Attached files
Exhibit
10.49
Executive
Retention Agreement
This
Executive Retention Agreement (the "Agreement") is effective as of
July 2009 (the "Effective Date"), by and between Michael C. Genau (the
"Executive"), and Kinetic Concepts, Inc. ("KCI" or the "Company") (together the
"Parties").
RECITALS
WHEREAS, the Executive has accepted
employment with the Company as President, Global VAC and has significant
strategic and management responsibilities necessary to the continued successful
operation of the Company’s business;
WHEREAS, the Board of Directors of the
Company (the "Board") has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the continued
dedication and objectivity of the Executive;
WHEREAS, the Board believes that it is
imperative to provide the Executive with certain severance benefits upon the
Executive’s termination of employment under the circumstances described herein
that provide the Executive with the financial incentive and encouragement
necessary to remain with the Company on a long-term basis.
NOW, THEREFORE, in
consideration of the mutual covenants contained herein, the Parties agree as
follows:
1. Term of
Agreement. The Company and the Executive agree that this
Agreement will be in effect from the Effective Date until the termination of the
Executive's employment with the Company as set forth in Section 2
herein.
2. At-Will
Employment. While this Agreement is in effect, the Executive's
employment with the Company shall continue to be at-will and, as such, may be
terminated by the Executive or the Company at any time, for any reason and with
or without advance notice, subject to the Company's severance obligations set
forth herein.
3. Definition of
Terms. The following terms referred to in this Agreement shall
have the following meanings:
(a) Change in
Control. A Change in Control means the first to occur of any
one of the following events: (i) consummation of any sale, lease, exchange, or
other disposition (in one transaction or a series of related transactions) of
all or substantially all of the assets of the Company (together with the assets
of the Company's direct and indirect subsidiaries) to any Person or group of
related Persons, as that term is used in Section 13(d) of the Exchange Act (a
"Group"), together with any affiliates thereof; or (ii) any Person or Group
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of Shares representing more than 50% of the
aggregate voting power of the issued and outstanding stock entitled to vote in
the election of directors of the Company; or (iii) the shareholders of the
Company approve a plan of complete liquidation or dissolution of the
Company.
(b) Qualifying
Termination. A "Qualifying Termination" shall mean the
Executive's (i) termination of employment by the Company without "Cause;" or
(ii) the Executive's resignation from employment for "Good Reason."
(c) Cause. "Cause"
shall mean conduct involving one or more of the following: (i) the
substantial and continuing failure of the Executive to render services to the
Company or any subsidiary or affiliate in accordance with the Executive’s
obligations and position with the Company, subsidiary or affiliate; provided that the
Company or any subsidiary or affiliate provides the Executive with adequate
notice of such failure and, if such failure is capable of cure, the Executive
fails to cure such failure within 30 days of the notice; (ii) dishonesty, gross
negligence, or breach of fiduciary duty; (iii) the Executive's indictment of,
conviction of, or no contest plea to, an act of theft, fraud or embezzlement;
(iv) the commission of a felony; or (v) a material breach of the terms of an
agreement between the Executive and the Company or any subsidiary or affiliate
on the other hand or a material breach of any Company policy.
(d) Good
Reason. "Good Reason" shall mean one or more of the
following: (i) the material reduction of Executive’s duties and/or
responsibilities, which is not cured within 30 days after the Executive provides
written notice to the Company; provided, however, it
shall not be considered Good Reason if, upon or following a Change in Control,
the Executive’s duties and responsibilities remain the same as those prior to
the Change in Control but the Executive’s title and/or reporting relationship is
changed; (ii) the material reduction of Executive’s base salary (which is not
cured within 30 days after the Executive provides written notice), other than
across-the-board decreases in base salary applicable to all executive officers
of the Company; or (iii) the relocation of the Executive to a business location
in excess of fifty (50) miles from the Company’s headquarters in San Antonio
(which is not cured within 30 days after the Executive provides written notice).
To be considered a resignation from employment on account of Good Reason, the
Executive must provide written notice to the Company (stating that Executive
believes one or more of the Good Reason conditions described above exists)
within 30 days of the initial existence of such condition, and must resign
within 30 days of the Company’s failure to cure such condition.
(e) Disability. For
purposes of this Agreement, "Disability" shall mean that the Executive is
unable, with or without reasonable accommodation, to perform one or more
essential functions of his or her position as an employee of the Company as the
result of his or her incapacity due to physical or mental impairment for more
than 90 days (not necessarily consecutive) in any 180-day period.
4. Severance Benefits Upon a
Qualifying Termination.
(a) Qualifying Termination in
Connection with a Change in Control. If the Executive
experiences a Qualifying Termination upon or within 24 months following a Change
of Control, then the Executive shall be entitled to receive the following
severance benefits, which shall be in addition to any salary earned and vacation
accrued up to and including the date of termination, as determined by the
Company: (i) a severance payment in the amount of two times the sum
of the Executive's annual base salary plus annual target bonus, payable as a
lump sum payment within five business days of the date the Executive executes
and returns a full waiver and release of all claims in a form provided by the
Company in the form attached hereto; and (ii) if the Executive timely elects
COBRA health insurance continuation coverage, reimbursement of COBRA premiums
for up to 18 months following the date of termination.
(b) Qualifying Termination not
in Connection with a Change in Control. If the Executive
experiences a Qualifying Termination that is not in connection with a Change of
Control as described in Section 4(a) herein, then the Executive shall be
entitled to receive the following severance benefits, which shall be in addition
to any salary earned and vacation accrued up to and including the date of
termination, as determined by the Company: (i) a severance payment in the amount
of the Executive's annual base salary plus annual target bonus, payable as a
lump sum payment within five business days of the date the Executive executes
and returns a full waiver and release of all claims in the form attached hereto;
and (ii) if the Executive timely elects COBRA health insurance continuation
coverage, reimbursement of COBRA premiums for up to 12 months following the date
of termination.
5. Termination of Executive's
Employment Other than a Qualifying Termination
(a) Termination on Account of
Executive's Disability or Death. If the Company terminates the
Executive’s employment as a result of the Executive’s Disability or due to the
death of the Executive, then the Executive shall not be entitled to receive any
severance benefits and shall only be entitled to receive any salary earned and
vacation accrued up to and including the date of termination; provided, however,
that this provision shall not have any effect upon any rights the Executive or
his estate may have under the terms of any Company short or long-term disability
policy or life insurance policy.
(b) Termination for Cause or
Resignation without Good Reason. If the Executive is
terminated for Cause or resigns from employment without Good Reason, then the
Executive shall not be entitled to receive any severance benefits and shall only
be entitled to receive any salary earned and vacation accrued up to and
including the date of termination
6. Conditions to Severance
Benefits.
(a) No
severance benefits shall be made under Sections 4(a) and (b) unless and until
the Executive shall, in consideration of such benefits, execute a full waiver
and release of all claims in the form attached hereto, which shall be delivered
to the Company within 45 days following the Executive’s
termination.
(b) The
Executive acknowledges and agrees that he or she is not entitled to any
severance or change in control benefits provided under the terms of the 1997 KCI
Severance Pay Plan or any similar agreement, plan or arrangement, other than the
Company's stock option plans.
(c) All
payment of severance benefits under this Agreement shall comply with section
409A of the Internal Revenue Code.
7. Successors.
(a) Company’s
Successors. Any successor (or parent thereof) to the Company
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) or to all or substantially all of the
Company’s business and/or assets shall assume the obligations under this
Agreement and agree expressly to perform the obligations under this Agreement in
the same manner and to the same extent as the Company would be required to
perform such obligations in the absence of a succession. For all
purposes under this Agreement, the term "Company" shall include any successor
(or parent thereof) to the Company’s business and/or assets.
(b) Executive’s
Successors. All rights of the Executive hereunder shall inure
to the benefit of, and be enforceable by, the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. Executive shall have no right to assign any of
his obligations or duties under this Agreement to any other person or
entity.
8. Notice.
(a) General. Notices
and all other communications contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered or when
mailed by U.S. registered or certified mail, return receipt requested and
postage prepaid. In the case of the Executive, mailed notices shall
be addressed to him at the home address which he most recently communicated to
the Company in writing. In the case of the Company, mailed notices
shall be addressed to its corporate headquarters, and all notices shall be
directed to the attention of its General Counsel.
(b) Notice of
Termination. Any termination by the Company for Cause or by
the Executive for Good Reason shall be communicated by a written notice of
termination to the other party hereto. Such notice shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated.
9. Arbitration. All
disputes relating to or arising out of this Agreement or otherwise in connection
with the Executive's employment with, or termination from, the Company, shall be
settled by binding arbitration in accordance with the Company's standard
arbitration policy and procedures.
10. Miscellaneous
Provisions.
(a) Waiver. No
provision of this Agreement shall be amended, modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed
by the Executive and by an authorized officer of the Company (other than the
Executive). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.
(b) Choice of
Law. The validity, interpretation, construction and
performance of this Amended Agreement shall be governed by the laws of the State
of Texas.
(c) Severability. The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
(d) Employment
Taxes. All payments made pursuant to this Agreement will be
subject to withholding of applicable income and employment taxes and other
authorized deductions.
(e) No
Representations. Each party acknowledges that it is not
relying and has not relied on any promise, representation or statement made by
or on behalf of the other party that is not set forth in this Amended
Agreement.
(f) Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together will constitute one and the same
instrument.
(g) Prior
Agreements. Except as specifically set forth in the
Non-Disclosure, Inventions Assignment and Non-Competition Agreement, this
Agreement shall supersede all prior arrangements, whether written or oral, and
understandings regarding the subject matter of this Agreement.
[Signatures
to Follow on Next Page]
In Witness
Whereof, each of the Parties has executed this Agreement, in the case of
the Company by its duly authorized officer, as of the day and year first above
written.
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COMPANY
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Kinetic
Concepts, Inc.
By: /s/ Cathy Burzek
Title: President
and Chief Executive Officer
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EXECUTIVE
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/s/
Michael C. Genau
Michael
C. Genau
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[FORM OF
RELEASE AGREEMENT]
Date
Employee
Name & Address
RE: Release
Agreement
Dear
_________:
As
discussed, this letter confirms that your employment with Kinetic Concepts, Inc.
(“KCI”) and any of its affiliates and subsidiaries (“KCI”) will end on a date to
be mutually agreed, but in no event later than ____________, 20--. In
connection with the separation, KCI will provide you with the severance benefits
set forth in paragraph 5 below, together with the KCI obligations set forth in
this letter (the “KCI Consideration”). This letter will confirm our
compromise and settlement of all the matters we discussed, as set forth
herein.
1. Release. You
agree that in exchange for the KCI Consideration you will release any and all
claims you may have against Kinetic Concepts, Inc., its affiliates,
subsidiaries, directors, officers, employees, trustees, agents, stockholders,
representatives and/or attorneys (“KCI” or the “Releasees”). With
full understanding of the contents and legal effects of this agreement, you
individually and on behalf of your spouse, heirs, executors, dependents and
successors, and each of them (“Releasors”), hereby knowingly and voluntarily
waive and release any claim against the Releasees relating to salary,
commissions, wages, benefits, stock, stock options, severance pay, bonuses, sick
leave, workers’ compensation benefits, holiday pay, vacation pay, agreements,
and any other claims or causes of action, attorneys’ fees, damages or any other
alleged liability arising out of or in any way connected this agreement, your
employment relationship with KCI, your separation from employment, and any other
transaction, occurrence, act or omission prior to the date of this agreement
between you and the Releasees.
This
release also includes any cause of action you may have based upon public policy,
claims involving discrimination or harassment of any form (including, without
limitation, sex, race, national origin, age, religion or disability), or
retaliation. This release further covers any claim you may have under
the Equal Pay Act, the Fair Labor Standards Act, the Family and Medical Leave
Act, Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act
of 1991, the Texas Commission on Human Rights Act, the Americans with
Disabilities Act, Texas Workers’ Compensation Act or any other similar federal,
state or local law or regulation and any claim for salary, wages, commissions
severance pay, bonus, sick leave, holiday pay, vacation pay, life insurance,
health or medical insurance or any other fringe benefits.
You
knowingly and voluntarily waive any possible rights or claims you may have
against KCI under the Age Discrimination in Employment Act and similar state or
local statute, and you understand and agree that:
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A.
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this
waiver is written in a manner that you understand;
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B.
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you
are not waiving any claims against KCI that may arise after this agreement
is executed;
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C.
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the
KCI Consideration is in addition to any other consideration or benefits
owed to you by KCI;
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D.
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you
have the right and have had the opportunity to consult with an attorney of
your choice regarding the terms of this agreement;
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E.
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you
have twenty-one (21) days to consider the terms of this agreement and
whether you will execute it; and
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F.
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this
agreement will only become effective or enforceable if you execute it
timely and do not revoke it during the seven (7) day revocation
period.
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2. Non-compete.
In exchange for the KCI Consideration provided pursuant to this agreement, and
because of your position as an executive with the company and your close contact
with many confidential affairs of KCI, you agree that for period of two (2)
years from your termination date (a) you will not, alone or as an officer,
director, stockholder (except for investments in securities of publicly traded
companies that are not in excess of one percent (1%) of such entity's
securities), be a partner, associate, employee, agent, principal, or in any
other capacity, participate with or become associated with any person, firm,
partnership, corporation or other entity that is engaged in a business that
competes directly with the Company (including, without limitation, the negative
pressure therapy, therapeutic surfaces, or tissue regeneration businesses of the
Company). This Non-Competition provision shall be limited to the
specific areas of responsibility and geographic areas served by you during your
employment with the Company.
3. Non-solicitation. You agree that
for a period of two (2) years from your separation of employment with the
Company, you will not directly or indirectly: (i) influence or attempt to
influence customers or suppliers of the Company or any of its present or future
subsidiaries or affiliates of the Company, either directly or indirectly, to
divert their business to any other entity then in competition with the business
of the Company or any subsidiary or affiliate of the Company, or (ii) solicit or
attempt to solicit any of the employees, agents, or consultants of the Company
out of their employment, contractual, or other relationship with the Company to
work for any business, individual, partnership, firm, or
corporation.
4. Confidentiality. In exchange for
the KCI Consideration provided pursuant to this agreement, and because of your
position as an executive in the company and your close contact with many
confidential affairs of KCI, including all matters related to KCI’s business,
such as information concerning customers, business plans, costs, profits,
markets, operations, sales, trade secrets, and plans for future developments and
any other proprietary information which is not publicly available, which
information was imparted to you because of and during your employment by KCI
(hereinafter collectively referred to as “Confidential Matters”), you agree at
all times to protect from damage or destruction and to keep secret and
confidential all Confidential Matters of KCI. Additionally, you agree
not to disclose any Confidential Matters to anyone outside of KCI or otherwise
use those Confidential Matters or your knowledge of the Confidential Matters for
your own benefit or for the benefit of any other person other than
KCI.
5. Separation
Payment. In exchange for your promises contained herein, KCI
agrees to make a separation payment to you, in an amount equal to
$--------------, provided that you do not revoke this agreement within the seven
(7) day period referenced in paragraph 1(F) above. If you timely
elect COBRA health insurance continuation coverage, you will be reimbursed for
COBRA premiums for up to 12 months or 18 months (as set forth in your
Executive Retention Agreement) following the date of termination. You
agree that as of the execution of this agreement, KCI has no outstanding
obligations to you, other than the consideration set forth herein.
6. Equity
Awards. You understand and acknowledge that your outstanding
equity awards (non-qualified stock options and restricted stock awards) will be
governed by the terms of the award agreements respecting such awards, and that
this letter does not alter or amend the terms thereof. Upon the
termination of your employment, KCI’s equity administration department will
provide you with a detail of vested equity awards that may be exercised by you
during the time periods prescribed under the equity award
agreements. All unvested equity awards will be forfeited according to
the terms of the equity award agreements and the KCI equity plans governing such
awards.
7. Miscellaneous. On or before the
date you execute this agreement, you will return all property in your
possession, custody or control which belongs to KCI, including without
limitation, keys, credit cards, computers, phone cards and any of KCI’s
documents, whether kept in paper or electronic format. Neither you
nor anyone acting on your behalf has maintained copies of any of these
documents.
Except as
required by applicable law, the terms and conditions of this agreement shall
remain confidential and you shall not respond to or participate in any public
discussion or other publicity concerning or relating to your employment with or
separation from KCI. Both parties agree and covenant not to make any
derogatory or negative comments about either party or the management, operations
or financial condition of KCI and agree to cooperate with KCI to the extent
reasonably necessary regarding the transition of matters worked on by you during
your employment with KCI. You agree to be available by phone for
consulting as needed on a reasonable basis by the Company for up to 60 days
following your termination.
You agree
to indemnify KCI and agree to hold it harmless for any claims brought by any
taxing authority against any of the Releasees seeking payment of taxes,
penalties and/or interest related to the assessment, determination and/or
reporting of taxes under federal, state and/or local law, including, without
limitation, payment of attorneys’ fees for counsel selected by KCI for its
defense of such matters and costs.
This
agreement is being executed voluntarily and without duress or
coercion. Any claim or controversy arising out of or relating to this
agreement, your employment with or separation from KCI, or arising out of any
other transaction or occurrence with the Releasees, shall be submitted to final
and binding arbitration in Bexar County Texas according to the procedures set
out in KCI's Arbitration Policy. With an adequate opportunity to
consult with legal counsel, you have knowingly and voluntarily waived any right
to trial by jury of any dispute with any of the Releasees, notwithstanding
contrary provisions of any federal, state or local law, regulation or
ordinance. Notwithstanding the foregoing provisions, if you breach
any of the non-disclosure provisions of this agreement, KCI shall have the right
to seek immediate injunctive relief in the form of a temporary restraining order
or preliminary injunction, enjoining you from such further breach of those
provisions of this agreement, pending a final ruling by the
arbitrator. This agreement is governed by the laws of the state of
Texas, without regard to conflict of laws rules.
Please
indicate your agreement to the foregoing terms by signing and dating the
agreement in the space provided below. If you decide to revoke the
agreement, it must be in writing and be received by me at the above address
before the close of business on the seventh day after execution of this
agreement.
Kinetic
Concepts, Inc.
By:
Name:
Title:
AGREED
AND ACCEPTED:
Name
Date:
WAIVER
I,
____________, understand that I may take up to twenty-one (21) days from receipt
of the ___________, 20-- Letter Agreement to which this is attached, to review
the document and determine whether to accept it. I hereby knowingly
and voluntarily waive the 21-day review provision of the Letter
Agreement. I acknowledge and understand that this Waiver is part of
the Letter Agreement between myself and Kinetic Concepts, Inc., and as such
includes all rights and claims arising prior to or on the effective date of the
Letter Agreement, including, but not limited to, the Age Discrimination in
Employment Act of 1967, Title VII of the Civil Rights Act of 1964, the Texas
Commission on Human Rights Act and the Older Workers' Benefits Protection
Act.
I have
been advised by Kinetic Concepts, Inc. to consult with my attorney prior to
executing the Letter Agreement, and I acknowledge that I fully understand the
terms of the Letter Agreement. I have not been compelled into signing
it by anyone associated with Kinetic Concepts, Inc. and have entered into the
Letter Agreement and this Waiver voluntarily and of my own free
will.
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Date
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Name
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