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EXHIBIT 10.30
AMENDED AND RESTATED
LOAN FORGIVENESS AGREEMENT
DATED OCTOBER 11, 1996 BETWEEN
THE COMPANY AND E. R. PICKARD
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EXHIBIT 10.30
AMENDED AND RESTATED LOAN FORGIVENESS AGREEMENT
This Agreement, which is effective this 11TH day of October, 1996, is
by and between Sofamor Danek Group, Inc., an Indiana corporation with principal
offices at 1800 Pyramid Place, Memphis, Tennessee 38132 (the "Company") and E.
R. Pickard ("Pickard"),
WHEREAS, Pickard is the Chairman and Chief Executive
Officer of the Company; and
WHEREAS, the Company loaned Pickard $1,740,000 pursuant
to a Promissory Note dated November 30, 1990, as amended, related to
the exercise of certain stock options, and $2,424,997 pursuant to
various Promissory Notes, as amended, for taxes related to the
exercise of those stock options (collectively, the "Loans"), which
Loans have a maturity date of March 31, 2006;
WHEREAS, the Loans are secured by shares of the
Company's common stock that are owned by Pickard;
WHEREAS, the Company and Pickard entered into a loan
forgiveness agreement on August 26, 1991 (the "Original Agreement"),
which has been, pursuant to the action of the Company's Board of
Directors, amended on February 16, 1995, December 15, 1995 and
October 13, 1996; and
WHEREAS, the Company and Pickard desire to amend the
Original Agreement and all amendments thereto and restate them in
one document.
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NOW, THEREFORE, in consideration of the mutual promises and
obligations contained herein, and each act done in furtherance thereof,
the Company and Pickard agree as follows:
1. TERM. This Agreement shall commence as of October 11, 1996
and shall terminate on March 31, 2006.
2. LOAN FORGIVENESS CREDIT. As used in this Agreement, "Loan
Forgiveness Credit" means a reduction in the principal balance
of the Loans between the Company and Pickard. During the term
of this Agreement there shall accrue to Pickard, subject to the
terms and conditions of this Agreement, Loan Forgiveness
Credits in the amounts and on the dates set forth below:
DATE AMOUNT
---- ------
December 31, 1996 $ 450,000
December 31, 1997 $ 450,000
December 31, 1998 $ 450,000
December 31, 1999 $ 450,000
December 31, 2000 $ 450,000
December 31, 2001 $ 450,000
December 31, 2002 $ 450,000
December 31, 2003 $ 450,000
December 31, 2004 $ 450,000
March 31, 2005 $ 114,997
3. VESTING OF LOAN FORGIVENESS CREDIT. Each Loan Forgiveness
Credit shall vest in favor of Pickard and shall become
effective if, but only if, on the date that a Loan Forgiveness
Credit is accrued pursuant to the schedule set forth above in
Section 2 of
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this Agreement, the following conditions have been fully
satisfied: (a) Pickard shall have remained, at his sole
discretion, employed by the Company, and (b) that the Company
shall have met or exceeded operational performance thresholds
as determined by the Company Board of Directors on an annual
basis.
4. CHANGE OF CONTROL. In the event of a change of control or a
threatened change of control in the Company, any Loan
Forgiveness Credit which has not accrued to and vested in
Pickard shall immediately vest upon the Change of Control and
the Company shall further pay to Pickard an amount equal to
cover any applicable taxes, interest, penalties and charges,
including without limitation, any interest and penalties
related in any way to the vesting of the Loan Forgiveness
Credits, together with any payments to Pickard necessary to
make the Loan Forgiveness tax neutral to Pickard.
For purposes of this Section 4 the terms "Change of
Control" and "Threatened Change of Control" shall have the
same definitions as those terms have and are used in Section
10 of the Company's Long Term Incentive Plan as of the
effective date of this Agreement.
5. ADDITIONAL COMPENSATION TO PICKARD. In connection with this
agreement the Company shall also continue to pay to
Pickard, as further compensation, a full tax gross up equal
to Pickard's personal tax liabilities resulting from (1) any
and all Loan Forgiveness Credits, and (2) the tax gross up
payments
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resulting therefrom. The Company shall also continue
to pay to Pickard, as additional compensation, an
amount equal to the amount of interest due on the
loans, plus a full tax gross up equal to Pickard's
personal tax liabilities resulting from (1) such
additional compensation, and (2) the tax gross up
payments resulting therefrom. The purpose of this
Section 5 is that all payments made by the Company to
Pickard and any and all Loan Forgiveness Credits
vested in Pickard shall be tax neutral for Pickard.
6. EXTENSION OF OPTION LOAN TERM. All appropriate
action necessary shall be taken to cause the term of
the Loans to be extended and make terminus with the
term of this Agreement.
7. ENTIRE AGREEMENT; AMENDMENT AND MODIFICATIONS. This
Agreement contains the entire agreement of the Parties
and supersedes any prior understandings and agreements
between the Company and Pickard with respect to the
subject matter of this Agreement. It may not be
changed orally, but only by agreement in writing,
signed by both the Company and Pickard.
8. RIGHT TO TERMINATE EMPLOYMENT. Nothing contained in
this Agreement shall restrict the right of the
Company to terminate the employment of Pickard at any
time.
9. BINDING EFFECT. This Agreement shall adhere to the
benefit of and be binding upon the parties hereto and
the respective heirs, executors, administrators,
successors and assigns.
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10. ENTIRE AGREEMENT. This Agreement supersedes and replaces the
Original Agreement and all amendments thereto.
11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Tennessee.
IN WITNESS WHEREOF, the Company and Pickard have executed this Amended
and Restated Loan Forgiveness Agreement as of October 11, 1996.
E. R. Pickard Sofamor Danek Group, Inc.
/s/ E. R. Pickard By: /s/ James J. Gallogly
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James J. Gallogly
President & Chief Operating Officer