Document:

Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT, dated as of August 3, 2015 (the “Effective Date”), is made between InVivo Therapeutics Holdings Corp. (the “Company”) and Tamara L. Joseph (the “Executive”).

 

WITNESSETH THAT:

 

WHEREAS, the parties desire to enter into this Employment Agreement (this “Agreement”) pertaining to the employment of the Executive by the Company:

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, it is hereby covenanted and agreed by the Executive and the Company as follows:

 

1.             Performance of Services.  The Executive’s employment with the Company shall be subject to the following:

 

(a)           Subject to the terms of this Agreement, the Company hereby agrees to continue to employ the Executive as its Senior Vice President, Chief Compliance Officer & General Counsel.  The Executive shall continue to serve as Senior Vice President, Chief Compliance Officer & General Counsel of InVivo Therapeutics Corporation, the Company’s wholly owned subsidiary.  The Executive shall continue to be based at the Company’s headquarters in Cambridge, MA.

 

(b)           While the Executive is employed by the Company, the Executive shall devote her business time, energies and talents to serving as its Senior Vice President, Chief Compliance Officer & General Counsel.  The Executive may, however, serve on outside boards of directors, to the extent that such activities do not materially inhibit or prohibit the performance of the Executive’s duties under this Agreement or conflict in any material way with the business of the Company or any subsidiary.

 

(c)           The Executive agrees that she shall perform her duties faithfully and efficiently subject to the directions of the Chief Executive Officer (“CEO”) and the Board of Directors of the Company (the “Board”).  The Executive shall not, without her consent, be assigned tasks that would be inconsistent with those of the Senior Vice President, Chief Compliance Officer & General Counsel.  The Executive shall report to the CEO and shall have such authority, power, responsibilities and duties as are inherent in her position (and the undertakings applicable to her position) and necessary to carry out her responsibilities and the duties required of her hereunder.

 

(d)           The Executive’s employment with the Company is “at-will,” which means that either the Executive or the Company may terminate the Executive’s employment at any time, for any reason, or for no reason, by providing notice thereof to the other party, subject to the terms of this Agreement.  The Executive acknowledges that the Agreement does not constitute a contract of employment for any particular period of time or impose on the Company any obligation to retain the Executive as an employee. If the Executive’s employment with the Company terminates for any reason, the Executive shall be deemed

 

 

to have resigned, effective as of such termination, as an officer or director of any subsidiary of the Company, and the Executive hereby agrees to promptly execute resignation letters documenting such resignations upon the request of the Company.

 

(e)           The Executive agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein which may be adopted from time to time by the Company.

 

2.             Compensation.  Subject to the terms of this Agreement, while the Executive is employed by the Company, the Company shall compensate her for her services as follows:

 

(a)           Salary.  The Company shall pay to the Executive a salary at the annual rate of $248,000 effective June 29, 2015, paid in accordance with the Company’s usual payroll practices.  This salary will be reviewed annually by the Board (or a designated committee thereof) and may be adjusted upward (but not downward without the Executive’s consent) in the sole discretion of the Board (or a designated committee thereof).

 

(b)           Bonus.  The Executive shall be eligible to receive an annual target bonus of 35% of her annual salary, subject to her performance of specified objectives to be established by the CEO in collaboration with the Executive each year.  Actual bonus payout may be below or above the annual target bonus subject to performance.

 

(c)           Equity Awards.  The Executive shall be eligible to receive equity awards through participation in the Company’s equity incentive programs, as determined in the sole discretion of the Board (or a designated committee thereof).

 

(d)           Other Benefits.  The Executive shall be eligible for all medical, dental and other benefits and fringe benefits to the same extent and on the same terms as those benefits are provided by the Company from time to time to the Company’s other senior management members, including paid vacation.  In addition, the Company shall pay for the Executive’s parking at or near the Company’s headquarters at One Kendall Square, Cambridge, MA.

 

(e)           Expense Reimbursement.  The Company will reimburse the Executive for all reasonable travel, entertainment and other expenses incurred or paid by the Executive in connection with, or related to, the performance of her duties, responsibilities or services under this Agreement, provided that such expenses are incurred and accounted for in accordance with the reasonable policies and procedures established by the Company.

 

(f)            Withholding.  All salary, bonus and other compensation payable to the Executive shall be subject to applicable withholding taxes.

 

(g)           Indemnification and Insurance.

 

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(i)            The Company and the Executive have entered into the Company’s standard Indemnification Agreement, and such agreement remains in full force and effect.

 

(ii)           The Company shall maintain directors and officers liability insurance in commercially reasonably amounts (as reasonably determined by the Board), and the Executive shall be covered under such insurance to the same extent as other senior management members.

 

3.             Termination.  The Executive’s employment with the Company pursuant to this Agreement shall terminate upon the occurrence of any of the following:

 

(a)           At the election of the Company, for Cause (as defined below), immediately upon written notice by the Company to the Executive, which notice shall identify the Cause upon which the termination is based.  For the purposes of this Section 3(a), “Cause” shall mean (i) a good faith finding by the Company that (A) the Executive has failed to perform her reasonably assigned duties for the Company and has failed to remedy such failure within 10 days following written notice from the Company to the Executive notifying her of such failure, (B) the Executive has engaged in dishonesty, gross negligence or misconduct, or (C) the Executive’s conviction, or the entry of a pleading of guilty or nolo contendere by the Executive to, any crime involving moral turpitude or any felony;

 

(b)           Upon the death or permanent disability of the Executive, if such disability renders the Executive incapable of performing her duties, as reasonably determined by the Company, and the Executive is considered disabled within the meaning of the relevant U.S. Treasury regulations;

 

(c)           At the election of either party, upon not less than 10 days’ prior written notice of termination; or

 

(d)           At the election of the Executive, for Good Reason (as defined below), immediately upon written notice by the Executive to the Company, which notice shall identify the Good Reason upon which the termination is based.  For the purposes of this Section 3(d), “Good Reason” for termination shall mean (i) a material adverse change in the Executive’s authority, duties or compensation without the prior consent of the Executive, or (ii) a material breach by the Company of the terms of this Agreement, which breach is not remedied by the Company within 10 days following written notice from the Executive to the Company notifying it of such breach.

 

4.             Rights Upon Termination.  Upon the Date of Termination (as defined below), the Company shall provide to the Executive the following:

 

(a)           Accrued Obligations.  The Company will pay the Executive her Accrued Obligations promptly following the Date of Termination.  For purposes of this Agreement, “Date of Termination” means the last day the Executive is employed by the Company pursuant to this Agreement, and “Accrued Obligations” means (i) the portion of the Executive’s salary as has accrued prior to any termination of her employment with the Company and has not yet been paid, (ii) an amount equal to the value of any accrued unused vacation days or paid time off, (iii) the amount of any annual bonus declared but not yet paid and (iv) the amount of any expenses properly incurred by the Executive on behalf of the Company prior to any such termination and not yet reimbursed pursuant to Section 2(e)

 

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hereof.

 

(b)           Severance.

 

(i)            If the Executive’s employment is terminated without Cause by the Company under Section 3(c) or by the Executive for Good Reason under Section 3(d) in the absence of a Change in Control (as defined in the Company’s 2015 Equity Incentive Plan, the Company shall (A) continue to pay the Executive her base salary as in effect on the Date of Termination, paid in accordance with the Company’s usual payroll practices, for a period of 12 months following the Date of Termination and (B) if the Executive is participating in the Company’s employee group health insurance plans on the Date of Termination, continue such benefits for a period of 6 months following the Date of Termination.

 

(ii)           If the Executive’s employment is terminated without Cause by the Company under Section 3(c) or by the Executive for Good Reason under Section 3(d) within the twelve month period following a Change in Control, the Company shall (A) pay the Executive an amount equal to 1.5 times her base salary as in effect on the Date of Termination plus 100% of her target annual bonus, (B) accelerate in fully the vesting on all outstanding, unvested equity awards held by the Executive and (C) if the Executive is participating in the Company’s employee group health insurance plans on the Date of Termination, continue such benefits for a period of 12 months following the Date of Termination.

 

(iii)          The payment to the Executive of the amounts payable under this Section 4(b) shall (A) be contingent upon the execution by the Executive of a release in a form reasonably acceptable to the Company and (B) constitute the sole remedy of the Executive in the event of a termination of the Executive’s employment in the circumstances set forth in this Section 4(b).

 

(c)           COBRA.  The Executive and any of her dependents shall be eligible for COBRA continuation coverage (as described in section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”)) at the Executive’s own cost to the extent permitted by applicable law.

 

(d)           Other Benefits.  The Company shall provide any other payments or benefits to be provided to the Executive by the Company or a subsidiary pursuant to any Executive benefit plans or arrangements established or adopted by the Company or a subsidiary (including, without limitation, any rights to indemnification from the Company (or from a third-party insurer for directors and officers liability coverage) under Section 2(g) or otherwise with respect to any costs, losses, claims, suits, proceedings, damages or liabilities to which the Executive may become subject which arise out of, are based upon or relate to the Executive’s employment by the Company), to the extent such amounts are due from the Company in accordance with the terms of this Agreement or such plans or arrangements.

 

5.             Proprietary Information.

 

(a)           The Executive agrees that all information, whether or not in writing, of a private, secret or confidential nature concerning the Company’s business, business relationships or financial affairs (collectively, “Proprietary Information”) is and shall be the exclusive

 

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property of the Company.  Without limitation, Proprietary Information shall include inventions, products, processes, methods, techniques, formulas, compositions, compounds, projects, development plans, research data, clinical data, confidential communications with regulatory bodies and other third parties, financial data, personnel data, computer programs, customer and supplier lists, and contacts with or knowledge of customers or prospective customers of the Company.  The Executive will not disclose any Proprietary Information to any person or entity other than employees of the Company with authorization to access the information or use the same for any purposes (other than in the performance of her duties as an Executive of the Company) without approval by an Executive of the Company, during or after her employment with the Company, unless and until such Proprietary Information has become public knowledge without fault of the Executive or such disclosure is required by law.

 

(b)           The Executive agrees that all files, letters, memoranda, reports, records, data, sketches, drawings, laboratory notebooks, program listings, or other written, photographic, electronic, or other tangible material containing Proprietary Information, in any form, whether created by the Executive or others, which shall come into her custody or possession, shall be the exclusive property of the Company and will be used by the Executive only in the performance of her duties for the Company.  All such materials or copies thereof and all tangible property of the Company in the custody or possession of the Executive shall be delivered to the Company, upon the earlier of (i) a request by the Company or (ii) the Date of Termination of her employment.  After such delivery, the Executive shall not retain any such materials or copies thereof or any such tangible property.

 

(c)           The Executive agrees that her obligation not to disclose or to use information and materials of the types set forth in Sections 5(a) and 5(b), and her obligation to return materials and tangible property, set forth in Section 5(b), also extends to such types of information, materials and tangible property of customers of the Company or suppliers to the Company or other third parties, including licensors and licensees, who may have disclosed or entrusted the same to the Company or to the Executive.

 

6.             Inventions.

 

(a)           The Executive will make full and prompt disclosure to the Company of all inventions, improvements, discoveries, methods, developments, software, and works of authorship, whether patentable or not, which are created, made, conceived or reduced to practice by her, or under her direction, or jointly with others, during her employment by the Company, whether or not during normal working hours or on the premises of the Company (all of which are collectively referred to in this Agreement as “Inventions”).

 

(b)           The Executive agrees to assign and does hereby assign to the Company (or any person or entity designated by the Company) all of her right, title and interest in and to all Inventions and related patents, patent applications, trade secrets, copyrights and copyright applications.  However, this Section 6(b) shall not apply to Inventions which are unrelated to the present or planned business or research and development of the Company and which are made and conceived by the Executive outside of normal working hours, outside the Company’s premises and do not involve use of the Company’s tools, devices, equipment or Proprietary Information.  The Executive understands that, to the extent this Agreement is to be construed in accordance with the laws of any state which precludes a requirement in an Executive agreement to assign certain classes of inventions made by an

 

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Executive, this Section 6(b) shall be interpreted to not apply to any invention which a court rules and/or the Company agrees to fall within such classes.

 

(c)           The Executive agrees to cooperate fully with the Company, both during and after her employment with the Company, with respect to the procurement, maintenance and enforcement of patents, trademarks, copyrights and other intellectual property rights (both in the United States and foreign countries) relating to Inventions.  The Executive shall sign all papers, including, without limitation, copyright applications, patent applications, declarations, oaths, formal assignments, assignments of priority rights, and powers of attorney, which the Company may deem necessary or desirable in order to protect its rights and interests in any Invention.  The Executive further agrees that if the Company is unable to secure the signature of the Executive on any such papers with reasonable effort, an executive officer of the Company shall be entitled to execute any such papers as the agent and the attorney-in-fact of the Executive, and the Executive hereby irrevocably designates and appoints each executive officer of the Company as her agent and attorney-in-fact to execute any such papers on her behalf, and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights and interests in any Invention, under the conditions described herein.

 

7.             Remedies.  The Executive agrees and acknowledges that her breach of Section 5 or Section 6 cannot be reasonably or adequately compensated for in money damages alone and would cause irreparable injury to the Company.  Accordingly, the Executive agrees that, with respect to a breach of such Sections, the Company is entitled to, in addition to all other rights and remedies available to the Company at law or in equity, specific performance and immediate injunctive relief, without posting a bond.

 

8.             Non-Compete and Non-Solicitation.

 

(a)           Restricted Activities.  While the Executive is employed by the Company and for a period of one year after the termination or cessation of such employment for any reason, the Executive will not directly or indirectly:

 

(i)            engage in any business or enterprise (whether as owner, partner, officer, director, employee, consultant, investor, lender or otherwise, except as the holder of not more than 1% of the outstanding stock of a publicly-held company) that develops, manufactures, markets, licenses, sells or provides any product or service that competes with any product or service developed, manufactured, marketed, licensed, sold or provided, or planned to be developed, manufactured, marketed, licensed, sold or provided by the Company while the Executive was employed by the Company; or

 

(ii)           either alone or in association with others (A) solicit, or permit any organization directly or indirectly controlled by the Executive to solicit, any employee of the Company to leave the employ of the Company, or (B) solicit for employment, hire or engage as an independent contractor, or permit any organization directly or indirectly controlled by the Executive to solicit for employment, hire or engage as an independent contractor, any person who was employed by the Company at any time during the last six months term of the Executive’s employment with the Company.

 

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(b)           Extension.  If the Executive violates the provisions of Section 8(a), the Executive shall continue to be bound by the restrictions set forth in Section 8(a) until a period of one year has expired without any violation of such provisions.

 

(c)           Interpretation.  If any restriction set forth in Section 8(a) is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable.

 

(d)           Equitable Remedies.  The restrictions contained in this Section 8 are necessary for the protection of the business and goodwill of the Company and are considered by the Executive to be reasonable for such purpose.  The Executive agrees that any breach of this Section 8 is likely to cause the Company substantial and irrevocable damage which is difficult to measure.  Therefore, in the event of any such breach or threatened breach, the Executive agrees that the Company, in addition to such other remedies which may be available, shall have the right to obtain an injunction from a court restraining such a breach or threatened breach and the right to specific performance of the provisions of this Section 8 and the Executive hereby waives the adequacy of a remedy at law as a defense to such relief.

 

9.             Compliance with Section 409A.

 

(a)           General.  It is the intention of both the Company and the Executive that the benefits and rights to which the Executive could be entitled pursuant to this Agreement comply with Section 409A of the Code and the Treasury Regulations and other guidance promulgated or issued thereunder (“Section 409A”), to the extent that the requirements of Section 409A are applicable thereto, and the provisions of this Agreement shall be construed in a manner consistent with that intention.  If the Executive or the Company believes, at any time, that any such benefit or right that is subject to Section 409A does not so comply, it shall promptly advise the other and shall negotiate reasonably and in good faith to amend the timing of such benefits and rights such that they comply with Section 409A (with the most limited possible economic effect on the Executive).

 

(b)           Distributions on Account of Separation from Service.  If and to the extent required to comply with Section 409A, no payment or benefit required to be paid under this Agreement on account of termination of the Executive’s employment shall be made unless and until the Executive incurs a “separation from service” within the meaning of Section 409A.

 

(c)           6 Month Delay for “Specified Employees”.

 

(i)            If the Executive is a “specified employee,” then no payment or benefit that is payable on account of the Executive’s “separation from service,” as that term is defined for purposes of Section 409A, shall be made before the date that is six months after the Executive’s “separation from service” (or, if earlier, the date of the Executive’s death) if and to the extent that such payment or benefit constitutes deferred compensation (or may be nonqualified deferred compensation) under Section 409A and such deferral is required to comply with the requirements of Section 409A.  Any payment or benefit delayed by reason of the prior sentence shall be paid out or provided in a single lump sum at the end of

 

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such required delay period in order to catch up to the original payment schedule.  There shall be added to any payments that are delayed pursuant to this provision interest at the prime rate as reported in the Wall Street Journal for the date of the Executive’s separation from service.  Such interest shall be calculated from the date on which the payment otherwise would have been made until the date on which the payment is made.

 

(ii)           For purposes of this provision, the Executive shall be considered to be a “specified employee” if, at the time of her separation from service, the Executive is a “key employee” (within the meaning of Section 416(i) of the Code) of the Company (or any person or entity with whom the Company would be considered a single employer under Section 414(b) or Section 414(c) of the Code) any stock in which is publicly traded on an established securities market or otherwise.

 

(d)           No Acceleration of Payments.  Neither the Company nor the Executive, individually or in combination, may accelerate any payment or benefit that is subject to Section 409A, except in compliance with Section 409A and the provisions of this Agreement, and no amount that is subject to Section 409A shall be paid prior to the earliest date on which it may be paid without violating Section 409A.

 

(e)           Treatment of Each Installment as a Separate Payment.  For purposes of applying the provisions of Section 409A to this Agreement, each separately identified amount to which the Executive is entitled under this Agreement shall be treated as a separate payment.  In addition, to the extent permissible under Section 409A, any series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

 

(f)            Taxable Reimbursements.

 

(i)            Any reimbursements by the Company to the Executive of any eligible expenses under this Agreement that are not excludable from the Executive’s income for Federal income tax purposes (the “Taxable Reimbursements”) shall be made by no later than the earlier of the date on which they would be paid under the Company’s normal policies and the last day of the taxable year of the Executive following the year in which the expense was incurred.

 

(ii)           The amount of any Taxable Reimbursements to be provided to the Executive during any taxable year of the Executive shall not affect the expenses eligible for reimbursement to be provided in any other taxable year of the Executive.

 

(iii)          The right to Taxable Reimbursements shall not be subject to liquidation or exchange for another benefit.

 

10.                               Survival.  The Executive agrees that her obligations under Sections 5, 6, 8 and 9 of this Agreement shall survive the termination of her employment or the Agreement Term, regardless of the reason for such termination.

 

11.                               Acknowledgement.  The Executive neither acknowledges and agrees that the Company does not desire her to use any confidential information of any prior employer during her employment hereunder and that the Company will not ask for nor accepts any such confidential information.  This acknowledgement shall not reduce or otherwise affect the Executive’s rights to

 

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indemnification from the Company.  The Executive acknowledges that she may be deemed to be a Section 16 officer of the Company and therefore subject to the various regulatory filing responsibilities that must be met by directors, officers and principal stockholders as required by Section 16 of the Securities and Exchange Act of 1934, as amended, and the related rules and regulations of the Securities and Exchange Commission.

 

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.                               Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the Commonwealth of Massachusetts.  Both parties agree to exclusive venue in the state (Middlesex County) or federal courts located in the Commonwealth of Massachusetts.

 

14.                               Successors and Assigns.  This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

 

15.                               Entire Agreement.  This Agreement, with the Indemnification Agreement, contains the entire agreement of the parties and supersedes any prior understandings or agreements between the Executive and the Company.  This Agreement may be changed only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought.

 

[Remainder of the page intentionally left blank]

 

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

 

 

	
 
    	
Company
    
	
 
    	
 
    
	
 
    	
InVivo Therapeutics   Holdings Corp.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mark D. Perrin
    
	
 
    	
Name:
    	
Mark D. Perrin
    
	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Executive
    
	
 
    	
 
    
	
 
    	
Tamara L. Joseph
    
	
 
    	
 
    
	
 
    	
/s/ Tamara L. Joseph
    

 

10Exhibit

Exhibit 10(b)
KIMBALL SEVERANCE BENEFITS PLAN

A.  Introduction

Kimball International, Inc. hereby restates the Kimball Severance Benefits Plan, effective as of July 1, 2014, to provide severance benefits to Eligible Employees who lose their jobs under certain circumstances.  This document describes the Plan's provisions and serves as both the official Plan document and the summary plan description required by ERISA, and supersedes the terms of any previous severance plan sponsored by Kimball International, Inc.

The Plan uses certain defined terms that appear as capitalized words or phrases. When you encounter a capitalized word or term, you should turn to the Glossary (Section I) to find its meaning.

B.  Severance Benefits

1.    Severance Benefits.  You will be entitled to receive the Severance Benefits described in this section, if you experience a Qualifying Termination as an Eligible Employee and satisfy the following additional conditions: (i) remain employed until the termination date selected by the Company; (ii) timely sign a Release Agreement acceptable to the Company; and (iii) do not revoke the Release Agreement:

(a)    Severance Pay.  If you incur an initial Qualifying Termination as an Eligible Employee, the amount of your severance pay will equal one week of Base Pay for each week of your Severance Period.  You will receive the severance pay in a single payment as soon as administratively feasible after signing, without revoking, the Release Agreement.

(b)    Medical Insurance.  If you are covered by the Company's medical insurance plan at the time of a Qualifying Termination, the Company will pay you, as a Medical Insurance Allowance, an amount equal to the product of (i) the number of weeks in your Severance Period and (ii) the weekly COBRA premium amount for the coverage you had immediately before termination.  The Company will also pay you a special reimbursement amount equal to your expected income tax liability, as determined by the Plan Administrator in its sole discretion, on the sum of the Medical Insurance Allowance and the special reimbursement amount.  You will receive the Medical Insurance Allowance and the special reimbursement amount in a single payment as soon as administratively feasible after termination.

2.    Qualifying Termination.  A Qualifying Termination is a termination of regular employment that is initiated by the Company without cause.  The following events do not constitute a Qualifying Termination, and you will not receive any Plan benefits if your employment is terminated for any of the following reasons:
(a)    Voluntary resignation, voluntary retirement, or other termination initiated by the Employee;

(b)    Termination initiated by the Company for cause (including but not limited to the Employee's malfeasance, misconduct, unsatisfactory work performance, or breach of an applicable employment agreement);

(c)    A layoff that the Plan Administrator expects will not result in the

Employee's permanent loss of employment with the Company; 
(d)    The Employee's death or disability; or

(e)    The Employee's failure to accept a substantially equivalent position with the Company, a related business entity, or any employer that becomes the successor to all or a portion of the Company through merger, stock purchase, asset purchase, or other form of corporate transaction.

3.    Other Severance Benefits Arrangements.  This Plan supersedes any previous severance plan, policy, or practice of general applicability.  If the Company agrees to provide severance benefits to a specific employee or group of employees in addition to or in lieu of the benefits provided generally under this Plan, that arrangement may provide that it is part of, and subject to the general terms and conditions of, this Plan.

4.    Interpretation.  This Plan will be interpreted and applied in a manner consistent with the applicable standards for nonqualified deferred compensation plans established by Internal Revenue Code Section 409A and its interpretive regulations and other regulatory guidance.  To the extent that any terms of the Plan would subject an Employee to gross income inclusion, interest, or additional tax pursuant to Internal Revenue Code Section 409A, those terms are to that extent superseded by, and will be adjusted to the minimum extent necessary to satisfy, or to be exempt from coverage by, the applicable Internal Code Section 409A standards.

C.  Funding Of Plan Benefits

The Company intends to pay Plan benefits from the Company's general assets, without setting aside assets in trust or otherwise placing assets beyond the reach of the Company's general creditors.

D.  Plan Administrator

The Plan Administrator administers the Plan and is a named fiduciary of the Plan within the meaning of ERISA. The Plan Administrator has the discretionary authority to interpret all Plan provisions and to determine all issues arising under the Plan, including issues of eligibility, coverage, and benefits.  The Plan Administrator's failure to enforce any provision of this Plan shall not affect its right later to enforce those provisions or any other provision of the Plan.  The Plan Administrator may delegate some of its responsibilities under the Plan to its agents.

E.  Claims Procedures

If you believe that you are entitled to a benefit under the Plan that has not been provided to you, you must submit a written claim for the benefit to the Plan Administrator within thirty (30) days after your date of termination.  If the Plan Administrator determines that your claim for benefits should be denied in whole or in part, you will receive written notice of the denial within a reasonable period of time not to exceed ninety (90) days (or under special circumstances, one hundred eighty (180) days) after the Plan Administrator receives your claim.  The notice will specify the reason(s) for the denial, the Plan provision(s) on which the denial is based, and the procedure for requesting review of the denied claim.  When appropriate, the notice will describe any material needed to perfect the claim and explain why that material is necessary.

You may request review of a denied claim by submitting a written request for review to the Plan Administrator within sixty (60) days after you receive notice that your claim was denied.  Your request must be signed by you or your authorized representative.  In connection with the review, you or your authorized representative may review pertinent documents in the Plan Administrator’s possession and submit written issues, comments, documents or records to the Plan Administrator.  In addition, you may request to receive, free of charge, copies of all documents, records, and other information that is relevant to your claim for benefits.  The Plan Administrator's review will take into account all comments, documents, records, and other information that you submit on appeal even if that information was not submitted or considered in initial benefit determination. Notice of the Plan Administrator's decision on review will be sent to you within sixty (60) days of receipt of the request or, if special circumstances require an extension of time for processing a request, within one hundred twenty (120) days after receipt of your request.  If the decision upholds the denial of your claim, it will explain the reason(s) with reference to the specific Plan provision(s) on which the decision is based.

F.  Required Statement Of Your Rights

Your Rights Under ERISA

You are a participant in the Plan if you are an Eligible Employee.  As a participant in the Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 ("ERISA").  The following lengthy statement concerning rights of participants under ERISA is required by regulations issued by the U.S. Department of Labor.  ERISA provides that all Plan participants are entitled to:

Receive Information About Your Plan and Benefit

Examine, without charge, at the Company's offices and at work sites, all Plan documents and a copy of the latest annual report (Form 5500 series) filed by the Plan with the U.S. Department of Labor.

Obtain, upon written request, copies of all Plan documents governing the operation of the Plan including the latest annual report (Form 5500 series), updated summary plan description, and other Plan information upon written request to the Plan Administrator.  The Plan Administrator may make a reasonable charge for the copies. 
Receive a summary of the Plan's annual financial report.  The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report.

Prudent Actions by Plan Fiduciaries

In addition to creating rights for Plan participants, ERISA imposes duties upon the persons who are responsible for the operation of the Plan.  These persons, referred to as "fiduciaries," have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries.  Neither the Company nor any other person may terminate your employment
or discriminate against you to prevent you from obtaining a Plan benefit or exercising your rights under ERISA.

Enforce Your Rights

If your claim for a benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision, without charge, and to appeal any denial all within certain time limits.  Under ERISA, there are steps that you can take to enforce the rights described above. For example, if you request a copy of Plan documents or the latest annual report from the Plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the Plan Administrator's control.  If you have a claim for a Plan benefit that is denied or ignored, in whole or in part, you may file suit in a state or federal court.  In addition, if you disagree with the Plan's decision, or lack thereof, concerning the qualified status of a domestic relations order, you may file suit in federal court.  If Plan fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court.  The court will decide who should pay court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay these costs and fees, for example, if it finds that your claim is frivolous.

Assistance with Your Questions

If you have any questions about the Plan, you should contact the Plan Administrator.  If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C., 20210.  .

G.  Amendment And Termination Of Plan

The Company expects to continue the Plan indefinitely, but the Company has the right to change or terminate the Plan and the benefits with respect to participants who have not yet signed a Release Agreement.

H.  Specific Information Required By ERISA

	
		
	Plan Name:
	Kimball Severance Benefits Plan

	Name, Address, and Telephone
Number of Plan Sponsor:
	Kimball International, Inc.
1600 Royal Street
Jasper, IN 47549
812-482-1600

	Plan Sponsor's Identification No.:
	35-2079204

	Plan Number:
	510

	Type of Plan:
	The Plan is a welfare benefit plan providing severance benefits to Eligible Employees.

	Type of Administration:
	The Plan is administered by Kimball International, Inc.

	
		
	Name, Address, and Telephone
Number of Plan Administrator:
	Kimball International, Inc.
1600 Royal Street
Jasper, IN 47549
812-482-1600

	Agent for Service of Legal Process:
	Service of legal process may be made on the Plan
Administrator at the address shown above.

	Basis of Keeping Records:
	Fiscal year

I.  Glossary

Wherever used in this document, the following terms have the following meanings, unless a different meaning is clearly indicated by the context.

Base Pay means one of the following, determined as of the date of the Qualifying Termination: (i) for a salaried Eligible Employee, the weekly salary; (ii) for an hourly-paid Eligible Employee, the regular base  hourly rate, including shift premium(excluding incentive/bonus and all other additional/special pay) times forty hours; or (iii) for Eligible Employees on a per mile pay system or regular part-time status, the average weekly pay (excluding overtime premium) for the six (6) weeks immediately preceding notice of termination.

Company means Kimball International, Inc. and related U.S. entities.  For the avoidance of doubt, Kimball Electronics, Inc. and its subsidiaries are only considered a related entity until October 31, 2014.

Eligible Employee means a regular (non-temporary), full-time or part-time Employee who is assigned by the Company to perform services principally in the United States, receives compensation directly from the Company that the Company reports on a Federal Wage and Tax Statement (Form W-2), and has at least one full Year of Service.

Employee means an individual who is a common law employee of the Company.

ERISA means the Employee Retirement Income Security Act of 1974, as Amended
Medical Insurance Allowance means the medical insurance allowance described in Section B.1(b).

Plan means the Kimball Severance Benefits Plan as set forth in this document and as amended from time to time.

Plan Administrator means Kimball International, Inc.

Qualifying Termination means the termination of an Eligible Employee's employment as described in Section B.2.

Release Agreement means a written document, in a form determined by the Company, that includes a release of any claims you may have against the Company or related entities, including any claims under the federal Age Discrimination in Employment Act ("ADEA").

Severance Benefits means the Plan benefits described in Section B.1.

Severance Period means, with respect to an Eligible Employee, the number of weeks, subject to a minimum of two weeks and a maximum of 26 weeks, equal to the Eligible Employee's Years of Service.

Year(s) of Service means, for an individual, the number of completed 12-month periods, as shown on the Company's official records, equal to (i) the number of full months that the individual has been employed by the Company, (ii) divided by 12, and (iii) rounded down to the nearest number of completed 12-month periods, subject to below. If an Eligible Employee was employed by the Company on June 30, 2014, all of the Eligible Employee’s prior service (whether bridged or not) with Kimball International, Inc, or any related company will be credited for the Year(s) of Service under this Plan.   If a former Employee was not employed by the Company on June 30, 2014, but is rehired on or after July 1, 2014, only the completed months of service from most recent date of hire (rehire date) forward will be credited for Year(s) of Service under this Plan and no prior completed or bridged service shall be credited for Years of Service.

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