Document:

ex10_56.htm

Exhibit 10.56

 

 

CHANGE IN CONTROL AGREEMENT

 

 

This Change in Control Agreement (the “Agreement”) is made and entered into as of _____________________ (date) by and between Hill-Rom Holdings, Inc., an Indiana corporation (the “Company”), and Gregory Pritchard (the “Executive”).

 

WHEREAS, the Company considers it essential to the best interests of its shareholders to foster continuous employment by the Company and its subsidiaries of their key management personnel;

 

WHEREAS, the Compensation and Management Development Committee (the “Committee”) of the Board of Directors (the “Board”) of the Company has recommended, and the Board has approved, that the Company enter into Change in Control Agreements with key executives of the Company and its subsidiaries who are from time to time designated by the management of the Company and approved by the Committee;

 

WHEREAS, the Committee and the Board believe that Executive has made valuable contributions to the productivity and profitability of the Company and consider it essential to the best interests of the Company and its shareholders that Executive be encouraged to remain with the Company; and

 

WHEREAS, the Board believes it is in the best interests of the Company and its shareholders that Executive continue in employment with the Company in the event of any proposed Change in Control (as defined below) and be in a position to provide assessment and advice to the Board regarding any proposed Change in Control without concern that Executive might be unduly distracted by the personal uncertainties and risks created by any proposed Change in Control;

 

NOW, THEREFORE, the Company and Executive agree as follows:

 

1.           Termination following a Change in Control.  After the occurrence of a Change in Control, the Company will provide or cause to be provided to Executive the rights and benefits described in Section 2 hereof in the event that Executive’s employment with the Company and its subsidiaries is terminated:

 

(a)           by the Company for any reason other than on account of Executive’s death, permanent disability, retirement or for Cause at any time prior to the second anniversary of a Change in Control; or

 

(b)           by Executive for Good Reason at any time prior to the second anniversary of a Change in Control.

 

  

  

  

 

Anything in this Agreement to the contrary notwithstanding, if a Change in Control occurs and if the Executive’s employment with the Company is terminated by the Company, without Cause, prior to the date on which the Change in Control occurs, and if it is reasonably demonstrated by Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with or anticipation of a Change in Control which subsequently occurs within 3 months of such termination, then for purposes of this Agreement a Change in Control shall be deemed to have occurred on the day immediately prior to such termination of employment and all references in Section 2 to payments within a specified period as allowed by law following “Termination” shall instead be references to the specified period following the Change in Control.

 

The rights and benefits described in Section 2 hereof shall be in lieu of any severance payments otherwise payable to Executive under any employment agreement or severance plan or program of the Company or any of its subsidiaries but shall not otherwise affect Executive’s rights to compensation or benefits under the Company’s compensation and benefit programs except to the extent expressly provided herein.

 

2.           Rights and Benefits Upon Termination.

 

In the event of the termination of Executive’s employment under any of the circumstances set forth in Section 1 hereof (“Termination”), the Company shall provide or cause to be provided to Executive the following rights and benefits, which, with the exception of Section 2(d) below, will only be provided if Executive executes and delivers to the Company within 45 days of the Termination a Release in the form attached hereto as Exhibit A (“Release”) and such Release has not been revoked:

 

(a)           a lump sum payment in cash in the amount of two times Executive’s Annual Base Salary (as defined below), payable (i) on the date which is six (6) months following Termination, if the Executive is a “specified employee” as defined in Code Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (“Code”) (Section 409A of the Code is hereunder referred to as “Section 409A”), and the Treasury Regulations promulgated thereunder, and such payment is not otherwise exempt from Section 409A, or (ii) on the next regularly scheduled payroll following the earlier to occur of fifteen (15) days from the Company's receipt of an executed Release or the expiration of sixty (60) days after Executive's Termination, if Executive is not such a “specified employee” (or such payment is exempt from Section 409A); provided, however, that if the before-stated sixty (60) day period ends in a calendar year following the calendar year in which the sixty (60) day period commenced,  then any benefits not subject to clause (i) shall only begin on the next regularly scheduled payroll following the expiration of sixty (60) days after the Executive’s Termination;

 

(b)           for the 24 months following Termination, continued health and medical insurance coverage for Executive and Executive’s dependents substantially comparable (with regard to both benefits and employee contributions) to the coverage provided by the Company immediately prior to the Change in Control for active employees of equivalent rank.  From the end of such 24-month period until Executive attains Social Security Retirement Age, Executive shall have the right to purchase (at COBRA rates applicable to such coverage) continued coverage for himself and Executive’s dependents under one or more plans maintained by the Company for its active employees, to the extent Executive would have been eligible to purchase continued coverage under the plan in effect immediately prior to the Change in Control had Executive’s employment terminated 24 months following Termination.  The payment of any health or medical claims for the health and medical coverage provided in this subparagraph (b) shall be made to the Executive as soon as administratively practicable after the Executive has provided 

 

  

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the appropriate claim documentation, but in no event shall the payment for any such health or medical claim be paid later than the last day of the calendar year following the calendar year in which the expense was incurred.  Notwithstanding anything herein to the contrary, to the extent required by Section 409A:  (1) the amount of medical claims eligible for reimbursement or to be provided as an in-kind benefit under this Agreement during a calendar year may not affect the medical claims eligible for reimbursement or to be provided as an in-kind benefit in any other calendar year, and (2) the right to reimbursement or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit;

 

(c)           continuation for Executive, for a period of two years following Termination, of the Executive Life Insurance Bonus Plan (if any) provided for Executive by the Company immediately prior to the Change in Control and the group term life insurance program provided for Executive immediately prior to the Change in Control.  The payment of any claim for death benefits provided under this subparagraph (c) shall be paid in accordance with the appropriate program, provided, however that if the death benefit is subject to Section 409A, then the death benefit shall be paid, as determined by the Company in its complete and absolute discretion, no later than the later to occur of (i) the last day of calendar year in which the death of the Executive occurs or (ii) the 90th day following the Executive's death;

 

(d)           a lump sum payment in cash, payable within 30 days after Termination, equal to all accrued and unpaid vacation, reimbursable business expenses, and similar miscellaneous benefits as of the Termination, provided, however, that to the extent that any such miscellaneous benefits are subject to Section 409A, such benefits shall be paid in one lump sum  (i) on the date which is six (6) months following Termination, if the Executive is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of Code and the Treasury Regulations promulgated thereunder, and such payment is not otherwise exempt from Section 409A, or (ii) on the next regularly scheduled payroll following the earlier to occur of fifteen (15) days from the Company's receipt of an executed Release or the expiration of sixty (60) days after Executive's Termination, if Executive is not such a “specified employee” (or such payment is exempt from Section 409A); provided, however, that if the before-stated sixty (60) day period ends in a calendar year following the calendar year in which the sixty (60) day period commenced,  then any benefits not subject to clause (i) shall only begin on the next regularly scheduled payroll following the expiration of sixty (60) days after the Executive’s Termination;

 

(e)           a lump sum payment in cash equal to the amount of Short-Term Incentive Compensation which would be payable to Executive if the Company performance targets (at 100%) with respect to such incentive compensation in effect for the entire year in which the Termination occurred had been achieved, payable (i) on the date which is six (6) months following Termination, if the Executive is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of Code and the Treasury Regulations promulgated thereunder, and such payment is not otherwise exempt from Section 409A, or (ii) on the next regularly scheduled payroll following the earlier to occur of fifteen (15) days from the Company's receipt of an executed Release or the expiration of sixty (60) days after Executive's Termination, if Executive is not such a “specified employee” (or such payment is exempt from Section 409A); provided, however, that if the before-stated sixty (60) day period ends in a calendar year following the calendar year in which the sixty (60) day period commenced,  then any benefits not subject to clause (i) shall only begin on the next regularly scheduled payroll following the expiration of sixty (60) days after the Executive’s Termination; and

 

  

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(f)           the number of shares of common stock of the Company that would be payable to Executive  under the Company’s Stock Incentive Plan provided, however, that if the Change in Control involves a merger, acquisition or other corporate restructuring where the Company is not the surviving entity (or survives as a wholly-owned subsidiary of another entity), then, in lieu of such shares of common stock of the Company, Executive shall be entitled to receive the consideration Executive would have received in such transaction in exchange for such shares of common stock; and provided, further, that the Company shall in any case have the right to substitute cash for such shares of common stock of the Company or merger consideration in an amount equal to the fair market value of such shares or merger consideration as determined by the Company including:

 

	
  

	
(i)

	
immediate vesting of all Bonus Stock Awards (as defined in the Company’s Stock Incentive Plan) awarded to Executive after the date of this Agreement;

 

	
  

	
(ii)

	
immediate vesting of all outstanding Stock Options awarded to Executive after the date of this Agreement under the Company’s Stock Incentive Plan;

 

	
  

	
(iii)

	
immediate vesting of all awards of Restricted Stock awarded to Executive after the date of this Agreement under any Stock Award Agreements (as defined in the Company’s Stock Incentive Plan) with Executive and Hill-Rom Holdings, Inc.;

 

	
  

	
(iv)

	
immediate vesting of all awards of Deferred Stock (as defined in the Company’s Stock Incentive Plan) (also known as Restricted Stock Units) awarded to Executive after the date of this Agreement under the Company’s Stock Incentive Plan; and

 

	
  

	
(v)

	
the exercise of any Stock Appreciation Right (as defined in the Company’s Stock Incentive Plan) within 60 days of a Change in Control as provided by section 7.2 of the Stock Incentive Plan.

 

Any awards of the type described in Paragraphs (i)-(v) above which were issued prior to the date of this Agreement shall be governed by the terms of the applicable award agreements at the time such awards were issued, and shall not be affected by this Agreement.  Shares or cash payments in lieu of shares shall be paid at the time specified in the Stock Incentive Plan and the applicable award, subject to Executive’s delivery of a Release to the extent required by this Agreement or the applicable awards within 45 days of Executive’s Termination which Release has not been revoked.

 

  

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3.           Payment Adjustment Due to Excise Tax.

 

In the event that any payment or benefits received or to be received by Executive pursuant to Section 2 of this Agreement would, but for this Section, be subject to the excise tax imposed by Internal Revenue Code Section 4999, or any comparable successor provisions, then such payment shall be either: (i) provided to Executive in full, or (ii) provided to Executive as to such lesser extent which would result in no portion of such payment being subject to such excise tax, whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, such excise tax, and any other applicable taxes, results in the receipt by Executive, on an after-tax basis, of the greatest amount of the payment, notwithstanding that all or some portion of such payment may be taxable under such excise tax.  To the extent such payment needs to be reduced pursuant to the preceding sentence, reductions shall come from taxable amounts before non-taxable amounts and beginning with the payments otherwise scheduled to occur soonest.  Executive agrees to cooperate fully with the Company to determine the benefits applicable under this Section.

 

4.           Section 409A Acknowledgement.

 

Executive acknowledges that Executive has been advised of Section 409A, which has significantly changed the taxation of nonqualified deferred compensation plans and arrangements.  Under proposed and final regulations as of the date of this Agreement, Executive has been advised that Executive’s severance pay and other Termination benefits may be treated by the Internal Revenue Service as “nonqualified deferred compensation,” subject to Section 409A.  In that event, several provisions in Section 409A may affect Executive’s receipt of severance compensation, including the timing thereof.  These include, but are not limited to, a provision which requires that distributions to “specified employees” (as defined in Section 409A) on account of separation from service may not be made earlier than six (6) months after the effective date of separation.  If applicable, failure to comply with Section 409A can lead to immediate taxation of such deferrals, with interest calculated at a penalty rate and a 20% excise tax.  As a result of the requirements imposed by the American Jobs Creation Act of 2004, Executive agrees that if Executive is a “specified employee” at the time of Executive’s termination and if severance payments are covered as “nonqualified deferred compensation” or otherwise not exempt, such severance pay (and other benefits to the extent applicable) due Executive at time of termination shall not be paid until a date at least six (6) months after Executive’s separation from service (as defined in Section 409A and applicable regulations). Executive acknowledges that, notwithstanding anything contained herein to the contrary, both Executive and the Company shall each be independently responsible for accessing their own risks and liabilities under Section 409A that may be associated with any payment made under the terms of this Agreement which may be deemed to trigger Section 409A.  To the extent applicable, Executive understands and agrees that Executive shall have the responsibility for, and Executive agrees to pay, any and all appropriate income tax or other tax obligations for which Executive  is individually responsible and/or related to receipt of any benefits provided in this Agreement.  Executive agrees to fully indemnify and hold the Company harmless for any taxes, penalties, interest, cost or attorneys’ fee assessed against or incurred by the Company on account of such benefits having been provided to Executive or based on any alleged failure to withhold taxes or satisfy any claimed obligation. Executive  understands and acknowledges that neither 

 

  

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the Company, nor any of its employees, attorneys, or other representatives has provided or will provide Executive with any legal or financial advice concerning taxes or any other matter, and that Executive has not relied on any such advice in deciding whether to enter into this Agreement.  Notwithstanding any provision of this Agreement to the contrary, to the extent that any payment under the terms of this Agreement would constitute an impermissible acceleration of payments under Section 409A or any regulations or Treasury guidance promulgated thereunder, such payments shall be made no earlier than at such times allowed under Section 409A.  If any provision of this Agreement (or of any award of compensation) would cause Executive to incur any additional tax or interest under Section 409A or any regulations or Treasury guidance promulgated thereunder, the Company or its successor may reform such provision; provided that it will (i) maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Section 409A and (ii) notify and consult with Executive regarding such amendments or modifications prior to the effective date of any such change.  Each amount to be paid or benefit to be provided to Executive pursuant to this Agreement shall be construed as a separate identified payment for purposes of Section 409A.  To the extent required to avoid an accelerated or additional tax under Section 409A, amounts reimbursable to Executive under this Agreement shall be paid to Executive on or before the last day of the year following the year in which the expense was incurred, the amount of expenses eligible for reimbursement (and in-kind benefits provided to Executive) during any one year may not effect amounts reimbursable or provided in any subsequent year, and the right to reimbursement (and in-kind benefits provided to Executive) under this Agreement shall not be subject to liquidation or exchange for another benefit.

 

5.           Definitions.  As used in this Agreement, the following terms shall have the following meanings:

 

	
  

	
(a)

	
“Annual Base Salary” means the annualized amount of Executive’s rate of base salary in effect immediately before the Change in Control or immediately before the date of Termination, whichever is greater.

 

	
  

	
(b)

	
“Cause” shall have the same meaning set forth in any current employment agreement that the Executive has with the Company or any of its subsidiaries.

 

(c)           A “Change in Control” shall be deemed to occur on:

 

	
  

	
(i)

	
the date that any person, corporation, partnership, syndicate, trust, estate or other group acting with a view to the acquisition, holding or disposition of securities of the Company, becomes, directly or indirectly, the beneficial owner, as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (“Beneficial Owner”), of securities of the Company representing 35% or more of the voting power of all securities of the Company having the right under ordinary circumstances to vote at an election of the Board (“Voting Securities”), other than by reason of (x) the acquisition of securities of the Company by the Company or any of its Subsidiaries or any employee benefit plan of the Company or any of its Subsidiaries, (y) the acquisition of Company securities directly from the Company, or (z) the acquisition of Company securities by one or more members of the Hillenbrand Family (which term shall mean descendants of John A. Hillenbrand and their spouses, trusts primarily for their benefit or entities controlled by them);

 

  

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(ii)

	
the consummation of a merger or consolidation of the Company with another corporation unless:

 

(A) the shareholders of the Company, immediately prior to the merger or consolidation, beneficially own, immediately after the merger or consolidation, shares entitling such shareholders to 50% or more of the voting power of all securities of the corporation surviving the merger or consolidation having the right under ordinary circumstances to vote at an election of directors in substantially the same proportions as their ownership, immediately prior to such merger or consolidation, of Voting Securities of the Company;

 

(B) no person, corporation, partnership, syndicate, trust, estate or other group beneficially owns, directly or indirectly, 35% or more of the voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation except to the extent that such ownership existed prior to such merger or consolidation; and

 

(C) the members of the Company’s Board, immediately prior to the merger or consolidation, constitute, immediately after the merger or consolidation, a majority of the board of directors of the corporation issuing cash or securities in the merger;

 

	
  

	
(iii)

	
the date on which a majority of the members of the Board consist of persons other than Current Directors (which term shall mean any member of the Board on the date hereof and any member whose nomination or election has been approved by a majority of Current Directors then on the Board);

 

	
  

	
(iv)

	
the consummation of a sale or other disposition of all or substantially all of the assets of the Company; or

 

	
  

	
(v)

	
the date of approval by the shareholders of the Company of a plan of complete liquidation of the Company.

 

Notwithstanding the foregoing, for benefits payable upon or in relation to a Change in Control which are not otherwise exempt from Section 409A, any of the events listed above must be a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company as described in Section 409A and any regulations or other applicable guidance promulgated thereunder.

 

  

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(d)

	
“Executive Life Insurance Bonus Plan” shall mean a program under which the Company pays the annual premium for a whole life insurance policy  on the life of Executive.

	
  

	
(e)

	
“Good Reason” means the occurrence, without Executive’s consent, of any of the following acts by the Company, or failures by the Company to act (each a “Good Reason Condition”), provided Executive provides written notice to the Company of the occurrence of the Good Reason Condition within ten (10) business days after the Executive has knowledge of it; the Company fails to notify Executive of the Company’s intended method of correction within thirty (30) business days after the Company receives Executive’s notice, or the Company fails to correct the Good Reason Condition within thirty (30) business days after such Executive notice; and the Executive resigns within ten (10) business days after the end of the 30-business-day period after Executive’s notice:

	
  

	
(i)

	
a material diminution in Executive’s duties;

	
  

	
(ii)

	
the failure to elect or reelect Executive as Vice President or other officer of the Company (unless such failure is related in any way to the Company's decision to terminate Executive for cause);

	
  

	
(iii)

	
the failure of the Company to continue to provide Executive with office space, related facilities and support personnel (including, but not limited to, administrative and secretarial assistance) within the Company's principal executive offices commensurate with Executive’s responsibilities to, and position within, the Company;

	
  

	
(iv)

	
a material reduction by the Company in the amount of Executive’s base salary or the discontinuation or material reduction by the Company of Executive’s participation at the same level of eligibility as compared to other peer employees in any incentive compensation, additional compensation, benefits, policies or perquisites subject to Executive understanding that such reduction(s) shall be permissible if the change applies in a similar way to other peer level employees;

	
  

	
(v)

	
the relocation of the Company's principal executive offices or Executive’s place of work to a location requiring a change of more than fifty (50) miles in Executive’s daily commute; or

	
  

	
(vi)

	
any other action or inaction by the Company that constitutes a material breach of this Agreement.

 

  

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(f)

	
“Section 409A” means Section 409A of the Internal Revenue Code.

 

	
  

	
(g)

	
“Short-Term Incentive Compensation” means the Incentive Compensation payable under the Short-Term Incentive Compensation Program, or any successor or other short-term incentive plan or program.

 

	
  

	
(h)

	
“Stock Incentive Plan” shall mean the Hill-Rom Holdings, Inc. Stock Incentive Plan maintained by the Company, as amended from time to time.

 

6.           Notice.

 

(a)           Any discharge or termination of Executive’s employment pursuant to Section 1 shall be communicated in a written notice to the other party hereto setting forth the effective date of such discharge or termination (which date shall not be more than 30 days after the date such notice is delivered) and, in the case of a discharge for Cause or a termination for Good Reason the basis for such discharge or termination.

 

(b)           For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to 1069 Highway 46 East, Batesville, Indiana 47006 provided that all notices to the Company shall be directed to the attention of the Board with a copy to Senior Vice President and Chief Legal Officer, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

 

7.           No Duty to Mitigate.  Executive is not required to seek other employment or otherwise mitigate the amount of any payments to be made by the Company pursuant to this Agreement.

 

8.           Assignment.

 

(a)           This Agreement is personal to Executive and shall not be assignable by Executive other than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

 

(b)           This Agreement shall inure to the benefit of and be binding upon the Company and its successors.  The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise, to expressly assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform it if no such succession had taken place.

 

9.           Arbitration.  Any dispute or controversy arising under, related to or in connection with this Agreement shall be settled exclusively by arbitration before a single arbitrator in Cincinnati, Ohio, in accordance with the Commercial Arbitration Rules of the American Arbitration Association.  The arbitrator’s award shall be final and binding on all parties to this Agreement.  Judgment may be entered on an arbitrator’s award in any court having competent jurisdiction.

 

  

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10.         Integration.  This Agreement supersedes and replaces any prior oral or written agreements or understandings in respect of the matters addressed hereby.

 

11.       Amendment.  This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

 

12.         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.

 

13.         Withholding.  The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

14.         Governing Law.  This Agreement shall be governed by and construed in accordance with the law of the State of Indiana without reference to principles of conflict of laws.

 

15.         Attorney’s Fees.  If any legal proceeding (whether in arbitration, at trial or on appeal) is brought under or in connection with this Agreement, each party shall pay its own expenses, including attorneys’ fees.

 

 

 

 

  

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16.         Term of Agreement. The term of this Agreement shall be one (1) year commencing on the date hereof; provided however, that this Agreement shall be automatically renewed for successive one-year terms commencing on each anniversary of the date of this Agreement unless the Company shall have given notice of non-renewal to Executive at least 30 days prior to the scheduled termination date; and further provided that notwithstanding the foregoing, this Agreement shall not terminate (i) within three years after a Change in Control or (ii) during any period of time when a transaction which would result in a Change in Control is pending or under consideration by the Board. The termination of this Agreement shall not adversely affect any rights to which Executive has become entitled prior to such termination.  In addition, Section 4(a) shall survive the termination of this Agreement.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the day and year first above set forth.

 

	 	HILL-ROM HOLDINGS, INC.	 
	 	 	 
	 	 	 	 
	
 

	
By

	 	 
	 	Title       	
President and Chief Executive Officer

	 
	 	 	 	 
	 	 	 	 
	 	 	 
	 	Executive	 

 

 

 

 

 

 

 

  

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CAUTION: READ BEFORE SIGNING

 

Exhibit A

 

SAMPLE SEPARATION AND RELEASE AGREEMENT

 

 

THIS SEPARATION and RELEASE AGREEMENT (“Agreement”) is entered into by and between [INSERT EXECUTIVE’S NAME] (“Executive”) and Hill-Rom Holdings, Inc. (together with its subsidiaries and affiliates, the “Company”).  To wit, the Parties agree as follows:

	
1.     

	
Executive and the Company have entered into an [Amended] Change in Control Agreement, attached hereto as Exhibit [A], effective as of [INSERT DATE] (the “Change in Control Agreement”).

 

	
2.     

	
Executive’s employment by the Company has been terminated following a Change in Control as described in the Change in Control Agreement.  Executive shall terminate employment effective [INSERT DATE OF TERMINATION] (Executive’s “Effective Termination Date”).  Except as specifically provided by this Agreement, the Change in Control Agreement, or any other non-employment agreement that may exist between the Company and Executive, Executive agrees that the Company shall have no other obligations or liabilities to Executive following Executive’s Effective Termination Date and that Executive’s receipt of the benefits as outlined in the Change in Control Agreement shall constitute a complete settlement, satisfaction and waiver of any and all claims Executive may have against the Company.

 

	
3.     

	
Executive acknowledges that Executive has been advised of the American Jobs Creation Act of 2004, which added Section 409A (“Section 409A”) to the Internal Revenue Code, and significantly changed the taxation of nonqualified deferred compensation plans and arrangements.  Under proposed and final regulations as of the date of this Agreement, Executive has been advised that if Executive is a “key Executive” covered by Section 409A or any similar law, Executive’s severance pay may be treated by the Internal Revenue Service as providing “nonqualified deferred compensation,” and therefore subject to Section 409A.  In that event, several provisions in Section 409A may affect Executive’s receipt of severance compensation.  These include, but are not limited to, a provision which requires that distributions to “specified employees” of public companies on account of separation from service may not be made earlier than six (6) months after the effective date of such separation.  If applicable, failure to comply with Section 409A can lead to immediate taxation of deferrals, with interest calculated at a penalty rate and a 20% penalty.  As a result of the requirements imposed by the American Jobs Creation Act of 2004, Executive agrees if Executive is a “specified employee” at the time of Executive’s termination of employment and if severance payments are covered as “non-qualified deferred compensation” or otherwise not exempt, the severance pay benefits shall not be paid until a date at least six (6) months after Executive’s Effective Termination Date from Company, as more fully explained in the Change in Control Agreement.

 

  

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4.     

	
In consideration of the promises contained in this Agreement and contingent upon Executive’s compliance with such promises, the Company agrees to provide Executive the benefits outlined in the Change in Control Agreement (the “Severance Benefits”).

 

	
5.     

	
The Company further agrees to provide Executive with limited out-placement counseling with a company of its choice provided that Executive participates in such counseling immediately following termination of employment.  Notwithstanding anything in this Section 5 to the contrary, the out-placement counseling shall not be provided after the last day of the second calendar year following the calendar year in which termination of employment occurs.

 

	
6.     

	
In exchange for the foregoing Severance Benefits, [INSERT EMPLOYEE FULL NAME] on behalf of himself/herself, Executive’s heirs, representatives, agents and assigns hereby RELEASES, INDEMNIFIES, HOLDS HARMLESS, and FOREVER DISCHARGES (i) Hill-Rom Holdings, Inc., (ii) its subsidiary or affiliated entities, (iii) all of their present or former directors, officers, Executives, shareholders, and agents, as well as, (iv) all predecessors, successors and assigns thereof from any and all actions, charges, claims, demands, damages or liabilities of any kind or character whatsoever, known or unknown, which Executive now has or may have had through the effective date of this Agreement.

 

	
7.     

	
Without limiting the generality of the foregoing release, it shall include:  (i) all claims or potential claims arising under any federal, state or local laws relating to the Parties’ employment relationship, including any claims Executive may have under the Civil Rights Acts of 1866 and 1964, as amended, 42 U.S.C. §§ 1981 and 2000(e) et seq.; the Civil Rights Act of 1991; the Age Discrimination in Employment Act, as amended, 29 U.S.C. §§ 621 et seq.; the Americans with Disabilities Act of 1990, as amended, 42 U.S.C §§ 12,101 et seq.; the Fair Labor Standards Act 29 U.S.C. §§ 201 et seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101, et seq.; the Sarbanes-Oxley Act of 2002, specifically including the Corporate and Criminal Fraud Accountability Act, 18 U.S.C. §1514,A et seq.; and any other federal, state or local law governing the Parties’ employment relationship; (ii) any claims on account of, arising out of or in any way connected with Executive’s employment with the Company or leaving of that employment; (iii) any claims alleged or which could have been alleged in any charge or complaint against the Company; (iv) any claims relating to the conduct of any Executive, officer, director, agent or other representative of the Company; (v) any claims of discrimination, harassment or retaliation on any basis; (vi) any claims arising from any legal restrictions on an employer’s right to separate its Executives; (vii) any claims for personal injury, compensatory or punitive damages or other forms of relief; and (viii) all other causes of action sounding in contract, tort or other common law basis, including (a) the breach of any alleged oral or written contract, (b) negligent or intentional misrepresentations, (c) wrongful discharge, (d) just cause dismissal, (e) defamation, (f) interference with contract or business relationship or (g) negligent or intentional infliction of emotional distress.

 

  

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8.     

	
Executive further agrees and covenants not to sue the Company or any entity or individual subject to the foregoing General Release with respect to any claims, demands, liabilities or obligations release by this Agreement provided, however, that nothing contained in this Agreement shall:

 

	
(a)     

	
prevent Executive from filing an administrative charge with the Equal Employment Opportunity Commission or any other federal state or local agency; or

 

	
(b)     

	
prevent employee from challenging, under the Older Worker’s Benefit Protection Act (29 U.S.C. § 626), the knowing and voluntary nature of Executive’s release of any age claims in this Agreement in court or before the Equal Employment Opportunity Commission.  [INCLUDE THIS SUBPARAGRAPH (b) IF EMPLOYEE IS AGE 40 OR OLDER]

 

	
9.     

	
Notwithstanding Executive’s right to file an administrative charge with the EEOC or any other federal, state, or local agency, Executive agrees that with Executive’s release of claims in this Agreement, Executive has waived any right Executive may have to recover monetary or other personal relief in any proceeding based in whole or in part on claims released by Executive in this Agreement.  For example, Executive waives any right to monetary damages or reinstatement if an administrative charge is brought against the Company whether by Executive, the EEOC, or any other person or entity, including but not limited to any federal, state, or local agency.  Further, with Executive’s release of claims in this Agreement, Executive specifically assigns to the Company Executive’s right to any recovery arising from any such proceeding.

 

	
10.     

	
[INCLUDE THIS LANGUAGE IF THE EMPLOYEE IS AGE 40 OR OLDER]  The Parties acknowledge that it is their mutual and specific intent that the above waiver fully complies with the requirements of the Older Workers Benefit Protection Act (29 U.S.C. § 626) and any similar law governing release of claims.  Accordingly, Executive hereby acknowledges that:

 

	
(a)     

	
Executive has carefully read and fully understands all of the provisions of this Agreement and that Executive has entered into this Agreement knowingly and voluntarily;

 

	
(b)     

	
The Severance Benefits offered in exchange for Executive’s release of claims exceed in kind and scope that to which Executive would have otherwise been legally entitled absent the execution of this Agreement;

 

	
(c)     

	
Prior to signing this Agreement, Executive had been advised, and is being advised by this Agreement, to consult with an attorney of Executive’s choice concerning its terms and conditions; and

 

	
(d)     

	
Executive has been offered at least [twenty-one (21)/forty-five (45)] days within which to review and consider this Agreement.

 

  

14

  

 

	
11.     

	
[ADD THIS LANGUAGE IF THE EMPLOYEE IS AGE 40 OR OLDER]  The Parties agree that this Agreement shall not become effective and enforceable until the date this Agreement is signed by both Parties or seven (7) calendar days after its execution by Executive, whichever is later.  Executive may revoke this Agreement for any reason by providing written notice of such intent to the Company within seven (7) days after Executive has signed this Agreement, thereby forfeiting Executive’s right to receive any Severance Benefits provided hereunder and rendering this Agreement null and void in its entirety.  This revocation must be sent to the Executive’s HR representative with a copy sent to the Hill-Rom Office of Chief Legal Officer and must be received by the end of the seventh day after the Executive signs this Agreement to be effective.

 

	
12.     

	
[ADD THIS LANGUAGE IF THE EMPLOYEE IS IN CALIFORNIA] Executive specifically acknowledges that, as a condition of this Agreement, Executive expressly releases all rights and claims that Executive knows about as well as those Executive may not know about.  Executive expressly waives all rights under Section 1542 of the Civil Code of the State of California, which reads as follows:

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in Executive’s favor at the time of executing the release which if known, must have materially affected Executive’s settlement with the debtor.”

 

Notwithstanding the provision by Section 1542, and for the purpose of implementing a full and complete release and discharge of the Company as set forth above, Executive expressly acknowledges that this Agreement is intended to include and does in its effect, without limitation, include all claims which Executive does not know or suspect to exist in Executive’s favor at the time of signing this Agreement and that this Agreement expressly contemplates the extinguishment of all such claims.

 

	
13.     

	
The Parties agree that nothing contained herein shall purport to waive or otherwise affect any of Executive’s rights or claims that may arise after Executive signs this Agreement.  It is further understood by the Parties that nothing in this Agreement shall affect any rights Executive may have under any Company sponsored Deferred Compensation Program, Executive Life Insurance Bonus Plan, Stock Grant Award, Stock Option Grant, Restricted Stock Unit Award, Pension Plan and/or Savings Plan (i.e., 401(k) plan) provided by the Company as of the date of Executive’s termination, such items to be governed exclusively by the terms of the applicable agreements or plan documents.

 

	
14.     

	
Similarly, notwithstanding any provision contained herein to the contrary, this Agreement shall not constitute a waiver or release or otherwise affect Executive’s rights with respect to any vested benefits, any rights Executive has to benefits which can not be waived by law, any coverage provided under any Directors and Officers (“D&O”) policy, any rights Executive may have under any indemnification agreement Executive has with the Company prior to the date hereof, any rights Executive has as a shareholder, or any claim for breach of this Agreement, including, but not limited to the benefits promised by the terms of this Agreement.

 

  

15

  

 

	
15.     

	
Except as provided in the Change in Control Agreement, Executive acknowledges that Executive will not be eligible to receive or vest in any additional stock options, stock awards or restricted stock units (“RSUs”) as of Executive’s Effective Termination Date.  Failure to exercise any vested options within the applicable period as set for in the plan and/or grant will result in their forfeiture.  Executive acknowledges that any stock options, stock awards or RSUs held for less than the required period shall be deemed forfeited as of the effective date of this Agreement.  All terms and conditions of such stock options, stock awards or RSUs shall not be affected by this Agreement, shall remain in full force and effect, and shall govern the Parties’ rights with respect to such equity based awards.

 

	
16.     

	
[Option A] Executive acknowledges that Executive’s termination and the Severance Benefits offered hereunder were based on an individual determination and were not offered in conjunction with any group termination or group severance program and waives any claim to the contrary.

 

[Option B] Executive represents and agrees that Executive has been provided relevant cohort information based on the information available to the Company as of the date this Agreement was tendered to Executive.  This information is attached hereto as Exhibit [B].  The Parties acknowledge that simply providing such information does not mean and should not be interpreted to mean that the Company was obligated to comply with 29 C.F.R. § 1625.22(f).

 

	
17.     

	
Executive hereby affirms and acknowledges Executive’s continued obligations to comply with the post-termination covenants contained in Executive’s Employment Agreement, including but not limited to, the non-compete, trade secret and confidentiality provisions.  Executive acknowledges that a copy of the Employment Agreement has otherwise been provided to Executive’s and, to the extent not inconsistent with the terms of this Agreement or applicable law, the terms thereof shall be incorporated herein by reference.  Executive acknowledges that the restrictions contained therein are valid and reasonable in every respect and are necessary to protect the Company’s legitimate business interests.  Executive hereby affirmatively waives any claim or defense to the contrary.  Executive hereby acknowledges that the definition of Competitor, as provided in Executive’s Employment Agreement shall include but not be limited to those entities specifically identified in the updated Competitor List, attached hereto as Exhibit [B].

 

  

16

  

 

	
18.     

	
Executive acknowledges that the Company as well as its subsidiary and affiliated companies (“Companies” herein) possess, and Executive has been granted access to, certain trade secrets as well as other confidential and proprietary information that they have acquired at great effort and expense.  Such information includes, without limitation, confidential information regarding products and services, marketing strategies, business plans, operations, costs, current or, prospective customer information (including customer contacts, requirements, creditworthiness and like matters), product concepts, designs, prototypes or specifications, regulatory compliance issues, research and development efforts, technical data and know-how, sales information, including pricing and other terms and conditions of sale, financial information, internal procedures, techniques, forecasts, methods, trade information, trade secrets, software programs, project requirements, inventions, trademarks, trade names, and similar information regarding the Companies’ business (collectively referred to herein as “Confidential Information”).

 

	
19.     

	
Executive agrees that all such Confidential Information is and shall remain the sole and exclusive property of the Company.  Except as may be expressly authorized by the Company in writing, or as may be required by law after providing due notice thereof to the Company, Executive agrees not to disclose, or cause any other person or entity to disclose, any Confidential Information to any third party for as long thereafter as such information remains confidential (or as limited by applicable law) and agrees not to make use of any such Confidential Information for Executive’s own purposes or for the benefit of any other entity or person.  The Parties acknowledge that Confidential Information shall not include any information that is otherwise made public through no fault of Executive or other wrong doing.

 

	
20.     

	
On or before Executive’s Effective Termination Date or per the Company’s request, Executive agrees to return the original and all copies of all things in Executive’s possession or control relating to the Company or its business, including but not limited to any and all contracts, reports, memoranda, correspondence, manuals, forms, records, designs, budgets, contact information or lists (including customer, vendor or supplier lists), ledger sheets or other financial information, drawings, plans (including, but not limited to, business, marketing and strategic plans), personnel or other business files, computer hardware, software, or access codes, door and file keys, identification, credit cards, pager, phone, and any and all other physical, intellectual, or personal property of any nature that Executive received, prepared, helped prepare, or directed preparation of in connection with Executive’s employment with the Company.  Nothing contained herein shall be construed to require the return of any non-confidential and de minimis items regarding Executive’s pay, benefits or other rights of employment such as pay stubs, W-2 forms, 401(k) plan summaries, benefit statements, etc.

 

	
21.     

	
Executive hereby consents and authorizes the Company to deduct as an offset from the above-referenced severance payments the value of any Company property not returned or returned in a damaged condition as well as any monies paid by the Company on Executive’s behalf (e.g., payment of any outstanding JPMorgan Chase Corporate MasterCard bill) to the extent permitted by Section 409A.

 

  

17

  

 

	
22.     

	
Executive agrees to cooperate with the Company in connection with any pending or future litigation, proceeding or other matter which has been or may be brought against or by the Company before any agency, court, or other tribunal and concerning or relating in any way to any matter falling within Executive’s knowledge or former area of responsibility.  Executive agrees to immediately notify the Company, through the Office of the Chief Legal Officer, in the event Executive is contacted by any outside attorney (including paralegals or other affiliated parties) unless (i) the Company is represented by the attorney, (ii) Executive is represented by the attorney for the purpose of protecting Executive’s personal interests or (iii) the Company has been advised of and has approved such contact.  Executive agrees to provide reasonable assistance and completely truthful testimony in such matters including, without limitation, facilitating and assisting in the preparation of any underlying defense, responding to discovery requests, preparing for and attending deposition(s) as well as appearing in court to provide truthful testimony.  The Company agrees to reimburse Executive for all reasonable out of pocket expenses incurred at the request of the Company associated with such assistance and testimony.

 

	
23.     

	
Executive agrees not to make any written or oral statement that may defame, disparage or cast in a negative light so as to do harm to the personal or professional reputation of (a) the Company, (b) its Executives, officers, directors or trustees or (c) the services and/or products provided by the Company and its subsidiaries or affiliate entities.  Similarly, in response to any written inquiry from any prospective employer or in connection with a written inquiry in connection with any future business relationship involving Executive, the Company agrees not to provide any information that may defame, disparage or cast in a negative light so as to do harm to the personal or professional reputation of Executive.  The Parties acknowledge, however, that nothing contained herein shall be construed to prevent or prohibit the Company or the Executive from providing truthful information in response to any court order, discovery request, subpoena or other lawful request.

 

	
24.     

	
EXECUTIVE SPECIFICALLY AGREES AND UNDERSTANDS THAT THE EXISTENCE AND TERMS OF THIS AGREEMENT ARE STRICTLY CONFIDENTIAL AND THAT SUCH CONFIDENTIALITY IS A MATERIAL TERM OF THIS AGREEMENT.  Accordingly, except as required by law or unless authorized to do so by the Company in writing, Executive agrees that Executive shall not communicate, display or otherwise reveal any of the contents of this Agreement to anyone other than Executive’s spouse, legal counsel or financial advisor provided, however, that they are first advised of the confidential nature of this Agreement and Executive obtains their agreement to be bound by the same.  The Company agrees that Executive may respond to legitimate inquiries regarding the termination of Executive’s employment by stating that the Parties have terminated their relationship on an amicable basis and that the Parties have entered into a Confidential Separation and Release Agreement that prohibits Executive’s from further discussing the specifics of Executive’s separation.  Nothing contained herein shall be construed to prevent Executive from discussing or otherwise advising subsequent employers of the existence of any obligations as set forth in Executive’s Employment Agreement.  Further, nothing contained herein shall be construed to limit or otherwise restrict the Company’s ability to disclose the terms and conditions of this Agreement as may be required by business necessity.

 

  

18

  

 

	
25.     

	
In the event that Executive breaches or threatens to breach any provision of this Agreement, Executive agrees that the Company shall be entitled to seek any and all equitable and legal relief provided by law, specifically including immediate and permanent injunctive relief.  Executive hereby waives any claim that the Company has an adequate remedy at law.  In addition, and to the extent not prohibited by law, Executive agrees that the Company shall be entitled to discontinue providing any additional Severance Benefits upon such breach or threatened breach as well as an award of all costs and attorneys’ fees incurred by the Company in any successful effort to enforce the terms of this Agreement.  Executive agrees that the foregoing relief shall not be construed to limit or otherwise restrict the Company’s ability to pursue any other remedy provided by law, including the recovery of any actual, compensatory or punitive damages.  Moreover, if Executive pursues any claims against the Company subject to the foregoing General Release, or breaches the above confidentiality provision, Executive agrees to immediately reimburse the Company for the value of all benefits received under this Agreement to the fullest extent permitted by law.

 

	
26.     

	
Similarly, in the event that the Company breaches or threatens to breach any provision of this Agreement, Executive shall be entitled to seek any and all equitable or other available relief provided by law, specifically including immediate and permanent injunctive relief.  In the event Executive is required to file suit to enforce the terms of this Agreement, the Company agrees that Executive shall be entitled to an award of all costs and attorneys’ fees incurred by Executive’s in any wholly successful effort (i.e. entry of a judgment in Executive’s favor) to enforce the terms of this Agreement.  In the event Executive is wholly unsuccessful, the Company shall be entitled to an award of its costs and attorneys’ fees.

 

	
27.     

	
Both Parties acknowledge that this Agreement is entered into solely for the purpose of terminating Executive’s employment relationship with the Company on an amicable basis and shall not be construed as an admission of liability or wrongdoing by the Company or Executive, both Parties having expressly denied any such liability or wrongdoing.

 

	
28.     

	
Each of the promises and obligations shall be binding upon and shall inure to the benefit of the heirs, executors, administrators, assigns and successors in interest of each of the Parties.

 

  

19

  

 

	
29.     

	
The Parties agree that each and every paragraph, sentence, clause, term and provision of this Agreement is severable and that, if any portion of this Agreement should be deemed not enforceable for any reason, such portion shall be stricken and the remaining portion or portions thereof should continue to be enforced to the fullest extent permitted by applicable law.

 

	
30.     

	
This Agreement shall be governed by and interpreted in accordance with the laws of the State of Indiana without regard to any applicable state’s choice of law provisions.

 

	
31.     

	
[USE THIS LANGUAGE IF OWBPA LANGUAGE (FOR EMPLOYEES AGE 40 OR OVER) IS NOT INCLUDED] Executive acknowledges that Executive has been offered a period of twenty-one (21) days within which to consider and review this Agreement; that Executive has carefully read and fully understands all of the provisions of this Agreement; and that Executive has entered into this Agreement knowingly and voluntarily.

 

	
32.     

	
Executive represents and acknowledges that in signing this Agreement Executive does not rely, and has not relied, upon any representation or statement made by the Company or by any of the Company’s Executives, officers, agents, stockholders, directors or attorneys with regard to the subject matter, basis or effect of this Agreement other than those specifically contained herein.

 

	
33.     

	
This Agreement represents the entire agreement between the Parties concerning the subject matter hereof, shall supersede any and all prior agreements which may otherwise exist between them concerning the subject matter hereof (specifically excluding, however, the post-termination obligations contained in an Executive’s Employment Agreement, any obligations contained in an existing and valid Indemnity Agreement of Change in Control, or any obligation contained in any other legally-binding document), and shall not be altered, amended, modified or otherwise changed except by a writing executed by both Parties.

 

PLEASE READ CAREFULLY.  THIS SEPARATION AND RELEASE 

AGREEMENT INCLUDES A COMPLETE RELEASE OF ALL

KNOWN AND UNKNOWN CLAIMS.

 

IN WITNESS WHEREOF, the Parties have themselves signed, or caused a duly authorized agent thereof to sign, this Agreement on their behalf and thereby acknowledge their intent to be bound by its terms and conditions.

 

	
 

[EXECUTIVE]

	  	
HILL-ROM HOLDINGS, INC.

	 	 	 
	
Signed:

	

/s/  Edward Gregory Pritchard

	  	
By:

	

/s/ John Greisch

	
Printed:

	

      Edward Gregory Pritchard

	  	
Title:

	

President & CEO

	
Dated:

	

      July 23, 2012

	  	
Dated:

	

 July 23, 2012

  

20

  

 

Exhibit B

ILLUSTRATIVE COMPETITOR LIST

 

The following is an illustrative, non-exhaustive list of Competitors with whom Employee may not, during Executive’s relevant non-compete period, directly or indirectly engage in any of the competitive activities proscribed by the terms of Executive’s Employment Agreement.

 

 

	 	●	Amico Corporation	●	Anodyne Medical Device, Inc.
	 	 	 	 	 
	 	●	APEX Medical Corp.	●	Apria Healthcare Inc.
	 	 	 	 	 
	 	●	Aramark Corporation	●	Ascom (Ascom US, Inc.)
	 	 	 	 	 
	 	●	Barton Medical Corporation	●	B.G. Industries, Inc.
	 	 	 	 	 
	 	●	CareMed Supply, Inc.	●	Comfortex, Inc.
	 	 	 	 	 
	 	●	Corona Medical SAS	●	Custom Medical Solutions
	 	 	 	 	 
	 	●	
Dukane Communication Systems, a 

division of Edwards Systems 

Technology, Inc.

	●	Freedom Medical, Inc.
	 	 	 	 	 
	 	●	Fitzsimmons Home Medical 

Equipment, Inc.	●	
GF Health Products, Inc. (Graham 

Field)

	 	 	 	 	 
	 	●	
Gaymar Holding Company, LLC 

(Gaymar Industries, Inc.)

	●	Handicare AS (Romedic, Inc.)
	 	 	 	 	 
	 	●	
Getinge Group (Arjo; Getinge; 

Maquet; Pegasus; Huntleigh 

Technology Plc (Huntleigh 

Healthcare, LLC))

	●	Horcher GmbH
	 	 	 	 	 
	 	●	Human Care HC AB	●	Intego Systems, Inc. (formerly 

known as Wescom Products, Inc.)
	 	 	 	 	 
	 	●	Industrie Guido Malvestio S.P.A.	●	Joerns Healthcare, Inc.
	 	 	 	 	 
	 	●	Invacare Corporation	●	Kinetic Concepts, Inc. (KCI)
	 	 	 	 	 
	 	●	
Joh. Stiegelmeyer & Co., GmbH 

(Stiegelmeyer)

	●	Linet (Linet France, Linet Far East)
	 	 	 	 	 
	 	●	Linak Group	●	Medical Specialties Distributors, LLC
	 	 	 	 	 
	 	●	MedaSTAT, LLC	●	Merivaara Corporation
	 	 	 	 	 
	 	●	Medline Industries, Inc.	●	Modular Service Company
	 	 	 	 	 
	 	●	MIZUOSI	●	Nemschoff Chairs, Inc.
	 	 	 	 	 
	 	●	Molift	●	Nurture by Steelcase, Inc.

 

  

21

  

 

	 	●	Paramount Bed Company, Ltd.	●	Pegasus Airwave, Inc.
	 	 	 	 	 
	 	●	Pardo	●	Prism Medical Ltd (Waverly Glen)
	 	 	 	 	 
	 	●	Premise Corporation	●	Rauland-Borg Corporation
	 	 	 	 	 
	 	●	Radianse, Inc.	●	Sentech Medical Systems, Inc.
	 	 	 	 	 
	 	●	Recovercare, LLC (Stenbar, T.H.E. Medical)	●	SIZEwise Rentals, LLC
	 	 	 	 	 
	 	●	SimplexGrinnell, LP	●	Statcom (Jackson Healthcare Solutions)
	 	 	 	 	 
	 	●	Span America Medical Systems, Inc.	●	Sunrise Medical (Ted Hoyer and Company)
	 	 	 	 	 
	 	●	Stryker Corporation	●	Tele-Tracking Technologies, Inc.
	 	 	 	 	 
	 	●	Tempur-Pedic Medical, Inc.	●	V. Guldmann A/S
	 	 	 	 	 
	 	●	Universal Hospital Services, Inc.	●	West-Com Nurse Call Systems, Inc.

 

While the above list is intended to identify the Company's primary competitors, it should not be construed as all encompassing so as to exclude other potential competitors falling within the Non-Compete definitions of "Competitor."  The Company reserves the right to amend this list at any time in its sole discretion to identify other or additional Competitors based on changes in the products and services offered, changes in its business or industry as well as changes in the duties and responsibilities of the individual employee.  An updated list will be provided to Employee upon reasonable request.  Employees are encouraged to consult with the Company prior to accepting any position with any potential competitor.

(Revised list April 2010)

 

22ex10-25.htm

Exhibit 10.25

 

 

EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement") is effective as of  August 15, 2011 (the "Effective Date"), by and between Texas Rare Earth Resources Corp., a Nevada corporation (the "Company"), and Anthony Garcia ("Employee").

WHEREAS, the Company wishes to employ Employee and Employee wishes to be employed by the Company; and

WHEREAS, the Company and Employee desire to enter into an agreement reflecting the terms of the employment relationship, including the termination thereof;

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties, and agreements contained herein, and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

1. Employment. The Company hereby employs Employee, and Employee will hereby be employed by the Company, on the terms and conditions set forth in this Agreement. The Company will establish, maintain and pay for an office in the greater Denver metropolitan area, including the provision of necessary computer equipment and other facilities’ equipment.

2. Term of Employment. Subject to the provisions for earlier termination provided in this Agreement, the term of this Agreement shall begin on August 1, 2011 and shall terminate on July 31, 2014.  The Term shall be extended for additional 1-year periods for two consecutive years (the initial Term, together with each one-year extension shall be referred to as the “Term”), provided that neither the Company nor Employee notify the other on or prior to 90 days before the expiration of such Term that either party does not intend to extend this Agreement.

3. Employee’s Duties. During the Term, Employee shall serve as Senior Vice President of Development, with such duties and responsibilities as may from time to time be assigned to him by the board of directors of the Company (the “Board”) and CEO, provided that such duties are consistent with the customary duties of such position. Employee agrees to devote his business time, skill and attention to the business and affairs of the Company and to use reasonable best efforts to perform faithfully and efficiently his duties and responsibilities. Employee shall not, either directly or indirectly, enter into any business or employment with or for any person, firm, association or corporation other than the Company during the Term; provided, however, that Employee shall not be prohibited from (i) engaging in charitable activities, educational mentoring, and community affairs, (ii) serving, with the prior approval of the Company’s Board, on the boards of a reasonable number of business entities, trade associations and charitable organizations, (iii)  managing his personal investments and affairs related to another business or companies (either as a principal, partner, shareholder, or member of such business), or (iv) any other such activity approved by the Board; provided that such activities do not either individually or in the aggregate materially interfere with the performance of his duties hereunder. Employee shall at all times observe and comply with all lawful directions and instructions of the Board.

  

  

  

4. Compensation.

 

(a) Stock Options.  As an inducement to Employee to enter into this Agreement, the Company  issued to Employee on August 19, 2011 5-year options to purchase up to 750,000 shares of Company common stock at an exercise price of $1.85 per share (“Options”), , which Options shall vest on a monthly basis over a three-year period measured from your date of hire.

(b) Base Compensation. For services rendered by Employee under this Agreement, the Company shall pay to Employee a base salary of $200,000 per annum (“Base Compensation”). The Base Compensation is payable in accordance with the Company’s customary payroll practices and subject to customary withholdings, including share withholdings as described in Section 14(b) hereof. The amount of Base Compensation shall be reviewed by the Board on an annual basis as of the close of each 12-month period of this Agreement and may be increased as the Board may deem appropriate. In the event the Board (or, if established, the compensation committee thereof) deems it appropriate to increase Employee’s annual base salary, said increased amount shall thereafter be the “Base Compensation.” Employee’s Base Compensation, as increased from time to time, may not thereafter be decreased unless agreed to in writing and signed by Employee. Nothing contained herein shall prevent the Board from paying additional compensation to Employee in the form of bonuses or otherwise during the Term.

 

(c) Signing Bonus.  As an inducement to Employee to enter into this Agreement, the Company paid to employee a signing bonus in the amount of $35,000 on or about August 19, 2011, and Employee acknowledges receipt of such signing bonus.

5. Bonus. With respect to each full 12-month period during the Term, the Board in its sole discretion may grant the Employee a bonus (“Bonus”) in such amount (if any), in cash or stock, and upon satisfaction of such milestones as may be developed by the Board of Directors, in its sole discretion.  Any bonus granted by the Board during the first calendar year of employment may be prorated based on the number of months employee is employed during such calendar year.

6. Additional Benefits. In addition to the Base Compensation provided for in Section 5 herein, Employee shall be entitled to the following:

(a) Expenses. The Company shall, in accordance with any rules and policies that it may establish from time to time for executive officers, reimburse Employee for business expenses reasonably incurred in the performance of his duties. It is understood that Employee is authorized to incur reasonable business expenses for promoting the business of the Company, including reasonable expenditures for travel, lodging, meals and client or business associate entertainment. Request for reimbursement for such expenses must be accompanied by appropriate documentation, and shall be reimbursed in accordance with the Company’s rules and policies as in effect from time to time and as set forth in Section 8(k)(iii) below.

  

  

  

 

(b) Vacation. Employee shall be entitled to five weeks of vacation per year, without any loss of compensation or benefits. Employee shall not be entitled to compensation for, or to carry forward, any unused vacation time.

(c) General Benefits. Employee shall be entitled to participate in the various employee benefit plans or programs, if any, provided to the officers of the Company in general, including but not limited to, health and dental, subject to the eligibility requirements with respect to each of such benefit plans or programs, and such other benefits or perquisites as may be approved by the Board during the Term. Nothing in this paragraph shall be deemed to prohibit the Company from making any changes in any of the plans, programs or benefits described in this Section 6, provided the change similarly affects all executive officers of the Company similarly situated.

(d) Corporate Change. Upon the occurrence of a “Corporate Change” as hereinafter defined, Employee shall be considered as immediately and totally vested in any and all Options or other similar equity or equity-based awards previously made to Employee by the Company or its subsidiaries under a “Long Term Incentive Plan” or other grant duly adopted by the Board or the Compensation Committee thereof (such Options or similar awards are hereinafter collectively referred to as “Awards”). For purposes of this Agreement, a “Corporate Change ” shall occur if (i) the Company (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (ii) any person or entity, including a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 50% or more of the outstanding shares of the Company’s voting stock (based upon voting power), and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (iii) the Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary of the Company) in a transaction that requires shareholder approval pursuant to applicable corporate law; or (iv) during a period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new director(s) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office, who either were directors at the beginning of the two (2) year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or (v) any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Corporate Change hereunder.

(e) Health Club Dues. The Company shall pay up to $300 per month for Employee’s health club dues.

7. Confidential Information. Employee, during the Term, will have access to and become familiar with confidential information, secrets and proprietary information concerning the business and affairs of the Company, its controlled subsidiaries and other controlled entities, including customer information, and other technical information, resource valuations and reports, business strategies and pricing information, and other confidential and/or proprietary information (collectively, “Confidential Information”). Confidential Information shall not include any information that is or becomes generally available to the public other than as a result of Employee’s improper or unauthorized disclosure of such information in violation of this Agreement. As to such Confidential Information, Employee agrees as follows:

(a) During the Term or at any time following the termination of this Agreement, Employee will not, directly or indirectly, without the prior written consent of the Company (1) disclose or permit the disclosure of any such Confidential Information, or (2) use, reproduce or distribute, or make or permit any use, reproduction or distribution of, directly or indirectly, any such Confidential Information, except for any disclosure, use, reproduction or distribution that is required in the course of his employment with the Company, its controlled subsidiaries or other controlled entities.

  

  

  

(b) If, during the Term or at any time following the termination of this Agreement, Employee is requested or required (by oral question or request for information or documents, in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, Employee agrees to notify the Company immediately in writing of the request or requirement so that the Company may seek an appropriate protection order or waive compliance with the provisions of this Section. If, in the absence of a protective order or the receipt of a waiver under this Agreement, Employee is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, Employee may disclose such Confidential Information to the tribunal; provided, however, that Employee shall use his commercially reasonable best efforts to obtain a court order or other assurance that confidential treatment will be accorded to such Confidential Information.  To the extent Employee incurs legal fees or other expenses in seeking to protect Confidential Information for Company’s benefit, Company agrees to reimburse Employee for all such reasonably-incurred fees and expenses.

(c) Upon termination of employment of Employee, for whatever reason, Employee shall surrender to the Company any and all documents, manuals, correspondence, reports, records and similar items then or thereafter coming into the possession of Employee which contain any Confidential Information of the Company or its controlled subsidiaries or other controlled entities.

(d) Employee recognizes and acknowledges that the obligations of Employee contained in Section 7 of this Agreement are reasonable and necessary to protect the legitimate business interests of the Company, and that any breach or violation of any of the provisions of such Section is likely to result in irreparable injury to the Company for which the Company would have no adequate remedy at law. Employee agrees that if Employee shall breach or violate Section 7 of this Agreement, the Company shall be entitled, if it so elects, to institute and prosecute proceedings at law or in equity, including, but not limited to, a proceeding seeking injunctive relief, to obtain damages with respect to such breach or violation, to enforce the specific performance of Section 7 this Agreement by Employee, or to enjoin Employee from engaging in any activity in violation of Section 7 of this Agreement. Employee acknowledges that in the event of any such breach or violation, the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, and to an equitable accounting of all earnings, profits, and other benefits arising from any such breach or violation, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled. Employee agrees that in the event of any such violation, an action may be commenced for preliminary or permanent injunctive relief and other equitable relief in any federal or state court of competent jurisdiction.  Employee agrees that effective service of process may be made upon Employee under the notice provisions contained in Section 11 of this Agreement.

  

  

  

8. Termination. This Agreement may be terminated prior to the end of the Term as set forth below:

(a) Resignation (other than for Good Reason). Employee may resign, including by reason of retirement, his position at any time by providing written notice of resignation to the Company in accordance with Section 11 hereof. In the event of such resignation, except in the case of resignation for Good Reason (as defined below), this Agreement shall terminate and Employee shall not be entitled to further compensation pursuant to this Agreement other than payment for (i) any unpaid Base Compensation or unpaid Bonus due and owing as of Employee’s employment termination date, and (ii) any unpaid reasonable business expenses incurred prior to Employee’s employment termination date, subject to the Company’s expense reimbursement rules and policies as in effect from time to time (the “Accrued Amounts”). Accrued Amounts, if any, shall be paid to Employee in accordance with the Company’s customary payroll practices as in effect from time to time, but in no event later than fifteen (15) days following Employee’s termination of employment.

(b) Death. If Employee’s employment is terminated due to his death, this Agreement shall terminate and the Company shall have no obligations to Employee or his estate, beneficiaries or legal representatives with respect to this Agreement other than payment of the Accrued Amounts, if any. Accrued Amounts, if any, shall be paid to Employee in accordance with the Company’s customary payroll practices as in effect from time to time but in no event later than 15 days following Employee’s termination of employment on account of death. Notwithstanding the foregoing, in the event of his death, Employee shall be considered as immediately and totally vested in any and all outstanding Awards previously granted to Employee by Company or its subsidiaries. .

(c) Discharge.

(i) The Company may terminate Employee’s employment in the event of Employee’s Misconduct or Disability (both as defined below) only upon written notice thereof delivered to Employee in accordance with Section 8(f) and Section 11 hereof. In the event that Employee’s employment is terminated during the Term by the Company for any reason other than his Misconduct or Disability (both as defined below), then, (A) the Company shall continue to pay Employee his Base Salary in effect as of the Date of Termination for a period of [12] months following the Date of Termination, in accordance with the Company’s standard payroll procedures; provided, however, that payment shall not begin until the expiration of the revocation period for the Release (as defined below) has lapsed, in which case all regularly scheduled salary payments that were delayed in accordance with the preceding clause shall be paid in the payroll period immediately following the expiration of such revocation period; and (B) for six months following the Date of Termination, the Company, at its cost, shall provide or arrange to provide Employee (and, as applicable, Employee’s dependents) with accident and group health insurance benefits substantially similar to those which Employee (and Employee’s dependents) were receiving immediately prior to Employee’s termination (if any); provided, however, the benefits otherwise receivable by Employee pursuant to this clause (B) shall be reduced to the extent comparable benefits are actually received by Employee (and/or Employee’s dependents) during such period under any other employer’s plan(s) or program(s), with Employee being obligated to promptly disclose to the Company any such comparable benefits; and provided, further, however, that for the avoidance of doubt, the COBRA continuation period shall run concurrently with the period set forth in this Clause (B).  If the Company’s pre-tax payment of the premiums for such benefits would cause the Executive to be taxed on the Company’s actual cost of providing such accident and group health insurance benefits because such benefits are “self-insured,” the Company will instead pay such premiums on an after-tax basis so the premium amounts are included in the Employee’s taxable income. In addition to the aforementioned compensation and benefits, Employee shall be considered as immediately and totally vested in any and all Awards previously granted to Employee by Company or its subsidiaries.  The Company’s obligation to make the payments and provide the benefits described in this Section 8(c)(i) is conditioned expressly on Employee’s executing (and not revoking) a general release of any and all claims arising out of or relating to Employee’s employment and termination of employment in a form reasonably satisfactory to the Company (the “Release”). If Employee fails to execute a Release within forty-five (45) days following the later of (i) the Date of Termination or (ii) the date Employee actually receives an execution copy of such Release (which shall be delivered to Employee no later than five (5) business days following Date of Termination), or if Employee revokes such Release within seven (7) days following execution, Employee shall forfeit all payments and benefits described hereunder.

  

  

  

(ii) In the event Employee is terminated because of Misconduct, the Company shall have no obligations pursuant to this Agreement after the Date of Termination other than for payment of the Accrued Amounts, if any. As used herein, “Misconduct” means (A) the continued failure by Employee to substantially perform his duties with the Company (other than any such failure resulting from Employee’s incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination by Employee for Good Reason), after a written demand for substantial performance is delivered to Employee by the Board, which demand specifically identifies the manner in which the Board believes that Employee has not substantially performed his duties, and the Employee fails to cure such failure within fifteen (15) days after receipt of such demand, (B) the engaging by Employee in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise (other than such conduct resulting from Employee’s incapacity due to physical or mental illness or any such actual or anticipated conduct after the issuance of a Notice of Termination by Employee for Good Reason), (C) Employee’s conviction for the commission of a felony, (D) action by Employee toward the Company involving dishonesty or (E) a failure to follow the Company’s policies and procedures regarding employment as constituting misconduct.  Anything contained in this Agreement to the contrary notwithstanding, the Board shall have the sole power and authority to terminate the employment of Employee on behalf of the Company.

(d) Disability. If Employee shall have been absent from the full-time performance of Employee’s duties with the Company for ninety (90) consecutive calendar days as a result of Employee’s incapacity due to physical or mental illness, Employee’s employment may be terminated by the Company for “Disability” and Employee shall not be entitled to further compensation pursuant to this Agreement, other than for payment of the Accrued Amounts, if any. Notwithstanding the foregoing, in the event that Employee’s employment is terminated by the Company due to Disability, Employee shall be considered as immediately and totally vested in any and all Awards previously granted to Employee by the Company or its subsidiaries.

Resignation for Good Reason. Employee shall be entitled to terminate his employment for Good Reason as defined herein. If Employee terminates his employment for Good Reason, he shall be entitled to the compensation and benefits provided in Section 8(c)(i) hereof in accordance with the terms therein, including, without limitation, the requirement that Employee execute and not revoke the Release contemplated in Section 8(c)(i). “Good Reason” shall mean the material breach of any of the Company’s obligations under this Agreement without Employee’s express written consent; provided, that, Employee has provided a Notice of Termination to the Company within fifteen (15) days after the initial occurrence of any such circumstance of Employee’s intention to terminate Employee’s employment for Good Reason, and the Company has failed to cure, to the extent curable, such circumstance within thirty (30) days of receipt of the Notice of Termination given in respect hereof.

(e) Notice of Termination. Any purported termination of Employee’s employment by the Company under Sections 8(c)(ii) (Misconduct) or 8(d) (Disability), or by Employee under Section 8(e) (Good Reason), shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 11 hereof, which notice shall provide for a Date of Termination that is at least fifteen (15) days following the date the Notice of Termination is given. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which, if by the Company and is for Misconduct or Disability, shall set forth in reasonable detail the reason for such termination of Employee’s employment, or in the case of resignation by Employee for Good Reason, said notice must specify in reasonable detail the basis for such resignation. A Notice of Termination given by Employee pursuant to Section 8(e) shall be effective even if given after the receipt by Employee of notice that the Board has set a meeting to consider terminating Employee for Misconduct. Any purported termination for which a Notice of Termination is required which is not effected pursuant to this Section 8(f) shall not be effective.

(f) Date of Termination. “Date of Termination” shall mean the date of Employee’s “separation from service” from the Company and its “affiliates” as defined in Code Section 409A and Final Treasury Regulations Section 1.409A-1(h), including the default presumptions thereof. Notwithstanding the foregoing, in the event Employee is terminated for Misconduct, the Company may refuse to allow Employee access to the Company’s offices (other than to allow Employee to collect his personal belongings under the Company’s supervision) prior to the Date of Termination. Notwithstanding anything herein to the contrary, for purposes of this Agreement, “termination of employment” shall mean (i) any person or entity that directly or indirectly controls, is controlled by or is under common control with the Company and/or (ii) to the extent provided by the Board, any person or entity in which the Company has a significant interest. The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of voting or other securities, by contract or otherwise; provided, however, with respect to any payment or benefit subject to Section 409A of the Code, the term “affiliate” shall mean any member of the Company’s control group within the meaning of Final Treasury Regulations Section 1.409A-1(h)(3), as such may be modified or amended from time to time, by applying the “at least 50 percent” provisions thereof.

  

  

  

(g) Mitigation. Employee shall not be required to mitigate the amount of any payment provided for in this Section 8 by seeking other employment or otherwise, nor (except as set forth in Section 8(c)(i)(B)) shall the amount of any payment provided for in this Agreement be reduced by any compensation earned or benefits received by Employee as a result of employment by another employer, except that any severance amounts payable to Employee pursuant to the Company’s severance plan or policy for employees in general shall reduce the amount otherwise payable pursuant to Sections 8(c)(i) or 8(e).

(h) Excess Parachute Payments. Notwithstanding anything in this Agreement to the contrary, to the extent that any payment or benefit received or to be received by Employee hereunder in connection with the termination of Employee’s employment would, as determined by tax counsel selected by the Company, constitute an “Excess Parachute Payment” (as defined in Section 280G of the Internal Revenue Code), the Company shall fully “gross-up” such payment so that Employee is in the same “net” after-tax position he would have been if such payment and gross-up payments had not constituted Excess Parachute Payments, and such “gross-up” payment shall be made no later than the end of Employee’s taxable year next following Employee’s taxable year in which he remits the taxes to which such gross-up payment relates. The Company shall reimburse any costs and expenses incurred by Employee, including without limitation, attorneys’ fees due to a tax audit or litigation in connection with any excise tax (including penalties and interest or other excise taxes thereon) under Code Section 4999 or Code Section 280G and any such reimbursement shall be made by the end of the Employee’s tax year following the tax year in which such taxes that are subject to the audit or litigation are remitted to the taxing authority, or where as a result of such audit or litigation no taxes are remitted, by the end of the Employee’s tax year following the tax year in which the audit is completed or there is a final nonappealable settlement or other resolution of the litigation. The Employee’s right to payment or reimbursement pursuant to this Section 8(i) shall not be subject to liquidation or exchange for any other benefit.

(i) Code Section 409A. Notwithstanding any provision of this Section 8 to the contrary, if all or any portion of the benefits provided in this Section 8 is determined to be “nonqualified deferred compensation” subject to Code Section 409A, and the Company determines that Employee is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code and the regulations and other guidance issued thereunder, then such benefits (or portion thereof) shall be accumulated and paid on the first day of the seventh month following Employee’s termination of employment. For purposes of this Agreement, whether Employee is a “specified employee” will be determined in accordance with the written procedures adopted by the Board.

(i) All separately identifiable payments provided hereunder shall be deemed separate and distinct payments for purposes of Code Section 409A, and any series of payments made in installments shall likewise be deemed a series of separate payments for purposes of Code Section 409A.

  

  

  

(ii) This payments and benefits provided hereunder are  intended to comply with or be exempt from the provisions of Section 409A of the Code, and this Agreement shall be interpreted and construed accordingly. The Company shall have the discretion and authority to amend this Agreement at any time to satisfy any requirements of Code Section 409A or guidance published thereunder; provided, however, any such amendment shall maintain as closely as possible the economic terms of this Agreement for the Employee. However, in no event will the Company have any liability for any failure of the Agreement to satisfy Code Section 409A, and the Company does not guarantee that the Agreement complies with Code Section 409A.

(iii) The Company shall promptly reimburse Employee for eligible expenses under this Agreement that Employee incurs and properly reports to the Company in accordance with its expense reimbursement rules and policies. With respect to all taxable reimbursements that are not  exempt from Section 409A of the Code and to the extent not exempt: (A) the amount of expenses eligible for reimbursement or in-kind benefits provided during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided in any other calendar year, (B) the reimbursements for expenses for which Employee is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred and (C) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.

9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit Employee’s continuing or future participation in any benefit, bonus, incentive, or other plan or program provided by the Company or any of its affiliated companies and for which Employee may qualify, nor shall anything herein limit or otherwise adversely affect such rights as Employee may have under any Awards with the Company or any of its affiliated companies.

10. Assignability. The obligations of Employee hereunder are personal and may not be assigned or delegated by him or transferred in any manner whatsoever, nor are such obligations subject to involuntary alienation, assignment or transfer. The Company shall have the right to assign this Agreement and to delegate all rights, duties and obligations hereunder, either in whole or in part, to any parent, affiliate, successor or subsidiary organization or company of the Company, so long as the obligations of the Company under this Agreement remain the obligations of the Company.

11. Notice. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Company at its principal office address, directed to the attention of the Board with a copy to the Secretary of the Company, and to Employee at Employee’s residence address on the records of the Company or to such other address as either party may have furnished to the other in writing in accordance herewith except that notice of change of address shall be effective only upon receipt.

  

  

  

12. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13. Successors; Binding Agreement.

(a) The Company will 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 expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used herein, the term “Company” shall include any successor to its business and/or assets as aforesaid which executes and delivers the Agreement provided for in this Section 13 or which otherwise becomes bound by all terms and provisions of this Agreement by operation of law.

(b) This Agreement and all rights of Employee hereunder shall inure to the benefit of and be enforceable by Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Employee should die while any amounts would be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Employee’s devisee, legatee, or other designee or, if there be no such designee, to Employee’s estate.

14. Withholding Taxes.

(a) Tax Withholding. The Company shall have the power and the right to deduct or withhold from any benefits payable under this Agreement an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld.

(b) Share Withholding. With respect to tax withholding required upon the upon the lapse of restrictions on any restricted common stock, or upon any other taxable event arising as a result of any stock awards pursuant to this Agreement, Employee may elect, to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares having a fair market value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Employee, and shall be subject to any restrictions or limitations that the Company, in its discretion, deems appropriate. Any fraction of a share required to satisfy such obligation shall be disregarded and the Employee shall instead pay the amount due in cash.

  

  

  

15. No Restraints. As an inducement to the Company to enter into this Agreement, Employee represents and warrants that he is not a party to any other agreement or obligation for personal services, and that there exist no impediments or restraints, contractual or otherwise, on Employee’s powers right or ability to enter into this Agreement and to perform his duties and obligations hereunder.

16. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Employee and such officer as may be specifically authorized by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or in compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement is an integration of the parties’ agreement; no agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party, except those which are set forth expressly in this Agreement. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS.

17. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

18. Arbitration. Either party may elect that any dispute or controversy arising under or in connection with this Agreement be settled by arbitration in Houston, Texas in accordance with the Employment Rules of the American Arbitration Association then in effect. If the parties cannot mutually agree on an arbitrator, then the arbitration shall be conducted by a three arbitrator panel, with each party selecting one arbitrator and the two arbitrators so selected selecting a third arbitrator. The findings of the arbitrator(s) shall be final and binding, and judgment may be entered thereon in any court having jurisdiction. The findings of the arbitrator(s) shall not be subject to appeal to any court, except as otherwise provided by applicable law. The arbitrator(s) may, in his or her (or their) own discretion, award legal fees and costs to the prevailing party.

[Signature Page Follows]

 

 

 

  

  

  

IN WITNESS WHEREOF, the parties hereby execute this Agreement on the dates set forth below.

 

TEXAS RARE EARTH RESOURCES CORP.

By:

/s/ K. Marc LeVier                                                                12/9/2011

K. Marc LeVier, Executive Officer                                         Date

/s/ Anthony Garcia                                                                12/9/2011

Anthony Garcia                                                                        Date

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