Termination Without Cause; Resignation for Good Reason. (i) If the Executive incurs a “Separation from Service” within the meaning of Section 409A of the Code and the Regulations thereunder, by reason of the Company’s termination of the Executive’s employment without Cause, or if the Executive resigns from his employment hereunder for Good Reason, the Executive shall be entitled to the following: (A) The Other Accrued Compensation and Benefits. (B) An amount equal to one (1) times the Executive’s Base Amount, which shall be payable in equal installments pursuant to the Company’s normal payroll practices and subject to all legally required and customary withholdings for the twelve (12) month period following termination. (C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C). (D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i). (E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof. (F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof. (ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following: (A) The Other Accrued Compensation and Benefits. (B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment. (C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C). (D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii). (E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. (F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax. (G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 2 contracts
Sources: Employment Agreement (First Western Financial Inc), Employment Agreement (First Western Financial Inc)
Termination Without Cause; Resignation for Good Reason. (i) If the Executive incurs a “Separation from Service” within the meaning of Section 409A of the Code and the Regulations thereunder, by reason of the Company’s termination of the Executive’s employment without Cause, or if the Executive resigns from his her employment hereunder for Good Reason, the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to one (1) times the Executive’s Base Amount, which shall be payable in equal installments pursuant to the Company’s normal payroll practices and subject to all legally required and customary withholdings for the twelve (12) month period following termination.
(C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, to the extent that the Executive is providing coverage for his her spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his her spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 2 contracts
Sources: Employment Agreement (First Western Financial Inc), Employment Agreement (First Western Financial Inc)
Termination Without Cause; Resignation for Good Reason. (i) If the Executive incurs a “Separation from Service” within the meaning of Section 409A of the Code and the Regulations thereunder, by reason of the Company’s termination of the Executive’s employment without Cause, or if the Executive resigns from his employment hereunder for Good Reason, the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to one two (12) times the Executive’s Base Amount, which shall be payable in equal installments pursuant to the Company’s normal payroll practices and subject to all legally required and customary withholdings for the twelve twenty-four (1224) month period following termination.
(C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) 2.99 times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen twenty-four (1824) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 2 contracts
Sources: Employment Agreement (First Western Financial Inc), Employment Agreement (First Western Financial Inc)
Termination Without Cause; Resignation for Good Reason. (i) If the Executive incurs a “Separation from Service” within the meaning of Section 409A of the Code and the Regulations thereunder, by reason of the Company’s termination of the Executive’s employment without Cause, or if the Executive resigns from his employment hereunder for Good Reason, the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to one (1) times the Executive’s Base Amount, which shall be payable in equal installments pursuant to the Company’s normal payroll practices and subject to all legally required and customary withholdings for the twelve (12) month period following termination.
(C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns 5 for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 2 contracts
Sources: Employment Agreement (First Western Financial Inc), Employment Agreement (First Western Financial Inc)
Termination Without Cause; Resignation for Good Reason. (i) If the Executive incurs a “Separation from Service” within the meaning of Section 409A of the Code and the Regulations thereunder, by reason of the Company’s termination of the Executive’s employment without is terminated by Navigators during the term of this Agreement for a reason other than Cause, or if the Executive resigns from his employment hereunder for Good Reason, the then subject to Executive’s execution and non-revocation of a General Release in accordance with Section 7 of this Agreement, Executive shall will be entitled to the following:
(Ai) The Other Accrued Compensation and Benefits.
continued payment of his base salary for a period of 12 months, payable on each of Navigators’ regularly scheduled payroll dates (B“Severance Pay”); (ii) An payment of an amount equal to one (1) times the 100% of Executive’s Base Amount, which shall be payable in equal installments pursuant to the Company’s normal payroll practices and subject to all legally required and customary withholdings target annual bonus for the twelve (12) month period following termination.
(C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of year in which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of employment terminates, payable within 60 days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of after the date of termination; (iii) for payment of any annual bonus earned in the year prior to the year in which Executive’s employment terminates, to the extent not paid and without regard to Executive’s continued employment through the date of payment, payable when otherwise paid to similarly situated senior officers of Navigators; and (iv) subject to Executive’s timely election of continuation coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), ) for the ExecutiveExecutive and his or her eligible dependents, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Causecontinued payment of premiums associated with such coverage, the Company shall provide pay or reimburse Executive, on a monthly basis, for the portion of the costs of continued health benefits for Executive and Executive’s covered dependents equal to the amount that the Company was paying immediately prior to such termination, with such reimbursement to continue for 18 months following such termination, or such earlier date on which COBRA coverage for the Executive with no less than ninety (90) days’ written notice and his or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release her covered dependents terminates in accordance with applicable laws) will result in COBRA. Any such payments scheduled to be paid prior to the forfeiture effective date of the payments and benefits under General Release shall be delayed until the General Release becomes effective in accordance with Section 7 of this Section 5(b)(i)(A), (B), (C) Agreement. In the event that such termination or (D). To resignation occurs during the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the 12-month period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of following a Change in Control, pursuant then in addition to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of clauses (i) the passage of eighteen through (18iv) months (ii) the expiration above, any outstanding stock grants will immediately vest, with outstanding performance-based awards vesting at 100% of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicaretarget level of performance. Notwithstanding the foregoing, if in the Company (or its successor) terminates event that Executive breaches any of the Executive’s employment without Causecovenants set forth in Sections 8, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein9 and 10, all payments of Severance Pay shall thereupon cease and benefits provided under this Section 5(b)(ii)(B) and (D) no further payments to Executive shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise TaxNavigators.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 1 contract
Termination Without Cause; Resignation for Good Reason. (i) If Executive’s employment may be terminated without Cause effective upon the Company’s delivery to Executive incurs of a “Separation from Service” Notice of Termination, or by Executive’s resignation for Good Reason effective 60 days following delivery to the Company of Notice of Termination provided such delivery is within the meaning of Section 409A 90 days following Executive’s initial actual knowledge of the Code and occurrence of events that result in Good Reason. No resignation for Good Reason will be effective unless during the Regulations thereunder30-day period following the delivery of the Notice of Termination, the Company has not cured the events that result in Good Reason. If Executive’s employment is terminated without Cause (other than by reason of the Company’s termination of the Executive’s employment without Causedeath or Disability), or if the Executive resigns from his employment hereunder for Good Reason, the Executive shall be entitled to the followingwill receive:
(A1) The Other the Accrued Compensation and Benefits.Obligations;
(B2) An any earned but unpaid Annual Bonus for a prior year;
(3) an amount equal to one 100% of the target Annual Bonus for the year of termination;
(14) times a payment equal to 100% of the annual Base Salary in effect on the termination date;
(5) a payment equal to the cost of health insurance coverage under COBRA for 18 months;
(6) accelerated vesting of the portion of each of Executive’s Base Amount, which shall GoDaddy equity awards that vests solely based on service (including the RSUs but excluding the PSUs or any other performance-based GoDaddy equity awards) that would have vested during the 12 months following the termination date had Executive continued to be payable a Service Provider under the 2015 Incentive Plan through such period; and
(7) vesting of the portion of each of Executive’s GoDaddy equity awards that would have vested in equal installments pursuant to whole or in part upon satisfaction of performance criteria (including the Company’s normal payroll practices and subject to all legally required and customary withholdings PSUs) for the performance period(s) ending on or within twelve (12) month months following the termination date assuming Executive’s continuous service through each such performance period following termination.
(Cwith any individual performance criteria deemed fully satisfied) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by based on the Executive shall automatically become vested andextent, if applicableany, exercisable that the underlying performance criteria for such performance period (s) are satisfied with respect to such awards and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on multiplied by a fraction, (I) the numerator of which is the number of calendar days that elapse from elapsed in each such performance period as of the grant date of the equity award until the Executive’s termination date of employment and the (II) the denominator of which is the total number of 365. Such awards shall be settled within five (5) days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date determination of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level attainment of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(Ccriteria for such performance period(s).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 1 contract
Sources: Employment Agreement (GoDaddy Inc.)
Termination Without Cause; Resignation for Good Reason. (i) If the Executive incurs a “Separation from Service” within the meaning of Section 409A of the Code and the Regulations thereunder, by reason of the Company’s termination of the Executive’s employment with the Company is terminated by the Company without Cause, Cause (as defined below) or if the by Executive resigns from his employment hereunder for Good ReasonReason (as defined below), the and subject to timely execution and non-revocation of a General Release (as defined below) and compliance with Section 4, and in lieu of any other severance benefits otherwise payable under any Company plan or policy, Executive shall be entitled to, in addition to the following:
Accrued Amounts: (Ai) The Other Accrued Compensation and Benefits.
(B) An amount equal to one (1) times the continued payment of Executive’s Base Amount, which shall be payable in equal installments pursuant to Salary for a period of 12 months immediately following the Company’s normal payroll practices and subject to all legally required and customary withholdings for the twelve (12) month period following termination.
(C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the of employment; (IIii) the denominator of which is the total number of days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued timely elects coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, Company-subsidized coverage (equal to the extent that the Executive is providing coverage for his spouse or eligible dependents as same portion of the termination date, monthly premium the Company pays for such individuals; provided, however, that active employees) until the Company’s obligation to pay such premiums shall cease immediately upon the earlier earliest of (ix) the passage of eighteen (18) months (ii) the expiration one-year anniversary of the statutory COBRA period and date of Executive’s termination of employment or (iiiy) the date the Executive becomes eligible for coverage health insurance under the health plans of another employer; (iii) any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding Annual Bonus for the foregoing, if the Company terminates the completed fiscal year that ended prior to fiscal year in which Executive’s termination of employment without Causeoccurred but for which the right payment thereof has not vested in accordance with Section 2(b), the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be deemed vested in addition to payments described under this an amount in accordance with the terms of Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B2(b) and payable at the same time annual bonuses are paid to similarly situated employees of the Company; (Div) shall commence on an amount equal to 100% of the first payroll date following target amount of the 60th day after Annual Bonus for the fiscal year in which the Executive’s termination of employmentemployment occurs, with payable as a lump sum cash payment at the first installment payment end of the Restricted Period (as defined in Section 4); (v) the vesting of all outstanding unvested RSUs granted to include any payments that would have otherwise been paid Executive pursuant to the Executive if such payments commenced Section 2(c) of this Agreement shall accelerate and vest in full on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the of Executive’s termination of employment, a release substantially employment and (vi) continued vesting of any other time-vesting RSUs that would have vested in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 6012-day period. The month period following Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based unvested on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan . The amounts payable pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of clauses (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (Di)‑(vi) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release payable in accordance with applicable laws) will result in the forfeiture of the payments Company policies and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or practices unless provided otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax3(b).
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 1 contract
Sources: Executive Employment Agreement (Greenidge Generation Holdings Inc.)
Termination Without Cause; Resignation for Good Reason. (i) If Subject to the Executive incurs further provisions of this Section 5(d) and Section 6, if during the Term or, if the Term expires without renewal or extension and prior to a “Separation from Service” within Change in Control, during the meaning of Section 409A one-year period following the expiration of the Code and Term, the Regulations thereunder, by reason of the Company’s termination of the Company terminates Executive’s employment without Cause, Cause or if the Executive resigns from his employment hereunder for Good Reason, the Company will pay Executive on the 60th day following the Termination Date (as defined below), in addition to the Accrued Obligations, a lump-sum cash payment equal to the following (the “Severance Amount”): • One times the amount of Executive’s then-current annual rate of Base Salary (based on the rate in effect immediately prior to the Termination Date); and • The cost of 12 months of COBRA coverage for Executive and his dependents (based on the COBRA rates in effect on the Termination Date). In addition, by no later than March 15th of the year following the year in which the Termination Date occurs, Executive shall be entitled to receive a pro rata portion of the following:
Annual Bonus (Athe “Pro Rata Bonus”) The Other Accrued Compensation and Benefits.
(B) An amount equal to one (1) times the Executive’s Base Amount, which shall be payable in equal installments pursuant to the Company’s normal payroll practices and subject to all legally required and customary withholdings for the twelve (12) month period following termination.
(C) A pro-rated portion year of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins calculated on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level basis of the Company’s actual achievement performance for such year and prorated based on the numbers of days elapsed in such year through the applicable performance goals as measured as Termination Date. ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Employment Agreement
(ii) Subject to the further provisions of this Section 5(d) and Section 6, in the event of Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the portion of then outstanding PSUs and Options that would have vested had Executive breaches remained continuously employed by the provisions of Sections 6 Company through 10 hereof or breaches any provision set forth in the executed copy end of the general release of claims, one-year period following the Executive Termination Date shall not be eligible, fully vest immediately as of the date Termination Date (the “Additional Equity Vesting”). The PSUs entitled to Additional Equity Vesting pursuant to this Section 5(d)(ii) shall become payable within 30 days following their originally scheduled vesting dates contemplated by Section 3(d)(iii). The Earn Out Number for any PSUs entitled to Additional Equity Vesting pursuant to this Section 5(d)(ii) for which the Performance Year has not been completed shall be determined after the end of such breach, the Performance Year based on actual performance for the payments and benefits described full Performance Year. Any then vested Options (including Options that vested in Section 5(b)(i)(A), accordance with this paragraph) held by Executive shall remain exercisable for a period of one year following the Termination Date (B), (C) or (D), and any and all obligations and agreements but not beyond the original term of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(FOptions) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(CExtended Exercisability”).
(Diii) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the The Company’s obligation to pay such premiums shall cease immediately Executive the Severance Amount and the Pro Rata Bonus and to provide the Additional Equity Vesting and the Extended Exercisability are each expressly conditioned upon Executive’s execution and timely delivery to the earlier Company of a valid and irrevocable release agreement in substantially the form of attached Schedule B by no later than 45 days following the Termination Date.
(iiv) As used in this Section 5(d), “Good Reason” means any of the following acts or omissions by the Company occurring without Executive’s prior written consent: (A) any action by the Company which results in Executive ceasing to be the President and Chief Risk Officer of the Company or any other material adverse change in Executive’s title, duties or reporting responsibilities; (B) the passage assignment to Executive of eighteen duties materially inconsistent with Executive’s position as the President and Chief Risk Officer of the Company; (18C) months a reduction in Executive’s rate of Base Salary or Annual Bonus opportunity or the failure by the Company (iiother than by reason of bankruptcy, insolvency or receivership) to pay Executive’s Base Salary or any earned Annual Bonus or, subject to Section 4(f), to make the PSU grant contemplated by this Agreement; (D) the expiration requirement by the Company that Executive move his principal place of employment more than 50 miles from the statutory COBRA period and location of his principal place of employment on the Effective Date; or (iiiE) any material breach by the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or MedicareCompany of this Agreement. Notwithstanding the foregoingabove, if an act or omission by the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make constitute an event of Good Reason unless Executive gives the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, Company written notice within sixty (60) 60 days following the Executive’s termination of employmentdate Executive first knows, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture reasonably should have known, of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 event constituting Good Reason of his intention to resign for Good Reason if such Good Reason event is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made not cured by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of and the Company’s assets Company does not cure such event (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties retroactively with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan monetary matter) to the contrary, any right reasonable satisfaction of Executive within 30 days following the Executive to any payment or benefit under this Agreement or any date the Company receives such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Taxwritten notice from Executive. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax▇▇▇ ▇. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.▇▇▇▇▇▇▇▇ Employment Agreement
Appears in 1 contract
Sources: Employment Agreement (Universal Insurance Holdings, Inc.)
Termination Without Cause; Resignation for Good Reason. (i) If the Executive incurs a “Separation from Service” within the meaning of Section 409A of the Code and the Regulations thereunder, by reason of the Company’s termination of the Executive’s employment with the Company is terminated by the Company without Cause, Cause or if the by Executive resigns from his employment hereunder for Good Reason, the and subject to Executive’s timely execution and non‑revocation of a general release of claims and compliance with all restrictive covenants applicable to Executive, and in lieu of any other severance benefits otherwise payable under any Company plan or policy, Executive shall be entitled to, in addition to the following:
Accrued Amounts: (Ai) The Other Accrued Compensation and Benefits.
(B) An amount equal to one (1) times the continued payment of Executive’s Base AmountSalary for a period of 12 months immediately following the date of Executive’s termination of employment, which shall be payable in equal installments pursuant to accordance with the Company’s normal ordinary payroll practices and subject as established from time to all legally required and customary withholdings for the twelve time; (12ii) month period following termination.
(C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the if Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued timely elects coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, Company-subsidized coverage (equal to the extent that the Executive is providing coverage for his spouse or eligible dependents as same portion of the termination date, monthly premium the Company pays for such individuals; provided, however, that active employees) for a period of 12 months immediately following the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration last day of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment month of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with ; (iii) any Annual Bonus for the first installment payment completed fiscal year that ended prior to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the fiscal year in which Executive’s termination of employmentemployment occurred but for which payment has not been made, a release substantially in payable at the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal same time annual bonuses are paid to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture other executive officers of the payments and benefits under this Section 5(b)(i)(A), Company; (B), (Civ) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two a pro rata portion of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, Annual Bonus for the payments and benefits described fiscal year in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employmentemployment occurs based on actual results for such year (determined by multiplying the amount of such bonus which would be due for the full fiscal year by a fraction, with the first numerator of which is the number of full months during the fiscal year of termination that Executive is employed by the Company and the denominator of which is 12), payable as a lump sum cash payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been at the same time annual bonuses are paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to other executive officers of the Company; and (v) subject to approval by the Board or the Compensation Committee, within sixty (60) days following the Executive’s termination pro rata vesting of employment, and the Release has become effective and irrevocable in its entirety in such 60any then-day period. The Executive’s failure or refusal to sign the Release outstanding unvested time-vesting equity awards (or the Executive’s revocation of such Release in accordance with applicable lawsa portion thereof) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then granted by the Company shall make to Executive under the severance payments starting in Plan determined by multiplying the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion number shares of the Company’s assets (within common stock underlying each such award by a fraction, the meaning numerator of Code Section 280G) or by any affiliate which is the number of such person, whether paid or payable or distributed or distributable pursuant to completed months in the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect vesting period applicable to such excise tax (award and the “Excise Tax”), then, notwithstanding any other provision denominator of this Agreement or any equity compensation plan to which the contrary, any right number of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, total months in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock unitsperiod.
Appears in 1 contract
Termination Without Cause; Resignation for Good Reason. (i) If Subject to the Executive incurs further provisions of this Section 5(d) and Section 6, if during the Term or, if the Term expires without renewal or extension and prior to a “Separation from Service” within Change in Control, during the meaning of Section 409A one-year period following the expiration of the Code and Term, the Regulations thereunder, by reason of the Company’s termination of the Company terminates Executive’s employment without Cause, Cause or if the Executive resigns from his employment hereunder for Good Reason, the Company will pay Executive on the 60th day following the Termination Date (as defined below), in addition to the Accrued Obligations, a lump-sum cash payment equal to the following (the “Severance Amount”): • One times the amount of Executive’s then-current annual rate of Base Salary (based on the rate in effect immediately prior to the Termination Date); and • The cost of 12 months of COBRA coverage for Executive and his dependents (based on the COBRA rates in effect on the Termination Date). In addition, by no later than March 15th of the year following the year in which the Termination Date occurs, Executive shall be entitled to receive a pro rata portion of the following:
Annual Bonus (Athe “Pro Rata Bonus”) The Other Accrued Compensation and Benefits.
(B) An amount equal to one (1) times the Executive’s Base Amount, which shall be payable in equal installments pursuant to the Company’s normal payroll practices and subject to all legally required and customary withholdings for the twelve (12) month period following termination.
(C) A pro-rated portion year of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins calculated on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level basis of the Company’s actual achievement performance for such year and prorated based on the numbers of days elapsed in such year through the applicable performance goals as measured as Termination Date.
(ii) Subject to the further provisions of this Section 5(d) and Section 6, in the event of Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the portion of then outstanding PSUs and Options that would have vested had Executive breaches remained continuously employed by the provisions of Sections 6 Company through 10 hereof or breaches any provision set forth in the executed copy end of the general release of claims, one-year period following the Executive Termination Date shall not be eligible, fully vest immediately as of the date Termination Date (the “Additional Equity Vesting”). The PSUs entitled to Additional Equity Vesting pursuant to this Section 5(d)(ii) shall become payable within 30 days following their originally scheduled vesting dates contemplated by Section 3(d)(iii). The Earn Out Number for any PSUs entitled to Additional Equity Vesting pursuant to this Section 5(d)(ii) for which the Performance Year has not been completed shall be determined after the end of such breach, the Performance Year based on actual performance for the payments and benefits described full Performance Year. Any then vested Options (including Options that vested in Section 5(b)(i)(A), accordance with this paragraph) held by Executive shall remain exercisable for a period of one year following the Termination Date (B), (C) or (D), and any and all obligations and agreements but not beyond the original term of the Company with respect to such payments shall thereupon ceaseOptions) (“Extended Exercisability”). This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Employment Agreement
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(Aiii) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately Executive the Severance Amount and the Pro Rata Bonus and to provide the Additional Equity Vesting and the Extended Exercisability are each expressly conditioned upon Executive’s execution and timely delivery to the earlier Company of a valid and irrevocable release agreement in substantially the form of attached Schedule B by no later than 45 days following the Termination Date.
(iiv) As used in this Section 5(d), “Good Reason” means any of the following acts or omissions by the Company occurring without Executive’s prior written consent: (A) any action by the Company which results in Executive ceasing to be the President and Chief Risk Officer of the Company or any other material adverse change in Executive’s title, duties or reporting responsibilities; (B) the passage assignment to Executive of eighteen duties materially inconsistent with Executive’s position as the President and Chief Risk Officer of the Company; (18C) months a reduction in Executive’s rate of Base Salary or Annual Bonus opportunity or the failure by the Company (iiother than by reason of bankruptcy, insolvency or receivership) to pay Executive’s Base Salary or any earned Annual Bonus or, subject to Section 4(f), to make the PSU grant contemplated by this Agreement; (D) the expiration requirement by the Company that Executive move his principal place of employment more than 50 miles from the statutory COBRA period and location of his principal place of employment on the Effective Date; or (iiiE) any material breach by the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or MedicareCompany of this Agreement. Notwithstanding the foregoingabove, if an act or omission by the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make constitute an event of Good Reason unless Executive gives the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, Company written notice within sixty (60) 60 days following the Executive’s termination of employmentdate Executive first knows, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture reasonably should have known, of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 event constituting Good Reason of his intention to resign for Good Reason if such Good Reason event is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made not cured by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of and the Company’s assets Company does not cure such event (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties retroactively with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan monetary matter) to the contrary, any right reasonable satisfaction of Executive within 30 days following the Executive to any payment or benefit under this Agreement or any date the Company receives such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Taxwritten notice from Executive.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 1 contract
Sources: Employment Agreement (Universal Insurance Holdings, Inc.)
Termination Without Cause; Resignation for Good Reason. If the Employee’s employment with the Company is terminated by the Company without Cause, or by the Employee’s voluntary resignation for Good Reason, other than in connection with a Change in Control (as defined in Section 7.2(a)), then the Employee shall be paid all accrued and unpaid base salary and any accrued but unused vacation through the date of termination. In addition, subject to the Employee’s execution and non-revocation of a binding severance and mutual release agreement in a form satisfactory to the Company (hereinafter, a “Severance Agreement”) and subject to the terms and conditions of Section 19 of this Agreement, the Employee shall be eligible to receive the following separation benefits:
(a) an amount equal to the product of (i) If one twelfth (1/12) of the Executive incurs Employee’s then-current annualized base salary (provided, however, that if Employee’s employment is terminated by the Employee’s voluntary resignation for Good Reason as a “Separation result of the Company’s material reduction of the Employee’s base salary, then the Employee’s then-current annualized base salary shall refer to his base salary as in effect immediately before such material reduction took effect) and (ii) six (6), less any amounts required to be withheld under applicable law, which amount shall be payable in six (6) substantially equal monthly installments, in accordance with the Company’s payroll practices in effect from Service” within time to time beginning on the meaning Payment Commencement Date (as defined below); and (b) the amount of any bonus for the prior year that was approved but not yet paid to the Employee at the time of the Employee’s termination of employment, less any amounts required to be withheld under applicable law, which amount shall be paid in a manner and timing consistent with the payments to other similarly situated employees and consistent with the requirements of Section 409A of the Internal Revenue Code and the Regulations thereunder, by reason of the Company’s termination of the Executive’s employment without Cause, or if the Executive resigns from his employment hereunder for Good Reason, the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to one (1) times the Executive’s Base Amount, which shall be payable in equal installments pursuant to the Company’s normal payroll practices and subject to all legally required and customary withholdings for the twelve (12) month period following termination.
(C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 19851986, as amended (the “COBRACode”), for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as ) but in no event later than March 15 of the termination date, for such individualsyear following the year of performance; provided, howeverin both cases, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA Severance Agreement has been executed and any applicable revocation period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, respect thereto has expired within sixty (60) days following the ExecutiveEmployee’s date of termination of employment(such 60th day, a release substantially in the form attached hereto as Exhibit A (the “ReleasePayment Commencement Date”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after following the ExecutiveEmployee’s date of termination occurs in the calendar year following the year of termination, then the Payment Commencement Date shall be no earlier than January 1 of the year following the year of termination; and
5.2 upon the Employee’s termination of employment, with the first payment from employment pursuant to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A)5, (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release contributions to the Company. The Executive may notcost of COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage on behalf of the Employee and any applicable dependents for a period of six (6) months after the Employee’s termination if the Employee elects COBRA coverage, directly or indirectlyand only for so long as such coverage continues in force; provided, designate however, that if the calendar year or timing of payments.
(F) In the event that it Employee commences new employment and is determined that any payment or distribution of any type to or eligible for the benefit of an Executive made by the Companya new group health plan, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within contributions toward COBRA coverage shall end when the meaning new employment begins. The cost of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant COBRA shall be determined on the same basis as the Company’s contribution to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right Company-provided health and dental insurance coverage in effect immediately before termination of the Executive to any payment or benefit under this Agreement or any Employee’s employment for an active employee with the same coverage elections. At the end of the six (6) month period, the Employee may continue such equity compensation plan COBRA, if applicable, and shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Taxresponsible for all premiums thereafter.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 1 contract
Termination Without Cause; Resignation for Good Reason. (i) If In the Executive incurs a “Separation from Service” within event that the meaning of Section 409A of the Code and the Regulations thereunder, by reason of the Company’s termination of Employer terminates the Executive’s employment hereunder during the Term without “Cause, ” or if the Executive resigns from his employment hereunder for “Good Reason”, then the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to one (1) times the Executive’s Base Amountno compensation or other benefits of any kind whatsoever, which shall be payable in equal installments pursuant to the Company’s normal payroll practices and subject to all legally required and customary withholdings for the twelve (12) month period following termination.
(C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of other than: (i) the passage of eighteen (18) months Accrued Obligations; (ii) the expiration Severance Amount (defined below), which Severance Amount shall be payable, subject to Section 16, in equal installments over the Severance Period (defined below) in accordance with the Employer’s normal payroll practices, commencing on the first regular pay date of the statutory COBRA period and Employer that occurs after the Termination Date; (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid 's stock options and/or restricted shares granted to the Executive if such payments commenced on during the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), Term (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, fully vested as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(ATermination Date), (B), (C) or (D)shall become fully vested as of the Termination Date, and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled permitted to exercise such options for up to twelve months following the following:
Termination Date (A) The Other Accrued Compensation and Benefits.
(B) An amount equal unless otherwise agreed to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive and the Employer in the case of any stock options or restricted shares granted after the Effective Date); and (iv) if the Executive elects COBRA Coverage following the Termination Date, the Employer shall automatically become vested and, if applicable, exercisable waive the cost of such coverage (for the Executive and any restrictions thereon shall immediately lapse, in each case, with respect to his eligible dependents) during the Severance Period (or such earlier date that number of shares of Company common stock that would otherwise vest based on Executive’s continued employmentCOBRA coverage expires). For purposes the avoidance of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentencedoubt, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms nothing in clause (iii) of this Section 5.1(b)(ii)(C).
(D5(b) Monthly payments shall apply to the Executive equal to Earnout Shares or the full premium amount Escrow Shares (determined each as of defined in the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that SPA). If the Executive is providing coverage resigns for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation Good Reason prior to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan Second Earnout Period (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, defined in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”SPA), then, notwithstanding any other provision of this Agreement or any equity compensation plan anything in the SPA to the contrary, any right the Employer’s obligation to pay the Earnout Consideration on the Separation Date (as each such term is defined in the SPA) pursuant to Section 2.5(r) of the Executive to any payment or benefit under this Agreement or any such equity compensation plan SPA shall be reduced or eliminatedsuspended if the Employer disputes in good faith the existence of Good Reason, but only by delivering a detailed written notice of the basis of such dispute to the extent necessary Executive within five (5) days after the Termination Date. The suspension shall, without further action, notice or deed, be lifted and the Earnout Consideration, together with accrued and unpaid interest thereon, shall be due and payable immediately upon the earliest to avoid imposition occur of (x) mutual written agreement of the Excise TaxEmployer and the Executive, (y) a court of competent jurisdiction shall determine that the Executive’s resignation was for Good Reason, or (z) a Default or an Event of Default (as each of those terms is defined in that certain Financing Agreement, of even date herewith, by and among the Employer, as borrower, the guarantors from time to time party thereto, the lenders party thereto and Victory Park Management, LLC, as agent, as in effect on the date hereof) shall have occurred (whether or not waived, cured or otherwise resolved). In no case, however, Interest shall such cutback be made if Total Payments accrue on the Earnout Consideration from and after the imposition Termination Date, at the rate of 10% per annum, until the Excise Tax are greater than Total Payments cut back as provided date of its indefeasible payment in this Section 5(b)(ii) to avoid the Excise Taxfull.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 1 contract
Termination Without Cause; Resignation for Good Reason. (i) If Executive’s employment may be terminated without Cause effective upon the Company’s delivery to Executive incurs of a “Separation from Service” Notice of Termination, or by Executive’s resignation for Good Reason effective 30 days following delivery to the Company of Notice of Termination provided such delivery is within 90 days following the meaning occurrence of Section 409A events that result in Good Reason. No resignation for Good Reason will be effective unless during the 30-day period following the delivery of the Code and Notice of Termination, the Regulations thereunder, Company has not cured the events that result in Good Reason. If Executive’s employment is terminated without Cause (other than by reason of the Company’s termination of the Executive’s employment without Causedeath or Disability), or if the Executive resigns from his employment hereunder for Good Reason, the Executive shall be entitled to the followingwill receive:
(A1) The Other the Accrued Compensation and Benefits.Obligations;
(B2) An any earned but unpaid Annual Bonus for a prior year;
(3) an amount equal to one a prorated amount of the target Annual Bonus for the year of termination;
(14) times a payment equal to 100% of the annual Base Salary in effect on the termination date;
(5) a payment equal to the cost of health insurance coverage under COBRA for 18 months;
(6) accelerated vesting of the portion of each of Executive’s Base Amount, which shall GoDaddy equity awards that vests solely based on service (including the Option and RSUs but excluding the PSUs or any other performance-based GoDaddy equity awards) that would have vested during the 12 months following the termination date had Executive continued to be payable a Service Provider under the 2015 Incentive Plan through such period and
(7) vesting of the portion of each of Executive’s GoDaddy equity awards that would have vested in equal installments pursuant to whole or in part upon satisfaction of performance criteria (including the Company’s normal payroll practices and subject to all legally required and customary withholdings PSUs) for the performance period(s) ending on or within twelve (12) month months following the termination date assuming Executive’s continuous service through each such performance period following termination.
(Cwith any individual performance criteria deemed fully satisfied) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by based on the Executive shall automatically become vested andextent, if applicableany, exercisable that the underlying performance criteria for such performance period (s) are satisfied with respect to such awards and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on multiplied by a fraction, (I) the numerator of which is the number of calendar days that elapse from elapsed in each such performance period as of the grant date of the equity award until the Executive’s termination date of employment and the (II) the denominator of which is the total number of 365. Such awards shall be settled within five (5) days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date determination of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level attainment of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(Ccriteria for such performance period(s).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 1 contract
Sources: Employment Agreement (GoDaddy Inc.)
Termination Without Cause; Resignation for Good Reason. (i) If The Company may terminate Principal Accounting Officer’s employment with the Executive incurs Company at any time without Cause (as defined below). Further, Principal Accounting Officer may resign at any time for Good Reason (as defined below).
(ii) In the event Principal Accounting Officer’s employment with the Company is terminated by the Company without Cause, or Principal Accounting Officer resigns for Good Reason, then provided such termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service” within the meaning of Section 409A of the Code ”), and the Regulations thereunder, by reason of the Company’s termination of the Executive’s employment without Cause, or if the Executive resigns from his employment hereunder for Good Reason, the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to one (1) times the Executive’s Base Amount, which shall be payable provided that Principal Accounting Officer remains in equal installments pursuant to the Company’s normal payroll practices and subject to all legally required and customary withholdings for the twelve (12) month period following termination.
(C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate compliance with the terms of this Agreement and the Company’s policies applicable to Principal Accounting Officer and satisfies the requirements set forth in Section 5.1(b)(i)(C)4, then Principal Accounting Officer shall receive the following severance benefits:
(a) Severance (the “Severance”) in an amount equal to twenty-six weeks of Base Salary as in effect immediately prior to the separation date. The Severance shall be subject to standard payroll deductions and withholdings, and will be payable in a lump-sum on the 60th day following Principal Accounting Officer’s Separation from Service.
(Db) The Company shall monthly pay Six months accelerated vesting of all of Principal Accounting Officer’s equity interests in the Company.
(iii) If Principal Accounting Officer’s termination without Cause or resignation for Good Reason occurs as a result of or immediately prior to the Executive closing of a Change-in-Control (and provided such termination or resignation constitutes a Separation from Service), and provided that Principal Accounting Officer remains in compliance with the terms of this Agreement and the Company’s policies applicable to Principal Accounting Officer and satisfies the requirements set forth in Section 4, then in lieu of the benefits set forth in Section 3.2(ii)(a) and (b), Principal Accounting Officer shall receive the following severance benefits:
(a) Severance in an amount equal to the full premium amount (determined as sum of the date following (shall be subject to standard payroll deductions and withholdings, and payable in a lump-sum on the 60th day following Principal Accounting Officer’s Separation from Service):
(1) Fifty-two weeks of termination) for continued coverage under the Company’s health plan pursuant Base Salary as in effect immediately prior to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended separation date; and
(“COBRA”), for the Executive, and, 2) Target bonus equal to the extent that product of (A) Principal Accounting Officer’s Base Salary as in effect immediately prior to the Executive is providing coverage for his spouse or eligible dependents as of the termination separation date, for such individuals; provided, however, that multiplied by (B) Principal Accounting Officer’s annual bonus percentage target as in effect immediately prior to the Companyseparation date.
(b) The vesting of all of Principal Accounting Officer’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, equity interests in the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments accelerated such that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals interests shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards vested and exercisable as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the CompanyPrincipal Accounting Officer’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th last day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 1 contract
Sources: Employment Agreement (Lipocine Inc.)
Termination Without Cause; Resignation for Good Reason. If (ix) If the Company terminates your employment at any time other than for Cause (which may include the Company terminating your employment as a result of a successful succession transition of a successor Chief Executive incurs a “Separation from Service” within Officer prior to the meaning of Section 409A expiration of the Code and the Regulations thereunder, by reason of the Company’s termination of the Executive’s employment without CauseTerm), or if the Executive resigns from his (y) you voluntarily terminate your employment hereunder for Good Reason, then, subject to your execution and non‑revocation of a Release, which Release becomes effective in accordance with its terms on or before the Executive thirtieth (30th) day following your termination of employment, you shall be entitled to the followingreceive:
(Ai) The Other your Accrued Compensation and Benefits.Compensation;
(Bii) An cash severance payments equal to the sum of (x) your monthly base salary multiplied by the number of full calendar months remaining in the Term as of the date of your termination of employment and (y) an amount equal to one (1i) times the Executive’s Base Amountquotient of your annual target bonus divided by twelve (12) multiplied by (ii) the number of full calendar months remaining in the Term. To the extent the cash severance payments described in this subsection (ii) are less than or equal to the sum of your annual base salary and target bonus, which such amount shall be payable in single lump sum and the excess amount, if any, shall be payable in substantially equal installments pursuant to for the remainder of the Term in accordance with the Company’s normal regular payroll practices schedule;
(iii) accelerated vesting of all equity awards that you received from the Company prior to such termination of employment which would otherwise become vested had you (A) remained an employee through the expiration of the remaining Term and subject to all legally required (B) a consultant through the Consulting Period and customary withholdings for the (C) received twelve (12) month period following termination.
(C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each months additional vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date as of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins on the date of grant last day of the applicable equity award and ends on the scheduled vesting date Consulting Period; provided that, with respect to any outstanding awards of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining Performance-Based Units for which the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (earned restricted stock units has not been determined as of the date of termination, the number of Performance-Based Units that will become earned for purposes of vesting shall be determined based on actual performance of the applicable performance metrics, as, and at such time as, determined by the Compensation Committee; and provided, further that all such earned and vested Performance-Based Units shall be settled as soon as practicable following such determination of any actual performance of the applicable performance metrics (but no later than two and a half (2 1/2) for continued coverage under months after the Company’s health plan pursuant to fiscal year in which the Consolidated Omnibus Budget Reconciliation Act termination date occurs);
(iv) the COBRA Benefit; and
(v) a pro rata portion of 1985, as amended (“COBRA”), your bonus for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as fiscal year of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with payable at the first installment payment same time the Company pays annual bonuses to include any payments that would have otherwise been paid to other executive officers for such fiscal year (but no later than two and a half (2 1/2) months after the Executive if such payments commenced fiscal year in which the termination date occurs) based on the first payroll date following the Executive’s (x) your termination date, (y) the determination by the Compensation Committee whether company performance objectives have been met, and (z) an assumption that any individual MBO has been achieved at one hundred percent (100%). The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D4(d) Monthly payments are conditioned in their entirety on your making yourself available to provide consulting services following the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) Employment Term and through the expiration of the statutory COBRA period and Consulting Period in accordance with Section 5 below (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if unless otherwise agreed to by the Company (or its successor) terminates the Executive’s employment without Causein writing). Additionally, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not you will be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture tender your resignation as a member of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of paymentsBoard.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 1 contract
Sources: Employment Agreement (Xilinx Inc)
Termination Without Cause; Resignation for Good Reason. (i) If the Executive incurs a “Separation from Service” within the meaning of Section 409A of the Code and the Regulations thereunder, by reason of the Company’s termination of the Executive’s employment is terminated by CTI without Cause, or if the Executive resigns from his employment hereunder for Good Reason, the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to one (1) times the Executive’s Base Amount, which shall be payable in equal installments pursuant to the Company’s normal payroll practices and subject to all legally required and customary withholdings for the twelve (12) month period following termination.
(C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety for Good Reason and provided that such termination constitutes a “separation from service” as defined in Treasury Regulation Section 1.409A-1(h) (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B“Separation”) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers does not revoke a general release of all claims in the form prescribed by the Company (such form to be substantially similar to the Companyform presented to Executive in connection with the Agreement, together with any changes to such form as CTI may reasonably determine to be appropriate to comply with applicable law) and such release becomes effective within sixty (60) days following the of Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A Separation (the “ReleaseDeadline”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
receive: (Ai) The Other Accrued Compensation and Benefits.
eighteen (B18) An months of Severance Pay; (ii) an amount equal to two the greater of the average of the three (3) prior years’ bonuses or thirty percent (30%) of base salary in effect upon Executive’s Severance Date; (iii) pay for all vacation time accrued as of the Severance Date; and (iv) CTI shall continue to pay premiums to maintain any life insurance for Executive, existing and paid for by CTI as of the Severance Date, for eighteen (18) months following the Severance Date. The parties agree that the foregoing shall be paid as follows: (w) the Severance Pay provided in (i) above shall be paid in eighteen (18) equal installments pursuant to CTI’s regular payroll procedures commencing on the Company’s first normal payroll date that occurs on or after the Deadline, (x) the severance provided in (ii) above shall be paid on the first normal payroll date on or after the Deadline, (y) the accrued but unused vacation shall be paid on the Severance Date and (z) premium payments for life insurance shall be made on each regularly scheduled due date for such payments beginning with the first regularly scheduled due date that occurs on or after the Deadline Date (with any payments due prior to such time being made on such date). In addition, CTI shall reimburse the Executive for any premium payments for COBRA continuation coverage for the Executive and Executive’s covered dependents under CTI’s medical plan only for the period from the Severance Date until the earlier of: (1) a date eighteen (18) months after the Severance Date; or (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest based date on Executive’s continued employment. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that which the Executive is providing coverage for his spouse covered under the medical plan of another employer, which does not exclude pre-existing conditions. At Executive’s sole cost and expense, Executive may elect to exercise any disability insurance conversion originally available to Executive under the then existing group or eligible dependents as individual disability insurance policies. In the event of a breach of the termination dateInventions and Proprietary Information Agreement, for such individualsin addition to any other remedy available to CTI, all of CTI’s obligations under this Section 1(b) shall terminate immediately; provided, however, that in the Companyevent of such a breach by Executive as to which CTI proposes to terminate its obligations under this Section 1(b), Executive shall be given notice and a reasonable opportunity (of in no event more than 30 days) to cure the alleged breach before any such termination (except that no such cure opportunity shall be required if the breach by Executive is not reasonably curable or has resulted in material harm to CTI). For purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), each payment that is paid under the preceding paragraph (other than payments referenced in Section 1(b)(iii) above and COBRA reimbursements) is hereby designated as a separate payment. Notwithstanding anything stated herein, if the Company (for this purpose, “employer” as defined in Treasury Regulation Section 1.409A-1(h)(3)) is publicly traded on an established securities market or otherwise at the time of Executive’s obligation Separation and, at the time of Executive’s Separation Executive is a “specified employee,” as defined in Treasury Regulation
Section 1. 409A-1(i), then any severance that Executive would otherwise be entitled to pay pursuant to 1(b) during the six (6) month period following his Separation (for purposes of clarity, this does not include amounts referenced in Section 1(b)(iii) above or COBRA reimbursements) shall not be paid during such premiums six (6) month period and shall cease immediately upon instead be paid on the earlier of (i) the passage of eighteen (18) months (ii) first business day following the expiration of the statutory COBRA such six (6) month period and (iii) or, if earlier, the date of Executive’s death, and any remaining payments shall continue to be paid in accordance with this Section 1(b). The Executive shall have no right under this Agreement or otherwise to receive any bonus, stock options, or other compensation awarded or benefits provided, determined or paid subsequent to the Severance Date to other employees of CTI, pro rata or otherwise. However, if Executive is terminated by CTI without Cause or the Executive becomes eligible resigns from Executive’s employment for coverage under any other group health plan (Good Reason, all unvested stock based compensation to which the Executive may have rights on the Severance Date shall accelerate and immediately vest and all options shall remain exercisable as an employee or otherwise) or Medicareprovided for in the parties’ corresponding Stock Option Agreement(s). Notwithstanding the foregoing, if the Company (or its successor) terminates and only if, CTI is a privately held company on the Executive’s employment without CauseSeverance Date, CTI shall recommend to the Company (or its successor) shall provide Board of Directors to extend the Executive with no less than ninety (90) days’ written notice or payment of exercise period from three (3) months Base Salary to two (2) years after the Severance Date for stock options other than any incentive stock options in lieu of ninety which the Executive may have rights on the Severance Date; provided however, should CTI stock become publicly traded during any extended stock option exercise period granted hereunder, Executive may only exercise stock options in which Executive may have rights during the three (903) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(Emonth period following the date a corresponding S-8 registration statement is declared effective; or ii) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case last day of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day extended stock option exercise period. The Executivedecision to accept CTI’s failure or refusal recommendation to sign extend the Release (or exercise period shall be within the Executive’s revocation sole discretion of such Release in accordance with applicable laws) the Board of Directors. If CTI Common Stock is publicly traded on the Severance Date, any exercise period will result remain as provided for in the forfeiture of the payments and benefits under this Section 5(b)(ii)(Aparties’ corresponding Stock Option Agreement(s), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 1 contract
Termination Without Cause; Resignation for Good Reason. Your employment with the Company may be terminated by the Company without Cause (iwhich for purposes of this Agreement shall include a termination resulting from the Company providing you with a Non-Renewal Notice) upon 30 days’ written notice to you or by you for Good Reason. If your employment with the Executive incurs a “Separation from Service” within Company is terminated by the meaning of Section 409A of the Code and the Regulations thereunder, Company without Cause or by reason of the Company’s termination of the Executive’s employment without Cause, or if the Executive resigns from his employment hereunder you for Good Reason, the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to one (1) times the Executive’s Base Amount, which shall be payable in equal installments pursuant to the Company’s normal payroll practices and subject to all legally required and customary withholdings for the twelve (12) month period following termination.
(C) A pro-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested your timely execution and, if applicable, exercisable non-revocation of a general release of claims in favor of the Company and any restrictions thereon shall immediately lapse. The pro-rated portioncompliance with all restrictive covenants applicable to you, determined separately you will be entitled to, in addition to the Accrued Amounts: (i) continued payment of your base salary for each vesting tranche for each such equity awarda period of nine (9) months, shall be based starting on a fractionthe 30th day after termination of employment and payable in accordance with the Company’s ordinary payroll practices as established from time to time, (Iii) if all annual bonus targets established by the numerator Company are met, any Annual Bonus for the completed calendar year that ended immediately prior to calendar year in which your termination of employment occurred but for which is number of days that elapse from the grant date payment has not been made, payable as a lump sum cash payment no later than March 15 of the equity award until calendar year immediately following the Executive’s termination date calendar year in which your employment terminated, and (iii) if any portion of the (II) the denominator Stock Option Award remains unvested, a prorated portion of which is the total number one-third of days in the period that begins your Stock Option Award will become fully vested and exercisable on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining the number of shares subject to any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) that would otherwise vest pursuant to the foregoing sentence, the applicable performance goals shall be deemed achieved at the level of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination date, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, provided that such prorated number will be calculated based on the Executive breaches number of days that have elapsed since the provisions of Sections 6 through 10 hereof most recent Vesting Date (or breaches any provision set forth in the executed copy of the general release of claimsgrant date, the Executive shall not be eligible, as of if no Vesting Date has occurred) and the date of such breachtermination, for with any performance metrics earned at the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements end of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, held by the Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to that number of shares of Company common stock that would otherwise vest relevant performance period based on Executive’s continued employmentactual performance. For purposes of determining the number of shares subject to any outstanding equity awards subject to performance vesting conditions that would otherwise vest pursuant to the foregoing sentencethis Agreement, the applicable performance goals shall be deemed achieved at the “targetGood Reason” level. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executivemeans, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of without your advance written consent: (i) a material reduction in your authority, duties or responsibilities such that they are fundamentally irreconcilable with your position as Chief Financial Officer of the passage of eighteen (18) months Company; (ii) a material reduction in your base salary (unless reductions comparable in percentage and duration are concurrently made for substantially all other executives of the Company); (iii) a change in your primary work location to a location outside of the Greater Houston area; or (iv) a material breach by the Company of this Agreement. You will not be deemed to have terminated your employment for Good Reason unless you provide the Company with written notice of such event within 90 days after the initial occurrence thereof and describe such claim in reasonable detail, the Company fails to cure the situation or event within 30 days of delivery of such notice and you terminate your employment within 30 days of the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii)such cure period.
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (D) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) on the first payroll date following the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A), (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.
Appears in 1 contract
Termination Without Cause; Resignation for Good Reason. (i) If the Executive incurs a “Separation from Service” within the meaning of Section 409A of the Code and the Regulations thereunder, by reason of the Company’s termination of the Executive’s employment is terminated by the Company without CauseCause pursuant to Section 4.1(d), or if the Executive resigns from his the Executive’s employment hereunder for Good ReasonReason pursuant to Section 4.1(e) (each such event a “Qualifying Termination”), and such Qualifying Termination does not occur during a Change in Control Period, then, in addition to the amounts set forth in Section 4.3, (i) the Company shall pay the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An an amount equal to one (1) 1.5 times the Executive’s Annual Base Amount, which shall be Salary as in effect immediately prior to the Date of Termination (but prior to any reduction that constitutes Good Reason) payable in equal installments pursuant to in accordance with the Company’s normal payroll practices and subject to all legally required and customary withholdings (disregarding, however, any past or future changes in the Company’s payroll practices that would result in an impermissible change in the timing of payments under this provision for purposes of Section 409A), during the twelve eighteen (1218) month period beginning on the first payroll date that follows the thirtieth (30th) day following termination.
the Date of Termination, (Cii) A proall Time-rated portion of each outstanding unvested equity award, including, without limitation, stock options, restricted stock and restricted stock units, Based Awards held by the Executive on the Date of Termination shall automatically become vested vest and, if applicable, become exercisable and any restrictions thereon shall immediately lapse. The pro-rated portion, determined separately for each vesting tranche for each such equity award, shall be based on with respect to a fraction, (I) the numerator of which is number of days that elapse from the grant date of the equity award until the Executive’s termination date and the (II) the denominator of which is the total number of days in the period that begins on the date of grant of the applicable equity award and ends on the scheduled vesting date of such equity award (or, if applicable, the scheduled vesting date of the applicable vesting tranche). For purposes of determining Company shares equal to the number of Company shares subject that are scheduled to vest on the next scheduled time-vesting date multiplied by the Pro-Ration Fraction, and all remaining Time-Based Awards (for the avoidance of doubt, not including any outstanding unvested equity awards subject to performance vesting conditions (as opposed to solely service-based vesting conditions) Equity Awards that would otherwise vest pursuant were already vested prior to the foregoing sentence, the applicable performance goals Date of Termination) shall be deemed achieved at forfeited on the level Date of the Company’s actual achievement of the applicable performance goals as measured as of the Executive’s termination dateTermination, as determined by the Compensation Committee in its reasonable discretion. Each of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(i)(C).
(D) The Company shall monthly pay to the Executive the amount equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company terminates the Executive’s employment without Cause, the Company shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(i).
(E) All payments and benefits provided under this Section 5(b)(i)(B) and (D) shall commence on the first payroll date following the 60th day after the Executive’s termination of employment, with the first installment payment to include any payments that would have otherwise been paid to the Executive if such payments commenced on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(i)(A), (B), (C) or (D) unless the Executive executes and delivers to the Company, within sixty (60) days following the Executive’s termination of employment, a release substantially in the form attached hereto as Exhibit A (the “Release”), and the Release has become effective and irrevocable in its entirety in such 60all Performance-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(i)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments. This Section 5(b)(i) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(F) If, following a termination of employment without Cause or a resignation for Good Reason, the Executive breaches the provisions of Sections 6 through 10 hereof or breaches any provision set forth in the executed copy of the general release of claims, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 5(b)(i)(A), (B), (C) or (D), and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease. This Section 5(b)(i)(F) shall expressly not apply to payments made on account of a Change in Control, pursuant to Section 5(b)(ii) hereof.
(ii) If the Company undergoes a Change in Control and, within 24 months of such Change in Control, the Executive is terminated without Cause or resigns for Good Reason, then, in lieu of (and not in addition to) any payments or benefits payable to the Executive pursuant to Section 5(b)(i), the Executive shall be entitled to the following:
(A) The Other Accrued Compensation and Benefits.
(B) An amount equal to two (2) times the Executive’s Base Amount, payable in a single lump sum payment.
(C) Each outstanding equity award, including, without limitation, stock options, restricted stock and restricted stock units, Based Awards held by the Executive on the Date of Termination shall automatically become vested remain outstanding and eligible to vest and, if applicable, exercisable and any restrictions thereon shall immediately lapsebecome exercisable, on the Performance Measurement Date in each case, with respect to that a number of Company shares of Company common stock that would otherwise vest based on Executive’s continued employment. For purposes the actual level of determining achievement of the number performance targets as determined on the Performance Measurement Date, multiplied by the Pro-Ration Fraction, and all remaining Performance-Based Awards (for the avoidance of shares subject to doubt, not including any outstanding equity awards subject to performance vesting conditions Equity Awards that would otherwise vest pursuant were already vested prior to the foregoing sentence, the applicable performance goals shall be deemed achieved at the “target” level. Each Date of the Executive’s outstanding equity awards as of the Effective Date is hereby amended to incorporate the terms of this Section 5.1(b)(ii)(C).
(D) Monthly payments to the Executive equal to the full premium amount (determined as of the date of termination) for continued coverage under the Company’s health plan pursuant to COBRA for the Executive, and, to the extent that the Executive is providing coverage for his spouse or eligible dependents as of the termination date, for such individuals; provided, however, that the Company’s obligation to pay such premiums shall cease immediately upon the earlier of (i) the passage of eighteen (18) months (ii) the expiration of the statutory COBRA period and (iii) the date the Executive becomes eligible for coverage under any other group health plan (as an employee or otherwise) or Medicare. Notwithstanding the foregoing, if the Company (or its successor) terminates the Executive’s employment without Cause, the Company (or its successor) shall provide the Executive with no less than ninety (90) days’ written notice or payment of three (3) months Base Salary in lieu of ninety (90) days’ written notice, which shall be in addition to payments described under this Section 5(b)(ii).
(E) Unless otherwise provided herein, all payments and benefits provided under this Section 5(b)(ii)(B) and (DTermination) shall be paid (or, in the case of the payments described in Section 5(b)(ii)(D), commence to be paid) forfeited on the first payroll date following Performance Measurement Date and (iv) during the 60th day after the Executive’s termination of employment, with the first payment to include any payments provided under Section 5(b)(ii)(D) that would have otherwise been paid to the Executive if such payments commenced 18-month period beginning on the first payroll date following the Executive’s termination date. The Company shall not be required to make the payments and provide the benefits provided for under this Section 5(b)(ii)(A)Date of Termination (such period, (B), (C) or (D) unless the Executive executes and delivers the Release to the Company, within sixty (60) days following the Executive’s termination of employment, and the Release has become effective and irrevocable in its entirety in such 60-day period. The Executive’s failure or refusal to sign the Release (or the Executive’s revocation of such Release in accordance with applicable laws) will result in the forfeiture of the payments and benefits under this Section 5(b)(ii)(A), (B), (C) or (D). To the extent any amount payable under this Section 5 is deferred compensation subject to the Code, if the period during which the Executive has discretion to execute or revoke the Release straddles two of the Executive’s taxable years, then the Company shall make the severance payments starting in the second of such taxable years, regardless of which taxable year the Executive actually delivers the executed Release to the Company. The Executive may not, directly or indirectly, designate the calendar year or timing of payments.
(F) In the event that it is determined that any payment or distribution of any type to or for the benefit of an Executive made by the Company, by any of its Affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of any equity compensation plan, this Agreement or otherwise (the “Total PaymentsContinuation Period”), would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (the “Excise Tax”), then, notwithstanding any other provision of this Agreement or any equity compensation plan to the contrary, any right of the Executive to any payment or benefit under this Agreement or any such equity compensation plan shall be reduced or eliminated, but only to the extent necessary to avoid imposition of the Excise Tax. In no case, however, shall such cutback be made if Total Payments after the imposition of the Excise Tax are greater than Total Payments cut back as provided in this Section 5(b)(ii) to avoid the Excise Tax.
(G) In the event that a cutback of Total Payments is permitted under Section 5(b)(ii)(F), and except as required by Code Section 409A or to the extent that Code 409A permits discretion, the Compensation Committee shall have the right, in the Compensation Committee’s sole discretion, to designate those rights, payments, or benefits and all other agreements that should be reduced or eliminated so as to provide the Executive with the maximum pre-tax amount which avoids imposition of the Excise Tax. For example, the Compensation Committee may choose to cut back cash severance, if that would yield a higher pre-tax amount than cutting back equity. Notwithstanding the foregoing, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A the Compensation Committee shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of options or stock appreciation rights, then by reducing or eliminating any accelerated vesting of restricted stock or restricted stock units.the
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