Compensation and Benefits Subject to the terms and conditions of this Agreement, during the Employment Period, while Executive is employed by the Employer, the Employer shall compensate Executive for Executive’s services as follows for periods following the Effective Date:
(a) Executive shall be compensated at an annual rate of $290,000 (the “Annual Base Salary”), which shall be payable in accordance with the Employer’s normal payroll practices as are in effect from time to time. Beginning on January 1, 2012 and on each anniversary of such date, Executive’s rate of Annual Base Salary shall be reviewed by the Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company (the “Board”), and following such review, the Annual Base Salary may be adjusted upward but in no event will it be decreased.
(b) Executive shall be entitled to receive performance based annual incentive bonuses (each, the “Incentive Bonus”) from the Employer for each fiscal year ending during the Employment Period. Any such Incentive Bonus shall be paid to Executive within thirty (30) days of the completion of the annual audit by the Company’s auditor, but in no event later than two and one-half months after the close of each such fiscal year. Executive’s target Incentive Bonus shall be not less than forty percent (40%) of the Annual Base Salary, which Incentive Bonus shall be determined by specific performance criteria established from time to time by the Compensation Committee.
(c) Executive shall be eligible to participate, subject to the terms and conditions thereof, in all other incentive plans and programs, including such cash and deferred bonus programs and equity incentive plans as may be in effect from time to time with respect to senior executives employed by the Employer on as favorable a basis as provided to other similarly situated senior executives. Executive and Executive’s dependents, as the case may be, shall be eligible to participate in all pension and similar benefit plans (qualified, non-qualified and supplemental), profit sharing, 401(k), as well as all medical and dental, disability, group and executive life, accidental death and travel accident insurance, and other similar welfare benefit plans and programs of the Employer, subject to the terms and conditions thereof, as in effect from time to time with respect to senior executives employed by the Employer on as favorable a basis as provided to other similarly situated senior executives.
(d) Executive shall be entitled to accrue vacation at a rate of no less than four (4) weeks paid vacation for each calendar year, subject to the Employer’s vacation programs and policies as may be in effect during the Employment Period.
(e) Executive shall be reimbursed by the Employer, on terms and conditions that are substantially similar to those that apply to other similarly situated executives of the Employer, for reasonable out-of-pocket expenses for entertainment, travel, meals, lodging and similar items which are consistent with the Employer’s expense reimbursement policy and actually incurred by Executive in the promotion of the Employer’s business.
Other Compensation and Benefits Except as may be provided under this Agreement, any benefits to which Executive may be entitled through the date of Executive’s termination pursuant to the plans, policies and arrangements referred to in Section 4(d) shall be determined and paid in accordance with the terms of such plans, policies and arrangements, and except as otherwise provided by this Agreement, Executive shall have no right to receive any other compensation, or to participate in any other plan, arrangement or benefit, with respect to future periods after such termination or resignation.
Accrued Compensation and Benefits Notwithstanding anything to the contrary in Section 2 and 3 above, in connection with any termination of employment (whether or not a Qualifying Termination or CIC Qualifying Termination), the Company shall pay Executive’s earned but unpaid base salary and other vested but unpaid cash entitlements for the period through and including the termination of employment, including unused earned vacation pay and unreimbursed documented business expenses incurred by Executive through and including the date of termination (collectively “Accrued Compensation and Expenses”), as required by law and the applicable Company plan or policy. In addition, Executive shall be entitled to any other vested benefits earned by Executive for the period through and including the termination date of Executive’s employment under any other employee benefit plans and arrangements maintained by the Company, in accordance with the terms of such plans and arrangements, except as modified herein (collectively “Accrued Benefits”). Any Accrued Compensation and Expenses to which the Executive is entitled shall be paid to the Executive in cash as soon as administratively practicable after the termination and, in any event, no later than two and one-half (2-1/2) months after the end of the taxable year of the Executive in which the termination occurs or at such earlier time as may be required by Section 10 below or to such lesser extent as may be mandated by Section 9 below. Any Accrued Benefits to which the Executive is entitled shall be paid to the Executive as provided in the relevant plans and arrangements.
ADDITIONAL COMPENSATION AND BENEFITS The Executive shall receive the following additional compensation and welfare and fringe benefits:
Severance Payments and Benefits If Executive (a) executes this Agreement and the revocation period described in Section 8 hereof expires within sixty (60) days following the Termination Date (the date on which such revocation period expires, the “Release Effective Date”) and (b) continues to comply with the covenants under the Employee Assignment and Confidentiality Agreement and any other material ongoing obligations to which he is subject, then the Executive shall be entitled to the following (the “Severance Benefits”):
(a) An amount in cash equal to $4,000,000, payable in substantially equal installments for twenty-four (24) months following the Termination Date (the “Payment Period”) in accordance with the Company’s normal payroll practices; provided that the first such payment shall be made on the first regularly scheduled payroll date following the Release Effective Date and shall include all payments that would have otherwise been made between the Termination Date and the Release Effective Date if such payments had commenced on the Termination Date;
(b) A lump sum cash payment equal to the product of (i) the lesser of (A) the cash bonus, if any, that would have been paid to Executive pursuant to the terms of the annual cash incentive plan in which Executive participates in respect of the 2015 fiscal year, had he remained in employment and (B) $1,000,000 and (ii) a fraction, the numerator of which is the number of days that elapsed in the 2015 fiscal year through the Termination Date and the denominator of which is 365, payable on the date such bonuses are paid to then-current employees of the Company;
(c) Subject to Executive’s timely election to continue coverage under COBRA, the Company shall pay the COBRA premiums to continue Executive’s coverage (including coverage for Executive’s eligible dependents, if applicable) for eighteen (18) months following the Termination Date (with such payments to end if Executive becomes eligible for group health insurance coverage through a new employer or Executive ceases to be eligible for COBRA continuation coverage for any reason), provided that the cost of such coverage shall be reported to the tax authorities as taxable income to Executive;
(d) 4,882,143 shares of Class A common stock, par value $0.00000625 per share of the Company (each, a “Share”) subject to the Make-Whole Grant (as defined in the Offer Letter) shall vest as of the Termination Date;
(e) 228,938 Shares subject to Executive’s Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement, dated March 14, 2014, shall vest as of the Termination Date; and
(f) 189,552 Shares subject to Executive’s Stock Option Grant Notice and Option Agreement, dated March 14, 2014, shall vest as of the Termination Date. Executive shall have up to two (2) years from the Termination Date to exercise not only these vested Shares, but also the Shares from all previously vested and currently unexercised Stock Option Grants.
(g) Company agrees to reimburse Executive for attorneys’ fees and costs that he may incur for legal advice regarding the negotiation of this Agreement, up to a maximum payment of $25,000. Notwithstanding any other provision of this Agreement to the contrary, if, on or following the Termination Date, Executive (i) fails to comply with his material obligations to the Company or (ii) materially breaches any of the covenants under the Employee Assignment and Confidentiality Agreement or Section 15 of the Offer Letter or any other material ongoing obligations to which he is subject, then Executive shall immediately forfeit his right to receive the Severance Benefits, to the extent then unpaid, provided that such material breach or obligation causes a measure of harm to the Company. The Company shall provide Executive with written notice of the breach and give him ten (10) days to either cure the breach, to the extent curable, or explain why he does not believe there has been a breach. This paragraph shall be in addition to any other remedy at law or in equity available to the Company.