation, or a threat to withdraw, alter, or provide different terms prior to the expiration of the Offer Period. Executive agrees that changes or revisions to this Agreement, whether material or immaterial, do not restart the running of the Offer Period; (vi) Executive has seven (7) calendar days after signing this Agreement to revoke the waiver (the “ Revocation Period ”) and (vii) this Waiver shall not become effective or enforceable until the Revocation Period has expired. If Executive revokes the w aiver, Section 5 of this Agreement and the provisions of this Agreement relating to Executive’s services as a Consultant (i.e., Sections 6, 7, 8, and 9) shall not be effective or enforceable and Executive shall not be entitled to the payments or benefits provided for in Sections 8 or 9 of this Agreement. To be effective, the revocation must be in writing and received by Jeffrey R. Binder, Chief Executive Officer at the Company’s address set forth in Section 13.
5. Continuing Indemnification . Subject to the terms and conditions of Section 6.3 of the Company's Restated Articles of Incorporation as in effect on the date hereof, the Company will advance and pay reasonable expenses (including attorneys' fees but not including judgments, penalties, fines, or settlements) incurred by Executive in connection with (a) proceedings arising out the Company's historic grant of compensatory stock options; (b) any other proceeding against Executive pending as of the date hereof arising out of his position as a director, officer, or employee of the Company; and (c) any other proceeding against or involving the Company in which Executive may be involved; provided that the Company's obligation to advance and pay such expenses shall be subject to the terms of any undertaking signed by Executive prior to the date hereof (which, under certain circumstances, requires repayment of expenses paid or advanced) or, in the absence of such an undertaking, to the Company's usual and customary practice with regard to its current and former employees in such matters.
6. Consulting Term . The Company hereby agrees to engage Executive as a consultant during the period commencing on the Separation Date and, unless terminated earlier pursuant to Section 9, continuing until the six month anniversary of the Separation Date (as applicable, the “ Consulting Separation Date ”). The period from the Separation Date to the Consulting Separation Date shall be referred to as the “ Consulting Term .”
7. Consulting Services . During the Consulting Term, Executive shall make himself available to provide such transition services as are reasonably requested by the Company’s Chief Executive Officer or his designee (the “ Company Representative ”), including, without limitation, assisting the Company in preparing its financial statement and other related documents and transitioning to other Company personnel the information necessary to prepare the Company’s financial statements (the “ Services ”). Executive agrees to provide the Services at such times and locations as the Company Representative reasonably requires, it being understood and agreed that the performance of the Services could require reasonable amounts of travel. Executive agrees to use his best efforts to perform the Services in a professional and competent manner.
8. Consulting Compensation and Expense .
(a) During the Consulting Term, Executive shall receive for the Services to be rendered hereunder a monthly retainer (the “ Retainer ”) of $29,166 (i.e., an aggregate Retainer of $175,000), which shall be paid monthly in arrears.
(b) The Company shall reimburse Executive for reasonable expenses incurred in connection with rendering the Services hereunder in accordance with policies adopted by the Company form time to time.
(c) During the Consulting Term, the Company shall pay or reimburse Executive the monthly amounts necessary to continue health care coverage for Executive and his eligible dependents pursuant to Section 4980B of the Code.
(d) Promptly after the later of the expiration of the Consulting Term and closing of the transactions contemplated by Agreement and Plan of Merger by and Among Biomet, Inc., LVB Acquisition Merger Sub, Inc. and LVB Acquisitions LLC (the “ Transaction Agreement ”) at a price per share of common stock, without par value, of the Company (a “ Share ”) of at least $44, the Company shall pay Executive a bonus in an amount equal to the sum of $325,000 (the “ Final Payment ”); provided that Executive shall be entitled to the Final Payment if the Transaction is consummated at a price per share of less than $44 and the Company determines in its sole discretion that the reduction in purchase price is unrelated, in whole or in part, to (i) the Investigation and (ii) any other matter related to the account practices or financial statements of the Company or its subsidiaries. As a condition to receiving