Exhibit 10.3
RETENTION AGREEMENT
This RETENTION AGREEMENT is entered into as of
this 30th day of September, 2008, by and between ICU MEDICAL, INC.,
a Delaware corporation (the “Company”) and
Scott E. Lamb, a key employee of the Company (the
“Employee”).
RECITALS
WHEREAS, the Company recognizes that, as is the
case with many publicly-held corporations, the possibility of a
change in control of the Company exists and that the uncertainties
raised by such a possibility may result in the distraction or even
the premature departure of the Employee to the detriment of the
Company and its stockholders, and
WHEREAS, the Board of Directors of the Company
(the “Board”) has determined that appropriate steps
should be taken to reinforce and encourage the continued employment
and dedication of the Employee without distraction from the
possibility of a change in control of the Company and related
events and circumstances.
NOW, THEREFORE, as an inducement for and in
consideration of the Employee remaining in its employ, the Company
agrees that the Employee shall receive the severance benefits set
forth in this Agreement in the event the Employee’s
employment with the Company is terminated under the circumstances
described below subsequent to a Change in Control (as defined in
Section 1.1).
As used herein, the following terms shall have
the following respective meanings:
A. “ Change in Control ”
means
1. the acquisition by an individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership of
any capital stock of the Company if, after such acquisition, such
Person beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) 50% or more of either (i) the
then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (ii) the
combined voting power of the then-outstanding voting securities of
the Company entitled to vote generally in the election of directors
(the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this subsection 1.1(a), the
following acquisitions shall not constitute a Change in Control:
(i) any acquisition from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (iv) any acquisition by
any corporation pursuant to a transaction which complies with all
of clauses (i), (ii) and (iii) of subsection (c) of this Section
1.1; or
2. individuals who, as of the date hereof,
constitute the members of the Board (the “Incumbent
Directors”) ceasing for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company’s stockholders was
approved by a vote of at least a majority of the Incumbent
Directors then in office shall be deemed to be an Incumbent
Director (except that this proviso shall not apply to any
individual whose initial election as a director occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board); or
3. the consummation of a reorganization, merger or
consolidation involving the Company or a sale or other disposition
of all or substantially all of the assets of the Company (a
“Business Combination”), unless, immediately following
such Business Combination, each of the following three conditions
is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of common
stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such
Business Combination (which shall include, without limitation, a
corporation which as a result of such transaction owns the Company
or substantially all of the Company’s assets either directly
or through one or more subsidiaries)(such resulting or acquiring
corporation is referred to as the “Acquiring
Corporation”) in substantially the same proportions, relative
to one another, as their ownership, immediately prior to such
Business Combination, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, respectively, (ii) no Person
(excluding the Acquiring Corporation or any employee benefit plan
(or related trust) maintained or sponsored by the Company or the
Acquiring Corporation) beneficially owns, directly or indirectly,
50% or more of the then-outstanding shares of common stock of the
Acquiring Corporation, or of the combined voting power of the
then-outstanding voting securities of such corporation (except to
the extent that such ownership existed prior to the Business
Combination) and (iii) a majority of the members of the board of
directors of the Acquiring Corporation were Incumbent Directors at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
4. approval of the stockholders of the Company of
a complete liquidation or dissolution of the Company.
B. “Change in Control Date”
means the first date during the Term
(as defined in Section 2) on which a Change in Control
occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change in Control occurs and if the
Employee’s employment with the Company is terminated prior to
the Change in Control Date or if any event which constitutes Good
Reason (as defined in Section 1.4) occurs prior to the Change in
Control Date, and if it is reasonably demonstrated by the Employee
that such termination of employment or event which constitutes Good
Reason (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change in Control or
(ii) otherwise arose in connection with or in anticipation of
a Change in Control, then for all purposes of this Agreement the
“Change in Control Date” shall mean the date
immediately prior to the date of such termination of employment or
event which constitutes Good Reason.
1. the Employee’s intentional, willful and
continuous failure to substantially perform his or her reasonable
assigned duties (other than any such failure resulting from
incapacity due to physical or mental illness or any failure after
the Employee gives notice of termination for Good Reason), which
failure is materially and demonstrably injurious to the Company,
and which failure is not cured within 30 days after a written
demand for substantial performance is received by the Employee from
the Board which specifically identifies the manner in which the
Board believes the Employee has not substantially performed the
Employee’s duties; or
2. the Employee’s intentional and willful
engagement in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company or is intended
to result in substantial personal enrichment; or
3. the Employee’s conviction for a felony or
the Employee’s plea of nolo contendere in connection
with a felony indictment.
For purposes of this Section 1.3, no act or
failure to act by the Employee shall be considered
“willful” unless it is done, or omitted to be done, in
bad faith and without reasonable belief that the Employee’s
action or omission was in the best interests of the
Company.
D. “Good Reason”
means the occurrence, without the
Employee’s written consent, or any of the events or
circumstances set forth in clauses (a) through (f)
below. Notwithstanding the occurrence of any such event
or circumstance, such occurrence shall not be deemed to constitute
Good Reason if, prior to the Date of Termination specified in the
Notice of Termination (each as defined in Section 3.2(a)) given by
the Employee in respect thereof, such event or circumstance has
been fully corrected and the Employee has been reasonably
compensated for any losses or damages resulting therefrom; provided
that such right of correction by the Company shall only apply to
the first Notice of Termination for Good Reason given by the
Employee:
1. any significant diminution in the
Employee’s duties, responsibilities or authority in effect
immediately prior to the earliest to occur of (i) the Change in
Control Date, (ii) the date of the execution by the Company of the
initial written agreement or instrument providing for the Change in
Control or (iii) the date of the adoption by the Board of a
resolution providing for the Change in Control (with the earliest
to occur of such dates referred to as the “Measurement
Date”);
2. a reduction in the Employee’s annual base
salary as in effect on the Measurement Date or as the same may be
increased from time to time;
3. the failure by the Company to (i) continue in
effect any material compensation or benefit plan or program (a
“Benefit Plan”) in which the Employee participates or
which is applicable to the Employee immediately prior to the
Measurement Date, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan or reasonable cash
compensation in lieu thereof) has been made with respect to such
plan or program, (ii) continue the Employee’s participation
in a Benefit Plan (or in such substitute or alternative plan or
make reasonable cash compensation in lieu thereof) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Employee’s participation
relative to other participants, than the basis existing immediately
prior to the Measurement Date or (iii) award cash bonuses to the
Employee in amounts and in a manner substantially consistent with
past practice in light of the Company’s financial
performance;
4. a change by the Company in the location at
which the Employee performs the Employee’s principal duties
for the Company to a new location that is either (i) outside a
radius of 35 miles from the Employee’s principal residence
immediately prior to the Measurement Date; (ii) more than 30 miles
from the location at which the Employee performs his or her
principal duties for the Company immediately prior to the
Measurement Date, and which results in an increase in the
Employee’s daily commuting distance; or (iii) a requirement
by the Company that the Employee travel on Company business to a
substantially greater extent than required immediately prior to the
Measurement Date;
5. the failure of the Company to obtain the
agreement, in a form reasonably satisfactory to the Employee, from
any successor to the Company to assume and agree to perform this
Agreement, as required by Section 6; or
6. any failure of the Company to pay or provide to
the Employee any portion of the Employee’s compensation or
benefits due under any Benefit Plan within seven days of the date
such compensation or benefits are due, or any material breach by
the Company of any employment agreement with the
Employee.
The Employee’s right to terminate his or
her employment for Good Reason shall not be affected by his or her
incapacity due to physical or mental illness.
E. “Disability” means the Employee’s absence from the
full-time performance of the Employee’s duties with the
Company for 180 consecutive calendar days as a result of incapacity
due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its
insurers and acceptable to the Employee or the Employee’s
legal representative.
F. “Effective Date”
means the date as of which this
Agreement is entered into.
II. Term of Agreement . This Agreement, and all rights and
obligations of the parties hereunder, shall take effect upon the
Effective Date and shall expire upon the first to occur of (a) the
expiration of the Term (as defined below) if a Change in Control
has not occurred during the Term, (b) the date 12 full calendar
months after the Change in Control Date, if the Employee is still
employed by the Company as of such later date, or (c) the
fulfillment by the Company of all of its obligations under Sections
4 and 6 if the Employee’s employment with the Company
terminates within 12 full calendar months following the Change in
Control Date, provided that Section 5 shall remain in effect from
the Effective Date until 24 full calendar months after the Date of
Termination of the Employee. “Term” shall
mean the period commencing as of the Effective Date and continuing
in ef
