Compensation Upon Separation From Service. (a) In the event that during the Term Employer terminates Employee for Cause (Section 7(a)) or Employee voluntarily resigns without Good Reason (Section 7(c)), or Employee dies or becomes Disabled (Section 7(d)), Employer shall have no further obligation to pay to Employee or provide Employee with either salary or other benefits, except those entitlements (“Accrued Benefits”) that have accrued as of the date of such termination (“Separation Date”) or to which Employee is entitled under any disability insurance or other applicable plan or program. In addition, if such termination occurs due to Employee's death or Disability, all unvested stock options and restricted stock units will automatically vest and any performance stock units will vest pro rata, based upon Employee's length of service during the performance period and based upon actual performance. For any restricted stock units or performance stock units that are subject to Section 409A of the Code, the term Disability, as used in the prior sentence, shall only include a Disability that would qualify as a "disability" as defined under Section 409A of the Code. (b) In the event that Employer terminates Employee without Cause or Employee resigns with Good Reason, Employee shall be entitled, in addition to his Accrued Benefits (which for this purpose shall include any VICP bonus for any performance period ending before the Separation Date, to the extent not theretofore paid) and subject to Section 12(c), to the following: (i) Employee shall continue to be paid his then current base salary during the two (2) year period beginning on his Separation Date on the Company’s normal payroll dates (the “Separation Period”). (ii) Employee shall be paid (x) at the same time as bonuses under the Company’s Variable Incentive Compensation Plan (or successor short-term bonus plan) (the “VICP”) are payable to active employees, the VICP bonus to which he would have been entitled had he remained employed throughout the performance year containing the Separation Date, prorated for the number of days he was employed during such performance year and (y) on each December 15 during the Separation Period, a lump sum payment equal to one hundred percent (100%) of Employee’s target annual VICP bonus award as in effect immediately prior to his Separation Date. (iii) During the Separation Period Employer shall continue to make employer contributions and credits (including matching contributions and credits) under all of the Company’s qualified or nonqualified retirement or deferred compensation plans that are account balance plans. For purposes of determining the maximum amount of Employer matching contributions or credits, it shall be assumed that Employee elects to maximize elective deferrals to such plan. In the event that continued employer contributions and/or credits are not permitted under the terms of the plans or by law, the Company shall pay to Employee in a lump sum on each December 15 during the Separation Period the amounts that would have been contributed or credited to the plans for the applicable year in the absence of the prohibition. (iv) During the Separation Period Employer shall treat Employee as if he were a continuing employee for purposes of applying the vesting and exercisability provisions of any stock-based awards held by him on the Separation Date and granted more than one year prior to the Separation Date. For the avoidance of doubt, the distribution date of any restricted stock units or performance stock units that are subject to Section 409A of the Code shall be the same "fixed date" distribution date that would have applied had Employee remained a continued employee for the Separation Period. (v) During the Separation Period Employee shall be eligible to participate in Employer’s medical, dental, and vision plans, subject to Employee’s payment of any premiums required by such plans at the premium rate applicable from time to time to an active senior executive of Employer with the same level of coverage provided; however, that if such plans by their terms do not permit participation by Employee because of his non-active status, then the Company will instead provide Employee the cost of premium continuation coverage to the extent available. (vi) Within 30 days after the Separation Date (or such later time as prescribed by Section 12(c)), Employee shall receive a lump-sum payment of the amount (the “Benefits Amount”) that the Company determines is equal to the value of continued participation (on the same basis as in effect immediately prior to the Separation Date) throughout the Separation Period in all welfare plans and the Employer’s executive reimbursement plan, company car, and other similar plans and arrangements, other than plans and arrangements described in clauses (i) through (v) of this Section 12(b), in which the Employee participated immediately before the Separation Date. (c) Notwithstanding anything to the contrary herein, any payment (other than a benefit excludable from Employee’s gross income and other than a benefit that qualifies for the "short-term deferral" exception under Section 409A) that under Section 12(b) would otherwise be scheduled to be paid before the six-month anniversary of the Separation Date shall instead be made on the Company’s first regular payroll date on or after the six-month anniversary of the Separation Date, unless Employee is not at such time a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, as determined by the Company in accordance with Treas. Reg. § 1.409A-1(i). (d) The amounts payable pursuant to this Section 12 shall be in lieu of any other severance benefits during the Term or at the end of the Term, provided however, that in the event of a separation where severance benefits are payable to Employee under the Change in Control Agreement previously executed by Employee and the total amount of severance benefits pursuant to Sections 5.2, 5.3 and 5.5 of such Change in Control Agreement are greater than the total amount of benefits payable pursuant to this Section 12 (excluding Accrued Benefits and the value of any stock-based awards under Section 12(b)(iv) to the extent such awards would vest pursuant to the terms of the applicable plan or agreement and not solely due to the provisions of Section 12(b)(iv) above), the Employee shall be entitled to the benefits under the Change in Control Agreement in lieu of this Agreement. Employee understands and agrees that the Company’s obligation to provide the severance pay and benefits in Section 12(b) above is contingent upon Employee’s compliance with all post-termination obligations under this Agreement and the Employee’s execution of a release and severance agreement in favor of the Company in the form (and inclusive of the terms) then used by the Company for such purposes. The executed release must be returned to the Company no later than the sixtieth (60th) day following the Employee’s termination; provided, that, if the sixty (60)-day period (together with any applicable consideration and revocation periods) begins in one (1) calendar year and ends in a second calendar year, then regardless of the date on which the release is actually executed, the severance benefits will be paid in such second calendar year no later than ten (10) days after the last day of such sixty (60)-day period (or, if later, upon the expiration of the applicable consideration and revocation periods).
Appears in 1 contract
Sources: Employment Agreement (Plexus Corp)
Compensation Upon Separation From Service. (a) In the event that during the Term Employer terminates Employee for Cause (Section 7(a)) or Employee voluntarily resigns without Good Reason (Section 7(c)), or Employee dies or becomes Disabled (Section 7(d)), other than by reason of a Change in Control Termination, or in the event that this Agreement expires naturally at the conclusion of the Term under Section 7(e), Employer shall have no further obligation to pay to Employee or provide Employee with either salary or other benefits, except those entitlements (“Accrued Benefits”) that have accrued as of the date of such termination (“Separation Date”) or to which Employee is entitled under any disability insurance or other applicable plan or program. In addition, if such termination occurs due to Employee's death or Disability, all unvested stock options and restricted stock units will automatically vest and any performance stock units will vest pro rata, based upon Employee's length of service during the performance period and based upon actual performance. For any restricted stock units or performance stock units that are subject to Section 409A of the Code, the term Disability, as used in the prior sentence, shall only include a Disability that would qualify as a "disability" as defined under Section 409A of the Code.
(b) In the event that Employer terminates Employee without Cause or Employee resigns with Good Reason, other than in a Change in Control Termination, Employee shall be entitled, in addition to his Accrued Benefits (which for this purpose shall include any VICP bonus for any performance period ending before the Separation Date, to the extent not theretofore paid) and subject to Section 12(c), to the following:
(i) Employee shall continue to be paid his then current base salary during the two (2) three-year period beginning on his Separation Date on the Company’s normal payroll dates (the “Separation Period”).
(ii) Employee shall be paid (x) paid, at the same time as bonuses under the Company’s Variable Incentive Compensation Plan (or successor short-term bonus plan) (the “VICP”) are payable to active employees, the VICP bonus to which he would have been entitled had he remained employed throughout the performance year containing the Separation Date, prorated for multiplied by a fraction, the numerator of which is the number of days he was employed during such in the performance year through his Separation Date and the denominator of which is 365.
(yiii) on On each December 15 during the Separation Period, Period Employee shall receive a lump lump-sum payment equal to the sum of:
(A) one hundred percent (100%) of Employee’s target his annual VICP bonus award base salary as in effect immediately prior to his Separation Date.; and
(iiiB) During the Separation Period maximum amount of Employer shall continue to make employer contributions and credits (including matching contributions and credits) for a full plan year under all of the Company’s qualified or nonqualified retirement or deferred compensation plans that are account balance plans. For purposes of clause (B) above, (x) Employee shall be deemed to be fully vested, (y) it shall be assumed that Employee’s total annual cash compensation and total targeted cash compensation is equal to Employee’s total target cash compensation as in effect immediately before the Separation Date, and (z) for purposes of determining the maximum amount of Employer matching contributions or credits, credits it shall be assumed that Employee elects to maximize elective deferrals to such plan. In the event that continued employer contributions and/or credits are not permitted under the terms of the plans or by law, the Company shall pay to Employee in a lump sum on each December 15 during the Separation Period the amounts that would have been contributed or credited to the plans for the applicable year in the absence of the prohibition.
(iv) During the Separation Period Employer shall treat Employee as if he were a continuing employee for purposes of applying the vesting and exercisability provisions of any stock-based awards held by him on the Separation Date and granted more than one year prior to the Separation Date. For the avoidance of doubt, the distribution date of any restricted stock units or performance stock units that are subject to Section 409A of the Code shall be the same "fixed date" distribution date that would have applied had Employee remained a continued employee for the Separation Period.
(v) During the Separation Period Employee shall be eligible to participate in Employer’s medical, dental, and vision plans, subject to Employee’s payment of any premiums required by such plans at the premium rate applicable from time to time to an active senior executive of Employer with the same level of coverage provided; however, that if such plans by their terms do not permit participation by Employee because of his non-active status, then the Company will instead provide Employee the cost of premium continuation coverage to the extent availablecoverage.
(vi) Within 30 days after the Separation Date (or such later time as prescribed by Section 12(c)), Employee shall receive a lump-sum payment of the amount (the “Benefits Amount”) that the Company determines is equal to the value of continued participation (on the same basis as in effect immediately prior to the Separation Date) throughout the Separation Period in all welfare plans and the Employer’s executive reimbursement plan, company car, and other similar plans and arrangements, other than plans and arrangements described in clauses (i) through (v) of this Section 12(b), in which the Employee participated immediately before the Separation Date. Such amount shall be “grossed up” for all Federal, state, and local income taxes (deemed for this purpose to be payable at the applicable withholding rates).
(c) Notwithstanding anything to the contrary herein, any payment (other than a benefit excludable from Employee’s gross income and other than a benefit that qualifies for will in all events be paid within 21/2 months after the "short-term deferral" exception under Section 409Ayear in which it ceases to be subject to a substantial risk of forfeiture) that under Section 12(b) or 13(a) would otherwise be scheduled to be paid before the six-month anniversary of the Separation Date shall instead be made on the Company’s first regular payroll date on or after the six-month anniversary of the Separation Date, unless Employee is not at such time a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, as determined by the Company in accordance with Treas. Reg. § 1.409A-1(i).
(d) The amounts payable pursuant to this Section 12 or Section 13, as applicable, shall be in lieu of any other severance benefits during the Term or at the end of the Term, provided however, that in the event of a separation where severance benefits are payable to Employee under the Change in Control Agreement previously executed by Employee and the total amount of severance benefits pursuant to Sections 5.2, 5.3 and 5.5 of such Change in Control Agreement are greater than the total amount of benefits payable pursuant to this Section 12 (excluding Accrued Benefits and the value of any stock-based awards under Section 12(b)(iv) to the extent such awards would vest pursuant to the terms of the applicable plan or agreement and not solely due to the provisions of Section 12(b)(iv) above), the Employee shall be entitled to the benefits under the Change in Control Agreement in lieu of this Agreement. Employee understands and agrees that the Company’s obligation to provide the severance pay and benefits in Section 12(b) above is contingent upon Employee’s compliance with all post-termination obligations under this Agreement and the Employee’s execution of a release and severance agreement in favor of the Company in the form (and inclusive of the terms) then used by the Company for such purposes. The executed release must be returned to the Company no later than the sixtieth (60th) day following the Employee’s termination; provided, that, if the sixty (60)-day period (together with any applicable consideration and revocation periods) begins in one (1) calendar year and ends in a second calendar year, then regardless of the date on which the release is actually executed, the severance benefits will be paid in such second calendar year no later than ten (10) days after the last day of such sixty (60)-day period (or, if later, upon the expiration of the applicable consideration and revocation periods).
Appears in 1 contract
Sources: Employment Agreement (Plexus Corp)