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.
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.