Retention AgreementEmployee Retention Agreement |
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BOSTON SCIENTIFIC CORP. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Search Employee Retention Agreement by:
Exhibit 10.1
[Date]
[Name of Executive]
[Address of Executive]
Re: Retention Agreement
Dear [Name of Executive]:
Boston Scientific Corporation (the “Company”) considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel. Further, the Board of Directors of the Company (the “Board”) recognizes that the possibility of a change in control exists, and that such possibility, and the uncertainty and questions that it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the management of the Company, including yourself, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from any possible change in control of the Company.
In order to induce you to remain in the employ of the Company, the Company agrees that you shall receive the severance benefits set forth in this letter agreement (this “Agreement”) in the event your employment with the Company is terminated subsequent to a Change in Control (as defined herein) under the circumstances described below.
1. Termination Following Change in Control. If a Change in Control occurs, you will be entitled to the benefits provided in Section 2 hereof upon the subsequent termination of your employment by the Company without Cause (as defined herein) or by you for Good Reason (as defined herein) during the two-year period following such Change in Control (the “Covered Period”). Any purported termination of your employment by the Company or by you shall be communicated by a Notice of Termination to the other party hereto in accordance with Section 8 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.
2. Compensation Upon Termination.
(a) Severance Benefits. If your employment by the Company shall be terminated during the Covered Period by the Company without Cause or by you for Good Reason, then you shall be entitled to the following benefits:
(i) Severance Payments. The Company shall pay you in cash within 5 days of the Date of Termination the full amount of any earned but unpaid base salary through the Date of Termination at the rate in effect at the time of the Notice of Termination, plus a cash payment for all unused vacation time which you may have accrued as of the Date of Termination. The Company shall also pay you in cash within five days of the Date of Termination a pro rata portion of the annual bonus for the year in which your employment terminates, calculated on the basis of your target bonus for that year and on the assumption that all performance targets have been or will be achieved. In addition, the Company shall pay you in a cash lump sum, within five days of the Date of Termination, an amount (the “Severance Payment”) equal to three times the sum of (A) your base salary on the Termination Date (without giving effect to any salary reductions which satisfy the definition of “Good Reason”), (B) the greater of (x) the most recent bonus paid to you (which shall be deemed to be the sum of (I) the cash bonus amount most recently paid to you and (II) the value of restricted stock (calculated as of the date of vesting) issued to you as bonus compensation that vested (other than restricted stock that vested solely by virtue of the Change in Control) within the immediately preceding year) plus the value of any other shares of stock issued to you without forfeiture provisions as bonus compensation within the immediately preceding year and (y) your target bonus in effect for the year in which the Change in Control occurred (calculated assuming that all performance targets have been or will be achieved) and (C) $25,000. The Severance Payment shall be in lieu of any other severance payments which you are entitled to receive under any other severance pay plan or arrangement sponsored by the Company or any of its subsidiaries;
(ii) Benefit Continuation. Subject to your compliance with the non-solicitation and confidentiality provisions described in Section 6, you and your eligible dependents shall continue to be eligible to participate during the Benefit Continuation Period (as hereinafter defined) in the medical, dental, health, life and other welfare benefit plans and arrangements applicable to you immediately prior to your termination of employment on the same terms and conditions in effect for you and your dependents immediately prior to such termination. For purposes of the previous sentence, “Benefit Continuation Period” means the period beginning on the Date of Termination and ending on the earlier to occur of (i) the third anniversary of the Date of Termination and (ii) the date that you and your dependents are eligible for coverage under the plans of a subsequent employer which provide substantially equivalent or greater benefits to you and your dependents;
(iii) Legal Fees and Expenses. The Company shall also pay you in cash all legal fees and expenses, if any, incurred by you in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement; provided, however, that the amount of the payments and reimbursements under this Section 2(a)(iii) shall not exceed $100,000; and provided, further, that no such legal fees or expenses shall be reimbursed if it is determined by the applicable arbitral panel or other tribunal that your claim is entirely without merit. Furthermore, nothing
shall prohibit the arbitral panel or other tribunal from awarding legal fees in excess of $100,000 if, in the interests of fairness and equity, the arbitral panel or other tribunal deems such award appropriate.
(b) No Mitigation. You shall not be required to mitigate the amount of any payment or benefit provided for in this Section 2 by seeking other employment or otherwise.
3. Additional Payment.
(a) Gross-Up Payment. Notwithstanding anything herein to the contrary, if it is determined that any Payment (as defined herein) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any interest or penalties thereon, is herein referred to as an “Excise Tax”), then you shall be entitled to an additional cash payment (a “Gross-Up Payment”) in an amount that will place you in the same after-tax economic position that you would have enjoyed if the Excise Tax had not applied to the Payment. The amount of the Gross-Up Payment shall be determined by the Accounting Firm (as defined herein) in accordance with such formula as the Accounting Firm deems appropriate. No Gross-Up Payments shall be payable hereunder if the Accounting Firm determines that the Payments are not subject to an Excise Tax. The Accounting Firm shall be paid by the Company for services performed hereunder.
(b) Determination of Gross-Up Payment. Subject to the provisions of Section 3(c), all determinations required under this Section 3, including whether a Gross-Up Payment is required, the amount of the Payments constituting excess parachute payments, and the amount of the Gross-Up Payment, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to you and the Company within fifteen days of any date reasonably requested by you or the Company on which a determination under this Section 3 is necessary or advisable. The Company shall pay you in cash the initial Gross-Up Payment within five days of the receipt by you and the Company of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by you, the Company shall cause the Accounting Firm to provide you with an opinion that the Accounting Firm has substantial authority under the Code and Regulations not to report an Excise Tax on your federal income tax return. Any determination by the Accounting Firm shall be binding upon you and the Company. If the initial Gross-Up Payment is insufficient to completely place you in the same after-tax economic position that you would have enjoyed if the Excise Tax had not applied to the Payments (hereinafter an “Underpayment”), the Company, after exhausting its remedies under Section 3(c) below, shall promptly pay you in cash an additional Gross-Up Payment in respect of the Underpayment.
(c) Procedures. You shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of a Gross-Up Payment. Such notice shall be given as soon as practicable after you know of such claim and shall apprise the Company of the nature of the claim and the date on which the claim is requested to be paid. You agree not to pay the claim until the expiration of the thirty-day period
following the date on which you notify the Company, or such shorter period ending on the date the Taxes with respect to such claim are due (the “Notice Period”). If the Company notifies you in writing prior to the expiration of the Notice Period that it desires to contest the claim, you shall: (i) give the Company any information reasonably requested by the Company relating to the claim; (ii) take such action in connection with the claim as the Company may reasonably request, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company and reasonably acceptable to you; (iii) cooperate with the Company in good faith in contesting the claim; and (iv) permit the Company to participate in any proceedings relating to the claim. You shall permit the Company to control all proceedings related to the claim and, at its option, permit the Company to pursue or forgo any and all administrative appeals, proceedings, hearings, and conferences with the taxing authority in respect of such claim. If requested by the Company, you agree either to pay the tax claimed and sue for a refund or contest the claim in any permissible manner and to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts as the Company shall determine; provided, however, that, if the Company directs you to pay such claim and pursue a refund, the Company shall advance the amount of such payment to you on an after-tax and interest-free basis (the “Advance”). The Company's control of the contest related to the claim shall be limited to the issues related to the Gross-Up Payment and you shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or other taxing authority. If the Company does not notify you in writing prior to the end of the Notice Period of its desire to contest the claim, the Company shall pay you in cash an additional Gross-Up Payment in respect of the excess parachute payments that are the subject of the claim, and you agree to pay the amount of the Excise Tax that is the subject of the claim to the applicable taxing authority in accordance with applicable law.
(d) Repayments. If, after receipt by you of an Advance, you become entitled to a refund with respect to the claim to which such Advance relates, you shall pay the Company the amount of the refund (together with any interest paid or credited thereon after Taxes applicable thereto). If, after receipt by you of an Advance, a determination is made that you shall not be entitled to any refund with respect to the claim and the Company does not promptly notify you of its intent to contest the denial of refund, then the amount of the Advance shall not be required to be repaid by you and the amount thereof shall offset the amount of the additional Gross-Up Payment then owing to you.
(e) Further Assurances. The Company shall indemnify you and hold you harmless, on an after-tax basis, from any costs, expenses, penalties, fines, interest or other liabilities (“Losses”) incurred by you with respect to the exercise by the Company of any of its rights under this Section 3, including, without limitation, any Losses related to the Company's decision to contest a claim or any imputed income to you resulting from any Advance or action taken on your behalf by the Company hereunder. The Company shall pay all legal fees and expenses incurred under this Section 3, and shall promptly reimburse you for the reasonable expenses incurred by you in connection with any actions taken by the Company or required to be taken by you hereunder. The Company shall also pay all of the fees and expenses of the
Accounting Firm, including, without limitation, the fees and expenses related to the opinion referred to in Section 3(b).
4. Equity Incentive Awards.
(a) Options.
