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This excerpt taken from the TGX DEF 14A filed Apr 6, 2009. Change in
Control. With the ever present possibility of acquisition activity in
today’s business environment, it is important that our executives be able to
focus on the day-to-day execution of the Company’s business
strategy. It is our belief that the interests of stockholders
will be best served if the interests of our executives are aligned with the
stockholders’ interests, and providing change in control benefits should enable
executives to pursue potential change in control transactions that may be in the
best interests of stockholders without regard to the executives’ immediate
personal financial condition.
14
Severance
payments in connection with a Change in Control (as defined in the employment
agreements) are generally the same as in a termination by the Company without
“Cause” or by the executive for “Good Reason” except as follows. The CEO would
be entitled to receive three times the sum of the respective averages of the
last three years of base salary and bonus, paid as one lump sum (instead of the
two times benefit described above). The non-CEO Named Executive Officers each
receive one to three times their current base salary, paid over a one to three
year period (instead of the one to two times benefit described above). Also,
unvested stock options, unvested restricted shares and any long-term incentive
cash opportunity (at Target) will all vest upon a change in control and be
issued immediately and the long-term incentive cash will be paid
immediately.
Because
of the excise tax imposed on “excess parachute payments” under Internal Revenue
Code 280G, we have agreed to reimburse the CEO for any excise taxes imposed as a
result of Change in Control benefits and all taxes due on the reimbursement. For
the remainder of the Named Executive Officers, we cap their change in control
benefits so that no such excise taxes will be imposed unless payment of the
amount after taxes would result in the Executive Officer receiving a greater
after-tax amount. Change in Control benefits for the CFO and the Presidents of
Galt Medical and CP Medical are “double trigger” (meaning both (i) a change in
control occurs and (ii) termination of employment by the acquirer without
“Cause”, or by the Named Executive Officer for “Good Reason”, as defined in the
employment agreements, occurs). The agreement for the Executive VP of
Strategy and Business Development provides for resignation for any reason in
connection with a Change in Control. The CEO’s agreement provides
that a Change in Control constitutes Good Reason.
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