Taxation of Payments and Benefits The Employer shall undertake to make deductions, withholdings and tax reports with respect to payments and benefits under this Agreement to the extent that it reasonably and in good faith believes that it is required to make such deductions, withholdings and tax reports. Payments under this Agreement shall be in amounts net of any such deductions or withholdings. Nothing in this Agreement shall be construed to require the Employer to make any payments to compensate the Executive for any adverse tax effect associated with any payments or benefits or for any deduction or withholding from any payment or benefit.
Termination Payments and Benefits Regardless of the circumstances of the Executive’s termination, Executive shall be entitled to payment when due of any earned and unpaid base salary, expense reimbursements and vacation days accrued prior to the termination of Executive’s employment, and other unpaid vested amounts or benefits under Company retirement and health benefit plans, and, as applicable, under Equity Agreements in accordance with their terms, and to no other compensation or benefits.
(a) If (i) the Company terminates the Executive’s employment without Cause, or (ii) the Executive terminates employment with the Company within twelve (12) months following the occurrence of a Change in Control, provided that within such period, (a) either Executive’s job duties have been materially and permanently diminished or the Executive’s compensation has been materially decreased and (b) Executive provides written notice to the Company within ninety (90) days of the occurrence of an aforementioned event and the Company fails to cure the event within thirty (30) days following the Company’s receipt of the Executive’s written notice, then, in the case of either (i) or (ii) above, the Company will provide the Executive with separation payments of twelve (12) months base salary at Executive’s base salary rate at the time of Executive’s termination or if greater, the Executive’s base rate in effect on the Change of Control Date; to be paid in twenty-six (26) regular bi-weekly pay periods beginning on the first pay period occurring after the sixtieth (60th) day following the Executive’s termination, provided the Executive executes and does not subsequently revoke the Separation and General Release Agreement referenced below within such sixty (60) day period.
(b) For a period of twelve (12) months from the Executive’s separation from service, the Company will pay to the Executive an amount, minus all applicable taxes and withholdings, equal to the full monthly cost (including any portion of the cost previously paid by the employee) to provide the same level of group health benefits maintained by Executive as of Executive’s separation from service, provided the Executive executes and does not subsequently revoke the Separation and General Release Agreement referenced below within such sixty (60) day period.
(c) For purposes of this Agreement, “Change in Control” shall mean the occurrence of any one of the following events:
PAYMENTS AND BENEFITS UPON TERMINATION (a) If within eighteen (18) months after a Change in Control, the Company terminates Employee’s employment other than by reason of Employee’s death, Disability or for Cause, or if Employee terminates Employee’s employment for Good Reason, then the Employee shall be entitled to the following payments and benefits:
(i) The Company shall pay to Employee as compensation for services rendered, no later than five (5) business days following the date of termination, a lump sum severance payment equal to 2.50 multiplied by the sum of (A) Employee’s Base Salary, (B) the highest annual bonus that was paid to Employee in any of the three fiscal years ending prior to the date of termination under the Company’s Management Incentive Plan (the “MIP”), and (C) the highest cash bonus for a performance period of more than one fiscal year that was paid to Employee in any of the three fiscal years ending prior to the date of termination under the MIP.
(ii) The Company shall pay to Employee as compensation for services rendered, no later than five (5) business days following the date of termination, a lump sum payment equal to a pro rata portion (based on the number of days elapsed during the fiscal year and/or other bonus performance period in which the termination occurs) of Employee’s target bonus under the MIP for the fiscal year and for any other partially completed bonus performance period in which the termination occurs.
(iii) All waiting periods for the exercise of any stock options granted to Employee and all conditions or restrictions of any restricted stock granted to Employee shall terminate, and all such options shall be exercisable in full according to their terms, and the restricted stock shall be transferred to Employee as soon as reasonably practicable thereafter.
(iv) Employee’s participation as of the date of termination in the life, medical/dental/vision and disability insurance plans and financial/tax counseling plan of the Company shall be continued on the same terms (including any cost sharing) as if Employee were an employee of the Company (or equivalent benefits shall be provided) until the earlier of Employee’s commencement of substantially equivalent full-time employment with a new employer or twenty- four (24) months after the date of termination; provided, however, that after the date of termination, Employee shall no longer be entitled to receive Company-paid executive physicals or, upon expiration of the applicable memberships, Company-paid airline memberships. In the event Employee shall die before the expiration of the period during which the Company is required to continue Employee’s participation in such insurance plans, the participation of Employee’s surviving spouse and family in the Company’s insurance plans shall continue throughout such period.
(v) Employee may elect upon termination to purchase any automobile then in the possession of Employee and subject to a lease of which the Company is the lessor by payment to the Company of the residual value set forth in the lease, without any increase for remaining lease payments during the term or other lease breakage costs. Employee may elect to have any such payment deducted from any payments due the Employee hereunder.
(vi) The entire balance credited to Employee’s account under the Company’s Supplemental Retirement Plan shall, no later than five (5) business days following the date of termination, be paid lump sum in cash to Employee.
(vii) The termination of Employee’s employment with the Company shall constitute a “retirement” from the Company for purposes of all Company compensation and benefits plans and programs to the extent Employee is otherwise eligible for “retirement” as defined by the Company immediately prior to the Change in Control.
(viii) All payments and benefits provided under this Agreement shall be subject to applicable tax withholding.
(b) Following Employee’s termination of employment for any reason, the Company shall have the unconditional right to reduce any payments owed to Employee hereunder by the amount of any due and unpaid principal and interest on any loans by the Company to Employee and Employee hereby agrees and consents to such right on the part of the Company.
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.
Other Payments and Benefits On any termination of employment, including, without limitation, termination due to the Employee’s death or Disability or for Cause, the Employee shall receive any accrued but unpaid salary, reimbursement of any business or other expenses incurred prior to Termination Date but for which the Employee had not received reimbursement, and any other rights, compensation and/or benefits as may be due the Employee in accordance with the terms and provisions of any agreements, plans or programs of the Company (but in no event shall the Employee be entitled to duplicative rights, compensation and/or benefits).