Document:

WMGI Separation Pay Agreement EX.10.32

SEPARATION PAY AGREEMENT

By and Between

WRIGHT MEDICAL TECHNOLOGY, INC. 

and 

TIMOTHY E. DAVIS, JR.

APRIL 1, 2009

SEPARATION PAY AGREEMENT

TABLE OF CONTENTS

1.  Definitions.
2.  Sarbanes-Oxley Act of 2002.
3.  Notice and Date of Termination
4.  Termination from the Board and any Offices Held.
5.  Severance Benefits upon Involuntary Termination Prior to Change in Control
6.  Severance Benefits upon Involuntary Termination in Connection with and after a Change in Control.
7.  Severance Benefits upon Termination by the Company for Cause or by the Executive Other than for Good Reason.
8.  Severance Benefits upon Termination due to Death.
9.  Adjustments to Maximize After-Tax Benefits
10.  Nonexclusivity of Rights.
11.  Full Settlement; Mitigation.
12.  Representations.
13.  Executive’s Covenants.
14.  Specific Remedies for Executive Breach of the Covenants as outlined in Section 13.
15.  Potential Impact of Accounting Restatements on Certain Bonuses and Profits.
16.  Successors.
17.  Administration Prior to Change in Control.
18.  Delayed Commencement of Certain Payments.
19.  Miscellaneous.
EXHIBIT A
EXHIBIT B

Exhibit 10.32
CONFIDENTIAL 
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SEPARATION PAY AGREEMENT

THIS SEPARATION PAY AGREEMENT (“Agreement”), dated as of April 1, 2009 (the “Effective Date”) is made by and between WRIGHT MEDICAL TECHNOLOGY, INC., a corporation organized and existing under the laws of the State of Delaware with its principal place of business at 5677 Airline Road, Arlington, Tennessee 38002 (the “Company”), and TIMOTHY E. DAVIS, JR. (the “Executive”).
WHEREAS, the Company or its Affiliate (collectively referred to as the “Company”) employs the Executive as Vice President, Business Development and recognizes the Executive as performing key functions for the success of the Company; and 
WHEREAS, the Company has determined that it is in the best interests of the Company to institute formalized separation arrangements for certain executives of the Company, including Executive, in the event of a separation of employment; and 
WHEREAS, the Executive desires to enter into this Agreement with Company; 
NOW, THEREFORE, based on the foregoing, and for and in consideration of the mutual covenants contained in this Agreement, the Company and the Executive hereby agree as follows:

1.    Definitions.  For the purposes of this Agreement, the following capitalized terms have the meanings set forth below:
1.1.    “    Accounting Firm” has the meaning assigned thereto in Section 9.4 hereof.
1.2.        “Act” has the meaning assigned in Section 2 hereof.
1.3.        “Affiliate” has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act.
1.4.        “Buyer” has the meaning assigned thereto in Section 19.11 hereof.
1.5.        “Cause” means:
1.5.1.        Prior to a Change in Control, (i) the willful failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness) as determined by the Board, which failure amounts to an intentional and extended neglect of the Executive’s duties, (ii) continued, documented poor performance on the part of the Executive following a reasonably sufficient time for the Executive to improve, (iii) the determination by the Board, in its sole discretion, that the Executive has engaged or is about to engage in conduct materially injurious to the Company, (iv) the Executive’s conviction of or entering of a guilty or no contest plea to a felony charge (or equivalent thereof) in any jurisdiction; and/or (v) the Executive’s participation in activities proscribed in Sections 13.1, 13.3, and 13.4 or the material breach of any other covenants contained herein.  For the purposes of clause (i) of this definition, no act, or failure to act, on the Executive’s part shall be deemed to be “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interests of the Company.

	
			
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1.5.2.        From and after a Change in Control, (i) the willful failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness) as determined by the Board, which failure amounts to an intentional and extended neglect of the Executive’s duties, (ii) the determination by the Board, in its sole discretion, that the Executive has engaged or is about to engage in conduct materially injurious to the Company, (iii) the Executive’s conviction of or entering of a guilty or no contest plea to a felony charge (or equivalent thereof) in any jurisdiction; and/or (iv) the Executive’s participation in activities proscribed in Sections 13.1, 13.3, and 13.4 or the material breach of any other covenants contained herein.  For the purposes of clause (i) of this definition, no act, or failure to act, on the Executive’s part shall be deemed to “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interests of the Company.  Notwithstanding the foregoing, the Executive shall not be deemed terminated for Cause pursuant to clause (i) of this definition unless and until the Executive shall have been provided  with reasonable notice of and, if possible, a reasonable opportunity to cure the facts and circumstances claimed to provide a basis for termination of the Executive’s employment for Cause.
1.6.        “Change in Control” shall be deemed to have occurred on or after the Effective Date of any of the following: 
1.6.1.        the acquisition by any Person or Persons acting as a group of capital stock of Wright Medical Group, Inc. (“WMG”), a Delaware corporation and the sole stockholder of the Company, which when added to any capital stock of WMG already owned by the Person, constitutes more than fifty percent (50%) of either (i) the total fair market value of the outstanding capital stock of WMG, or (ii) the total voting power of the outstanding capital stock of WMG; provided, however, that a Change in Control will not be deemed to have occurred when any Person who owns more than fifty percent (50%) of the total fair market value or the total voting power of the outstanding capital stock of WMG as of the date of this Agreement acquires any additional capital stock of WMG; and provided further, that an increase in the percentage of the outstanding capital stock of WMG owned by a Person as a result of a transaction in which WMG acquires its capital stock in exchange for property will be treated as an acquisition of such capital stock by such Person; or
1.6.2.        the acquisition by a Person, in a single transaction or a series of transactions within a twelve (12) month period, of capital stock of WMG representing not less than thirty-five percent (35%) of the total voting power of the outstanding capital stock of WMG; or
1.6.3.        the acquisition by a Person, in a single transaction or a series of transactions within a twelve (12) month period, of consolidated assets of WMG which have a total gross fair market value of not less than forty percent (40%) of the total gross fair market value of all the consolidated assets of WMG immediately prior to such acquisition(s), in each case without regard to any liabilities associated with such assets; provided, however, that a Change in Control will not be deemed to have occurred when such assets are acquired by:
1.6.3.1.        an entity of which WMG owns, directly or indirectly, fifty percent (50%) or more of the total fair market value or the total voting power of the outstanding capital stock;
1.6.3.2.        a Person which owns, directly or indirectly, fifty percent (50%) or more of the total fair market value or the total voting power of the outstanding capital stock of WMG;
1.6.3.3.        an entity of which a Person described in clause ii above owns, directly or indirectly, fifty percent (50%) or more of the total fair market value or the total voting power of the outstanding capital stock;
1.6.3.4.        an entity which is controlled by the stockholders of WMG immediately after the transfer; or
1.6.3.5.        a stockholder of WMG in exchange for or with respect to 

	
			
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capital stock of WMG.
                   1.6.4  a majority of the members of the WMG Board of Directors (the “Board”) is replaced in any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or
                    1.6.5  there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation or partnership which results in a forty percent (40%) or more of the Company’s assets to be transferred under the control of a different legal entity.
1.7.        “Change in Control Date” means the date on which a Change in Control occurs.
1.8.        “Code” means the Internal Revenue Code of 1986, as amended and the Treasury Regulations promulgated thereunder, as in effect from time to time.
1.9.        “Compensation Committee” means the compensation committee of the Board.
1.10.        “Competitive Business” means the manufacturing, supplying, producing, selling, distributing, marketing or providing for sale of any product, device or instrument manufactured or sold by the Company or any of its Affiliates or subsidiaries, in each case as of the Executive’s Date of Termination.
1.11.        “Confidential Information” means non-public privileged or confidential information and trade secrets concerning the operations, future plans and methods of doing business.
1.12.        “Date of Termination” has the meaning assigned thereto in Section 3.2 hereof.
1.13.        “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the applicable rulings and regulations thereunder.
1.14.        “Excise Tax” has the meaning assigned thereto under Section 9 hereof.
1.15.    “Good Reason” means:
1.15.1.        Prior to a Change in Control, the occurrence of any of the following without the prior written consent of the Executive, unless such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination (as discussed in Section 3 hereof):
1.15.1.1.        the assignment to the Executive of any duties materially inconsistent with the range of duties and responsibilities appropriate to a senior executive within the Company, such range determined by reference to past, current and reasonable practices within the Company;
1.15.1.2.        a material reduction in the Executive’s overall standing and responsibilities within the Company, but not including a mere title change or a transfer within the Company which does not singly or together adversely affect the Executive’s overall status within the Company, provided however, that no change in reporting relationship resulting from organizational realignment due to the addition of a Chief Operating Officer or Chief Commercial Officer shall be included in this definition of Good Reason;
1.15.1.3.        a material reduction by the Company in the Executive’s aggregate annualized compensation and benefits opportunities, except for across-the-board reductions or modifications of benefit plans similarly affecting all similarly situated executives of comparable rank with the Executive;

	
			
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1.15.1.4.        the failure by the Company to pay to the Executive any portion of the Executive’s current compensation and benefits under any program with the Company within thirty (30) days of the date such compensation and/or benefits are due;
1.15.1.5.        any purported termination of the Executive’s employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3 hereof; for the purposes of this Agreement, no such purported termination shall be effective;
1.15.1.6.        the failure by the Company to obtain a satisfactory agreement from any successor of the Company requiring such successor to assume and agree to perform the Company’s obligations under this Agreement, as contemplated in Section 16.3 hereof;
1.15.1.7.        the failure of the Company to provide indemnification and D&O insurance protection as required in Section 10 of this Agreement; or
1.15.1.8.        the failure by the Company to comply with any material provision of this Agreement.
1.15.2.        From and after a Change in Control, the occurrence of any of the following without the prior written consent from the Executive, unless such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination (as discussed in Section 3 hereof):
1.15.2.1.        a material and adverse change in the Executive’s title, authority as an executive officer, duties, responsibilities or reporting lines as in effect immediately prior to the Change in Control;
1.15.2.2.        a material reduction in the Executive’s aggregate annualized compensation opportunities or the failure to continue in effect any material benefit plan in which the Executive participates immediately prior to the Change in Control, unless an equitable arrangement, agreeable to the Executive, has been made with respect to such plan as replacement or the reduction in participation levels of such replacement plans of the Executive;
1.15.2.3.        the relocation of the Executive’s principal place of employment immediately prior to the Change in Control Date (the “Principal Location”) to a location which is more than forty (40) miles from the Principal Location.
1.15.3.        Notwithstanding any of the foregoing, placing the Executive on a paid leave for up to ninety (90) days pending a determination of whether there is a basis to terminate the Executive for Cause shall not constitute a Good Reason.
1.15.4.        Following a Change in Control, the Executive’s determination that an act or failure to act constitutes Good Reason shall be presumed to be valid unless the Company can provide incontrovertible evidence to the contrary.  The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness.  The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.
1.16.        “Incentive Compensation Awards” means awards granted under Incentive Compensation Plans providing the Executive with the opportunity to earn, on a year-by-year or a multi-year basis, annual and long-term incentive compensation.
1.17.        “Incentive Compensation Plans” means annual incentive compensation plans and long-term incentive compensation plans of the Company, which long-term incentive compensation plans may include plans offering stock options, restricted stock and other forms of long-tern incentive compensation.

	
			
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1.18.        “Involuntary Termination” means (a) a termination of employment by the Company for other than for Cause or death, or (b) the Executive’s resignation of employment for Good Reason; provided, however, that except as provided in the last paragraph of Section 6 hereof, a termination of the Executive’s employment by reason of the Executive’s retirement on or after age [65] prior to a Change in Control shall not constitute an Involuntary Termination hereunder.  In addition, an Involuntary Termination that would cause an amount to be paid to an Executive which is non-qualified deferred compensation subject to Code Section 409A, shall also mean an Executive’s “separation from service” within the meaning of Section 409A of the Code.
1.19.        “Notice of Termination” has the meaning assigned thereto under Section 3.1 hereof.
1.20.        “Payment” has the meaning assigned thereto in Section 9 hereof.
1.21.        “Person” has the meaning set forth in Section 3(a)(9) of the Exchange Act, as modified and used in sections 13(d) and 14(d) thereof, except that the term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of the stock in the Company, or (v) a person or group as used in Rule 13d-1(b) promulgated under the Exchange Act.
1.22.        “Post-Change In Control Accrued Obligations” has the meaning assigned thereto in Section 6.3.1 hereof.
1.23.        “Post-Change In Control Severance Payment” has the meaning assigned thereto in Section 6 hereof.
1.24.        “Pre-Change In Control Accrued Obligations” has the meaning assigned thereto in Section 5.3.1 hereof.
1.25.        “Pre-Change In Control Severance Payment” has the meaning assigned thereto in Section 5 hereof.
1.26.        “Principal Location” has the meaning assigned thereto in Section 1.15.2.3 above.
1.27.        “Release” has the meaning assigned thereto in Section 13.5 hereof.
1.28.        “Total Number of Months” has the meaning assigned thereto in Sections 5 and 6 hereof. 
1.29.        “Underpayment” has the meaning assigned thereto in Section 9.2 hereof.
    
2.    Sarbanes-Oxley Act of 2002.  Notwithstanding anything herein to the contrary, if the Company determines, in its good faith judgment, that any provision of this Agreement is likely to be interpreted as a personal loan prohibited by the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder (the “Act”), then such provision shall be modified as necessary or appropriate so as to not violate the Act; and if this cannot be accomplished, then the Company shall use its best efforts to provide the Executive with similar, but lawful, substitute benefit(s) at a cost to the Company not to significantly exceed the amount the Company would have otherwise paid to provide such benefit(s) to the Executive.  In addition, if the Executive is required to forfeit or to make any repayment of any compensation or benefit(s) to the Company under the Act or any other law, such forfeiture or repayment shall not constitute Good Reason.
3.    Notice and Date of Termination

	
			
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3.1.        Any termination of the Executive’s employment by the Company or by the Executive shall be communicated by a written notice of termination to the other party (the “Notice of Termination”).  Where applicable, the Notice of Termination 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 the Executive’s employment under the provision so indicated.  Unless the Board determines otherwise, a Notice of Termination by the Executive alleging a termination for Good Reason must be made within 90 days of the initial instance, or the initial instance which should reasonably have been known to the Executive, of an act or failure to act that the Executive alleges to constitute Good Reason.
3.2.        The date of the Executive’s termination of employment with the Company (the “Date of Termination”) shall be determined as follows:
3.2.1.        If due to Company terminating the Executive’s employment, either with or without Cause, the Date of Termination shall be the date specified in the Notice of Termination; if for other than Cause, the Date of Termination shall not be less than two (2) weeks from the date such Notice of Termination is given, unless the Company elects to pay the Executive for that period in lieu of notice.
3.2.2.        If due to death, the Date of Termination is the date of death.
3.2.3.        If the basis of the Executive’s Involuntary Termination is the Executive’s resignation for Good Reason, the Date of Termination shall be determined by the Company, but shall not be less than two (2) weeks nor more than eight (8) weeks form the date such Notice of Termination is given.
4.    Termination from the Board and any Offices Held.   Upon termination of the Executive’s employment for any reason, the Executive agrees the Executive’s membership on the Board of the Company, the board of directors of any of the Company’s Affiliates, any committees of the Board, any committees of the board of directors of any of the Company’s Affiliates and any and all offices held, if applicable, shall be automatically terminated.  Executive hereby agrees to cooperate with the Company and execute any documents reasonably required by the Company or competent authorities to effect this provision.  
5.    Severance Benefits upon Involuntary Termination Prior to Change in Control.    Except as provided in Sections 6 and 17 hereof, in the event of the Involuntary Termination of the Executive prior to a Change in Control, the Company shall pay to the Executive the following Pre-Change in Control Severance Payment in the following amounts and manner:
5.1.        The total payment will be equal to the product of  () months (the “Total Number of Months”) multiplied by  times monthly base pay.  Provided, however, if the termination occurs within the first two (2) years of the Executive’s initial employment, the Total Number of Months shall not be less than eighteen (18) months.  
5.2.        The payment will be made as follows:  (i) half in a lump sum payable at or within a reasonable period of time after the Date of Termination and (ii) subject to receipt of an executed Release that has not been revoked, the remaining half in installments starting six (6) months after the Date of Termination with a final installment of all remaining amounts to be paid on or before March 15 of the calendar year following the year in which the Date of Termination occurred.  The amount of each installment payment described in clause (ii) of the preceding sentence will be determined by dividing half of the total payment by 50% of the Total Number of Months.  The final installment will be equal to the total payment reduced by all the amounts previously paid (i.e., the lump sum payment and the sum of all the installment payments previously paid).  Notwithstanding the provisions of clause (ii) to the contrary, if the 

	
			
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six month period would cause the installments to begin to be paid after the March 15 date described in the first sentence of this section 5.2, then no installments will be paid, and the second payment will be a lump sum equal to half the total payment and that payment will be paid on or before March 15 of the calendar year following the year in which the Date of Termination occurred.  The installment payments (or the second lump sum payment, if applicable) are specifically designated as consideration for execution of the Release required in Section 13 and compliance with Executive’s covenants outlined in Section 13.  All payments will have applicable taxes withheld and any installment payments will be paid at the same time as the normal Company payroll.
5.3.        In addition to the Pre-Change in Control Severance Payment, the Executive shall be entitled to receive the following additional benefits:
5.3.1.        Accrued Obligations.  The Company shall pay to the Executive a lump sum amount in cash equal to the sum of (i) the Executive’s annual base salary through the Date of Termination to the extent not theretofore paid, (ii) an amount equal to any annual cash Incentive Compensation Awards earned (based on the performance for the most recently completed incentive period, whether that period is the prior quarter or the prior calendar year), but not yet paid, (iii) an amount equal to the value of any accrued and/or untaken vacation, if any, and (iv) reimbursement for unreimbursed business expenses, if any, properly incurred by the Executive in the performance of the Executive’s duties  in accordance with the policies established from time to time by the Board. (The amounts specified in clauses (i), (ii), (iii) and (iv) shall be hereinafter referred to as the “Pre-Change in Control Accrued Obligations”.)
5.3.2.        Equity Based Compensation.  All equity-based Incentive Compensation Awards (including, without limitation, stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance share awards or other related awards) held by the Executive shall be governed by the terms of the applicable Incentive Compensation Plan and Incentive Compensation Award agreement, and this Agreement shall have no effect upon them.
5.3.3.         Welfare Benefits.  Subject to Section 11 herein, the Executive shall be eligible for health and dental coverage as provided for under COBRA, using the normal COBRA administration process of the Company.  The Company will pay all costs of these benefits for a period up to, but not exceeding 18 months. If the Executive accepts employment with another employer or otherwise is no longer eligible for COBRA coverage, these welfare benefits will cease to be provided.
5.3.4.        Outplacement Benefits.  The Executive shall receive outplacement assistance and services following the Date of Termination for a period of months equal to the Total Number of Months.  These services will be provided by a national firm whose primary business is outplacement assistance, selected by the Company.  Notwithstanding the above, if the Executive accepts employment with another employer, these outplacement benefits shall cease on the date of such acceptance.
5.3.5.        Financial Planning Services.  The Executive shall receive financial planning services for a period of months equal to the Total Number of Months following the Date of Termination, at a level consistent with the benefits provided under the Company’s financial planning program for the Executive as in effect immediately prior to the Date of Termination.
5.3.6.        Annual Physical.  The Executive may, within the 12 months following the Date of Termination, receive an annual physical consistent with the physical provided under the Company’s annual physical program as in effect immediately prior to the Date of Termination.
5.3.7.        General Insurance Benefit.  No later than March 15 of the calendar year following the year in which the Date of Termination occurred, provided Executive has made a request for the payment described in this section 5.3.7 on such form as the Company may require.  Executive shall 
receive a payment for use in continuation of insurance coverage, such payment to be equal to the annual 

	
			
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supplemental executive insurance benefit provided to the Executive prior to the Executive’s Date of Termination.  The Company will use its best efforts to make this payment at the time requested.
5.3.8.        Attorney’s Fees in Defense of This Agreement.  Notwithstanding any provision in this Agreement, the Company shall pay all reasonable attorneys’ fees and expenses for the Executive if the Executive must engage an attorney in order to enforce this Agreement following the Executive’s Date of Termination.  The Company will make payments on at least a quarterly basis based on billings presented by the Executive from his or her legal counsel.
6.    Severance Benefits upon Involuntary Termination in Connection with and after a Change in Control.  Notwithstanding the provisions of Section 5 above, in the event of the Involuntary Termination of the Executive within twelve (12) months following a Change in Control, the Company shall pay to the Executive the following Post-Change in Control Severance Payment in the following amounts and manner:
6.1.        The total payment will be equal to  () months multiplied by  times monthly base pay.  This is the Total Number of Months (the “Total Number of Months”).  Provided, however, if the termination occurs within the first two (2) years of the Executive’s initial employment, the Total Number of Months shall not be less than eighteen (18) months.   
6.2.        The payment will be made as follows:  (i) half in a lump sum payable at or within a reasonable period of time after the Date of Termination and (ii) subject to receipt of an executed Release that has not been revoked, the remaining half in installments starting six (6) months after the Date of Termination with a final installment of all remaining amounts to be paid on March 15 of the calendar year following the year in which the Date of Termination occurred.  The amount of each installment payment described in clause (ii) of the preceding sentence will be determined by dividing half of the total payment by 50% of the total Number of Months.  The final installment will be equal to the total payment reduced by all the amounts previously paid (i.e., the lump sum payment and the sum of all the installment payments previously paid).  Notwithstanding the provisions of clause (ii) to the contrary, if the six month period would cause the installments to begin to be paid after the March 15 date described in the first sentence of this section 6.2, then no installments will be paid, and the second payment will be a lump sum equal to half the total payment and that payment will be paid on March 15 of the calendar year following the year in which the Date of Termination occurred.  The installment payments (or the second lump sum payment, if applicable) are specifically designated as consideration for execution of the Release required in Section 13 and compliance with Executive’s covenants outlined in Section 13.  All payments will have applicable taxes withheld and any installment payments will be paid at the same time as the normal Company payroll.
6.3.        In addition to the Post-Change in Control Severance Payment, the Executive shall be entitled to receive the following additional benefits:
6.3.1.        Accrued Obligations.  The Company shall pay to the Executive a lump sum amount in cash equal to the sum of (i) the Executive’s annual base salary through the Date of Termination to the extent not theretofore paid, (ii) an amount equal to any annual cash Incentive Compensation Awards earned (based on most recently completed performance period, whether that period is the prior quarter or the prior year),  but not yet paid, (iii) an amount equal to the value of any accrued and/or untaken vacation, if any, (iv) reimbursement for unreimbursed business expenses, if any, properly incurred by the Executive in the performance of the Executive’s duties  in accordance with the policies established from time to time by the Board and (v) an annual incentive payment at target for the year that includes the Date of Termination, prorated. (The amounts specified in clauses (i), (ii), (iii), (iv) and (v) shall be hereinafter referred to as the “Post-Change in Control Accrued Obligations”.)
6.3.2.        Equity Based Compensation.  All equity-based Incentive Compensation Awards (including, without limitation, stock options, stock appreciation rights, restricted stock awards, 

	
			
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restricted stock units, performance share awards or other related awards) held by the Executive shall be governed by the terms of the applicable Incentive Compensation Plan and Incentive Compensation Award agreement, and this Agreement shall have no effect upon them.
6.3.3.        Welfare Benefits.  Subject to Section 11 herein, the Executive shall be eligible for health and dental coverage as provided for under COBRA, using the normal COBRA administration process of the Company.  The Company will pay all costs of these benefits for a period up to, but not exceeding 18 months. If the Executive accepts employment with another employer or otherwise is no longer eligible for COBRA coverage, these welfare benefits will cease to be provided.
6.3.4.        Outplacement Benefits.  The Executive shall receive outplacement assistance and services following the Date of Termination for a period of months equal to the Total Number of Months.  These services will be provided by a national firm whose primary business is outplacement assistance, selected by the Company.  Notwithstanding the above, if the Executive accepts employment with another employer, these outplacement benefits shall cease on the date of such acceptance.
6.3.5.        Financial Planning Services.  The Executive shall receive financial planning services for a period of months equal to the Total Number of Months following the Date of Termination, at a level consistent with the benefits provided under the Company’s financial planning program for the Executive as in effect immediately prior to the Date of Termination.
6.3.6.        Annual Physical.  The Executive shall, within the 12 months following the Date of Termination, receive an annual physical consistent with the physical provided under the Company’s annual physical program as in effect immediately prior to the Date of Termination.
6.3.7.        General Insurance Benefit.  No later than March 15 of the calendar year following the year in which the Date of Termination occurred, provided Executive has made a request for the payment described in this section 6.3.7 on such form as the Company may require.  Executive shall receive a payment for use in continuation of insurance coverage, such payment to be equal to the annual supplemental executive insurance benefit provided to the Executive prior to the Executive’s Date of Termination.  The Company will use its best efforts to make this payment at the time requested.
6.3.8.        Attorney’s Fees in Defense of This Agreement.  Notwithstanding any provision in this Agreement, the Company shall pay all reasonable attorneys’ fees and expenses for the Executive if the Executive must engage an attorney in order to enforce this Agreement following the Executive’s Date of Termination.  The Company will make payments on at least a quarterly basis based on billings presented by the Executive from his or her legal counsel.
6.4.        Notwithstanding anything contained herein, if a Change in Control occurs and the Executive’s employment with the Company is terminated by reason of Involuntary Termination prior to the Change in Control Date, and if such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change in Control or (ii) otherwise arose in connection with or in anticipation of the Change in Control, then the Executive shall, in lieu of the payments described in Section 5 hereof, be entitled to the Post-Change in Control Severance Payment and the additional benefits described in this Section 6 as if such Involuntary Termination had occurred within twelve (12) months following the Change in Control.
7.    Severance Benefits upon Termination by the Company for Cause or by the Executive Other than for Good Reason.  If the Executive’s employment shall be terminated for Cause, or if the Executive terminates employment other than for Good Reason, the Company will have no further obligations to the Executive under this Agreement other than the Pre-Change in Control Accrued Obligations and any amounts described in Section 10 hereof.
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terminate by reason of death, the Company shall pay the Executive’s estate the Post-Change in Control Accrued Obligations and any amounts or benefits described in Section 10 herein.  Such payments shall be in addition to those rights and benefits to which the Executive’s estate may be entitled under the relevant Company plans or programs.
9.    Adjustments to Maximize After-Tax Benefits.  In the event it shall be determined that any payment or distribution by the Company or its Affiliates to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 9 ( a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”) , then the Executive’s Unreduced and Reduced Net Benefit shall be determined and the Payments shall be adjusted in accordance with Section 9.3.
9.1.        For purposes of Section 9.3 the Unreduced Net Benefit shall equal the Payments, less the amount of federal, state and local income and other taxes (including the excise tax under Code Section 4999) payable with respect to such benefits.  For these purposes, the federal, state, local and any other taxes shall be calculated at the maximum marginal income tax rates applicable to such Executive for each year in which the foregoing amounts shall be paid.
9.2.    For purposes of Section 9.3 the Reduced Net Benefit shall equal the amount determined under Section 9.1 but with the Payments first reduced by an amount such that the present value of all payments and benefits that the Executive receives or is entitled to receive from the Company that would constitute “parachute payments” within the meaning of Code Section 280G does not exceed 2.99 times the Executive’s “base amount,” as defined under Code Section 280G.  For purposes of calculating the aggregate present value of such parachute payments, the requirements of Code Section 280G shall be followed.
9.3.        If the Executive’s Reduced Net Benefit is greater than the Unreduced Net Benefit, then the amount of the Payments set forth in Section 9.2 of the Agreement shall be reduced to an aggregate present value amount that does not subject any of the payments to taxation under Code Section 4999.
9.4.        A nationally recognized accounting firm as may be agreed upon by the Company and the Executive (the ”Accounting Firm”) shall perform any and all calculations required under Code Section 280G, and shall determine the Executive’s Reduced and Unreduced Net Benefit.  Such determination shall be made within ten (10) business days of the date of a change in control or ownership as determined under Code Section 280G and such determinations shall be binding on the Company and the Executive.  In the event a reduction of the Payments is to be made pursuant to Section 9.3, the Executive shall have discretion to determine which and how much of the Payments shall be eliminated or reduced consistent with the requirements of Section 9.3 and in accordance with the requirements of Code Section 409A.  The Executive shall make such decision no later than five (5) business days following the determination by the independent accounting firm of the Executive’s Reduced and Unreduced Net Benefit.
10.    Nonexclusivity of Rights.  Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any benefit plan, program, policy or practice provided by the Company and for which the Executive may qualify (except with respect to any benefit to which the Executive has waived the Executive’s rights in writing), including, without limitation, any and all indemnification arrangements in favor of the Executive (whether under agreements or under the Company’s charter documents or otherwise), and insurance policies covering the Executive, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any other contract or agreement entered into after the Effective Date with the Company.  Amounts which are vested benefits or which the 

	
			
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Executive is otherwise entitled to receive under any benefit, plan, policy, practice or program of, or any contract or agreement entered into with, the Company shall be payable in accordance with such benefit, plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.  At all times during the Executive’s employment with the Company and thereafter, the Company shall provide the Executive with indemnification and director and officer insurance insuring the Executive against insurable events which occur or have occurred while the Executive was a director or executive officer of the Company, on terms and conditions that are at least as generous as that then provided to any other current or former director or executive officer of the Company or any Affiliate.
11.    Full Settlement; Mitigation.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform the obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others, provided that nothing herein shall preclude the Company from separately pursuing recovery from the Executive based on any such claim.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts (including amounts for damages for breach) payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment.
12.    Representations.  The Executive hereby represents to the Company that the Executive is legally entitled to enter into this Agreement and to perform the Executive’s obligations hereunder, and that the Executive has the full right, power and authority, subject to no rights of any third parties, to grant to the Company the rights contemplated in Section 13.2.
13.    Executive’s Covenants.  The Executive hereby agrees to the following:
13.1.        Confidentiality.  The Executive recognizes and acknowledges that the Company’s and its predecessor’s Confidential Information is a valuable, special and unique asset of the Company’s businesses, access to and knowledge of which are essential to the performance of the Executive’s duties.  Confidential Information shall include trade secrets and includes information acquired by the Executive in the course and scope of the Executive’s job with the Company, including information acquired from third parties, that is (i) not generally known or disseminated outside the Company (such as nonpublic information), (ii) is designated or marked by the Company as “confidential” or reasonably should be considered confidential or proprietary, or (iii) the Company indicates through its policies, procedures or other instructions should not be disclosed to anyone outside the Company.  Without limiting the foregoing definitions, some examples of Confidential Information under this Agreement include (a) matters of a technical nature, such as scientific, trade or engineering secrets, “know-how”, formulae, secret processes, inventions, and research and development plans or projects regarding existing and prospective customers, and products and services, (b) information about costs, profits, markets, sales, customer lists, customer needs, customer preferences and customer purchasing histories, supplier lists, internal financial data, personnel evaluations, nonpublic information about medical devices or  products of the Company (including future plans about them), information and material provided by third parties in confidence and/or with nondisclosure restrictions, computer access passwords, and internal market studies or surveys and (c) any other information or matters of a similar nature.  The Executive shall not, during or after the Executive’s employment by the Company, in whole or in part, disclose such Confidential Information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, nor shall the Executive make use of any such property for the Executive’s own purposes or for the benefit of any person firm, corporation, association or other entity (except the Company) under any circumstances during or after the Executive’s employment by the Company; provided, however, that after the Executive’s employment by the Company ceases these restrictions shall not apply to such Confidential Information, if any, which are then in the public domain, and provided further that the Executive was not responsible, directly or indirectly, for such Confidential Information entering the public domain without the Company’s consent.

	
			
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13.2.        Inventions.   The Executive hereby sells, transfers and assigns to the Company or to any person or entity designated by the Company all of the right, title and interest of the Executive in and to all inventions, ideas, disclosures and improvements, whether patented or unpatented, and copyrightable material, made or conceived by the Executive, solely or jointly, during the Executive’s employment by the Company or any of its predecessors which relate to methods, apparatus, designs, products, processes or devices sold, leased, used or under consideration or development by the Company or any of its predecessors, or which otherwise relate to or pertain to the business, functions or operations of the Company or any of its predecessors, or which arise from the efforts of the Executive during the Executive’s employment with the Company or any of its predecessors.  The Executive shall, during and after the Executive’s employment with the Company, communicate promptly and disclose to the Company, in such form as the Company requests, all information, details and data pertaining to the aforementioned inventions, ideas, disclosures and improvements.  The Executive shall, during and after the Executive’s employment by the Company, execute and deliver to the Company such formal transfers and assignments and such other papers and documents as may be necessary by the Company to file and prosecute the patent applications and, as to copyrightable material, to obtain copyright thereof.  Any invention relating to the business of the Company and disclosed by the Executive within one (1) year after the Executive’s employment with the Company ceases shall be deemed to fall within the provisions of this Section 13.2 unless proved to have been first conceived and made following such termination or expiration.
13.3.        Non-Solicitation of Employees.   The Executive recognizes that the Executive possesses and will possess confidential information about other employees of the Company and its Affiliates relating to their education, experience, skills, abilities, compensation and benefits,   and inter-personal relationships with customer of the Company and its Affiliates.  The Executive recognizes that the information the Executive possesses and will possess about these other employees is not generally known, is of substantial value to the Company and its Affiliates in developing their business and in securing and retaining customers, and has been and will be acquired by the Executive because of the Executive’s business position with the Company and its Affiliates.  The Executive agrees that at all times during the Executive’s employment with the Company and for a period equal to the Executive’s Total Number of Months thereafter, the Executive will not, directly or indirectly, solicit or recruit any employee of the Company or its Affiliates for the purpose of being employed by the Executive or by any competitor of the Company or its Affiliates on whose behalf the Executive is acting as an agent, representative or employee and that the Executive will not convey such confidential information or trade secrets about other employees of the Company and its Affiliates to any other Person; provided, however, that it shall not constitute a solicitation or recruitment of employment in violation of paragraph to discuss employment opportunities with any employee of the Company or its Affiliates who has either first contacted the Executive or regarding whose employment the Executive has discussed with and received the written approval of the Company’s Vice President, Human Resources (or, if such position is vacant, the Company’s then Chief Executive Officer), prior to making such solicitation or recruitment.  In view of the nature of the Executive’s employment with the Company, the Executive likewise agrees that the Company and its Affiliates would be irreparably harmed by any such solicitation or recruitment in violation of the terms of this paragraph and that the Company and its Affiliates shall therefore be entitled to preliminary and/or permanent injunctive relief prohibiting the Executive from engaging in any activity or threatened activity in violation of the terms of this paragraph and to any other relief available to them.
13.4.        Non-Interference and Non-Competition.    During the Executive’s employment by the Company and its Affiliates and for a period of months equal to the Executive’s Total Number of Months after such employment ceases, the Executive shall not, directly or indirectly (whether as an officer, director, owner, employee, partner, or other participant), engage in any Competitive Business.  During this period, the Executive shall not solicit or entice any agent, supplier, consultant, distributor, contractor, lessors or lessees of the Company or its Affiliates to make any changes whatsoever in their current relationships with the Company or its Affiliates, and will not assist any other Person or entity to interfere with or dispute such relationship.  In view of the nature of the Executive’s employment with the Company, the Executive likewise agrees that the Company and its Affiliates would be irreparably harmed by any 

	
			
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such interference or competitive actions in violation of the terms of this paragraph and that the Company and its Affiliates shall therefore be entitled to preliminary and/or permanent injunctive relief prohibiting the Executive from engaging in any activity or threatened activity in violation of the terms of this paragraph and to any other relief available to them.
13.5.        Release.  The Executive and the Company agree that if the Executive’s employment is terminated for any reason other than Cause or death, the Executive and the Company will execute a release (the “Release”) of all claims substantially in the form attached hereto as Exhibit A within forty-five (45) days after the applicable Date of Termination and does not revoke such Release in accordance to the terms thereof.  The Executive recognizes and agrees that notwithstanding any other section to the contrary, this executed Release is required to be made prior to any payments of any kind under this Agreement.  Furthermore, in the event that the Executive is covered under the Age Discrimination in Employment Act (“ADEA”), the Executive agrees to execute the ADEA Release of all ADEA claims substantially in the form attached hereto as Exhibit B as provided in the ADEA Release.  
13.6.      Cooperation with Legal Matters.  Executive agrees to cooperate with the Company and its designated attorneys, representatives and agents in connection with any actual or threatened judicial, administrative or other legal or equitable proceeding in which the Company is or may become involved.  Upon reasonable notice, Executive agrees to meet with and provide to the Company or its designated attorneys, representatives or agents all information and knowledge Executive may have relating to the subject matter of any such proceeding.  The Company agrees to reimburse Executive for any reasonable costs incurred by Executive in providing such cooperation.
14.    Specific Remedies for Executive Breach of the Covenants as outlined in Section 13.    Without limiting the rights and remedies available to the Company, and notwithstanding the rights of the Executive set forth in Section 11, in the event of any breach by the Executive of the covenants set forth in Section 13 above, the following actions may be taken by the Company:
14.1.        if the Company believes a breach has occurred, it will deliver to the Executive a summary of the breach and a demand for explanation or agreement that such breach has occurred; the Executive shall have twenty (20) business days to respond in writing to this demand, whereupon the Company will make a decision as to whether the breach has, in fact, occurred; if it is determined such a breach has occurred, then
14.2.        the Company’s obligation to make any payment or provide any benefits to the Executive under Sections 5, 6, 7, 8 or 9 of this Agreement shall cease immediately and permanently, which shall not have any impact whatsoever on the Executive’s continuing obligations under Sections 14.3 and 14.4 below, except, however, the benefits outlined in Sections 5.3.8 and 6.3.8 will continue to be provided;
14.3.        the Executive shall repay to the Company, within ten (10) days after the Executive receives written demand therefore, an amount equal to ninety percent (90%) of the payments and benefits previously received by the Executive under this Agreement, plus interest on such amount at an annual rate equal to the lesser of ten percent (10%) or the maximum non-usurious rate under applicable law, from the dates on which such payments and benefits were received to the date of repayment to the Company; and
14.4.        the Executive shall pay to the Company from time to time, within ten (10) days after the Executive receives written demand therefore, an amount or amounts equal to the reasonable costs and expenses (including reasonable attorney’s fees and expenses) incurred by or on behalf of the Company in enforcing this Section 14 from and after the date on which the Company delivers notice of such breach to the Executive.

	
			
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14.5.        It is the desire and intent of the parties that the provisions of this Section 14 be enforced to the fullest extent permissible under the applicable laws in each jurisdiction in which enforcement is sought.  Accordingly, if any portion of this Section 14 is adjudicated to be invalid or unenforceable, this Section 14 shall be deemed curtailed, whether as to time or location, to the minimum extent required for its validity under applicable law and shall be binding and enforceable with respect to the Executive as so curtailed, such curtailment to apply only with respect to the operation of this Section 14 in the jurisdiction in which the such adjudication is made.  If a court in any jurisdiction, in adjudicating the validity of this Section 14, imposes any additional terms or restrictions with respect to this Section 14, this Section 14 shall be deemed amended to incorporate such additional terms or restrictions.
14.6.        Executive agrees and acknowledges that Executive has received good and adequate consideration for the covenants set forth in this Section 14 in the form of employment, compensation and benefits separate and independent of any payments or potential payments in this Agreement.
15.    Potential Impact of Accounting Restatements on Certain Bonuses and Profits.
15.1.        If the Company is required to prepare an accounting restatement of the Company’s consolidated balance sheet or statement of operations affecting any reporting period that transpires during the term of this Agreement due to the material noncompliance of the Company with any financial requirements under the securities laws, the Company’s Board will be entitled to determine whether the noncompliance was the result of knowing, intentional, fraudulent or illegal conduct by the Executive, and if it so determines, to require the Executive to reimburse the Company for (i) any bonus or other incentive-based or equity-based compensation received by the Executive from the Company during the term of this Agreement and (ii) any profits realized from the sale of securities of the issuer by the Executive during the term of this Agreement.  

15.2.        In making the determination whether to seek reimbursement from Executive, the Board will consider whether any bonus, incentive payment, equity award, or other compensation has been awarded or received by the Executive during the term of this Agreement and whether such compensation was based on any financial results or operating metrics that were satisfied as a result of the Executive’s knowing, intentional, fraudulent or illegal conduct.  The Board has sole discretion in determining whether the Executive’s conduct has or has not met the standard of such forfeiture.
15.3.        If the Board determines that a forfeiture is appropriate, such amounts shall be withheld from any future amounts owed to the Executive as compensation.  The Company may commence legal action to collect such sums as the Board determines is owed to the Company.
16.    Successors.
16.1.        Assignment by the Executive.   This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.
16.2.        Successors and Assigns of the Company.  This Agreement shall inure to the benefit of and be binding upon the Company, its successors and assigns.  The Company may not assign this Agreement to any person or entity (except for a successor described in Section 16.3 below) without the Executive’s written consent.
16.3.        Assumption.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that 

	
			
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the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.
17.    Administration Prior to Change in Control.  Prior to a Change in Control, the Compensation Committee shall have full and complete authority to construe and interpret the provisions of this Agreement, to determine an individual’s entitlement to benefits under this Agreement, to make in its sole and absolute discretion all determinations contemplated under this Agreement, to investigate and make factual determinations necessary or advisable to administer or implement this Agreement.  All determinations made under this Agreement by the Compensation Committee shall be final and binding on all interested persons.  Prior to a Change in Control, the Compensation Committee may delegate responsibilities for the operation and administration of this Agreement to one or more officers or employees of the Company.  The provisions of this Section 17 shall terminate and be of no further force and effect upon the occurrence of a Change in Control.
18.    Delayed Commencement of Certain Payments.   
18.1.        Any payment due hereunder that is not considered non-qualified deferred compensation and is not subject to Section 409A of the Code shall be paid no later than March 15 of the calendar year following the year in which the Executive’s Date of Termination occurs provided that all other payment conditions, including the execution of an unrevoked Release, are met.
18.2.        Not withstanding any provision of this Agreement to the contrary, the parties intend that this Agreement be construed and applied in a manner that will conform its provisions with the requirements for exemption from Section 409A of the Code or, if and to the extent payments are subject to Section 409A of the Code, to conform to Section 409A of the Code in order to avoid the imposition of additional federal income tax pursuant to Section 409A of the Code.  Without limiting the foregoing, in the event that the Executive is a “specified employee” within the contemplation of Section 409A(a)(2)(B) of the Code at the time that any payment that is subject to Section 409A of the Code is made on account of the Executive’s Involuntary Termination the Executive’s separation from service with the Company and its Affiliates within the contemplation of Section 409A(a)(2)(A)(i) of the Code), then in no event shall such payment or the commencement thereof be made before the six-month anniversary of the Date of Termination or, if earlier, the date of the Executive’s post-separation death.
18.3.        Any reimbursement payment made under this Agreement that is considered non-qualified deferred compensation within the meaning of Section 409A of the Code shall be made within the timing requirements of Treasury Regulation Section 1.409A-3(i)(iv).
19.    Miscellaneous.
19.1.        Governing Law.  This Agreement shall be governed by, construed under and enforced in accordance with the laws of the State of Tennessee without regard to conflicts-of-laws principles that would require the application of any other law.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.
19.2.        Amendment.  This Agreement may not be amended, modified, repealed, waived, extended or discharged except by an agreement in writing of both parties.  No person, other than pursuant to a resolution of the Board or the Compensation Committee, shall have authority on behalf of the Company to agree to amend, modify, repeal, waive, extend or discharge any provision of this Agreement or anything in reference thereto.
19.3.        Insurance.  The Company may, at its election and for its benefit, insure the Executive against accidental loss or death, and the Executive shall submit to such physical examination and supply such information to the insurance company as may be required in connection therewith; provided, 

	
			
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however, that no detailed information concerning the Executive’s physical examination will be provided to the Company or made available to the Company by the insurance company.
19.4.        Waiver of Breach.  A waiver by the Company or the Executive of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach of the other party.
19.5.      Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
19.6.        Notices.  Any notice required or permitted to be given under this Agreement shall be sufficient in writing and if sent by certified mail or express delivery to the Executive at his home address or to the Company at Wright Medical Technology, Inc., Attention:  General Counsel, 5677 Airline Road, Arlington, Tennessee 38002, or to such other address as either party shall notify the other.  Notices and communications shall be effective when actually received by the addressee.
19.7.        Taxes.  The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.
19.8.        Entire Agreement.  This Agreement contains the entire agreement of the parties with respect to the subject matter referred to herein and supersedes any and all prior negotiations, understandings, arrangements, letters of intent, and agreements, whether written or oral, between the Executive and the Company and its Affiliates, or any of its or their directors, officers, employees or representatives with respect thereto.
19.9.        No Right of Employment.  Nothing in this Agreement shall be construed as giving the Executive any right to be retained in the employ of the Company or shall interfere in any way with the right of the Company to terminate the Executive’s employment at any time, with or without Cause.
19.10.        Unfunded Obligation.  The obligations under this Agreement shall be unfunded.  Benefits payable under this Agreement shall be paid from the general assets of the Company.  The Company shall have no obligation to establish any fund or to set aside any assets to provide benefits under this Agreement.
19.11.        Termination.  Notwithstanding anything contained herein, this Agreement shall automatically terminate and be of no further force and effect and no benefits shall be payable hereunder in the event that the Company sells or otherwise disposes of any part of the business or assets of the Company (other than such a sale or disposition which is part of a transaction or series of transactions which would result in a Change in Control) and as a result of such transaction, the Executive is offered employment by the buyer of such business or assets (the “Buyer”) in an executive position with reasonably comparable status, compensation, benefits and separation agreement and which is consistent with the Executive’s experience and education, but the Executive declines to accept such offer.
19.12.        Term.  The term of this Agreement shall commence from the Effective Date and shall continue until the third (3rd) anniversary of the Effective Date; provided, however, that commencing on the second (2nd) anniversary of the Effective Date (and each anniversary of the Effective Date thereafter), the term of this Agreement shall automatically be extended for one (1) additional year, unless at least ninety (90) days prior to such date, the Company or the Executive shall give written notice to the other party that it or he, as the case may be, does not wish to so extend this Agreement.  Notwithstanding the foregoing, if the Company gives such written notice to the Executive less than one (1) year after a Change in Control, the term of this Agreement shall be automatically extended until the later of (a) the date that is one (1) year after the anniversary of the Effective Date that follows such written notice or (b) the second (2nd) anniversary of the Change in Control Date.

	
			
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IN WITNESS WHEREOF, the parties executed this Agreement as of the Effective Date.

AGREED AND ACCEPTED

	
		
	WRIGHT MEDICAL TECHNOLOGY, INC.
	TIMOTHY E. DAVIS, JR.

	

By: Jason P. Hood

Title: Vice President, General Counsel and Secretary
	/s/ Timothy E. Davis, Jr.

 

EXHIBIT A

MUTUAL RELEASE AGREEMENT

THIS MUTUAL RELEASE AGREEMENT (“Release”) dated as of        (the “Effective Date”) is made by and between WRIGHT MEDICAL TECHNOLOGY, INC., a corporation organized and existing under the laws of the State of Delaware with its principal place of business at 5677 Airline Road, Arlington, Tennessee 38002 (the “Company”), and TIMOTHY E. DAVIS, JR. (the “Executive”) as provided in the Separation Pay Agreement between the parties.  
The Executive, on behalf of the Executive and the Executive’s heirs, executors, administrators, successors and assigns, whether herein named or referred to or not, does hereby release, discharge, and acquit and by these presents does hereby release, acquit, and forever discharge Company, its successors and assigns, its agents, servants, and employees, its divisions, subdivisions, and affiliates (collectively, the “Company”), of and from any and all past, present, and future claims, counterclaims, demands, actions, causes of action, liabilities, damages, costs, loss of services, expenses, compensation, third-party actions, suits at law or in equity, of every nature and description, whether known or unknown, suspected or unsuspected, foreseen, or unforeseen, real or imaginary, actual or potential, and whether arising at law or in equity, under the common law, state or federal law, or any other law, or otherwise, including, but not limited to, any claims that have been or might have been asserted as a result of the establishment or termination of the employer-employee relationship, hereinafter collectively referred to as claims.  It is the intention of the parties hereto to effect a full and final general release of all such claims.  It is expressly understood and agreed that this release and agreement is intended to cover, and does cover, not only all now known injuries, losses, and damages, but any future injuries, losses, and damages not now known or anticipated, but which may later develop or be discovered, including all the effects and consequences thereof.
Executive does hereby declare that the Executive does understand, covenant, and agree that the Executive will not make any claims or demands, or file any legal proceedings against Company or join Company as a party to any claim, demand, or legal proceedings nor shall Executive proceed against any other party, person, firm, or corporation on the claims described above except as is necessary in order to enforce the terms and conditions of this Release and the Separation Pay Agreement.
THE FILING OF ANY CLAIM, DEMAND, OR ANY AND ALL OTHER LEGAL PROCEEDINGS, BY THE EXECUTIVE, AGAINST COMPANY, SHALL BE DEEMED TO BE A MATERIAL BREACH OF THE TERMS OF THIS AGREEMENT. SUCH BREACH SHALL, IMMEDIATELY, TERMINATE COMPANY'S DUTY TO PAY ANY FURTHER SUMS TO EXECUTIVE AND SHALL ALSO BIND EXECUTIVE TO REPAY ANY AND ALL SUMS PAID TO EXECUTIVE PURSUANT TO THE TERMS OF THIS AGREEMENT.  ADDITIONALLY, EXECUTIVE SHALL INDEMNIFY AND HOLD HARMLESS COMPANY FROM ANY AND ALL JUDGMENTS, COSTS, EXPENSES, OR ATTORNEY FEES WHATSOEVER ARISING ON ACCOUNT OF THE FILING OF ANY SUCH CLAIM, DEMAND, OR OTHER LEGAL PROCEEDINGS BY THE EXECUTIVE.
It is further understood and agreed that the acceptance of the consideration more fully described in the Separation Pay Agreement between the parties is in full accord and satisfaction of any obligations, claims, and/or disputes that Executive may have with Company.
And the parties hereby declare, understand, covenant, and agree that the terms of the Separation Pay Agreement, and the amount stated therein, are the sole consideration for this release and agreement and that the parties voluntarily accept said consideration for the purpose of making a full and final compromise, adjustment and settlement of all claims 

for injuries, losses, and damages resulting, or to result, from said claims.
Except for any claim under Sections 13, 14 or 15 of the Separation Pay Agreement, the Company, on behalf of itself, its agents, servants, and employees, its divisions, subdivisions, and affiliates (collectively, the “Company”), successors and assigns, whether herein named or referred to or not, does hereby release, discharge, and acquit and by these presents does hereby release, acquit, and forever discharge Executive, the Executive's heirs, executors, administrators, successors and assigns, of and from any and all past, present, and future claims, counterclaims, demands, actions, causes of action, liabilities, damages, costs, loss of services, expenses, compensation, third-party actions, suits at law or in equity, of every nature and description, whether known or unknown, suspected or unsuspected, foreseen, or unforeseen, real or imaginary, actual or potential, and whether arising at law or in equity, under the common law, state or federal law, or any other law, or otherwise, including, but not limited to, any claims that have been or might have been asserted as a result of the establishment or termination of the employer-employee relationship, hereinafter collectively referred to as claims.  It is the intention of the parties hereto to effect a full and final general release of all such claims.  It is expressly understood and agreed that this release and agreement is intended to cover, and does cover, not only all now known injuries, losses, and damages, but any future injuries, losses, and damages not now known or anticipated, but which may later develop or be discovered, including all the effects and consequences thereof.
Company does hereby declare that the Company does understand, covenant, and agree that the Company will not make any claims or demands, or file any legal proceedings against Executive or join Executive as a party to any claim, demand, or legal proceedings nor shall Company proceed against any other party, person, firm, or corporation on the claims described above except as is necessary in order to enforce the terms and conditions of this Release and the Separation Pay Agreement.
THE FILING OF ANY CLAIM, DEMAND, OR ANY AND ALL OTHER LEGAL PROCEEDINGS, BY THE COMPANY, AGAINST EXECUTIVE, SHALL BE DEEMED TO BE A MATERIAL BREACH OF THE TERMS OF THIS AGREEMENT. SUCH BREACH SHALL, IMMEDIATELY, TERMINATE EXECUTIVE'S DUTY TO COMPLY WITH THE NON-SOLICITATION, NON-INTERFERENCE, AND NON-COMPETITION COVENANTS OF THE SEPARATION PAY AGREEMENT BETWEEN THE PARTIES.  ADDITIONALLY, COMPANY SHALL INDEMNIFY AND HOLD HARMLESS EXECUTIVE FROM ANY AND ALL JUDGMENTS, COSTS, EXPENSES, OR ATTORNEY FEES WHATSOEVER ARISING ON ACCOUNT OF THE FILING OF ANY SUCH CLAIM, DEMAND, OR OTHER LEGAL PROCEEDINGS BY THE COMPANY.
It is further understood and agreed that the acceptance of the consideration more fully described in the Separation Pay Agreement between the parties is in full accord and satisfaction of any obligations, claims, and/or disputes that Company may have with Executive.
It is further understood and agreed that this is the full and complete understanding of the parties, that it is the integrated memorial of their agreement and that there are no other written or oral understandings, agreements, covenants, promises, or arrangements, directly or indirectly connected with this release, that are not incorporated herein. The terms of this release are contractual and are not mere recitals.
Notwithstanding the foregoing, nothing in this Release shall release either party from obligations resulting from the Separation Pay Agreement nor prohibit either party from seeking the enforcement of the Separation Pay Agreement.  
    

IN WITNESS WHEREOF, the parties executed this Release as of the Effective Date.

AGREED AND ACCEPTED

	
			
	WRIGHT MEDICAL TECHNOLOGY, INC.
	TIMOTHY E. DAVIS, JR. 

	 

	

By: _______________________________

Title: ______________________________
	

____________________________________ 

 

EXHIBIT B

ADEA RELEASE AND AGREEMENT

As a material inducement to Wright Medical Technology, Inc. (hereinafter referred to as “Wright” or “Employer”) to enter into this ADEA Release and Agreement (the “Release or “Agreement”) with TIMOTHY E. DAVIS, JR. (hereinafter referred to as "Executive") (for Executive, Executive’s heirs, executors, administrators and assigns), Executive hereby unconditionally releases and forever discharges Wright and each of the Wright’s stockholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, divisions, subsidiaries, affiliates and all persons acting by, through, under, or in concert with any of them from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorney's fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, including, but not limited to, rights, under the Age Discrimination in Employment Act of 1967, as amended from time to time, and other federal, state, or local laws prohibiting discrimination, any claims the employee may have with regard to Executive’s hiring, employment, or electing the re-employment program and termination of employment claims growing out of any legal restrictions on Wright's right to terminate its employees ("Claim" or Claims"), which  the Executive now has, owns or holds, or claims to have owned or held, or which the Executive at any time hereinafter may have owned or held or claimed to have owned or held against Wright.
To comply with the Older Workers Benefit Protection Act of 1990, as amended from time to time, the Release and Agreement has advised Executive of the legal requirements of this Act and fully incorporates the legal requirements by reference into this Agreement as follows:
		
	a.
	This Agreement is written in layman's terms, and the Executive understands and comprehends its terms; 

		
	b.
	Executive has been advised of Executive’s rights to consult an attorney to review the Agreement;

		
	c.
	Executive does not waive any rights or claims that may arise after the date the Release is executed;

		
	d.
	Executive is receiving consideration beyond anything of value to which he already is entitled;

		
	e.
	Executive has been given a reasonable period of time to consider this Agreement (45 days).

As consideration for this Release, Wright agrees to provide the items listed in the Separation Pay Agreement dated April 1, 2009.  The Executive enters into this Release with full knowledge of its contents and enters into this Agreement voluntarily.

AGREED AND ACCEPTED

	
		
	EXECUTIVE:

I acknowledge that I fully understand and agree that this Agreement may be pleaded by Wright Medical Technology, Inc. as a complete defense to any claim which hereafter may be asserted by me or a claim against Wright Medical Technology, Inc. for or on account of any matter or thing whatsoever arising out of the employment relationship or my termination from active employment.

_______________________________________
TIMOTHY E. DAVIS, JR.

	WRIGHT MEDICAL TECHNOLOGY, INC.

By: _____________________________________

Title: ____________________________________

	

SWORN TO AND SUBSCRIBED, before me, a Notary Public, in my presence this              day of                                   ___________, 2009

               __________________________________
               Notary Public 

County of  ______________________

State of  ________________________

My Commission Expires:  ___________________

	

SWORN TO AND SUBSCRIBED, before me, a Notary Public, in my presence this              day of                                   ___________, 2009

               __________________________________
               Notary Public 

Shelby County
Tennessee

My Commission Expires:  ___________________

NOTE:    EXECUTIVE IS HEREBY ADVISED OF HIS OR HER RIGHT TO RESCIND AND NULLIFY THIS AGREEMENT, WHICH RIGHT MUST BE EXERCISED, IF AT ALL, WITHIN SEVEN (7) DAYS OF THE DATE OF EXECUTIVE'S SIGNATURE.  EXECUTIVE MUST REVOKE RELEASE BY LETTER TO WRIGHT MEDICAL TECHNOLOGY, INC., ATTENTION: GENERAL COUNSEL, 5677 AIRLINE ROAD, ARLINGTON, TN 38002, WITHIN SEVEN (7) DAYS.  NO CONSIDERATION SHALL BE CONVEYED UNTIL SUCH TIME PERIOD HAS EXPIRED.ex10_1.htm

Exhibit 10.1

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AGREEMENT, effective April 18, 2012, is by and between HERSHA HOSPITALITY TRUST, a Maryland real estate investment trust (the “Company”), and HASU P. SHAH (the “Executive”).

WITNESSETH:

WHEREAS, the Company and the Executive entered into that certain Amended and Restated Employment Agreement effective as of June 28, 2007 (the “Prior Agreement”); and

WHEREAS, the Company and the Executive desire to amend the Prior Agreement in certain respects and restate the terms and conditions of the Prior Agreement as set forth herein;

NOW, THEREFORE, in consideration of the premises and mutual obligations hereinafter set forth the parties agree as follows:

1.             Employment.  The Company shall employ the Executive, and the Executive agrees to be so employed, as the Chairman of the Company’s Board of Trustees on the terms set forth herein.

2.             Term.  The term (the "Term") of the Executive’s employment hereunder shall commence on April 18, 2012 and unless earlier terminated in accordance with the terms hereof, shall expire on December 31, 2014, if written notice of non-renewal is given not later than July 1, 2014 by either party to the other party, and if no such notice is given, this Agreement shall continue for successive one year terms until terminated by either party by written notice to the other party on or prior to July 1 of the year of termination, with such termination to be effective as of December 31 of such year unless otherwise agreed by the parties.  Notwithstanding the foregoing, termination of this Agreement and any termination of the Executive’s employment hereunder shall be subject to the provisions of Sections 9, 10 and 11 of this Agreement.

3.             Services.  The Executive shall devote such amount of his time and attention to the Company’s affairs as are necessary to perform his duties to the Company as determined by the Company's Board of Trustees (the "Board").  The Executive shall have authority and responsibility with respect to the day-to-day operations and management of the Company and Hersha Hospitality Limited Partnership (the "Partnership"), for which the Company currently serves as sole general partner, and the Company’s other subsidiaries ("Subsidiary") (collectively "Affiliates"), as well as implementation of the long range growth strategy of the Company and Affiliates consistent with direction from the Board.

 

  

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4.             Compensation.

 

(a)           During the Term, the Company shall pay the Executive for his services an initial annual base salary of two hundred fifteen thousand dollars ($215,000.00), to be paid in accordance with the Company’s regular payroll procedures, subject to any increases approved by the Board.

(b)           In addition to the base salary, the Executive may be entitled to receive other incentive compensation, including but not limited to, grants of stock options or shares of stock of the Company, which awards shall be made (if at all) in consideration of and as an incentive for services performed solely for the Company, in accordance with rules and criteria established by the Compensation Committee and approved by the Board.  Such criteria may include, but not be limited to, the growth in the Company’s net income per share, funds from operations per share or other performance goals.

(c)           In consideration of this amendment and restatement of the Original Agreement, the Company has granted to the Executive a special one time retention Stock Award of 62,408 common shares, subject to the terms and conditions of the 2012 Equity Incentive Plan of the Company and the Stock Award Agreement attached hereto as Exhibit A.

5.             [Intentionally Left Blank]

6.             Expenses.  The Company recognizes that the Executive will have to incur certain out-of-pocket expenses, including but not limited to travel expenses, related to his services and the Company’s business and the Company agrees to reimburse the Executive for all reasonable expenses necessarily incurred by him in the performance of his duties upon presentation of a voucher or documentation indicating the amount and business purposes of any such expenses and in accordance with applicable rules of the Internal Revenue Service.  The documentation and expense reimbursement payment must be completed no later than March 15 of the calendar year following the calendar year in which the Executive incurred the expense.

7.             [Intentionally Left Blank]

8.             Definitions.  For purposes of this Agreement, the following terms shall have the following definitions:

(a)           "Voluntary Termination" means, subject to the provisions of Section 11 hereof, the Executive’s voluntary termination of his employment hereunder, which may be effected by the Executive giving the Board not less than sixty (60) days’ prior written notice of the Executive’s desire to terminate his employment as of a specified date or the Executive’s failure to provide the services described in Section 3 hereof for a period greater than four consecutive weeks by reason of the Executive’s voluntary refusal to perform such services as determined by the Board.  Notwithstanding the foregoing, if the Executive gives notice of Voluntary Termination and, prior to the expiration of the notice period, the Executive voluntarily refuses or fails to provide the services described in Section 3 hereof for a period greater than two consecutive weeks, the Company may, in its discretion, accelerate the Voluntary Termination effective the date on which the Executive so ceases to carry out his duties as determined by the Board.  For purposes of this Section 8, voluntary refusal to perform services shall not include taking vacation otherwise permitted, the Executive’s failure to perform services on account of his illness or the illness of a member of his immediate family (provided such illness is adequately substantiated at the reasonable request of the Company), or any other absence from service with the written consent of the Board.  A Voluntary Termination shall not include the Executive’s resignation with Good Reason following a Change in Control (as defined below).

  

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(b)           "Termination Without Cause" means the termination of the Executive’s employment by the Company for any reason other than Voluntary Termination or Termination With Cause.

(c)           "Termination With Cause" means the termination of the Executive’s employment by act of the Board for any of the following reasons:

(i)           the Executive’s conviction of a felony;

(ii)           the Executive’s theft, embezzlement, misappropriation of or intentional and malicious infliction of damage to the Company’s (or its subsidiaries’) property or business opportunity;

(iii)           the Executive’s breach of the covenants in Section 12 hereof;

(iv)           the Executive’s neglect of his duties or responsibilities hereunder or his failure or refusal to follow any written direction of the Board or any duly constituted committee thereof, which failure continues for a period of twenty (20) calendar days after Company provides Employee written notice (other than as a result of the Executive’s physical or mental inability to perform the services described in Section 3 above, which is addressed in Section 10 below); and

(v)           the Executive’s abuse of alcohol, drugs or other substances, or his engaging in other deviant personal activities in a manner that, in the reasonable judgment of the Board, adversely affects the reputation, goodwill or business position of the Company.

9.             Voluntary Termination; Termination With Cause.  If (i) the Executive shall cease being an employee of the Company on account of a Voluntary Termination or (ii) there shall be a Termination With Cause, the Executive shall not be entitled to any compensation after the effective date of such Voluntary Termination or Termination With Cause (except base salary and vacation accrued but unpaid on the effective date of such event).  In the event of a Voluntary Termination (which shall not include the Executive’s resignation for Good Reason following a Change in Control as defined by Paragraph 11), or Termination With Cause, the Executive shall continue to be subject to the covenants contained in Section 13 hereof.

  

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10.           Death or Disability; Termination Without Cause.

(a)           Upon (i) the death of the Executive, or (ii) Disability of the Executive, this Agreement shall terminate and the Company shall continue to pay the Executive or his heirs, devisees, executors, legatees or personal representatives, as appropriate, the payments of the Executive’s base salary then in effect through the month following the month in which such event occurs plus vacation accrued but unpaid as of the termination date.  For purposes hereof, a "Disability" means the Executive's becoming permanently disabled within the meaning of the Company's long-term disability plan then in effect for, or applicable to, the Executive.  If the Company does not provide any such benefit, then at the request of the Company, the Executive shall promptly make himself available for an examination by a physician selected by the Company who is board certified in a practice area selected by the Company, and to follow the recommendation of such physician regarding further examination and testing.  The issue to be presented to the physician for determination is whether the Executive suffers from a mental or physical incapacity which materially inhibits or prevents him from carrying out the duties of his full-time employment as described herein, and, if so, whether such condition is more likely than not to exist for a period in excess of one hundred twenty (120) days.  The Executive intends for the Company to be treated as Executive would be with respect to his rights regarding the use and disclosure of his individually identifiable health information or other medical records.  This release authority applies to any information governed by the Health Insurance Portability and Accountability Act of 1996 (a/k/a HIPAA), 42 USC 1320d and 45 CFR 160-164 and authorizes:  any physician, health-care professional, dentist, health plan, hospital, clinic, laboratory, pharmacy or other covered health-care provider, any insurance company and the Medical Information Bureau Inc. or other health-care clearinghouse that has provided treatment or services to him, or that has paid for or is seeking payment from him for such services, to give, disclose and release to the Company, without restriction, all of his individually identifiable health information and medical records regarding any past, present or future medical or mental health condition, including all information relating to the diagnosis and treatment of HIV/AIDS, sexually transmitted diseases, mental illness, and drug or alcohol abuse.

(b)           Upon a Termination Without Cause, the non-recruitment restrictions contained in Section 13(a)(iii) shall apply, except for a Termination Without Cause during the 12-month period following a Change of Control (as defined below).  In all other respects, upon a Termination Without Cause (other than a Termination Without Cause during the 12 month period following a Change of Control (as defined below), which shall be governed by the provisions of Section 11 below) this Agreement shall terminate and, subject to Section 12 below, the Company shall make a lump sum payment to the Executive within ten (10) days after Termination Without Cause equal to the sum of the Executive’s accrued but unused vacation to the date of termination plus the amount of the Executive’s monthly base salary then in effect for the lesser of 12 months or the number of months (including a fractional month) remaining in the Term.

  

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11.           Change of Control Compensation.

(a)           Compensation.  In the event of a Termination Without Cause or the Executive’s resignation for Good Reason (as defined below) in either case within 12 months following a Change of Control (as defined below), the Company shall (i) fully vest the Executive in any outstanding awards made pursuant to the 2012 Equity Incentive Plan or any other equity compensation plan adopted by the Company and stock options that have not previously vested or become exercisable shall be exercisable, in whole or in part, and shall remain exercisable in accordance with their terms notwithstanding the Executive’s termination or resignation, (ii) pay the Executive any base salary and expenses reimbursable to the Executive by the Company, each through the date of the termination, (iii) pay a benefit (the “Change of Control Bonus”) equal to two times the sum of (x) the Executive’s then annual base salary, (y) the maximum annual bonus that the Executive could earn for the year that includes the date of termination (or if no maximum bonus amount has been set, the Executive’s target bonus for that year) and (z) the fair market value (determined as of the date of the Change of Control (as defined below)) of the share award(s) or other equity-based awards (other than stock options, stock appreciation rights or awards that vest based on achievement of performance objectives measured over more than one year) received by the Executive for the year that includes the date of termination (or if no such share awards were made in that year, the next preceding year in which the Executive received such a share award) and (iv) pay the insurance benefit described below.  Subject to Section 12 below, the base salary, expense reimbursement and Change of Control Bonus shall be paid in one lump sum within ten days after the Executive’s Termination Without Cause of the Executive’s resignation for Good Reason.  In addition, the Company shall cause the Executive’s insurance benefits, as in effect immediately prior to the termination, to remain in effect for eighteen (18)  months following the date of termination upon the same terms, and at the same cost to the Executive, as in effect immediately prior to termination.  The Executive shall also receive payment of accrued but unused vacation to the date of termination.

(b)           A "Change of Control", for purposes of this Agreement, shall be deemed to have occurred if, at any time during the Term, any of the following events occurs:

(i)           any "person", as that term is used in Section 13(d) and Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), becomes, is discovered to be, or files a report on Schedule 13D or 14D-1 (or any successor schedule, form or report) disclosing that such person is, a beneficial owner (as defined in Rule 13d-3 under the Exchange Act or any successor rule or regulation), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of trustees;

(ii)           a change in the membership of the Board during any twenty-four month period such that individuals who, as of the election to the Board, without the recommendation or approval of the incumbent Board, constitute a majority of the numbers of trustees of Company then in office;

  

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(iii)           the Company is merged, consolidated or reorganized into or with another corporation or other legal person, or securities of the Company are exchanged for securities of another corporation or other legal person, and immediately after such merger, consolidation, reorganization or exchange less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction are held, directly or indirectly, in the aggregate by the holders of securities entitled to vote generally in the election of trustees of the Company immediately prior to such transaction;

(iv)           the Company in any transaction or series of related transactions, sells all or substantially all of its assets to any other corporation or other legal person and less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such sale or sales are held, directly or indirectly, in the aggregate by the holders of securities entitled to vote generally in the election of trustees of the Company immediately prior to such sale;

(v)           the Company and its affiliates shall sell or transfer of (in a single transaction or series of related transactions) to a non-affiliate business operations or assets that generated at least two-thirds of the consolidated revenues (determined on the basis of the Company’s four most recently completed fiscal quarters for which reports have been filed under the Exchange Act) of the Company and its subsidiaries immediately prior thereto;

(vi)           the Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K (or any successor, form or report or item therein) that a change in control of the Company has occurred; or

(vii)           any other transaction or series of related transactions occur that have substantially the effect of the transactions specified in any of the preceding clauses in this sentence.

(c)           Certain Transactions.  Notwithstanding the provisions of Section 11(b)(i) or 11(b)(vi) hereof, unless otherwise determined in a specific case by majority vote of the Board, a Change of Control shall not be deemed to have occurred for purposes of this Agreement solely because (i) the Company, (ii) an entity in which the Company directly or indirectly beneficially owns 20% or more of the voting securities or (iii) any Company-sponsored employee stock ownership plan, or any other employee benefit plan of the Company, either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or item thereon) under the Exchange Act, disclosing beneficial ownership by it of shares of stock of the Company, or because the Company reports that a Change of Control of the Company has or may have occurred or will or may occur in the future by reason of such beneficial ownership.

(d)           Good Reason.  "Good Reason," for purposes of this Agreement, shall be deemed to mean any of the following:

  

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(i)            a change in the Executive’s position or responsibilities (including reporting responsibilities) which materially diminishes the Executive’s position or responsibilities as in effect immediately prior to a Change of Control; the assignment to the Executive of any duties or responsibilities which are materially inconsistent with such position or responsibilities; or any removal of the Executive from or failure to reappoint or reelect the Executive to any of such positions, except in connection with a Termination with Cause as defined in Section 8(c) as a result of the Executive’s death or Disability, or by Voluntary Termination;

(ii)           a reduction (unless performance justified) in the Executive’s base salary bonus arrangement as in effect on the date hereof or as the same may be increased from time to time;

(iii)          the Company’s requiring the Executive to be based at any place other than a location within a thirty-mile radius of Harrisburg, Pennsylvania or Philadelphia, Pennsylvania, except for reasonably required travel on the Company’s business which is not materially greater than such travel requirements prior to the Change of Control;

(iv)          the failure by the Company to continue to provide the Executive with compensation and benefits provided for under this agreement or benefits substantially similar to those provided to the Executive under any of the employee benefit plans in which the Executive is or becomes a participant, or the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change of Control;

(v)           any material breach by the Company of any provision of this Agreement; or

(vi)          the failure of the Company to obtain a satisfactory agreement from any successor or assign of the Company to assume and agree to perform this Agreement.

The Executive’s resignation shall be for Good Reason only if the Executive gives the Company written notice of the ground(s) asserted as Good Reason within 90 days after the Executive knows of the ground(s) for Good Reason, the Company fails to remedy or cure those grounds within 30 days after its receipt of the Executive’s notice and the Executive resigns within 90 days after the end of the cure period.

                (e)           Limitation on Benefits.

 

(i)            The benefits that the Executive may be entitled to receive under this Agreement and other benefits that the Executive is entitled to receive under other plans, agreements and arrangements (which, together with the benefits provided under this Agreement, are referred to as “Payments”), may constitute Parachute Payments that are subject to Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (the “Code”).  As provided in this Section 11(e), the Parachute Payments will be reduced if, and only to the extent that, a reduction will allow the Executive to receive a greater Net After Tax Amount than the Executive would receive absent a reduction.

 

  

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(ii)           The Company will first determine the amount of any Parachute Payments that are payable to the Executive.  The Company also will determine the Net After Tax Amount attributable to the Executive’s total Parachute Payments.

 

(iii)          The Company will next determine the largest amount of Payments that may be made to the Executive without subjecting the Executive to tax under Code Section 4999 (the “Capped Payments”).  Thereafter, the Company will determine the Net After Tax Amount attributable to the Capped Payments.

 

(iv)          The Executive will receive the total Parachute Payments or the Capped Payments, whichever provides the Executive with the higher Net After Tax Amount.  If the Executive will receive the Capped Payments, the total Parachute Payments will be adjusted by first reducing the amount of any Payments that are not “deferred compensation” under Code Section 409A (first reducing any such noncash benefits under this Agreement or any other plan, agreement or arrangement (with the source of the reduction to be directed by the Executive) and then by reducing the amount of any such cash benefits under this Agreement or any other plan, agreement or arrangement (with the source of the reduction to be directed by the Executive) and thereafter by reducing Payments that are “deferred compensation” under Code Section 409A (any such noncash benefits under this Agreement or any other plan, agreement or arrangement (with the source of the reduction to be directed by the Executive).  The Company will notify the Executive if it determines that the Parachute Payments must be reduced to the Capped Payments and will send the Executive a copy of its detailed calculations supporting that determination.

 

(v)           As a result of the uncertainty in the application of Code Sections 280G and 4999 at the time that the Company makes its determinations under this Section 11(e), it is possible that amounts will have been paid or distributed to the Executive that should not have been paid or distributed under this Section 11(e), (“Overpayments”), or that additional amounts should be paid or distributed to the Executive under this Section 11(e), (“Underpayments”).  If the Company determines, based on either the assertion of a deficiency by the Internal Revenue Service against the Company or the Executive, which assertion the Company believes has a high probability of success or controlling precedent or substantial authority, that an Overpayment has been made, that Overpayment will be treated for all purposes as a loan ab initio that the Executive must repay to the Company together with interest at the applicable Federal rate under Code Section 7872; provided, however, that no loan will be deemed to have been made and no amount will be payable by the Executive to the Company unless, and then only to the extent that, the deemed loan and payment would either reduce the amount on which the Executive is subject to tax under Code Section 4999 or generate a refund of tax imposed under Code Section 4999.  If the Company determines, based upon controlling precedent or substantial authority, that an Underpayment has occurred, the Company will notify  the Executive of that determination and the amount of that Underpayment will be paid to the Executive promptly by the Company.

 

(vi)           In making any of the calculations or determinations contemplated by this Section 11(e), the Company may retain or rely on the advice of one or more professional service firms, including but not limited to its independent registered public accountant, its normal outside legal counsel, its normal outside compensation consultant, or other firms with experience in making calculations contemplated by Section 280G of the Code.  For purposes of this Section 11(e), the term “Net After Tax Amount” means the amount of any Parachute Payments or Capped Payments, as applicable, net of taxes imposed under Code Sections 1, 3101(b) and 4999 and any State or local income taxes applicable to the Executive on the date of payment.  The determination of the Net After Tax Amount shall be made using the highest combined effective rate imposed by the foregoing taxes on income of the same character as the Parachute Payments or Capped Payments, as applicable, in effect on the date of payment.  For purposes of this Section 11(e), the term “Parachute Payment” means a payment that is described in Code Section 280G(b)(2), determined in accordance with Code Section 280G and the regulations promulgated or proposed thereunder.

 

  

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12.           Section 409A.  The Company and the Executive intend that the benefits and payments provided under this Agreement shall be exempt from the requirements of Section 409A of the Code (“Section 409A”).  Notwithstanding that intent, if the Company determines that any benefit or payment under this Agreement is, or may reasonably be expected to be, subject to Section 409A, then such benefit shall be provided and such payment shall be made in a manner that complies with Section 409A and the regulations and other guidance issued pursuant to Section 409A.  By way of example, if the Company determines that the Change of Control Bonus is subject to Section 409A and that the Executive is a “specified employee” (as defined for purposes of Section 409A), then the payment of the Change of Control Bonus shall be postponed until the first day of the seventh month beginning after the Executive’s termination.  If any cash payment under this Agreement is postponed on account of the application of Section 409A, then such payment shall accrue interest at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code from the date that the payment is due under this Agreement (but for the requirements of Section 409A) until the date of payment.

13.           Protection of Confidential Information; Noncompetition; Non- Recruitment

(a)           Covenant.  The Executive acknowledges that his employment by the Company, will, throughout the Term, bring him into close contact with many confidential affairs of the company, including, without limitation, information about ownership of the company, customer lists, costs, profits, markets, sales, key personnel, pricing polices, and other business affairs and methods and other information not readily available to the public, and plans for future development.  The Executive further acknowledges that the services to be performed under this Agreement are of a special, unique, unusual, extraordinary and intellectual character.  In recognition of the foregoing, Executive covenants and agrees:

(i)           the Executive shall use all reasonable efforts to protect the confidential matters of the Company and shall keep secret all such confidential matters, including without limitation, the terms and provisions of this Agreement, and shall not intentionally disclose such matters to anyone outside of the Company except as required in the performance of his duties under this Agreement, either during or after the Term, except with the Company’s written consent, provided that:  (1) Executive shall have no such obligation to the extent such matters are or become publicly known other than as a result of Executive’s breach of his obligations hereunder; (2) Executive may, after giving prompt written notice to the Company to the extent practicable under the circumstances, disclose such matters to the extent required by applicable laws or governmental regulations or judicial or regulatory proceedings; and (3) Executive may disclose the terms and provisions of this Agreement to his spouse and legal tax and financial advisors, provided however, they agree in writing to be bound by the confidentiality provisions hereof;

  

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(ii)           The Executive shall deliver promptly to the Company on termination of his employment by the Company, or at any other time the Company may so request, at the Company’s expense, all memoranda, notes, records, reports and other documents, and all copies thereof relating to the Company’s business, which Executive obtained while employed, or otherwise serving or acting on behalf of, the Company and which he may then possess or have under his control other than publicly available documents or documents related to the terms and conditions of Executive employment;

(iii)           Non-Recruitment.  Independent of the foregoing provisions, the Executive agrees that, during the term of the Executive’s employment by the Company and for a period of twelve (12) months thereafter, except for a Termination without Cause during the 12 month period following a Change of Control or a Voluntary Termination for Good Reason during the 12 month period following a Change of Control, the Executive shall not, without the prior written consent of the Company:  (1) directly or indirectly, cause any person engaged or employed by the Company or any of its subsidiaries, (whether part-time or full-time and whether as an officer, employee, consultant, agent, adviser or independent contractor) to voluntarily leave the employ of or engagement with, the Company or any of its subsidiaries or to cease providing services to or on behalf of the Company or any of its subsidiaries, or (2) in any manner seek to engage or employ any such person (whether or not for compensation) as an officer, employee, consultant, agent, adviser or independent contractor for any person other than the Company or any of its subsidiaries (other than legal or accounting advisors).

(b)           Noncompete.  The Executive expressly covenants and agrees that he will not directly or indirectly, without the prior written consent of the Board, at any time while employed by the Company and for a period of one year (plus the length of time that Executive is in violation of this provision) following the date of that Executive’s employment terminates (1) for cause (as defined in Section 8(c)) or (2) for voluntary termination (as defined by Section 8(a)), other than for Good Reason following a Change in Control (as defined in Section 11), enter into or engage generally in direct or indirect competition with the Company either as an individual on his own or as a partner or joint venture, or as a director, officer, shareholder, employee or agent for any person nor render any services to any person or entity that competes with the Company or any Affiliate.  For the purposes of this Section, the Executive or any person or entity shall be deemed to "compete" with the Company or any Affiliate if the Executive personally engages, owns or provides services to any entity engaged in the ownership or management of hospitality units located in the United States east of the Mississippi including but not limited to Ashford Hospitality Trust, Inc., Chatham Lodging Trust, Chesapeake Lodging Trust, DiamondRock Hospitality, Felcor Lodging Trust Incorporated, LaSalle Hotel Properties, Pebblebrook Hotel Trust, RLJ Lodging Trust, Strategic Hotels & Resorts, Inc. and Sunstone Hotel Investors, Inc.

  

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(c)           Specific Remedy — Injunctive Relief.  The parties agree that the restrictions outlined in Sections 13(a) and (b) are reasonable and necessary protections of the immediate interests of the Company and that the Company would not have entered into this Agreement without receiving additional consideration offered by Executive and binding himself to these restrictions.  In addition to such other rights and remedies as the Company may have at equity or in law with respect to any breach of this Agreement, if Executive commits a breach of any of the provisions of Section 13(a) or 13(b), the Company shall have the right and remedy to have such provision specifically enforced by any Court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that monetary damages will not provide an adequate remedy to the Company.  In the event that, notwithstanding the foregoing, a restriction or any portion thereof, contained in Section 13(a) or 13(b) is deemed to be unreasonable by a court of competent jurisdiction, Executive and the Company agree that such restriction, or portion thereof, shall be modified in order to make it reasonable and shall be enforceable accordingly.

(d)           Consideration.  The parties acknowledge the requirement that the currently employed Executive be provided good and valuable consideration for providing the restrictions set forth in Section 13(a) and 13(b).  Therefore, in consideration of the foregoing restrictions, the Company shall allow the Executive to participate in the Company’s long-term incentive program, the terms of which shall be separately specified and incorporated by reference herein.

14.           Notices.  All notices or deliveries authorized or required pursuant to this Agreement shall be deemed to have been given when in writing and personally delivered or when deposited in the U.S. mail, certified, return receipt requested, postage prepaid, addressed to the parties at the following addresses or to such other addresses as either may designate in writing to the other party:

 

	 	To the Company:   	
Hersha Hospitality Trust

	 
	 	 	
44 Hersha Drive

	 
	 	 	
Harrisburg, PA 17102

	 
	 	 	 	 
	 	 	 	 
	 	To the Executive: 	
Hasu P. Shah

	 
	 	 	 	 
	 	 	 	 

 

15.           Entire Agreement; Prior Agreement.  This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and shall not be modified in any manner except by instrument in writing signed, by or on behalf of the parties hereto; provided, however, that any amendment or termination of the covenant of noncompetition in Section 13 must be approved by a majority of the trustees of the Company other than the Executive, if the Executive is then a trustee of the Company.  This Agreement shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto.  This Agreement supersedes and replaces the Prior Agreement and the Prior Agreement shall have no further force or effect after the execution of this Agreement.

  

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16.           Arbitration.

(a)           All disputes (except for those arising pursuant to Section 13) arising out of, relating to or concerning this Agreement, the breach of this Agreement, the employment of Executive, or the termination of Executive's employment shall be resolved pursuant to this Section 16.  This includes all claims or disputes whether arising in tort or contract and whether arising under statute or common law, including Title VII, the ADA, the ADEA, and all other federal and state employment statutes.  Any such dispute will be resolved by arbitration held in Harrisburg, Pennsylvania under the Employment Dispute rules of the American Arbitration Association.  This agreement to arbitrate will be specifically enforceable.

(b)           Executive and Company agree that he or it must file any arbitration with the AAA and serve on the other party within sixty (60) days after the date on which the dispute arose.

(c)           Subject to Section 16(e) below, each party shall bear its own expenses for arbitration, including attorney and witness fees and expenses, except that the fee of the arbitrator shall be borne solely by the Company.

(d)           Upon a request for arbitration under this Agreement, the parties shall confer with each other for the purpose of attempting to select a single independent arbitrator.  In the event that the parties cannot agree to the selection of an arbitrator within thirty days of notice of arbitration, three (3) individuals shall serve as arbitrators in accordance with the Expedited Procedures of the Commercial Arbitration Rules of the American Arbitration Association.  One of the arbitrators shall be selected by Executive and another by Company.  The two arbitrators so selected shall select a third arbitrator.  The finding of a majority of the arbitrators shall be final and binding on the parties.  The agreement to arbitrate shall be specifically enforceable under applicable law in any court having jurisdiction.

(e)           The prevailing party in connection with such arbitration shall be entitled to recover from the other party reasonable sums as attorney fees and expenses in connection with such action, except that the fee of the arbitrator shall be borne solely by the Company regardless of outcome.

(f)           The arbitrators will have no authority to extend, modify, or suspend any of the terms of this Agreement.  The arbitrators will make the award in writing and shall accompany it with an opinion discussing the evidence and setting forth the reasons for the award.  The decision of the arbitrators within the scope of the submission will be final and binding on both parties, and any right to judicial action on any matter subject to arbitration hereunder is waived (unless otherwise required by applicable law), except suit to enforce this arbitration award and any rights to vacate or modify the arbitration award in accordance with the Uniform Arbitration Act as enacted in Pennsylvania.  The arbitrators shall have authority to award all relief provided for by such relevant laws at issue.  If the rules of the AAA differ from those of this Section, the provisions of this Agreement will control.

17.           Applicable Law.  Except to the extent pre-empted by federal law, this Agreement shall be construed in accordance with the laws of the Commonwealth of Pennsylvania without regard to internal conflict of law principles and any litigation or legal action concerning this Agreement, not otherwise waived or subject to arbitration, shall be brought before a state or federal court of competent jurisdiction in Harrisburg, Pennsylvania.

  

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18           Assignment.  The Executive acknowledges that his services are unique and personal.  Accordingly, the Executive may not assign his rights or delegate his duties or obligations under this Agreement.  The Company’s rights and obligations under this Agreement shall inure to the benefit of and shall be binding upon the Company’s successors and assigns.

19.           Headings.  Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions.

[Signature page follows.]

 

  

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IN WITNESS WHEREOF, the Parties hereto have executed this Second Amended and Restated Employment Agreement as of the date first set forth above.

	 	
HERSHA HOSPITALITY TRUST

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 
	 	 	 	 
	 	EXECUTIVE	 
	 	 	 	 
	 	 	 	 
	 	 	 
	 	
Hasu P. Shah

	 

 

 

 

Second Amended and Restated Employment Agreement

 

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