Exhibit 10.73
CAREFUSION
CORPORATION
EXECUTIVE CHANGE IN CONTROL
SEVERANCE PLAN
(Effective as of August 31,
2009)
The purpose of the Plan is to assure
the Company and its Affiliates of the continued dedication,
loyalty, and service of, and the availability of objective advice
and counsel from, key executives of the Company in the event of a
Change in Control. The Plan is intended to be a
“top-hat” plan (i.e., an unfunded deferred compensation
plan maintained for a select group of management or
highly-compensated employees) under ERISA sections 201(2),
301(a)(3), and 401(a)(1).
As used herein, the following
definitions shall apply:
(a) “ Affiliate ”
means any entity, whether now or hereafter existing, which
controls, is controlled by, or is under common control with, the
Company (including, but not limited to, joint ventures, limited
liability companies and partnerships), as determined by the
Board.
(b) “ Base Salary
” means a Participant’s annual rate of base salary in
effect as of the date of termination of employment, determined
without regard to any reduction thereof that constitutes Good
Reason under the Plan.
(c) “ Board ”
means the Board of Directors of the Company.
(d) “ Cause ”
means:
(i) the willful and continued
failure of the Participant to perform substantially the
Participant’s duties with the Company (other than any such
failure resulting from incapacity due to physical or mental
illness), as determined by the Board no earlier than 30 days after
a written demand for substantial performance is delivered to the
Participant, which specifically identifies the manner in which the
Company believes that the Participant has willfully and
continuously failed to perform substantially the
Participant’s duties with the Company;
(ii) the willful engaging by the
Participant in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company or its
affiliates;
(iii) conviction of a felony;
or
(iv) a material breach of the
restrictive covenants in the Plan subject to the cure provisions of
Section 6(b).
For purposes of this definition, no
act or failure to act on the part of the Participant shall be
considered “willful” unless it is done, or omitted to
be done, by the Participant in bad faith or without reasonable
belief that the Participant’s act or omission was in the best
interests of the Company.
(e) “ Change in Control
” means any of the following:
(i) the acquisition by any
individual, entity or group (within the meaning of section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended) (a
“ Person ”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended) of twenty-five percent (25%) or more of
either (x) the then outstanding Common Stock of the Company
(the “ Outstanding Company Common Stock ”), or
(y) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of Directors (the “ Outstanding Company Voting
Securities ”); provided , however , that
for purposes of this Section 2(e)(i), the following
acquisitions shall not constitute a Change in Control: (A) any
acquisition directly from the Company or any corporation controlled
by the Company; (B) any acquisition by the Company or any
corporation controlled by the Company; (C) any acquisition by
any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company; or (D) any acquisition by any corporation that is a
Non-Control Acquisition (as defined in Section 2(e)(iii));
or
(ii) individuals who, as of the
effective date of the Plan, constitute the Board (the “
Incumbent Board ”) cease for any reason to constitute
at least a majority of the Board; provided , however
, that any individual becoming a Director subsequent to the
effective date whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least a
majority of the Directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(iii) consummation of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or the acquisition by the Company of assets or shares of
another corporation (a “ Business Combination
”), unless, such Business Combination is a Non-Control
Acquisition. A “ Non-Control Acquisition ” shall
mean a Business Combination where: (x) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than fifty percent (50%) of, respectively, the then
outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be; (y) no Person (excluding any
employee benefit plan (or related trust) of the Company
or
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such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, twenty-five
percent (25%) or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the
extent that such ownership existed prior to the Business
Combination (including any ownership that existed in the Company or
the company being acquired, if any); and (z) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) approval by the stockholders of
the Company of a complete liquidation or dissolution of the
Company.
(f) “ Code ”
means the Internal Revenue Code of 1986, as amended, and the
regulations and Treasury guidance promulgated under the
Code.
(g) “ Company ”
means CareFusion Corporation, a Delaware corporation, or, except as
utilized in the definition of Change in Control, its
successor.
(h) “ Change in Control
Date ” means the date on which a Change in Control
becomes effective.
(i) “ Director ”
means a member of the Board.
(j) “ Disability
,” unless the Board specifies otherwise, has the meaning
specified in the Company’s long-term disability plan
applicable to the Participant at the time of Disability.
(k) “ ERISA ”
means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and guidance promulgated under
it.
(l) “ Good Reason
” means
(i) a material reduction of the
Participant’s base compensation (including Base Salary or
Target Bonus);
(ii) a material diminution in the
Participant’s authority, duties, or
responsibilities;
(iii) a material diminution in the
authority, duties, or responsibilities of the supervisor to whom
the Participant is required to report;
(iv) a material diminution in the
budget over which the Participant retains authority; or
(v) material change in the
geographic location at which the Participant must perform services,
where a change of at least 35 miles or to another country will be
deemed material.
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The Participant must provide notice to the
Company of the existence of one of the “Good Reason”
conditions within 90 days after the initial existence of the
“Good Reason” condition, upon the notice of which the
Company shall have 30 days to remedy the condition and not be
required to pay any amount of severance. In all cases, for the
Participant to receive any severance benefit, the
Participant’s termination must occur no later than two years
following the initial existence of one or more of the “Good
Reason” conditions arising without the consent of the
Participant.
(m) “ Participant
” means an individual designated by the Board (or an
authorized officer of the Company) as eligible to participate in
the Plan pursuant to Section 4(a) who executes and returns to
the Company a Participation Agreement in accordance with
Section 4(b) of the Plan.
(n) “ Participation
Agreement ” means the agreement between the Participant
and the Company pursuant to Section 4(b).
(o) “ Plan ”
means this Executive Change in Control Severance Plan.
(p) “ Prorated Target
Bonus ” means the Target Bonus multiplied by a fraction,
the numerator of which is the number of whole and partial months
(rounded up) from the date of termination of employment until the
end of the fiscal year of the Company, and the denominator of which
is 12.
(q) “ Restricted Period
” means the period beginning on the date on which an eligible
executive becomes a Participant under Section 4(b) and ending
on the last day of the 24-month period after the date of
termination of employment.
(r) “ Target Bonus
” means the Participant’s target bonus for the fiscal
year of the Company in which the termination of employment occurs,
determined without regard to any reduction thereof that constitutes
Good Reason under the Plan.
(s) “ Tier I Executive
” means the Chief Executive Officer of the
Company.
(t) “ Tier II Executive
” has the meaning given that term in
Section 4(a).
(u) “ Tier III
Executive ” has the meaning given that term in
Section 4(a).
(a) The Company shall act as the
plan administrator and the “named fiduciary” of the
Plan for purposes of ERISA. Prior to a Change in Control, the Board
has sole and absolute discretion and authority to administer the
Plan on behalf of the Company, including the discretionary power
and authority to:
(i) adopt such rules as it deems
advisable in connection with the administration of the Plan, and to
construe, interpret, apply and enforce the Plan and any such rules
and to remedy ambiguities, errors or omissions in the
Plan;
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(ii) determine eligibility pursuant
to Section 4(a), the terms and conditions of individual
Participation Agreements pursuant to Section 4(a), and any
other terms of the Plan applicable to Participants, including, but
not limited to, the Restricted Period, amount and method of
payment, and a Participant’s continued entitlement to
benefits under the Plan; the Board’s determinations will be
conclusive and binding on all parties affected by its
determinations;
(iii) act under the Plan on a
case-by-case basis; the Board’s decisions under the Plan need
not be uniform with respect to similarly situated participants;
and
(iv) delegate its authority under
the Plan with respect to Tier II and Tier III Executives to any
committee of the Board, and with respect to Tier II Executives who
are not subject to Section 16 of the Securities Exchange Act
of 1934 and Tier III Executives to any officer of the
Company.
(b) If any person with
administrative authority becomes eligible or makes a claim for Plan
benefits, he or she will have no authority with respect to any
matter specifically affecting his or her individual interest under
the Plan and the Company will designate another person to exercise
such authority.
(c) Notwithstanding anything in the
Plan to the contrary, after a Change in Control, neither the Board
nor any other person shall have discretionary authority in the
administration of the Plan, and any court or tribunal that
adjudicates any dispute, controversy, or claim in connection with
benefits under Section 5 will apply a de novo standard
of review to any determinations made by the Board or the Company.
Such de novo standard shall apply notwithstanding the grant of full
discretion hereunder to the Board or any person or characterization
of any decision by the Board or by such person as final, binding or
conclusive on any party.
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4.
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Eligibility
and Participation
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(a) Eligibility . The Board,
in its sole discretion, may from time to time designate key
executives of the Company who are eligible to participate in the
Plan. The Chief Executive Officer of the Company shall be designed
as a Tier I Executive and other eligible executives shall be
designated by the Board as either Tier II or Tier III
Executives.
(b) Participation; Execution of
Participation Agreement . Each eligible executive designated by
the Board pursuant to Section 4(a) shall become a Participant
in the Plan only upon execution of a Participation Agreement in the
form, or substantially the form, attached hereto as Appendix
A , subject to additional terms as the Board may specify. Each
executed Participation Agreement shall constitute the
Participant’s agreement to the terms and conditions of
participation in the Plan.
(a) Entitlement to Severance
Benefits . In the event a Participant’s employment with
the Company is terminated within 24 months after the Change in
Control Date either (i) by the Company for reasons other than
Cause, death, or Disability, or (ii) by the Participant for
Good
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Reason, the Company shall make payments and
provide benefits to the Participant as specified under Sections
5(b) through 5(e), subject to the Participant’s satisfaction
of the requirements of Section 6(a) (regarding waiver and
release of claims) and Section 6(b) (regarding restrictive
covenants). In addition, if a Participant’s employment with
the Company had terminated before a Change in Control that is a
“change in control event” under Treasury regulation
section 1.409A-3(i)(5), and if it is reasonably demonstrated by the
Participant to the Board that his or her termination of employment
either was at the request of a third party that had taken steps
reasonably calculated to effect the Change in Control or otherwise
arose in connection with or in anticipation of the Change in
Control, then, for purposes of determining entitlement to severance
benefits under the Plan, the Participant’s employment is
deemed to have terminated on the Change in Control Date.
(b) Lump-Sum Cash Payment .
The Company shall pay to the Participant a lump-sum cash payment
equal to the following applicable amount:
(i) Tier I Executive : the
sum of (1) two times the sum of Base Salary plus Target Bonus
and (2) the Prorated Target Bonus.
(ii) Tier II Executives : for
Tier II Executives with a position of senior vice president or
higher, the sum of (1) two times the sum of Base Salary plus
Target Bonus and (2) the Prorated Target Bonus, and for all
other Tier II Executives, two times the sum of Base Salary plus
Target Bonus.
(iii) Tier III Executives :
an amount to be determined at the discretion of the Board, but in
no event less than four months’ Base Salary or more than one
times the sum of Base Salary plus Target Bonus.
The lump-sum cash payment shall be
made no later three business days following the expiration of any
period during which a Participant may revoke the waiver and release
of claims executed pursuant to Section 6(a), so long as that
waiver and release becomes effective no later than 60 days
after the Participant’s termination of employment (or the
Change in Control Date, for a Participant whose termination of
employment is deemed to occur on the Change in Control Date).
Notwithstanding the foregoing, if the period during which a
Participant has discretion to execute or revoke the waiver and
release of claims straddles two taxable years of the Participant,
then the Company shall make the payment in the second of such
taxable years, regardless of which taxable year the Participant
actually delivers the executed waiver and release to the
Company.
(c) Health Benefit
Continuation . The Company shall pay the premium for COBRA
coverage, if elected by the Participant and his eligible
dependents, upon loss of coverage under the Company’s group
health plan for active employees of the Company due to termination
of employment, until the earlier of (i) the date that the
Participant becomes eligible for coverage under another group
health plan, or (ii) for Tier I and Tier II Executives, the
end of the 18-month maximum COBRA coverage period or, for Tier III
Executives, the end of the 12-month period beginning on the date of
termination of employment. F