Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if: (i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and (ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in Control. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (i) the highest of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (x) the target bonus for the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based. (B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination; (C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive. (A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2. (B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due. 6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). 6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 8 contracts
Sources: Severance Agreement (JPF Acquisition Corp), Severance Agreement (Jevic Transportation Inc), Severance Agreement (Jevic Transportation Inc)
Severance Payments. 6.1. The Subject to Section 6.2 hereof, the Company shall pay the Executive the payments and benefits described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement), in addition to the applicable payments and benefits described in Section 5 hereof, unless such upon any termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before after a Change in Control and during by the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused Company Without Cause or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in ControlReason.
(Ai) In lieu Within 15 days of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay make a lump sum cash payment to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (ia) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, and (b) the highest annualized (for a partial year of service) annual aggregate bonuses paid, or such salary accrued to be paid if not then yet paid (or, in effect immediately the event that the Executive has been recently hired and has not had a full fiscal year of employment and Profit Incentive Plan opportunity, then the higher of the amount paid in the prior year, recalculated as if the Executive had been employed for the full entire year, or the planned amount of Profit Incentive Plan bonus payout for the Executive for the year in which the termination occurs) to the Executive under the Profit Incentive Plan or its successor plan or by vote of the Board of Directors (or a committee thereof) or bonuses of Sales Incentive Compensation or other bonuses, in each case determined (except as provided above with respect to a recently hired Executive) over the period beginning with the fifth (5th) year preceding the year in which occurs the Change in Control and ending with the period in which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make an additional lump sum cash severance payment to the Executive equal to the annual level of contributions, credits or other benefits the Executive was receiving (or that were being made or were required to be made for the Executive's benefit) for the most recent applicable plan period prior to a Potential the Change in ControlControl or prior to the Notice of Termination (whichever is more favorable to the Executive under any employee benefits plan then existing including the SARP, the ESOP, the "excess benefit" restoration account under the Company's Supplemental Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella Pension Plan, the Company's matching contribution under its 401(k) plan applicable to the Executive and (subject to the following sentence) the LTDCIP (and in each case any successor plan or arrangement), in each case based on the levels of compensation taken into account under Section 6.1(i). In the case of the LTDCIP the payment shall equal to an amount equal to the award credit that would have been credited to the Executive's account under the LTDCIP for the calendar year in which the Date of Termination occurs, assuming for such year, (i) the Company's Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount projected for the applicable year as Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case" provided to the Company's investment banker prior the Change in Control (or if not available, the best equivalent), and (ii) the higher of (x) Executive's percentage award opportunity had equaled the target bonus for percentage award opportunity which was the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period Executive's most recent award level preceding the Date Change in Control. For the period of Termination but has not yet been paid twelve (pursuant to Section 5.2 hereof or otherwise12) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of months following the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with lifeany employee welfare benefits including health, dental, disability, life, and accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving on the same premium cost share basis as was applicable to the Executive immediately prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive (without utilizing or limiting the Executive's subsequent resort to COBRA rights under applicable laws and without giving effect to any reduction in such benefits subsequent to a Change in Control if such which reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive under any employee welfare benefits including health, dental, disability, life, and accident insurance pursuant to this Section 6.1(C6.1(ii) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost or at a lower cost than was charged to the Executive prior to the Change in Control or the Notice of Termination (whichever is more favorable to the Executive) during the above-referenced period. In addition, twelve (12) month period following the Executive's termination of employment (and any such benefits actually received or made available by the Executive shall be reported to the Company by the Executive.
(A) Whether or not ). In the event that the Company self-insures with respect to one of these benefits, such as for example dental benefits, then the Executive becomes entitled shall be reimbursed for all dental expenses during the 12-month period that would have been reimbursed under the self-funded policy in effect prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive. If the benefits provided to the Executive under this Section 6.1(ii) shall result in a decrease, pursuant to Section 6.2, in the Severance Payments, if any Payments and as a result the Section 6.1(ii) benefits are thereafter reduced pursuant to the immediately preceding sentence because of the Total Payments will be subject to the Excise Taxreceipt or availability of comparable benefits, the Company shall shall, at the time of such reduction, pay to the Executive an additional the lesser of (a) the amount (of the "Gross-Up Payment") such that decrease made in the net amount retained by the Executive, after deduction of any Excise Tax on the Total Severance Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this pursuant to Section 6.2, shall or (b) the maximum amount which can be equal paid to the excess Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Total Payments over the payment provided for by this Section 6.2Code.
(B) For purposes 6.2. Notwithstanding any other provisions of determining whether this Agreement, in the event that any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's termination of employment, employment (whether or not received pursuant to the terms of this Agreement or any other planotherwise) (all such payments and benefits, arrangement or agreement with including option benefits and the CompanySeverance Payments, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (being hereinafter called the "Total Payments"), shall ) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (subject in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject part to the Excise Tax unlessTax, in then the opinion of such tax counselSeverance Payments shall be reduced to the extent, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within but only to the meaning of section 280G(b)(4)(B) extent, necessary so that no portion of the Code), or are otherwise not Total Payments is subject to the Excise Tax; provided, and (ii) the value of any noncash benefits or any deferred payment or benefit that no such reduction shall be determined by effected unless the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the net amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of Total Payments after such reduction in Excise Tax is finally determined, the portion Severance Payments and after deduction of the Gross-Up Payment attributable to such reduction (plus that portion net amount of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed taxes on such reduced Total Payments would be greater than the Gross-Up Payment being repaid by excess of (A) the Executive net amount of the Total Payments without such reduction in the Severance Payments but after deduction of the net amount of federal, state and local income taxes (other than the Excise Tax) on such unreduced Total Payments, over (b) the Excise Tax to which the extent that such repayment results in Total Payments are subject. The determination as to whether a reduction in Excise Tax or a federalSeverance Payments is to be made under this Section 6.2 and, state or local income tax deduction) plus interest on if so, the amount of any such repayment at reduction shall be made by the rate provided firm of certified public accountants that had been acting as the Company's auditors prior to the Change in section 1274(b)(2)(3) Control or by such other firm of certified public accountants, benefits consulting firm or legal counsel as the Code. In Board may designate for such purpose, with the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination approval of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3Change in Control. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner auditor's calculations of the amounts referred to in which this Section 6.2 and such payments were calculated and supporting materials as are reasonably necessary for the basis for such calculations including, without limitation, any opinions or other advice Executive to evaluate the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)Company's calculations.
6.46.3. The In the event of a termination following a Change in Control, the Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any payment, benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
6.4. During the period of one year from the Termination Date, the Company shall engage, at the request of the Executive, made in writing in the Termination Notice or within ten days of receipt by the Executive of a Notice of Termination, a mutually agreed upon, full executive outplacement counseling service of national reputation, reasonably proximate to the Executive's home or home office, to assist the Executive in obtaining employment.
Appears in 7 contracts
Sources: Cic Agreement (Brown & Sharpe Manufacturing Co /De/), Cic Agreement (Brown & Sharpe Manufacturing Co /De/), Cic Agreement (Brown & Sharpe Manufacturing Co /De/)
Severance Payments. 6.1. The Subject to Section 6.2 hereof, the Company shall pay the Executive the payments and benefits described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement), in addition to the applicable payments and benefits described in Section 5 hereof, unless such upon any termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before after a Change in Control and during by the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused Company Without Cause or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in ControlReason.
(Ai) In lieu Within 15 days of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay make a lump sum cash payment to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times twice (two times) the sum of (ia) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, and (b) the highest annualized (for a partial year of service) annual aggregate bonuses paid, or such salary accrued to be paid if not then yet paid (or, in effect immediately the event that the Executive has been recently hired and has not had a full fiscal year of employment and Profit Incentive Plan opportunity, then the higher of the amount paid in the prior year, recalculated as if the Executive had been employed for the full entire year, or the planned amount of Profit Incentive Plan bonus payout for the Executive for the year in which the termination occurs) to the Executive under the Profit Incentive Plan or its successor plan or by vote of the Board of Directors (or a committee thereof) or bonuses of Sales Incentive Compensation or other bonuses, in each case determined (except as provided above with respect to a recently hired Executive) over the period beginning with the fifth (5th) year preceding the year in which occurs the Change in Control and ending with the period in which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make an additional lump sum cash severance payment to the Executive equal to twice (two times) the annual level of contributions, credits or other benefits the Executive was receiving (or that were being made or were required to be made for the Executive's benefit) for the most recent applicable plan period prior to a Potential the Change in ControlControl or prior to the Notice of Termination (whichever is more favorable to the Executive) under any employee benefits plan then existing including the SARP, the ESOP, the "excess benefit" restoration account under the Company's Supplemental Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella Pension Plan, the Company's matching contribution under its 401(k) plan applicable to the Executive and (subject to the following sentence) the LTDCIP (and in each case any successor plan or arrangement), in each case based on the levels of compensation taken into account under Section 6.1(i). In the case of the LTDCIP the payment shall equal to an amount equal to the award credits that would have been credited to the Executive's account under the LTDCIP for the calendar year in which the Date of Termination occurs and for the succeeding year, assuming for each of such years, (i) the Company's Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount projected for the applicable year as Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case" provided to the Company's investment banker prior the Change in Control (or if not available, the best equivalent), and (ii) the higher of (x) Executive's percentage award opportunity had equaled the target bonus for percentage award opportunity which was the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period Executive's most recent award level preceding the Date Change in Control. For the period of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after months following the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with lifeany employee welfare benefits including health, dental, disability, life, and accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving on the same premium cost share basis as was applicable to the Executive immediately prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive (without utilizing or limiting the Executive's subsequent resort to COBRA rights under applicable laws and without giving effect to any reduction in such benefits subsequent to a Change in Control if such which reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive under any employee welfare benefits including health, dental, disability, life, and accident insurance pursuant to this Section 6.1(C6.1(ii) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost or at a lower cost than was charged to the Executive prior to the Change in Control or the Notice of Termination (whichever is more favorable to the Executive) during the abovetwenty-referenced period. In addition, four (24) month period following the Executive's termination of employment (and any such benefits actually received or made available by the Executive shall be reported to the Company by the Executive.
(A) Whether or not ). In the event that the Company self-insures with respect to one of these benefits, such as for example dental benefits, then the Executive becomes entitled shall be reimbursed for all dental expenses during the 24-month period that would have been reimbursed under the self-funded policy in effect prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive. If the benefits provided to the Executive under this Section 6.1(ii) shall result in a decrease, pursuant to Section 6.2, in the Severance Payments, if any Payments and as a result the Section 6.1(ii) benefits are thereafter reduced pursuant to the immediately preceding sentence because of the Total Payments will be subject to the Excise Taxreceipt or availability of comparable benefits, the Company shall shall, at the time of such reduction, pay to the Executive an additional the lesser of (a) the amount (of the "Gross-Up Payment") such that decrease made in the net amount retained by the Executive, after deduction of any Excise Tax on the Total Severance Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this pursuant to Section 6.2, shall or (b) the maximum amount which can be equal paid to the excess Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Total Payments over the payment provided for by this Section 6.2Code.
(B) For purposes 6.2. Notwithstanding any other provisions of determining whether this Agreement, in the event that any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's termination of employment, employment (whether or not received pursuant to the terms of this Agreement or any other planotherwise) (all such payments and benefits, arrangement or agreement with including option benefits and the CompanySeverance Payments, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (being hereinafter called the "Total Payments"), shall ) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (subject in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject part to the Excise Tax unlessTax, in then the opinion of such tax counselSeverance Payments shall be reduced to the extent, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within but only to the meaning of section 280G(b)(4)(B) extent, necessary so that no portion of the Code), or are otherwise not Total Payments is subject to the Excise Tax; provided, and (ii) the value of any noncash benefits or any deferred payment or benefit that no such reduction shall be determined by effected unless the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the net amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of Total Payments after such reduction in Excise Tax is finally determined, the portion Severance Payments and after deduction of the Gross-Up Payment attributable to such reduction (plus that portion net amount of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed taxes on such reduced Total Payments would be greater than the Gross-Up Payment being repaid by excess of (A) the Executive net amount of the Total Payments without such reduction in the Severance Payments but after deduction of the net amount of federal, state and local income taxes (other than the Excise Tax) on such unreduced Total Payments, over (b) the Excise Tax to which the extent that such repayment results in Total Payments are subject. The determination as to whether a reduction in Excise Tax or a federalSeverance Payments is to be made under this Section 6.2 and, state or local income tax deduction) plus interest on if so, the amount of any such repayment at reduction shall be made by the rate provided firm of certified public accountants that had been acting as the Company's auditors prior to the Change in section 1274(b)(2)(3) Control or by such other firm of certified public accountants, benefits consulting firm or legal counsel as the Code. In Board may designate for such purpose, with the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination approval of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3Change in Control. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner auditor's calculations of the amounts referred to in which this Section 6.2 and such payments were calculated and supporting materials as are reasonably necessary for the basis for such calculations including, without limitation, any opinions or other advice Executive to evaluate the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)Company's calculations.
6.46.3. The In the event of a termination following a Change in Control, the Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any payment, benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
6.4. During the period of two years from the Termination Date, the Company shall engage, at the request of the Executive, made in writing in the Termination Notice or within ten days of receipt by the Executive of a Notice of Termination, a mutually agreed upon, full executive outplacement counseling service of national reputation, reasonably proximate to the Executive's home or home office, to assist the Executive in obtaining employment.
Appears in 7 contracts
Sources: Cic Agreement (Brown & Sharpe Manufacturing Co /De/), Cic Agreement (Brown & Sharpe Manufacturing Co /De/), Cic Agreement (Brown & Sharpe Manufacturing Co /De/)
Severance Payments. 6.1. The Subject to Section 6.2 hereof, the Company shall pay the Executive the payments and benefits described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement), in addition to the applicable payments and benefits described in Section 5 hereof, unless such upon any termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before after a Change in Control and during by the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused Company Without Cause or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in ControlReason.
(Ai) In lieu Within 15 days of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay make a lump sum cash payment to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times twice (two times) the sum of (ia) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, (b) the highest annualized (for a partial year of service) annual aggregate bonuses paid, or such salary accrued to be paid if not then yet paid (or, in effect immediately prior to the event that the Executive has been recently hired and has not had a Potential Change in Controlfull fiscal year of employment and Profit Incentive Plan opportunity, and (ii) then the higher of (x) the target amount paid in the prior year, recalculated as if the Executive had been employed for the full entire year, or the planned amount of Profit Incentive Plan bonus payout for the Executive for the year in which the Notice termination occurs) to the Executive under the Profit Incentive Plan or its successor plan or by vote of Termination is the Board of Directors (or a committee thereof) or bonuses of Sales Incentive Compensation or other bonuses excluding any bonuses paid as part of the hiring process, in each case determined (except as provided or above with respect to a recently hired Executive) over the period beginning with the fifth (y5th) year preceding the year in which occurs the Change in Control and ending with the period in which occurs the Date of Termination, and (c) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of or Termination is basedbased or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as Within 15 days of the Date of Termination;
, the Company shall make an additional lump sum cash severance payment to the Executive equal to twice (Ctwo times) For the annual level of contributions, credits or other benefits the Executive was receiving (ior that were being made or were required to be made for the Executive's benefit) a twelve for the most recent applicable plan period prior to the Change in Control or prior to the Notice of Termination (12whichever is more favorable to the Executive) month period after under any employee benefits plan then existing including the SARP, the ESOP, the "excess benefit" restoration account under the Company's Supplemental Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella Pension Plan, the Company's matching contribution under its 401(k) plan applicable to the Executive and (subject to the following sentence) the LTDCIP (and in each case any successor plan or arrangement), in each case based on the levels of compensation taken into account under Section 6.1(i). In the case of the LTDCIP the payment shall equal to an amount equal to the award credits that would have been credited to the Executive's account under the LTDCIP for the calendar year in which the Date of Termination if Executive has one year or less occurs and for the succeeding year, assuming for each of continuous service as an employee of such years, (i) the Company's Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount projected for the applicable year as Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case" provided to the Company's investment banker prior the Change in Control (or if not available, the best equivalent), and (ii) a the Executive's percentage award opportunity had equaled the percentage award opportunity which was the Executive's most recent award level preceding the Change in Control. For the period of twenty-four (24) month period after months following the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with lifeany employee welfare benefits including health, dental, disability, life, and accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving on the same premium cost share basis as was applicable to the Executive immediately prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive (without utilizing or limiting the Executive's subsequent resort to COBRA rights under applicable laws and without giving effect to any reduction in such benefits subsequent to a Change in Control if such which reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive under any employee welfare benefits including health, dental, disability, life, and accident insurance pursuant to this Section 6.1(C6.1(ii) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost or at a lower cost than was charged to the Executive prior to the Change in Control or the Notice of Termination (whichever is more favorable to the Executive) during the abovetwenty-referenced period. In addition, four (24) month period following the Executive's termination of employment (and any such benefits actually received or made available by the Executive shall be reported to the Company by the Executive.
(A) Whether or not ). In the event that the Company self-insures with respect to one of these benefits, such as for example dental benefits, then the Executive becomes entitled shall be reimbursed for all dental expenses during the 24-month period that would have been reimbursed under the self-funded policy in effect prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive. If the benefits provided to the Executive under this Section 6.1(ii) shall result in a decrease, pursuant to Section 6.2, in the Severance Payments, if any Payments and as a result the Section 6.1(ii) benefits are thereafter reduced pursuant to the immediately preceding sentence because of the Total Payments will be subject to the Excise Taxreceipt or availability of comparable benefits, the Company shall shall, at the time of such reduction, pay to the Executive an additional the lesser of (a) the amount (of the "Gross-Up Payment") such that decrease made in the net amount retained by the Executive, after deduction of any Excise Tax on the Total Severance Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this pursuant to Section 6.2, shall or (b) the maximum amount which can be equal paid to the excess Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Total Payments over the payment provided for by this Section 6.2Code.
(B) For purposes 6.2. Notwithstanding any other provisions of determining whether this Agreement, in the event that any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's termination of employment, employment (whether or not received pursuant to the terms of this Agreement or any other planotherwise) (all such payments and benefits, arrangement or agreement with including option benefits and the CompanySeverance Payments, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (being hereinafter called the "Total Payments"), shall ) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (subject in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject part to the Excise Tax unlessTax, in then the opinion of such tax counselSeverance Payments shall be reduced to the extent, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within but only to the meaning of section 280G(b)(4)(B) extent, necessary so that no portion of the Code), or are otherwise not Total Payments is subject to the Excise Tax; provided, and (ii) the value of any noncash benefits or any deferred payment or benefit that no such reduction shall be determined by effected unless the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the net amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of Total Payments after such reduction in Excise Tax is finally determined, the portion Severance Payments and after deduction of the Gross-Up Payment attributable to such reduction (plus that portion net amount of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed taxes on such reduced Total Payments would be greater than the Gross-Up Payment being repaid by excess of (A) the Executive net amount of the Total Payments without such reduction in the Severance Payments but after deduction of the net amount of federal, state and local income taxes (other than the Excise Tax) on such unreduced Total Payments, over (b) the Excise Tax to which the extent that such repayment results in Total Payments are subject. The determination as to whether a reduction in Excise Tax or a federalSeverance Payments is to be made under this Section 6.2 and, state or local income tax deduction) plus interest on if so, the amount of any such repayment at reduction shall be made by the rate provided firm of certified public accountants that had been acting as the Company's auditors prior to the Change in section 1274(b)(2)(3) Control or by such other firm of certified public accountants, benefits consulting firm or legal counsel as the Code. In Board may designate for such purpose, with the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination approval of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3Change in Control. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner auditor's calculations of the amounts referred to in which this Section 6.2 and such payments were calculated and supporting materials as are reasonably necessary for the basis for such calculations including, without limitation, any opinions or other advice Executive to evaluate the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)Company's calculations.
6.46.3. The In the event of a termination following a Change in Control, the Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any payment, benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
6.4. During the period of two years from the Termination Date, the Company shall engage, at the request of the Executive, made in writing in the Termination Notice or within ten days of receipt by the Executive of a Notice of Termination, a mutually agreed upon, full executive outplacement counseling service of national reputation, reasonably proximate to the Executive's home or home office, to assist the Executive in obtaining employment.
Appears in 5 contracts
Sources: Cic Agreement (BNS Co), Cic Agreement (BNS Co), Cic Agreement (BNS Co)
Severance Payments. 6.1. The Subject to Section 6.2 hereof, the Company shall pay the Executive the payments and benefits described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement), in addition to the applicable payments and benefits described in Section 5 hereof, unless such upon any termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before after a Change in Control and during by the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused Company Without Cause or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in ControlReason.
(Ai) In lieu Within 15 days of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay make a lump sum cash payment to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (ia) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, (b) the highest annualized (for a partial year of service) annual aggregate bonuses paid, or such salary accrued to be paid if not then yet paid (or, in effect immediately prior to the event that the Executive has been recently hired and has not had a Potential Change in Controlfull fiscal year of employment and Profit Incentive Plan opportunity, and (ii) then the higher of (x) the target amount paid in the prior year, recalculated as if the Executive had been employed for the full entire year, or the planned amount of Profit Incentive Plan bonus payout for the Executive for the year in which the Notice termination occurs) to the Executive under the Profit Incentive Plan or its successor plan or by vote of Termination is the Board of Directors (or a committee thereof) or bonuses of Sales Incentive Compensation or other bonuses excluding any bonuses paid as part of the hiring process, in each case determined (except as provided or above with respect to a recently hired Executive) over the period beginning with the fifth (y5th) year preceding the year in which occurs the Change in Control and ending with the period in which occurs the Date of Termination, and (c) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of or Termination is basedbased or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as Within 15 days of the Date of Termination;
, the Company shall make an additional lump sum cash severance payment to the Executive equal to the annual level of contributions, credits or other benefits the Executive was receiving (Cor that were being made or were required to be made for the Executive's benefit) For for the most recent applicable plan period prior to the Change in Control or prior to the Notice of Termination (whichever is more favorable to the Executive under any employee benefits plan then existing including the SARP, the ESOP, the "excess benefit" restoration account under the Company's Supplemental Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella Pension Plan, the Company's matching contribution under its 401(k) plan applicable to the Executive and (subject to the following sentence) the LTDCIP (and in each case any successor plan or arrangement), in each case based on the levels of compensation taken into account under Section 6.1(i). In the case of the LTDCIP the payment shall equal to an amount equal to the award credit that would have been credited to the Executive's account under the LTDCIP for the calendar year in which the Date of Termination occurs, assuming for such year, (i) a the Company's Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount projected for the applicable year as Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case" provided to the Company's investment banker prior the Change in Control (or if not available, the best equivalent), and (ii) the Executive's percentage award opportunity had equaled the percentage award opportunity which was the Executive's most recent award level preceding the Change in Control. For the period of twelve (12) month period after months following the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with lifeany employee welfare benefits including health, dental, disability, life, and accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving on the same premium cost share basis as was applicable to the Executive immediately prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive (without utilizing or limiting the Executive's subsequent resort to COBRA rights under applicable laws and without giving effect to any reduction in such benefits subsequent to a Change in Control if such which reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive under any employee welfare benefits including health, dental, disability, life, and accident insurance pursuant to this Section 6.1(C6.1(ii) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost or at a lower cost than was charged to the Executive prior to the Change in Control or the Notice of Termination (whichever is more favorable to the Executive) during the above-referenced period. In addition, twelve (12) month period following the Executive's termination of employment (and any such benefits actually received or made available by the Executive shall be reported to the Company by the Executive.
(A) Whether or not ). In the event that the Company self-insures with respect to one of these benefits, such as for example dental benefits, then the Executive becomes entitled shall be reimbursed for all dental expenses during the 12-month period that would have been reimbursed under the self-funded policy in effect prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive. If the benefits provided to the Executive under this Section 6.1(ii) shall result in a decrease, pursuant to Section 6.2, in the Severance Payments, if any Payments and as a result the Section 6.1(ii) benefits are thereafter reduced pursuant to the immediately preceding sentence because of the Total Payments will be subject to the Excise Taxreceipt or availability of comparable benefits, the Company shall shall, at the time of such reduction, pay to the Executive an additional the lesser of (a) the amount (of the "Gross-Up Payment") such that decrease made in the net amount retained by the Executive, after deduction of any Excise Tax on the Total Severance Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this pursuant to Section 6.2, shall or (b) the maximum amount which can be equal paid to the excess Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Total Payments over the payment provided for by this Section 6.2Code.
(B) For purposes 6.2. Notwithstanding any other provisions of determining whether this Agreement, in the event that any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's termination of employment, employment (whether or not received pursuant to the terms of this Agreement or any other planotherwise) (all such payments and benefits, arrangement or agreement with including option benefits and the CompanySeverance Payments, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (being hereinafter called the "Total Payments"), shall ) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (subject in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject part to the Excise Tax unlessTax, in then the opinion of such tax counselSeverance Payments shall be reduced to the extent, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within but only to the meaning of section 280G(b)(4)(B) extent, necessary so that no portion of the Code), or are otherwise not Total Payments is subject to the Excise Tax; provided, and (ii) the value of any noncash benefits or any deferred payment or benefit that no such reduction shall be determined by effected unless the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the net amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of Total Payments after such reduction in Excise Tax is finally determined, the portion Severance Payments and after deduction of the Gross-Up Payment attributable to such reduction (plus that portion net amount of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed taxes on such reduced Total Payments would be greater than the Gross-Up Payment being repaid by excess of (A) the Executive net amount of the Total Payments without such reduction in the Severance Payments but after deduction of the net amount of federal, state and local income taxes (other than the Excise Tax) on such unreduced Total Payments, over (b) the Excise Tax to which the extent that such repayment results in Total Payments are subject. The determination as to whether a reduction in Excise Tax or a federalSeverance Payments is to be made under this Section 6.2 and, state or local income tax deduction) plus interest on if so, the amount of any such repayment at reduction shall be made by the rate provided firm of certified public accountants that had been acting as the Company's auditors prior to the Change in section 1274(b)(2)(3) Control or by such other firm of certified public accountants, benefits consulting firm or legal counsel as the Code. In Board may designate for such purpose, with the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination approval of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3Change in Control. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner auditor's calculations of the amounts referred to in which this Section 6.2 and such payments were calculated and supporting materials as are reasonably necessary for the basis for such calculations including, without limitation, any opinions or other advice Executive to evaluate the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)Company's calculations.
6.46.3. The In the event of a termination following a Change in Control, the Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any payment, benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
6.4. During the period of one year from the Termination Date, the Company shall engage, at the request of the Executive, made in writing in the Termination Notice or within ten days of receipt by the Executive of a Notice of Termination, a mutually agreed upon, full executive outplacement counseling service of national reputation, reasonably proximate to the Executive's home or home office, to assist the Executive in obtaining employment.
Appears in 5 contracts
Sources: Cic Agreement (BNS Co), Cic Agreement (BNS Co), Cic Agreement (BNS Co)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "“Severance Payments"”) upon the termination of the Executive's ’s employment following a Change in Control and during the term of this Agreement, Agreement (in addition to the any payments and benefits described in to which the Executive is entitled under Section 5 and 8 hereof), unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of the Executive's employment with Good Reason following a Potential Change in Control but before if (i) the Executive’s employment is terminated without Cause prior to a Change in Control which actually occurs during the term of this Agreement and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment with Good Reason prior to a Change in Control which actually occurs during the term of this Agreement and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason prior to a Change in Control and the Executive reasonably demonstrates that such termination is otherwise in connection with or in anticipation of a Change in Control which actually occurs during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
or (iiv) the termination Executive’s employment is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company terminated without Cause if after a Potential Change in Control had occurred on the date of the type described in paragraph (I) of the definition of “Potential Change in Control”.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier two (2) times the sum of (i) the highest higher of the Executive's ’s annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such the Executive’s highest annual base salary in effect during the three (3) completed fiscal years immediately prior to preceding the Change in Control, or such salary in effect immediately prior to a Potential Control (the “Change in ControlControl Salary”), and (ii) the higher of the highest annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three (x3) the target bonus for completed fiscal years immediately preceding the year in which the Notice Date of Termination is provided or (y) occurs, the highest annual bonus so earned in respect of the actual bonuses paid three (3) completed fiscal years immediately preceding the year in which the Change in Control occurs, or payable to the maximum of the bonus opportunity range for the Executive for any of the five years completed in effect immediately prior to the Date of Termination, or if higher, immediately prior to the first occurrence of the event or circumstance upon which constituting Good Reason (the Notice of Termination is based“Change in Control Bonus”).
(B) Notwithstanding any provision of any bonus planannual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within incentive award under such plan for the performance then uncompleted period under such plan, calculated by multiplying the maximum of the bonus opportunity range established with respect to such award for the Executive by the fraction obtained by dividing the number of full months and basing such pro-rata portion upon the any fractional portion of the a month during such performance award period that has elapsed as of through the Date of Termination;Termination by the total number of months contained in such performance award period.
(C) For the two (i2) a twelve (12) month year period after immediately following the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive (which includes the Executive’s eligible dependents for purposes of this paragraph (C)) with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is was receiving immediately prior to the Notice of Termination (without giving effect to any reduction in amendment to such benefits made subsequent to the earlier of a Potential Change in Control or a Change in Control if which amendment adversely affects in any manner the Executive’s entitlement to or the amount of such reduction constitutes Good Reasonbenefits); Notwithstanding any other provision of this Agreementprovided, however, that, unless the Company Executive consents to a different method, such health insurance benefits shall continue to fund Executive's splitbe provided through a third-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policyparty insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits (including continued coverage for any preexisting medical condition of any person covered by the benefits provided to the Executive and his eligible dependents immediately prior to the Notice of Termination) are actually received by or made available to the Executive by a subsequent employer without cost during the above-referenced period. In addition, two (2) year period following the Executive’s Date of Termination (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive). The applicable benefit continuation period for the Executive and the Executive’s qualifying dependents under the Consolidated Omnibus Budget Reconciliation Act of 1984, as amended (“COBRA”), shall commence at the expiration of the period of continued benefits referenced above in this Section 6.1(C).
(AD) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise TaxFollowing a Change in Control, the Company shall pay provide the Executive with outplacement services suitable to the Executive’s position for a period of one (1) year commencing on the date the Executive an additional amount first uses such outplacement services; provided, however, such first use must occur during the two (2) year period following the "Gross-Up Payment"Executive’s Date of Termination.
6.2. (A) such Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that the net amount retained any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Executive, after deduction of any Excise Tax on Company to or for the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess benefit of the Total Payments over the payment provided for by this Section 6.2.
Executive (B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments paid or benefits received payable or to be received by the Executive in connection with a Change in Control distributed or the Executive's termination of employment, whether distributable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in otherwise) (a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall “Payment”) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of imposed on the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the retains an amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable equal to the Excise Tax and federal, state and local income tax imposed on upon the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 5 contracts
Sources: Executive Employment Agreement (Inspire Pharmaceuticals Inc), Executive Employment Agreement (Inspire Pharmaceuticals Inc), Executive Employment Agreement (Inspire Pharmaceuticals Inc)
Severance Payments. 6.1. The Subject to Section 6.2 hereof, the Company shall pay the Executive the payments and benefits described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement), in addition to the applicable payments and benefits described in Section 5 hereof, unless such upon any termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before after a Change in Control and during by the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused Company Without Cause or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in ControlReason.
(Ai) In lieu Within 15 days of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay make a lump sum cash payment to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times twice (two times) the sum of (ia) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, (b) the highest annualized (for a partial year of service) annual aggregate bonuses paid, or such salary accrued to be paid if not then yet paid (or, in effect immediately prior to the event that the Executive has been recently hired and has not had a Potential Change in Controlfull fiscal year of employment and Profit Incentive Plan opportunity, and (ii) then the higher of (x) the target amount paid in the prior year, recalculated as if the Executive had been employed for the full entire year, or the planned amount of Profit Incentive Plan bonus payout for the Executive for the year in which the Notice termination occurs) to the Executive under the Profit Incentive Plan or its successor plan or by vote of Termination is the Board of Directors (or a committee thereof) or bonuses of Sales Incentive Compensation or other bonuses excluding any bonuses paid as part of the hiring process, in each case determined (except as provided or above with respect to a recently hired Executive) over the period beginning with the fifth (y5th) year preceding the year in which occurs the Change in Control and ending with the period in which occurs the Date of Termination, and (c) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of or Termination is basedbased or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as Within 15 days of the Date of Termination;
, the Company shall make an additional lump sum cash severance payment to the Executive equal to twice (Ctwo times) For the annual level of contributions, credits or other benefits the Executive was receiving (ior that were being made or were required to be made for the Executive's benefit) a twelve for the most recent applicable plan period prior to the Change in Control or prior to the Notice of Termination (12whichever is more favorable to the Executive) month period after under any employee benefits plan then existing including the SARP, the ESOP, the "excess benefit" restoration account under the Company's Supplemental Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella Pension Plan, the Company's matching contribution under its 401(k) plan applicable to the Executive and (subject to the following sentence) the LTDCIP (and in each case any successor plan or arrangement), in each case based on the levels of compensation taken into account under Section 6.1(i). In the case of the LTDCIP the payment shall equal to an amount equal to the award credits that would have been credited to the Executive's account under the LTDCIP for the calendar year in which the Date of Termination if Executive has one year or less occurs and for the succeeding year, assuming for each of continuous service as an employee of such years, (i) the Company's Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount projected for the applicable year as Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case" provided to the Company's investment banker prior the Change in Control (or if not available, the best equivalent), and (ii) a the Executive's percentage award opportunity had equaled the percentage award opportunity which was the Executive's most recent award level preceding the Change in Control. For the period of twenty-four (24) month period after months following the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with lifeany employee welfare benefits including health, dental, disability, life, and accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving on the same premium cost share basis as was applicable to the Executive immediately prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive (without utilizing or limiting the Executive's subsequent resort to COBRA rights under applicable laws and without giving effect to any reduction in such benefits subsequent to a Change in Control if such which reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive under any employee welfare benefits including health, dental, disability, life, and accident insurance pursuant to this Section 6.1(C6.1(ii) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost or at a lower cost than was charged to the Executive prior to the Change in Control or the Notice of Termination (whichever is more favorable to the Executive) during the abovetwenty-referenced period. In addition, four (24) month period following the Executive's termination of employment (and any such benefits actually received or made available by the Executive shall be reported to the Company by the Executive.
(A) Whether or not ). In the event that the Company self-insures with respect to one of these benefits, such as for example dental benefits, then the Executive becomes entitled shall be reimbursed for all dental expenses during the 24- month period that would have been reimbursed under the self-funded policy in effect prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive. If the benefits provided to the Executive under this Section 6.1(ii) shall result in a decrease, pursuant to Section 6.2, in the Severance Payments, if any Payments and as a result the Section 6.1(ii) benefits are thereafter reduced pursuant to the immediately preceding sentence because of the Total Payments will be subject to the Excise Taxreceipt or availability of comparable benefits, the Company shall shall, at the time of such reduction, pay to the Executive an additional the lesser of (a) the amount (of the "Gross-Up Payment") such that decrease made in the net amount retained by the Executive, after deduction of any Excise Tax on the Total Severance Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this pursuant to Section 6.2, shall or (b) the maximum amount which can be equal paid to the excess Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Total Payments over the payment provided for by this Section 6.2Code.
(B) For purposes 6.2. Notwithstanding any other provisions of determining whether this Agreement, in the event that any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's termination of employment, employment (whether or not received pursuant to the terms of this Agreement or any other planotherwise) (all such payments and benefits, arrangement or agreement with including option benefits and the CompanySeverance Payments, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (being hereinafter called the "Total Payments"), shall ) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (subject in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject part to the Excise Tax unlessTax, in then the opinion of such tax counselSeverance Payments shall be reduced to the extent, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within but only to the meaning of section 280G(b)(4)(B) extent, necessary so that no portion of the Code), or are otherwise not Total Payments is subject to the Excise Tax; provided, and (ii) the value of any noncash benefits or any deferred payment or benefit that no such reduction shall be determined by effected unless the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the net amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of Total Payments after such reduction in Excise Tax is finally determined, the portion Severance Payments and after deduction of the Gross-Up Payment attributable to such reduction (plus that portion net amount of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed taxes on such reduced Total Payments would be greater than the Gross-Up Payment being repaid by excess of (A) the Executive net amount of the Total Payments without such reduction in the Severance Payments but after deduction of the net amount of federal, state and local income taxes (other than the Excise Tax) on such unreduced Total Payments, over (b) the Excise Tax to which the extent that such repayment results in Total Payments are subject. The determination as to whether a reduction in Excise Tax or a federalSeverance Payments is to be made under this Section 6.2 and, state or local income tax deduction) plus interest on if so, the amount of any such repayment at reduction shall be made by the rate provided firm of certified public accountants that had been acting as the Company's auditors prior to the Change in section 1274(b)(2)(3) Control or by such other firm of certified public accountants, benefits consulting firm or legal counsel as the Code. In Board may designate for such purpose, with the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination approval of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3Change in Control. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner auditor's calculations of the amounts referred to in which this Section 6.2 and such payments were calculated and supporting materials as are reasonably necessary for the basis for such calculations including, without limitation, any opinions or other advice Executive to evaluate the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)Company's calculations.
6.46.3. The In the event of a termination following a Change in Control, the Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any payment, benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
6.4. During the period of two years from the Termination Date, the Company shall engage, at the request of the Executive, made in writing in the Termination Notice or within ten days of receipt by the Executive of a Notice of Termination, a mutually agreed upon, full executive outplacement counseling service of national reputation, reasonably proximate to the Executive's home or home office, to assist the Executive in obtaining employment.
Appears in 4 contracts
Sources: Cic Agreement (BNS Co), Cic Agreement (BNS Co), Cic Agreement (BNS Co)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of 5.1 If the Executive's ’s employment is terminated during the twenty-four (24) month period immediately following a Change in Control and during the term of this AgreementControl, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the amounts, and provide the Executive the benefits described in this Section 5 (collectively, the “Severance Payments upon termination of Payments”) in addition to any payments and benefits to which the Executive's employment following a Potential Change in Control but before a Change in Control and during the term Executive is entitled under Section 4 of this Agreement, in addition . The Executive shall also be entitled to Severance Payments under this Agreement if the payments and benefits described in Section 5 hereof, if:
(i) Executive’s employment is terminated without Cause by the termination is initiated, caused Company or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by at any time beginning on the Company without Cause if first day of the 90 day period immediately prior to the execution of a definitive purchase and sale agreement that results in such Change in Control had occurred on and the date closing of the Potential such Change in Control.
(Aa) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive under the Executive’s Employment Agreement with the Company or otherwise, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (i) the highest of two (2) times the Executive's annual ’s base salary as in effect immediately prior to the occurrence Date of the Termination or, if Section 18(n)(ii) is applicable as an event or circumstance upon which constituting Good Reason, the Notice of Termination is based, or such salary rate in effect immediately prior to the Change in Control, such event or such salary in effect immediately prior to a Potential Change in Controlcircumstance, and (ii) two (2) times the higher of (x) the target last annual bonus for the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses paid or payable awarded (to the extent not yet paid) to the Executive for any of in the five previous three years completed (if any) immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (Termination, pursuant to Section 5.2 hereof any annual bonus or otherwise) and (ii) a pro rata portion to incentive plan maintained by the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;Company.
(Cb) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after immediately following the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with lifeand his dependents medical, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect)dental, and all other material accidental death and dismemberment benefits or perquisites on a monthly basis that is substantially similar to those which such benefits as provided to the Executive is receiving and his dependents immediately prior to the Notice Date of Termination (without giving effect or, if more favorable to any reduction in such benefits subsequent the Executive, those provided to a Change in Control if such reduction constitutes the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date or occurrence. The parties intend that the first 18 months of continued medical and dental coverage shall not constitute a “deferral of compensation” under Treas. Reg. Sect. 1.409A-1(b); Notwithstanding any other provision , and that continued accidental death and dismemberment benefits hereunder shall qualify as a “limited payment” of an “in kind” benefit under Treas. Reg. Sect. 1.409A-1(b)(9)(v)(C) and (D). Any portion of the continued medical, dental and accidental death and dismemberment coverage under this Agreement, the Company shall continue Section 5.1(b) that is subject to fund Executive's splitSection 409A is intended to qualify as a “reimbursement or in-dollar life insurance arrangement until dividends payable kind benefit plan” under the policy are sufficient to pay premiums under the policyTreas. Reg. Sect. 1.409A-3(i)(1)(iv). Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C5.1(b) shall be reduced to the extent comparable benefits of the same type are actually received by or made available by a subsequent employer to the Executive during the twenty-four (24) month period following the Date of Termination (and any such benefits received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. Any such reimbursement under this Section 5.1(b) shall be made promptly in accordance with Company policy, but in any event on or before the last day of the Executive’s taxable year following the taxable year in which the expense or cost was incurred. In no event shall the amount that the Company pays for any such benefit in any one year affect the amount that it will pay in any other year and in no event shall the benefits described in this paragraph be subject to liquidation or exchange.
(Ac) Whether Notwithstanding any provision to the contrary in any plan or not agreement maintained by or through the Company pursuant to which the Executive becomes entitled to the Severance Paymentshas been granted restricted stock, if any of the Total Payments will be subject to the Excise Taxstock options, the Company shall pay to the Executive an additional amount (the "Grossstock appreciation rights or long-Up Payment") such that the net amount retained by the Executiveterm performance awards, after deduction of any Excise Tax effective on the Total Payments Date of Termination, (i) all service and performance based restrictions with respect to any federalthen unvested restricted stock shall lapse, state (ii) all stock appreciation rights and local income tax and Excise Tax upon the payment provided for by this Section 6.2, stock options shall be deemed fully vested and then canceled in exchange for a cash payment equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any fair market value of the Total Payments will be shares of Parent Company stock subject to the Excise Tax and stock appreciation right or stock option on the amount Date of Termination, over the exercise price(s) of such Excise Taxstock appreciation rights or stock options, and (iiii) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employmentall unvested long-term performance awards (each, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), an “LTIP Award”) shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) deemed fully vested and fully earned and then shall be canceled in exchange for a cash payment equal to 100% of the Code) unlesstarget value of each such award; provided, in the opinion of tax counsel selected by the Company's independent auditors and reasonablyhowever that, acceptable if necessary for such compensation to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(Aqualify as “performance-based compensation” under Section 162(m) of the Code, and all "excess parachute payments" an unvested Post January 1, 2009 Award (within the meaning of section 280G(b)(1) of the Codeas defined herein) shall be treated as subject only vest when such award would otherwise have vested and the actual amount that the Executive shall receive with respect to the Excise Tax unless, in the opinion of any such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall award will be determined by multiplying the Company's independent auditors in accordance amount the Executive would have received based upon actual performance for the entire period by a fraction, the numerator which is the number of days the Executive remained employed with the principles of actions 280G(d)(3) Company during such award’s performance period and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount denominator of which cannot be determined at is the time total number of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of days during such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder)award’s performance period. For purposes of this Section 6.45.1(c), a “Post January 1, 2009 Award” shall mean an Executive shall be deemed LTIP Award intended to have acted in good faith unless an arbitrator finds that qualify as “performance-based compensation” within the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5meaning of Section 162(m) business days after delivery of the Executive's written request for payment accompanied Code with such evidence of fees and expenses incurred as the Company reasonably may requirea performance period beginning after January 1, 2009.
Appears in 3 contracts
Sources: Change in Control Agreement (Kaman Corp), Change in Control Agreement (Kaman Corp), Change in Control Agreement (Kaman Corp)
Severance Payments. 6.1. In the event that during the Term of Employment (i) Executive’s employment is terminated by the Company for any reason except due to a termination by the Company for Cause (as defined in Section 6(d)), or (ii) Executive terminates his own employment hereunder for Good Reason or Retirement (as such terms are defined in Section 6(d)), the following severance benefits shall be provided to Executive or, in the event of his death before receiving all such benefits, to his Designated Beneficiary (as defined in Section 6(d)) following his death:
(1) The Company shall pay the to Executive the payments described in this Section 6.1 as additional compensation (the "Severance Payments"“Additional Payment”), an amount which is equal to “Total Cash” (defined below). “Total Cash” means 1.50 times the sum of (A) upon Executive’s annual Base Salary (as in effect immediately prior to his Termination Date) plus (B) Executive’s current annual incentive target Bonus (Section 2(b)) for the full year in which the termination of employment occurred; provided, in the Executive's employment following event of a Change in Control and during the term a termination of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) Executive by the Company for without Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by for Retirement within the Company without Cause if six (6) months preceding or the 12 months following a Change in Control had occurred on the date of the Potential Change in Control.
, “Total Cash” shall be calculated as two (A2) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (iA) the highest of the Executive's ’s annual base salary Base Salary (as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of his Termination is based, or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and Date) plus (iiB) the higher of (x) the Executive’s current annual incentive target bonus Bonus (Section 2(b)) for the full year in which the Notice termination of Termination is provided employment occurred or (y) the highest of the actual bonuses paid or payable annual incentive Bonus received by Executive with respect to the Executive for any of the five years last three completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the fiscal years. The Company shall pay make the Additional Payment to the Executive in a cash lump sum amountnot later than 60 calendar days following the Termination Date and, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established if applicable with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(Cthat occurs within six (6) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, months after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment)Date, the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect a payment equal to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expensespositive difference, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by of the Additional Payment due under this Agreement or in connection with any tax audit or proceeding Section 6(b) applicable to the extent attributable Change in Control less the Additional Payment previously made pursuant to this Section 6(b) prior to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted Change in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may requireControl.
Appears in 3 contracts
Sources: Employment Agreement (Basic Energy Services Inc), Employment Agreement (Basic Energy Services Inc), Employment Agreement (Basic Energy Services Inc)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this 6.1 Subject to Section 6.1 (the "Severance Payments") upon the termination of 6.2 and Section 6.3 hereof, if the Executive's employment is terminated following a Change in Control and during the term of this AgreementTerm either by the Company or by the Executive, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (ia) by the Company for Cause, (iib) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiic) by the Executive without Good Reason. The , (any such employment termination being hereafter sometimes referred to as a "Compensable Termination"), then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 ("Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before a Change in Control and during the term of this AgreementPayments"), in addition to the any payments and benefits described to which the Executive is entitled under Sections 5 and 6.3 hereof. Notwithstanding the foregoing, the Executive shall not be eligible to receive any payment or benefit provided for in this Section 5 hereof, if:
6.1 unless the Executive shall have executed (i) a release substantially in the termination is initiatedform of Exhibit A hereto, caused or directed by any Person who has initiated and a transaction covenant not to compete substantially in the consummation form of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on Exhibit B hereto, effective as of the date of the Potential Change in Control.
(A) In lieu of any further salary payments to the Executive for periods Compensable Termination or a date subsequent to the Date of Termination thereto and shall not have revoked said release. The Severance Payments are in lieu of any severance benefit benefits that would otherwise be payable or provided pursuant to any severance plan or practice of the Company.
(i) The Company shall pay the Executive, at the time provided in Section 6.2 below, his annual bonus for the fiscal year of the Company shall pay preceding the fiscal year of the Company in which the Compensable Termination occurs, if unpaid at the time of the Compensable Termination, the amount of such bonus to be determined by the Compensation Committee of the Board on a basis no less favorable to the Executive a lump sum severance payment, in cash, equal than its bonus determinations with respect to the Applicable Multiplier times the sum of (i) the highest of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, or such salary in effect immediately Executive prior to the Change in Control, or such salary in effect immediately prior unless the Committee made no bonus determinations with respect to a Potential the Executive before the Change in Control, and in which case on a basis no less favorable to the Executive than its bonus determinations with respect to other executives of comparable rank before the Change in Control.
(ii) The Company shall pay the higher of (x) Executive, at the target time provided in Section 6.2 below, a prorated annual bonus for the fiscal year of the Company in which the Notice of Compensable Termination is provided or (y) occurs, such prorated bonus to be determined by multiplying the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, “Applicable Average Bonus” as defined below in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and this subsection (ii) by a pro rata portion to fraction the Date numerator of Termination which shall be the number of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each days elapsed in such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one fiscal year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits through (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those including) the date on which the Executive is receiving immediately prior to Compensable Termination occurs and the Notice denominator of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision which shall be the number 365. For purposes of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under “Applicable Average Bonus” means the policy are sufficient to pay premiums under higher of (A) the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(Caverage of all annual bonuses (including any deferred bonuses) shall be reduced to the extent comparable benefits are actually received by or made available awarded to the Executive without cost during the above-referenced period. In addition36 months immediately preceding the Compensable Termination or, any such benefits actually received if the Executive was employed by the Executive shall be reported Company for less than 36 months before the Compensable Termination, during the period of his employment by the Company prior to the Company by Compensable Termination (annualizing any bonus awarded for less than a full year of employment), or (B) the Executive.
average of all annual bonuses (Aincluding any deferred bonuses) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay awarded to the Executive an additional amount (during the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess three fiscal years of the Total Payments over Company that precede the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar fiscal year in which the Gross-Up Payment is to be made, FICA taxes at Compensable Termination occurs or during the highest rate applicable with respect to wages portion of such three fiscal years in excess of which he was employed by the Social Security taxable wage base in effect Company (annualizing any bonus awarded for the less than a full year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter describedemployment), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
or (C) In the event that the Excise Tax is subsequently determined average of all annual bonuses (including any deferred bonuses) awarded to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to during the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following 36 months preceding the date on which the Executive notifies Change in Control occurred or during the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts portion of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined 36 month period in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand he was employed by the Company (together with interest at the rate provided in section 1274(b)(2)(9) annualizing any bonus awarded for less than a full year of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statementemployment).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 3 contracts
Sources: Change in Control Agreement (Angiodynamics Inc), Change in Control Agreement (Angiodynamics Inc), Change in Control Agreement (Angiodynamics Inc)
Severance Payments. 6.1. In the event that during the Term of Employment (i) Executive’s employment is terminated by the Company for any reason except due to a termination by the Company for Cause (as defined in Section 6(d)), or (ii) Executive terminates his own employment hereunder for Good Reason or Retirement (as such terms are defined in Section 6(d)), the following severance benefits shall be provided to Executive or, in the event of his death before receiving all such benefits, to his Designated Beneficiary (as defined in Section 6(d)) following his death:
(1) The Company shall pay the to Executive the payments described in this Section 6.1 as additional compensation (the "Severance Payments"“Additional Payment”), an amount which is equal to “Total Cash” (defined below). “Total Cash” means 1.50 times the sum of (A) upon Executive’s annual Base Salary (as in effect immediately prior to his Termination Date) plus (B) Executive’s current annual incentive target Bonus (Section 2(b)) for the full year in which the termination of employment occurred; provided, in the Executive's employment following event of a Change in Control and during the term a termination of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) Executive by the Company for without Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by for Retirement within the Company without Cause if six (6) months preceding or the 12 months following a Change in Control had occurred on the date of the Potential Change in Control.
(A, “Total Cash” shall be calculated as two(2) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (iA) the highest of the Executive's ’s annual base salary Base Salary (as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of his Termination is based, or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and Date) plus (iiB) the higher of (x) the Executive’s current annual incentive target bonus Bonus (Section 2(b)) for the full year in which the Notice termination of Termination is provided employment occurred or (y) the highest of the actual bonuses paid or payable annual incentive Bonus received by Executive with respect to the Executive for any of the five years last three completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the fiscal years. The Company shall pay make the Additional Payment to the Executive in a cash lump sum amountnot later than 60 calendar days following the Termination Date and, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established if applicable with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(Cthat occurs within six (6) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, months after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment)Date, the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect a payment equal to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expensespositive difference, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by of the Additional Payment due under this Agreement or in connection with any tax audit or proceeding Section 6(b) applicable to the extent attributable Change in Control less the Additional Payment previously made pursuant to this Section 6(b) prior to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted Change in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may requireControl.
Appears in 3 contracts
Sources: Employment Agreement (Basic Energy Services Inc), Employment Agreement (Basic Energy Services Inc), Employment Agreement (Basic Energy Services Inc)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The Executive's employment shall be deemed to have been terminated, following a Change in Control by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of with Good Reason if the Executive's employment following is terminated prior to a Change in Control without Cause after consultation with a Person who has entered into an agreement with the Company the consummation of which will constitute a Change in Control or if the Executive terminates his employment with Good Reason prior to a Change in Control (determined by treating a Potential Change in Control but before as a Change in Control and during in applying the term definition of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason under Section 15(M)(i) through (vii) hereof) if the circumstance or by event that constitutes Good Reason occurs at the Company without Cause if a Change in Control had occurred on the date direction of the Potential Change in Controlsuch Person.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (i) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (x) the target bonus for the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses bonus paid or payable to the Executive pursuant to the Company's Bonus Plan or any successor thereto (the "Bonus Plan") for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus planthe Bonus Plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under the Bonus Plan but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods under the Bonus Plan calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
6.2. (A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), ) shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, reasonably acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(31274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section section 6.1 hereof (other than Section 6.1(C)), ) and in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(91274(b)(2)(B) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessivefrivolous. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 2 contracts
Sources: Severance Agreement (Systems & Computer Technology Corp), Severance Agreement (Systems & Computer Technology Corp)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of If the Executive's ’s employment is terminated either during the Initial Term or otherwise following a Change in Control and during within two (2) years after a Change in Control (provided that such termination of employment constitutes a “separation from service” within the term meaning of this AgreementSection 409A of the Code), in addition to the payments and benefits described in Section 5 hereof, unless such termination is either event other than (iA) by the Company for Cause, (iiB) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments upon termination Payments”) and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's ’s employment shall be deemed to have been terminated following a Potential Change in Control but before a Change in Control and during by the term of this AgreementCompany without Cause or by the Executive with Good Reason, in addition to the payments and benefits described in Section 5 hereof, if:
if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination is initiated, caused was at the request or directed by any direction of a Person who has initiated a transaction entered into an agreement with the Company the consummation of which would result in constitute a Change in Control; and
, or (ii) the termination would have been by the Executive terminates his employment for Good Reason or by the Company without Cause if prior to a Change in Control had occurred on (whether or not a Change in Control ever occurs) and the date circumstance or event which constitutes Good Reason occurs at the request or direction of such Person. For purposes of any determination regarding the applicability of the Potential Change in Controlimmediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that such position is not correct.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier two (2) times the sum of (i) the Executive’s highest of the Executive's annual base salary as in effect during the three-year period ending immediately prior to the occurrence Date of Termination (including, if the Date of Termination occurs within three years after the Effective Date, salary paid in respect of employment by Temple-Inland or its Affiliates during such three-year period) and (ii) the Executive’s target annual bonus pursuant to any annual bonus or incentive plan maintained by the Company in respect of the event or circumstance upon fiscal year in which occurs the Notice Date of Termination is based(or, if higher, the greatest actual annual bonus in respect of any of the three preceding fiscal years (including as applicable, with respect to years ending at or such salary in effect before the Effective Date, annual bonuses paid by Temple-Inland)).
(B) For the two-year period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, accidental death and dismemberment, medical and dental benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Change in ControlDate of Termination or, or such salary in effect if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date or occurrence; provided, however, that such health and welfare benefits shall be provided through an arrangement that satisfies the requirements of Sections 105 and 106 of the Code. To the extent that health and welfare benefits of the same type are received by or made available to the Executive during the two-year period following the Executive’s Date of Termination (which such benefits received by or made available to the Executive shall be reported by the Executive to the insurance company or other appropriate party in accordance with any applicable coordination of benefits provisions), the benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be made secondary to such benefits; provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason.
(C) Vesting shall accelerate and restrictions shall lapse on all unvested or restricted equity or equity-based awards in respect of either the Company or Temple-Inland held by the Executive as of the Date of Termination and each stock option to acquire common stock of the Company or Temple-Inland and each stock appreciation right in respect of either the Company or Temple-Inland held by the Executive as of the Date of Termination shall remain exercisable following the Date of Termination for the full term of such option or stock appreciation right. The Company also shall cause the subsidiary holding Temple-Inland’s real estate operations to provide that vesting shall accelerate and restrictions shall lapse on all unvested or restricted equity or equity-based awards in respect of such company held by the Executive as of the Date of Termination and that each stock option to acquire common stock of such company and each stock appreciation right in respect of such company held by the Executive as of the Date of Termination shall remain exercisable following the Date of Termination for the full term of such option or stock appreciation right.
(D) For purposes of determining the amount of any benefit payable to the Executive and the Executive’s right to any benefit otherwise payable under a Potential Change Pension Plan, and except to the extent it would result in Controla duplication of benefits under Section 6.1(E) hereof, the Executive shall be treated as if he had accumulated (after the Date of Termination) twenty-four (24) additional months of service credit thereunder and had been credited during such period with compensation at the highest rate in effect during the three-year period ending immediately prior to the Date of Termination.
(E) In addition to the benefits to which the Executive is entitled under any defined contribution Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the sum of (i) the amount that would have been contributed thereto or credited thereunder by the Company on the Executive’s behalf during the two (2) years immediately following the Date of Termination (but not including as amounts that would have been contributed or credited an amount equal to the amount of any reduction in base salary, bonus or other compensation that would have occurred in connection with such contribution or credit), determined (x) as if the Executive made the maximum permissible contributions thereto or credits thereunder during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s highest rate of compensation (as defined in the Pension Plan) during the three-year period ending immediately prior to the Date of Termination, and (z) without regard to any amendment to the Pension Plan made subsequent to the Effective Date and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of benefits thereunder, and (ii) the higher excess, if any, of (x) the target bonus for Executive’s account balance under the year in which Pension Plan as of the Notice Date of Termination is provided or over (y) the highest portion of such account balance that is nonforfeitable under the terms of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is basedPension Plan.
(BF) Notwithstanding any provision of any bonus planannual or long-term incentive plan (exclusive of equity-based plans) to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period bonus cycle preceding the Date of Termination but has not yet been paid (pursuant under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to Section 5.2 hereof or otherwise) a subsequent date, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus incentive compensation awards to the Executive for all the uncompleted periods period under any such plan, calculated as to each such award by multiplying the award that the Executive would have earned on the last day of the performance award period, assuming the achievement of achievement, at the target level, of any individual and corporate performance level within the performance range goals established with respect to such award award, multiplied by the fraction obtained by dividing the number of full months and basing such pro-rata portion upon the any fractional portion of the a month during such performance award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after through the Date of Termination by the total number of months contained in such performance award period (or if such fraction is greater than 1/2, multiplied by one (1)).
(G) The Company shall reimburse the Executive has for expenses incurred for outplacement services suitable to the Executive’s position for a period of one (1) year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after following the Date of Termination (or, if earlier, until the first acceptance by the Executive has more than one year but of an offer of employment) in an amount not more than two years of continuous service as an employee exceeding 15% of the Company, and (iii) a thirtysum of the Executive’s highest annual base rate of salary as in effect during the three-six (36) month year period after ending immediately prior to the Date of Termination (including, if Executive has more than two the Date of Termination occurs within three years after the Effective Date, salary paid in respect of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's splitemployment by Temple-dollar life insurance arrangement now in effectInland or its Affiliates during such three-year period), and all other material benefits the greatest target annual bonus pursuant to any annual bonus or perquisites substantially similar to those incentive plan maintained by the Company in respect of the fiscal year in which occurs the Executive is receiving immediately prior to the Notice Date of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control or, if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreementhigher, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if highest actual annual bonus in respect of any of the Total Payments will three preceding fiscal years (including as applicable, with respect to years ending at or before the Effective Date, annual bonuses paid by Temple-Inland)), which payment shall be subject made as soon as practicable but in any event within thirty (30) business days following the date of request for reimbursement. Subject to the Excise Taxforegoing, the Company in no event shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by described in this Section 6.2, shall 6.1(G) be equal to made after the excess end of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in calendar year following the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxesexpenses were incurred.
(CH) In For the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Grosstwo-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day year period immediately following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with perquisites (such as any use of a written statement setting forth the manner in which such payments Company provided automobile, club membership fee reimbursements, income tax preparation and financial advisory services) that were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached applicable immediately prior to the statement).
6.4. The Company also shall pay Date of Termination or, if more favorable, immediately prior to the Executive all legal fees and expenses incurred first occurrence of an event or circumstance constituting Good Reason, provided that in good faith by no event shall the amount of perquisites to which the Executive as a result of a termination is entitled under this Section 6.1(H) for any taxable year of the Executive's employment following a Change in Control and during Executive affect the term amount of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith perquisites to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to which the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of Executive is entitled under this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (56.1(H) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may requireany other taxable year.
Appears in 2 contracts
Sources: Change in Control/Severance Agreement (Guaranty Financial Group Inc.), Change in Control/Severance Agreement (Guaranty Financial Group Inc.)
Severance Payments. 6.1. The 6.1 Subject to Section 6.2 hereof, the Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 5.0 hereof, unless such termination is (iA) by the Company for Cause, (iiB) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiiC) by the Executive without Good Reason. The Executive's employment shall be deemed to have been terminated following a Change in Control by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of with Good Reason if the Executive's employment following is terminated prior to a Change in Control without Cause at the direction (or action which constitutes a direction) of a Person who has entered into an agreement with the Company the consummation of which will constitute a Change in Control or if the Executive terminates his employment with Good Reason prior to a Change in Control (determined by treating a Potential Change in Control but before as a Change in Control and during in applying the term definition of this Agreement, in addition to Good Reason) if the payments and benefits described in Section 5 hereof, if:circumstance or event which constitutes Good Reason occurs at the direction (or action which constitutes a direction) of such Person.
(i) Subsequent to the termination is initiatedDate of Termination, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in Control.
(A) In lieu of any further salary shall make cash severance payments to the Executive for periods subsequent to the Date of Termination and over a twenty-four (24) month period in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance paymentsubstantially equal bi-weekly installments, in cash, an amount equal to the Applicable Multiplier two (2) times the sum of (ia) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event 3 or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (iib) the higher of (x) the target highest annual bonus for paid to the Executive in the three years preceding the year in which the Notice Date of Termination is provided occurs or (y) paid in the highest of three years preceding the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon year in which the Notice of Termination is basedChange in Control occurs.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with life, disability, accident medical and health dental insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such which reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C6.1(ii) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the abovetwenty-referenced period. In addition, four (24) month period following the Executive's termination of employment (and any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not ). If the benefits provided to the Executive becomes entitled under this Section 6.1(ii) shall result in a decrease, pursuant to Section 6.2, in the Change in Control Payments and these Section 6.1(ii) benefits are thereafter reduced pursuant to the Severance Payments, if any immediately preceding sentence because of the Total Payments will be subject to the Excise Taxreceipt of comparable benefits, the Company shall shall, at the time of such reduction, pay to the Executive an additional the lesser of (a) the amount (of the "Gross-Up Payment") such that decrease made in the net amount retained by the Executive, after deduction of any Excise Tax on the Total Severance Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this pursuant to Section 6.2, shall or (b) the maximum amount which can be equal paid to the excess Executive without being, or causing any other payment to be, nondeductible by reason of section 28OG of the Total Payments over the payment provided for by this Section 6.2Code.
(B) For purposes 6.2 Notwithstanding any other provisions of determining whether this Agreement, in the event that any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, the Executive' s employment (whether or not received pursuant to the terms of this Agreement or any other planAgreement) (all such payments and benefits, arrangement or agreement with including but not limited to the CompanySeverance Payments, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (being hereinafter called the "Total Payments"), shall ) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (subject in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject part to the Excise Tax unlessTax, in then the opinion of such tax counselSeverance Payments shall be reduced to the extent, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within but only to the meaning of section 280G(b)(4)(B) extent, necessary so that no portion of the Code), or are otherwise not Total Payments is subject to the Excise Tax; provided, and (ii) the value of any noncash benefits or any deferred payment or benefit that no such reduction shall be determined by effected unless the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the net amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of Total Payments after such reduction in Excise Tax is finally determined, the portion Severance Payments and after deduction of the Gross-Up Payment attributable to such reduction (plus that portion net amount of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed taxes on such reduced Total Payments would be greater than the Gross-Up Payment being repaid by excess of (a) the Executive net amount of the Total Payments without such reduction in the Severance Payments but after deduction of the net amount of federal, state and local income taxes (other than the Excise Tax) on such unreduced Total Payments, over (b) the Excise Tax to which the extent that such repayment results in Total Payments are subject. The determination as to whether a reduction in Excise Tax or a federalSeverance Payments is to be made under this Section 6.2 and, state or local income tax deduction) plus interest on if so, the amount of any such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment reduction shall be made no later than by the later Company's auditors or by such other firm of (i) certified public accountants, benefits consulting firm or legal counsel as the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days Board may designate prior to the date on which the Excise Tax is initially due.
6.3Change in Control. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the executive with its calculations of the amounts referred to in this Section 6.2 and such supporting materials as are reasonably necessary for the Executive with a written statement setting forth to evaluate the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)Company's calculations.
6.4. 6.3 The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of which entitles the Executive's employment following a Change in Control and during Executive to the term of this Agreement Severance Payments (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 2 contracts
Sources: Executive Officer Change in Control Agreement (Picturetel Corp), Executive Officer Change in Control Agreement (Picturetel Corp)
Severance Payments. 6.1(A) Not in Connection with a Change in Control. The Company shall pay In the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of event that the Executive's ’s employment with the Corporation and its Affiliates terminates during the term of this Agreement and such termination does not occur coincident with or within one year following a Change in Control Control, the terms of this Paragraph (A) of Section 4 shall apply.
(i) By the Corporation for Cause or by Executive without Good Reason. f the Corporation terminates Executive’s employment for Cause or Executive terminates his or her employment with the Corporation without Good Reason, then the Corporation shall pay to Executive Executive’s base salary and any accrued vacation pay through the Date of Termination to the extent not theretofore paid, and such amount shall be paid in a lump sum within 30 days following the Date of Termination.
(ii) By the Corporation not for Cause or by Executive with Good Reason. If the Corporation terminates Executive’s employment not for Cause or Executive terminates his or her employment with the Corporation with Good Reason, then the Corporation shall pay to Executive:
(a) Executive’s base salary and any accrued vacation pay through the Date of Termination to the extent not theretofore paid and such amount shall be paid in a lump sum within 30 days following the Date of Termination;
(b) within (I) 30 days following the Date of Termination or (II) any earlier date as required by the Annual Incentive Plan, and subject to Sections 7 and 10 of this Agreement, the amount of any incentive compensation that has been allocated to, accrued to, earned by, or awarded to Executive for a completed fiscal year or other completed measuring period preceding the occurrence of the Date of Termination under any incentive compensation plan that has not yet been paid to Executive;
(c) Commencing on the first payroll date on or immediately following the 60th day following the Date of Termination, subject to Sections 7 and 10 of this Agreement, the Corporation shall pay to Executive an amount equal to the product of: (I) 1.5 (one and one-half) multiplied by (II) the sum of (x) Executive’s annual base salary in effect on the Date of Termination and (y) the average of the bonus payments paid to Executive under an Annual Incentive Plan during the three years (or lesser period if the Executive has been employed fewer than three full fiscal years) preceding the year in which the Date of Termination occurs. This amount will be paid to Executive in equal installments over a period of 1 year. Such installment payments will be made to Executive in accordance with the Corporation’s customary payroll practices; and
(d) Commencing on the first payroll date on or immediately following the 60th day following the Date of Termination and continuing for a period of 1 year, and subject to Sections 7 and 10 of this Agreement the Corporation shall pay to Executive, in equal installments over the course of the applicable payment period, an amount equal to the product of (I) Executive’s monthly premium for health, vision and dental insurance continuation coverage for Executive and Executive’s family under the Consolidated Omnibus Budget Reconciliation Act of 1985, based on the monthly premium rate for such coverage in effect on the Date of Termination, multiplied by (II) 12 months. The installment payments will be made to Executive in accordance with the Corporation’s customary payroll practices.
(B) Coincident with or within one year following a Change in Control. In the event that Executive’s employment with the Corporation and its Affiliates terminates during the term of this Agreement and such termination occurs coincident with or within one year following a Change in Control, the terms of this Paragraph (B) of Section 4 shall apply.
(i) By the Corporation for Cause or by Executive without Good Reason. If the Corporation terminates Executive’s employment for Cause or Executive terminates his or her employment without Good Reason, then the Corporation shall pay to Executive Executive’s base salary and any accrued vacation pay through the Date of Termination to the extent not theretofore paid, and such amount shall be paid in a lump sum within 30 days following the Date of Termination.
(ii) Upon the occurrence of a Payment Trigger. If a Payment Trigger occurs during the term of this Agreement, in addition then the Corporation shall provide to Executive:
(a) within 30 days following the Date of Termination, Executive’s base salary and accrued vacation pay through the Date of Termination to the payments and benefits described in Section 5 hereof, unless such termination is extent not theretofore paid;
(ib) within (I) 30 days following the Date of Termination or (II) any earlier date as required by the Company for CauseAnnual Incentive Plan, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before a Change in Control and during the term subject to Sections 7 and 10 of this Agreement, in addition the amount of any incentive compensation that has been allocated to, accrued to, earned by, or awarded to Executive for a completed fiscal year or other completed measuring period preceding the occurrence of the Date of Termination under any incentive compensation plan that has not yet been paid to Executive;
(c) within (I) the 30-day period commencing on the 60th day following the Date of Termination, or (II) such later period as required by Section 6, and subject to Sections 7 and 10 of this Agreement, a lump sum payment equal to the payments product of (x) the Annual Incentive Target in effect immediately prior to the Payment Trigger and benefits described (y) a fraction, the numerator of which is the number of calendar days in Section 5 hereofthe current fiscal year through the Date of Termination, if:and the denominator of which is 365, reduced by the amount, if any, paid to Executive under the Annual Incentive Plan’s terms with respect to the fiscal year during which the Date of Termination occurs;
(id) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred Commencing on the first payroll date of on or immediately following the Potential Change in Control.
(A) In lieu of any further salary payments to the Executive for periods subsequent to 60th day following the Date of Termination and in lieu continuing for a period of any severance benefit otherwise payable 1 year, or within such other period as required by Section 6, and subject to the ExecutiveSections 7 and 10 of this Agreement, the Company Corporation shall pay to the Executive a lump sum severance paymentExecutive, in cashequal installments over the course of the applicable payment period, an amount equal to the Applicable Multiplier times product of: (I) two multiplied by, (II) the sum of: (x) the higher of (i1) the highest of the Executive's ’s annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, or such Change in Control and (2) Executive’s annual base salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, Payment Trigger; and (iiy) the higher average of the bonus payments paid to Executive under an Annual Incentive Plan during the three years (xor lesser period if the Executive has been employed fewer than three full fiscal years) the target bonus for preceding the year in which the Notice Date of Termination is provided or (y) occurs. The installment payments will be made to Executive in accordance with the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.Corporation’s customary payroll practices;
(Be) Notwithstanding any provision of any bonus plan, Commencing on the Company shall pay to first payroll date on or immediately following the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding 60th day following the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) continuing for a pro rata portion to the Date period of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company1 year, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange subject to provide the Executive with life, disability, accident Sections 7 and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision 10 of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company Corporation shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction in equal installments over the course of any Excise Tax on the Total Payments and any federalapplicable payment period, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be an amount equal to the excess product of (I) Executive’s monthly premium for health, vision and dental insurance continuation coverage for Executive and Executive’s family under the Total Payments over Consolidated Omnibus Budget Reconciliation Act of 1985, based on the payment provided monthly premium rate for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base coverage in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless multiplied by (II) 24 months. The installment payments will be made to Executive elects in accordance with the Corporation’s customary payroll practices; and
(f) subject to Sections 7 and 10 of this Agreement, up to $25,000 for executive transition/outplacement services received by Executive (I) prior to the expiration of the Non-Interference / Assistance Period (II) through a later date of payment for all or any part thereof; provided, however, that, if the amounts third party professional provider of such payments cannot services identified and retained by Executive. Such payment will be finally determined on or before paid directly to such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith third-party provider by the Company Corporation promptly following its receipt of an invoice from such provider confirming the minimum amount provision of such payments services to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 2 contracts
Sources: Severance Agreement (Uniti Group Inc.), Severance Agreement (Uniti Group Inc.)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of If the Executive's ’s employment is terminated on or within two years following a Change in Control and during the term of this AgreementControl, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The , the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments upon termination Payments”), and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's ’s employment shall be deemed to have been terminated following a Potential Change in Control but before a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause or by the Executive with Good Reason, if (a) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control had occurred on (whether or not a Change in Control ever occurs) and such termination was at the date request or direction of the Potential a Person who has indicated an intention or taken steps reasonably calculated to effect a Change in Control, or (b) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person. Notwithstanding any other provision of this Agreement to the contrary, the Severance Payments shall be payable to the Executive if and only if the Executive signs and does not revoke a release of claims agreement in a form provided by the Company (the “Release”), and the Release becomes effective and irrevocable no later than the 60th day following the Date of Termination. If these conditions are not satisfied, then Executive will forfeit any right to the Severance Payments. To become effective and irrevocable, the Release must be executed by the Executive and any revocation periods (as required by statute, regulation, or otherwise) must have expired without Executive having revoked the Release.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay to the Executive Executive, on the first day of the seventh month following the month in which occurs the Executive’s Separation from Service, a lump sum severance payment, in cash, equal to the Applicable Multiplier two and one half times the sum of (i) the highest of the Executive's annual ’s base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is basedor, or such salary if higher, in effect immediately prior to the Change in Control, first occurrence of an event or such salary in effect immediately prior to a Potential Change in Controlcircumstance constituting Good Reason, and (ii) the higher Executive’s target annual bonus pursuant to any annual bonus or incentive plan maintained by the Company in respect of (x) the target bonus for the fiscal year in which occurs the Notice Date of Termination is provided or, if higher, the fiscal year in which occurs the first event or (ycircumstance constituting Good Reason. The amount payable pursuant to this Section 6.1(A) the highest shall be in lieu of the actual bonuses paid any cash severance or salary continuation benefit payable to the Executive for under any other plan, policy or program of the Company or any of the five years completed immediately prior to the occurrence of the event or circumstance upon its Affiliates (for which the Notice Executive shall be deemed ineligible if amounts are payable hereunder) or any written employment agreement between the Executive and the Company or any of Termination is basedits Affiliates.
(B) Subject to the limitations specified below in this Section 6.1(B), for the 18 month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason. The Company will provide these life and accident insurance benefits at no greater cost to the Executive than the cost to the Executive immediately prior to the date or occurrence specified in the first sentence of this Section 6.1(B). The Company will either pay directly, or reimburse the Executive for, the entire cost otherwise payable by the Executive for these health insurance benefits. Unless the Executive consents to a different method (after taking into account the effect of such method on the calculation of “parachute payments” pursuant to Section 6.2 hereof), such life, accident and health insurance benefits shall be provided through a third-party insurer and the premiums for that insurance (to the extent paid directly by the Company or reimbursed by the Company to the Executive) will be included in the Executive’s income for tax purposes to the extent required by applicable law. The Company may withhold from any such direct payment or reimbursement an amount sufficient to cover the amount of required withholding. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive by another employer during the 18 month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. Notwithstanding anything in this Section 6.1(B) to the contrary, with respect to the first six months following the Executive’s Separation from Service, if the premiums payable by the Company for group term life insurance on the Executive’s life exceeds the amount of the “limited payments” exemption set forth in Section 1.409A-1(b)(9)(v)(B) of the Income Tax Regulations (or any successor provision thereto), then, to the extent required in order to comply with Code Section 409A, the Executive, in advance, shall pay to the Company an amount equal to the premiums for any such life insurance policy, other than with respect to life insurance coverage to which the Executive would be entitled independent of this Agreement. Promptly following the end of such six month period, the Company will make a cash payment to the Executive equal to the difference between the aggregate amount paid by the Executive for such coverage and the amount that the Executive would have paid for such life insurance coverage if such cost had been determined pursuant to this Section 6.1(B) other than the preceding sentence.
(C) Unless payable to the Executive under the terms of any bonus annual incentive plan, the Company shall pay to the Executive Executive, on the first day of the seventh month following the month in which occurs the Executive’s Separation from Service, a lump sum amount, in cash, equal to the sum of (i) any unpaid annual bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to Section 5.2 hereof or otherwise) a subsequent date, and (ii) a pro rata portion of the annual bonus awarded to the Executive for the fiscal year in which the Date of Termination occurs, calculated by multiplying the award that the Executive would have earned on the last day of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by fiscal year, assuming the achievement achievement, at the target level, of the target individual and corporate performance level within the performance range goals established with respect to the annual bonus, by the fraction obtained by dividing the number of days during such award fiscal year through the Date of Termination by 365. Notwithstanding the forgoing, if and basing to the extent the Executive had elected to defer receipt of any such pro-rata portion upon unpaid annual bonus, and if the portion of the award period that has elapsed Executive’s deferral election is irrevocable as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date Termination for purposes of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyCode Section 409A, the Company amount calculated above shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior be credited to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable ’s account under the policy are sufficient applicable deferred compensation plan in lieu of being distributed directly to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(AD) Whether The benefits then accrued by or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay payable to the Executive an additional amount (under the "Gross-Up Payment") Company’s 2010 Supplemental Executive Retirement Plan, 2010 Pension Parity Plan, Savings Parity Plan or any successor to any such that plan, and the net amount retained benefits then accrued by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal or payable to the excess Executive under any other nonqualified plan providing supplemental retirement or deferred compensation benefits shall become fully vested as of the Total Payments over Date of Termination notwithstanding any eligibility conditions that would otherwise apply with respect to such benefits and the payment provided for by this Section 6.2benefit, as so vested, will be paid in accordance with the terms of the applicable plan or program.
(BE) For purposes of determining whether any of The Company shall reimburse the Total Payments will be subject Executive for expenses incurred for outplacement services suitable to the Excise Tax and Executive’s position for a period of twelve months following the Executive’s Separation from Service (or, if earlier, until the first acceptance by the Executive of an offer of employment) in an amount not exceeding $50,000.
6.2 Notwithstanding any other provisions of such Excise Taxthis Agreement, (i) in the event that any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, the Executive’s employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the "Severance Payments, being hereinafter called “Total Payments"”) would be subject (in whole or part), to the Excise Tax, the Total Payments shall be reduced to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments) is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments).
(A) The reduction of Total Payments under this Section 6.2, if applicable, shall be treated made by first reducing any Total Payments due under Section 6.1(A) hereof, and then any Total Payments due under Section 6.1(C) hereof, and then any Total Payments due under Section 6.1(E) hereof, and then any other Total Payments due in the following order: (i) reduction of cash Total Payments, (ii) cancellation of accelerated vesting of performance-based equity awards (based on the reverse order of the date of grant), (iii) cancellation of accelerated vesting of other equity awards (based on the reverse order of the date of grant), and (iv) reduction of any other Total Payments due to the Executive (with benefits or payments in any group having different payment terms being reduced on a pro-rata basis).
(B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as "parachute payments" (not to constitute a “payment” within the meaning of section 280G(b)(2Section 280G(b) of the CodeCode shall be taken into account, (ii) unlessno portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the Company's independent auditors and reasonablyaccounting firm (the “Auditor”) which was, acceptable immediately prior to the ExecutiveChange in Control, such payments or benefits the Company’s independent auditor (in whole or in partA) do does not constitute a “parachute payments, payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of section Section 280G(b)(4)(A) of the Code, and all "excess parachute payments" ) or (within the meaning of section 280G(b)(1B) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent constitutes reasonable compensation for services actually rendered (rendered, within the meaning of section Section 280G(b)(4)(B) of the Code), or are otherwise not subject in excess of the Base Amount allocable to the Excise Taxsuch reasonable compensation, and (iiiii) the value of any noncash benefits non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditors Auditor in accordance with the principles of actions Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this sectionAgreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counselTax Counsel, auditors the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.46.3 The payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made on the first day of the seventh month following the month in which occurs the Executive’s Separation from Service. At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4 The Company also shall pay to reimburse the Executive for all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such issue hereunder relating to the termination or of the Executive’s employment (provided that the Executive prevails on at least one material claim disputed by the Company), in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement (provided that the Executive prevails on at least one material claim disputed by the Company) or in connection with any tax audit or proceeding to the extent attributable to the application of section Section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's ’s written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require, or if required in order to comply with Section 409A of the Code, the first day of the seventh month following the month in which occurs the Executive’s Separation from Service; provided that no reimbursement pursuant to this Section 6.4 shall be made later than the end of the calendar year following the calendar year in which such fee or expense was incurred.
Appears in 1 contract
Severance Payments. 6.1. The Subject to Section 6.2 hereof, the Company shall pay the Executive the payments and benefits described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement), in addition to the applicable payments and benefits described in Section 5 hereof, unless such upon any termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before after a Change in Control and during by the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused Company Without Cause or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in ControlReason.
(Ai) In lieu Within 15 days of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay make a lump sum cash payment to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (ia) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, (b) the highest annualized (for a partial year of service) annual aggregate bonuses paid, or such salary accrued to be paid if not then yet paid (or, in effect immediately prior to the event that the Executive has been recently hired and has not had a Potential Change in Controlfull fiscal year of employment and Profit Incentive Plan opportunity, and (ii) then the higher of (x) the target amount paid in the prior year, recalculated as if the Executive had been employed for the full entire year, or the planned amount of Profit Incentive Plan bonus payout for the Executive for the year in which the Notice termination occurs) to the Executive under the Profit Incentive Plan or its successor plan or by vote of Termination is the Board of Directors (or a committee thereof) or bonuses of Sales Incentive Compensation or other bonuses excluding any bonuses paid as part of the hiring process, in each case determined (except as provided or above with respect to a recently hired Executive) over the period beginning with the fifth (y5th) year preceding the year in which occurs the Change in Control and ending with the period in which occurs the Date of Termination, and (c) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of or Termination is basedbased or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as Within 15 days of the Date of Termination;
, the Company shall make an additional lump sum cash severance payment to the Executive equal to the annual level of contributions, credits or other benefits the Executive was receiving (Cor that were being made or were required to be made for the Executive's benefit) For for the most recent applicable plan period prior to the Change in Control or prior to the Notice of Termination (whichever is more favorable to the Executive under any employee benefits plan then existing including the SARP, the ESOP, the "excess benefit" restoration account under the Company's Supplemental Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella Pension Plan, the Company's matching contribution under its 401(k) plan applicable to the Executive and (subject to the following sentence) the LTDCIP (and in each case any successor plan or arrangement), in each case based on the levels of compensation taken into account under Section 6.1(i). In the case of the LTDCIP the payment shall equal to an amount equal to the award credit that would have been credited to the Executive's account under the LTDCIP for the calendar year in which the Date of Termination occurs, assuming for such year, (i) a the Company's Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount projected for the applicable year as Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case" provided to the Company's investment banker prior the Change in Control (or if not available, the best equivalent), and (ii) the Executive's percentage award opportunity had equaled the percentage award opportunity which was the Executive's most recent award level preceding the Change in Control. For the period of twelve (12) month period after months following the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with lifeany employee welfare benefits including health, dental, disability, life, and accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving on the same premium cost share basis as was applicable to the Executive immediately prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive (without utilizing or limiting the Executive's subsequent resort to COBRA rights under applicable laws and without giving effect to any reduction in such benefits subsequent to a Change in Control if such which reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive under any employee welfare benefits including health, dental, disability, life, and accident insurance pursuant to this Section 6.1(C6.1(ii) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost or at a lower cost than was charged to the Executive prior to the Change in Control or the Notice of Termination (whichever is more favorable to the Executive) during the above-referenced period. In addition, twelve (12) month period following the Executive's termination of employment (and any such benefits actually received or made available by the Executive shall be reported to the Company by the Executive.
(A) Whether or not ). In the event that the Company self-insures with respect to one of these benefits, such as for example dental benefits, then the Executive becomes entitled shall be reimbursed for all dental expenses during the 12- month period that would have been reimbursed under the self-funded policy in effect prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive. If the benefits provided to the Executive under this Section 6.1(ii) shall result in a decrease, pursuant to Section 6.2, in the Severance Payments, if any Payments and as a result the Section 6.1(ii) benefits are thereafter reduced pursuant to the immediately preceding sentence because of the Total Payments will be subject to the Excise Taxreceipt or availability of comparable benefits, the Company shall shall, at the time of such reduction, pay to the Executive an additional the lesser of (a) the amount (of the "Gross-Up Payment") such that decrease made in the net amount retained by the Executive, after deduction of any Excise Tax on the Total Severance Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this pursuant to Section 6.2, shall or (b) the maximum amount which can be equal paid to the excess Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Total Payments over the payment provided for by this Section 6.2Code.
(B) For purposes 6.2. Notwithstanding any other provisions of determining whether this Agreement, in the event that any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's termination of employment, employment (whether or not received pursuant to the terms of this Agreement or any other planotherwise) (all such payments and benefits, arrangement or agreement with including option benefits and the CompanySeverance Payments, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (being hereinafter called the "Total Payments"), shall ) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (subject in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject part to the Excise Tax unlessTax, in then the opinion of such tax counselSeverance Payments shall be reduced to the extent, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within but only to the meaning of section 280G(b)(4)(B) extent, necessary so that no portion of the Code), or are otherwise not Total Payments is subject to the Excise Tax; provided, and (ii) the value of any noncash benefits or any deferred payment or benefit that no such reduction shall be determined by effected unless the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the net amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of Total Payments after such reduction in Excise Tax is finally determined, the portion Severance Payments and after deduction of the Gross-Up Payment attributable to such reduction (plus that portion net amount of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed taxes on such reduced Total Payments would be greater than the Gross-Up Payment being repaid by excess of (A) the Executive net amount of the Total Payments without such reduction in the Severance Payments but after deduction of the net amount of federal, state and local income taxes (other than the Excise Tax) on such unreduced Total Payments, over (b) the Excise Tax to which the extent that such repayment results in Total Payments are subject. The determination as to whether a reduction in Excise Tax or a federalSeverance Payments is to be made under this Section 6.2 and, state or local income tax deduction) plus interest on if so, the amount of any such repayment at reduction shall be made by the rate provided firm of certified public accountants that had been acting as the Company's auditors prior to the Change in section 1274(b)(2)(3) Control or by such other firm of certified public accountants, benefits consulting firm or legal counsel as the Code. In Board may designate for such purpose, with the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination approval of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3Change in Control. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner auditor's calculations of the amounts referred to in which this Section 6.2 and such payments were calculated and supporting materials as are reasonably necessary for the basis for such calculations including, without limitation, any opinions or other advice Executive to evaluate the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)Company's calculations.
6.46.3. The In the event of a termination following a Change in Control, the Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any payment, benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
6.4. During the period of one year from the Termination Date, the Company shall engage, at the request of the Executive, made in writing in the Termination Notice or within ten days of receipt by the Executive of a Notice of Termination, a mutually agreed upon, full executive outplacement counseling service of national reputation, reasonably proximate to the Executive's home or home office, to assist the Executive in obtaining employment.
Appears in 1 contract
Sources: Cic Agreement (BNS Co)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this 6.1 Subject to Section 6.1 6.2 hereof, if (the "Severance Payments"i) upon the termination of the Executive's ’s employment is terminated following a Change in Control and during the term of this AgreementTerm, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death death, Disability or Disability more than six months following the Change in ControlRetirement, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments upon termination Payments”) and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's ’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause after the occurrence of a Potential Change in Control but before and prior to a Change in Control (whether or not a Change in Control ever occurs) and during such termination was at the term request or direction of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any a Person who has initiated a transaction entered into an agreement with the Company the consummation of which would result in constitute a Change in Control; and
Control or (ii) the termination would have been by the Executive terminates his employment for Good Reason or by after the Company without Cause if occurrence of a Potential Change in Control and prior to a Change in Control had occurred on the date of the Potential (whether or not a Change in ControlControl ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to _______ [ ] (or, if less, the Applicable Multiplier number of full and partial years between the Date of Termination and the Executive’s scheduled date of Retirement) times the sum of (i) the highest of the Executive's ’s base annual base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is based(without giving effect to any reduction in base annual salary, or such salary which reduction constitutes an event of Good Reason) or, if higher, in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (xA) the target average annual bonus for earned by the year Executive pursuant to the annual bonus or incentive plan maintained by the Company in which the Notice of Termination is provided or (y) the highest respect of the actual bonuses paid or payable to the Executive for any of the five three fiscal years completed ending immediately prior to the occurrence of fiscal year in which occurs the event or circumstance upon which the Notice Date of Termination is based(without giving effect to any reduction in bonus caused by an adverse change in the Executive’s bonus plan participation, which adverse constitutes an event of Good Reason) or, if higher, immediately prior to the fiscal year in which occurs the Change in Control or (B) the Executive’s target annual bonus for the fiscal year in which occurs the Date of Termination (without giving effect to any reduction in bonus caused by an adverse change in the Executive’s bonus plan participation, which adverse change constitutes an event of Good Reason) or, if higher, the fiscal year in which occurs the Change in Control.
(B) For the [ ] month period (or, if less, the number of months between the Date of Termination and the Executive’s scheduled date of Retirement) immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination (without giving effect to any reduction in benefits, which reduction constitutes an event of Good Reason) or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the Change in Control, at no greater cost to the Executive than the cost to the Executive immediately prior to such date; provided, however, that, unless the Executive consents to a different method (after taking into account the effect of such method on the calculation of “parachute payments” pursuant to Section 6.2 hereof), such health insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1 (B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the _______ [ ] (or, if less, the number of months between the Date of Termination and the Executive’s scheduled date of Retirement) month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the date on which the Change in Control occurs. If the Severance Payments shall be decreased pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Executive the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code. In the event the Executive receives health insurance benefits during the _______ [ ] month period following the Date of Termination pursuant to the foregoing provisions of this Section 6.1(B), the Executive and his or her dependents shall continue to be eligible for health insurance benefits for up to an additional sixty (60) months, provided however, that no benefits will be provided (i) if health insurance benefits are available to the Executive through another employer during such period, or (ii) after the insured individual reaches age 65. Such health insurance benefits shall be substantially similar to, and have no greater cost to the Executive than those in effect for the ________ [ ] month period following the Date of Termination.
(C) Notwithstanding any provision of any bonus planannual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum product of (i) any the target bonus amount to which has been allocated or awarded to the Executive for a completed fiscal would have been entitled under the Company’s annual incentive plan in respect of the year or other measuring period preceding in which the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) occurs and (ii) a pro rata portion fraction, the numerator of which shall be the number of months (including fractions thereof) from the first day of the fiscal year during which the Date of Termination occurs to the Date of Termination Termination, and the denominator of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a which shall be twelve (12) month period after ); provided, however, that if the Date of Termination if Executive has one occurs during the same year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyChange in Control, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable payment under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced offset by any payments received under the Company’s annual incentive plan in connection with such Change in Control.
(D) In addition to the extent comparable retirement benefits are actually received by to which the Executive is entitled under each Pension Plan or made available any successor plan thereto, the Company shall pay the Executive a lump sum amount, in cash, equal to the sum of (i) the pay related credits the Executive without cost would have accrued under the Salaried Employees’ Retirement Plan of C▇▇▇▇▇ Industries and the C▇▇▇▇▇ Industries Supplemental Excess Defined Benefit Plan; and (ii) the Company-Matching Contributions the Executive would have accrued under the C▇▇▇▇▇ Industries Savings and Stock Ownership Plan and the C▇▇▇▇▇ Industries Supplemental Excess Defined Contribution Plan (the plans referred to in subsections (i) and (ii) hereof, “The Plans”), in each case, during the above[ ] month (or, if less, the number of months between the Date of Termination and the Executive’s scheduled date of Retirement) period immediately following the Executive’s Date of Termination based upon: (1) the terms and provisions of The Plans as in effect immediately prior to the Change in Control; (2) the lump sum payment set forth in Section 6.1(A) hereof, which lump sum shall be deemed to have been earned ratably over such period; and (3) the assumption that the Executive was making the maximum allowable pre-referenced tax contributions under The Plans during such period. In addition.
(E) The Company shall provide the Executive with outplacement services suitable to the Executive’s position for a period of one year or, any such benefits actually received if earlier, until the first acceptance by the Executive of an offer of employment.
(F) C▇▇▇▇▇ shall continue to maintain officers’ indemnification insurance for the Executive for a period of five years following the Date of Termination, the terms and conditions of which shall be reported no less favorable than the terms and conditions of the officers’ indemnification insurance maintained by C▇▇▇▇▇ for the Executive immediately prior to the Company by date on which the ExecutiveChange in Control occurs.
6.2 (A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits benefit received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, the Executive’s employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the "Severance Payments, being hereinafter called “Total Payments"), shall ”) will be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits subject (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and then, subject to the provisions of subsection (iiB) of this Section 6.2, the value Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction of any noncash benefits or Excise Tax on the Total Payments and any deferred payment or benefit federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be determined by equal to the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the CodeTotal Payments. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's ’s residence on the Date of Termination (or such other time as if there is hereinafter describedno Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of this Section 6.2), net of the maximum reduction in federal income taxes tax which could be obtained from deduction of such state and local taxes.
(CB) In the event that the amount of the Total Payments does not exceed 110% of the largest amount that would result in no portion of the Total Payments being subject to the Excise Tax (the “Safe Harbor”), then subsection (A) of this Section 6.2 shall not apply and the noncash Severance Payments shall first be reduced (if necessary, to zero), and the cash Severance Benefits shall thereafter be reduced (if necessary, to zero) so that the amount of the Total Payments is equal to the Safe Harbor; provided, however, that the Executive may elect to have the cash Severance Payments reduced (or eliminated) prior to any reduction of the noncash Severance Payments.
(C) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute payments” within the meaning of section 280G(b)(2) of the Code, unless in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, C▇▇▇▇▇’▇ independent auditor (the “Auditor”), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments” within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its calculation of the amounts referred to in this Section 6.2(C) and such supporting materials as are reasonably necessary for the Executive to evaluate the Company’s calculations. If the Executive disputes the Company’s calculations (in whole or in part), the reasonable opinion of Tax Counsel with respect to the matter in dispute shall prevail.
(D) In the event that (i) amounts are paid to the Executive pursuant to subsection (A) of this Section 6.2, (ii) the Excise Tax is subsequently finally determined to be less than the amount taken into account hereunder at in calculating the time Gross-Up Payment, and (iii) after giving effect to such redetermination, the Severance Payments are to be reduced pursuant to subsection (B) of termination of the Executive's employment (or such other time as is hereinafter described)this Section 6.2, the Executive shall repay to the Company, at within five (5) business days following the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax and employment taxes imposed on the Gross-Up Payment being repaid by the Executive Executive), to the extent that such repayment results in (i) no portion of the Total Payments being subject to the Excise Tax and (ii) a dollar-for-dollar reduction in Excise Tax or a the Executive’s taxable income and wages for purposes of federal, state or and local income tax deductionand employment taxes) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(31274(b)(2)(B) of the Code. In the event that (x) the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's ’s employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment)) and (y) after giving effect to such redetermination, the Severance Payments should not have been reduced pursuant to subsection (B) of this Section 6.2, the Company shall make an additional Gross-Up Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to which the Company had not previously made a Gross-Up Payment (plus any interest, penalties or addition additions payable by the Executive with respect to such excessexcess and such portion) at within five (5) business days following the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. 6.3 The payments provided for in subsections (A), (C) and (D) of Section 6.1 hereof (other than Section 6.1(C)), and in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, that if the amounts of such payments, and the limitations on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company Executive or, in the case of payments under Section 6.2 hereof, in accordance with Section 6.2 hereof, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder [or on all such payments to the extent the Company fails to make such payments when due] at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.s
Appears in 1 contract
Sources: Management Continuity Agreement (Cooper Industries LTD)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "“Severance Payments"”) upon the termination of the Executive's ’s employment following a Change in Control and during the term of this Agreement, Agreement (in addition to the any payments and benefits described in to which the Executive is entitled under Section 5 and 8 hereof), unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of the Executive's employment with Good Reason following a Potential Change in Control but before if (i) the Executive’s employment is terminated without Cause prior to a Change in Control which actually occurs during the term of this Agreement and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment with Good Reason prior to a Change in Control which actually occurs during the term of this Agreement and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason prior to a Change in Control and the Executive reasonably demonstrates that such termination is otherwise in connection with or in anticipation of a Change in Control which actually occurs during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
or (iiv) the termination Executive’s employment is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company terminated without Cause if after a Potential Change in Control had occurred on the date of the type described in paragraph (I) of the definition of “Potential Change in Control”.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier three (3) times the sum of (i) the highest higher of the Executive's ’s annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such the Executive’s highest annual base salary in effect during the three (3) completed fiscal years immediately prior to preceding the Change in Control, or such salary in effect immediately prior to a Potential Control (the “Change in ControlControl Salary”), and (ii) the higher of the highest annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three (x3) the target bonus for completed fiscal years immediately preceding the year in which the Notice Date of Termination is provided or (y) occurs, the highest annual bonus so earned in respect of the actual bonuses paid three (3) completed fiscal years immediately preceding the year in which the Change in Control occurs, or payable to the maximum of the bonus opportunity range for the Executive for any of the five years completed in effect immediately prior to the Date of Termination, or if higher, immediately prior to the first occurrence of the event or circumstance upon which constituting Good Reason (the Notice of Termination is based“Change in Control Bonus”).
(B) Notwithstanding any provision of any bonus planannual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within incentive award under such plan for the performance then uncompleted period under such plan, calculated by multiplying the maximum of the bonus opportunity range established with respect to such award for the Executive by the fraction obtained by dividing the number of full months and basing such pro-rata portion upon the any fractional portion of the a month during such performance award period that has elapsed as of through the Date of Termination;Termination by the total number of months contained in such performance award period.
(C) For the three (i3) a twelve (12) month year period after immediately following the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive (which includes the Executive’s eligible dependents for purposes of this paragraph (C)) with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is was receiving immediately prior to the Notice of Termination (without giving effect to any reduction in amendment to such benefits made subsequent to the earlier of a Potential Change in Control or a Change in Control if which amendment adversely affects in any manner the Executive’s entitlement to or the amount of such reduction constitutes Good Reasonbenefits); Notwithstanding any other provision of this Agreementprovided, however, that, unless the Company Executive consents to a different method, such health insurance benefits shall continue to fund Executive's splitbe provided through a third-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policyparty insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits (including continued coverage for any preexisting medical condition of any person covered by the benefits provided to the Executive and his eligible dependents immediately prior to the Notice of Termination) are actually received by or made available to the Executive by a subsequent employer without cost during the above-referenced period. In addition, three (3) year period following the Executive’s Date of Termination (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive). The applicable benefit continuation period for the Executive and the Executive’s qualifying dependents under the Consolidated Omnibus Budget Reconciliation Act of 1984, as amended (“COBRA”), shall commence at the expiration of the period of continued benefits referenced above in this Section 6.1(C).
(AD) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise TaxFollowing a Change in Control, the Company shall pay provide the Executive with outplacement services suitable to the Executive’s position for a period of one (1) year commencing on the date the Executive an additional amount first uses such outplacement services; provided, however, such first use must occur during the three (3) year period following the "Gross-Up Payment"Executive’s Date of Termination.
6.2. (A) such Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that the net amount retained any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Executive, after deduction of any Excise Tax on Company to or for the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess benefit of the Total Payments over the payment provided for by this Section 6.2.
Executive (B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments paid or benefits received payable or to be received by the Executive in connection with a Change in Control distributed or the Executive's termination of employment, whether distributable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in otherwise) (a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall “Payment”) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of imposed on the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the retains an amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable equal to the Excise Tax and federal, state and local income tax imposed on upon the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Sources: Executive Employment Agreement (Inspire Pharmaceuticals Inc)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "“Severance Payments"”) upon the termination of the Executive's ’s employment following a Change in Control and during the term of this Agreement, Agreement (in addition to the any payments and benefits described in to which the Executive is entitled under Section 5 and 8 hereof), unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of the Executive's employment with Good Reason following a Potential Change in Control but before if (i) the Executive’s employment is terminated without Cause prior to a Change in Control which actually occurs during the term of this Agreement and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment with Good Reason prior to a Change in Control which actually occurs during the term of this Agreement and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason prior to a Change in Control and the Executive reasonably demonstrates that such termination is otherwise in connection with or in anticipation of a Change in Control which actually occurs during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
or (iiv) the termination Executive’s employment is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company terminated without Cause if after a Potential Change in Control had occurred on the date of the type described in paragraph (I) of the definition of “Potential Change in Control”.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier one and one-half (1.5) times the sum of (i) the highest higher of the Executive's ’s annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such the Executive’s highest annual base salary in effect during the three (3) completed fiscal years immediately prior to preceding the Change in Control, or such salary in effect immediately prior to a Potential Control (the “Change in ControlControl Salary”), and (ii) the higher of the highest annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three (x3) the target bonus for completed fiscal years immediately preceding the year in which the Notice Date of Termination is provided occurs or (y) the highest annual bonus so earned in respect of the actual bonuses paid or payable to three (3) completed fiscal years immediately preceding the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon year in which the Notice of Termination is basedChange in Control occurs (the “Change in Control Bonus”).
(B) Notwithstanding any provision of any bonus planannual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within incentive award under such plan for the performance range established with respect to then uncompleted period under such plan, calculated by multiplying the Executive’s target award by the fraction obtained by dividing the number of full months and basing such pro-rata portion upon the any fractional portion of the a month during such performance award period that has elapsed as of through the Date of Termination;Termination by the total number of months contained in such performance award period.
(C) For the eighteen (i) a twelve (1218) month period after immediately following the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive (which includes the Executive’s eligible dependents for purposes of this paragraph (C)) with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is was receiving immediately prior to the Notice of Termination (without giving effect to any reduction in amendment to such benefits made subsequent to the earlier of a Potential Change in Control or a Change in Control if which amendment adversely affects in any manner the Executive’s entitlement to or the amount of such reduction constitutes Good Reasonbenefits); Notwithstanding any other provision of this Agreementprovided, however, that, unless the Company Executive consents to a different method, such health insurance benefits shall continue to fund Executive's splitbe provided through a third-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policyparty insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits (including continued coverage for any preexisting medical condition of any person covered by the benefits provided to the Executive and his eligible dependents immediately prior to the Notice of Termination) are actually received by or made available to the Executive by a subsequent employer without cost during the above-referenced period. In addition, eighteen (18) month period following the Executive’s Date of Termination (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive).
6.2. (A) Whether Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or not distribution (or any acceleration of any payment, award, benefit or distribution) by the Company to or for the benefit of the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments paid or benefits received payable or to be received by the Executive in connection with a Change in Control distributed or the Executive's termination of employment, whether distributable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in otherwise) (a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall “Payment”) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of imposed on the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the retains an amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable equal to the Excise Tax and federal, state and local income tax imposed on upon the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Sources: Executive Employment Agreement (Inspire Pharmaceuticals Inc)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The Executive's employment shall be deemed to have been terminated, following a Change in Control by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of with Good Reason if the Executive's employment following is terminated prior to a Change in Control without Cause after consultation with a Person who has entered into an agreement with the Company the consummation of which will constitute a Change in Control or if the Executive terminates his employment with Good Reason prior to a Change in Control (determined by treating a Potential Change in Control but before as a Change in Control and during in applying the term definition of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason under Section 15(M)(i) through (vii) hereof) if the circumstance or by event that constitutes Good Reason occurs at the Company without Cause if a Change in Control had occurred on the date direction of the Potential Change in Controlsuch Person.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (i) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (x) the target bonus for the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses bonus paid or payable to the Executive pursuant to the Company's Bonus Plan or any successor thereto (the "Bonus Plan") for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus planthe Bonus Plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under the Bonus Plan but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods under the Bonus Plan calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) ____________ month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), ) shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, reasonably acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(31274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section section 6.1 hereof (other than Section 6.1(C)), ) and in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(91274(b)(2)(B) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessivefrivolous. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Sources: Severance Agreement (Systems & Computer Technology Corp)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this 6.1 Subject to Section 6.1 6.2 hereof, if (the "Severance Payments"i) upon the termination of the Executive's employment is terminated following a Change in Control and during the term of this AgreementTerm, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death death, Disability or Disability more than six months following the Change in ControlRetirement, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 ("Severance Payments upon termination Payments") and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive's employment is terminated by the Company without Cause after the occurrence of a Potential Change in Control but before and prior to a Change in Control (whether or not a Change in Control ever occurs) and during such termination was at the term request or direction of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any a Person who has initiated a transaction entered into an agreement with the Company the consummation of which would result in constitute a Change in Control; and
Control or (ii) the termination would have been by the Executive terminates his employment for Good Reason or by after the Company without Cause if occurrence of a Potential Change in Control and prior to a Change in Control had occurred on the date of the Potential (whether or not a Change in ControlControl ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to __________________ [ ] (or, if less, the Applicable Multiplier number of full and partial years between the Date of Termination and the Executive's scheduled date of Retirement) times the sum of (i) the highest of the Executive's annual base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is based(without giving effect to any reduction in base salary, or such salary which reduction constitutes an event of Good Reason) or, if higher, in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (xA) the target average annual bonus for earned by the year Executive pursuant to the annual bonus or incentive plan maintained by the Company in which the Notice of Termination is provided or (y) the highest respect of the actual bonuses paid or payable to the Executive for any of the five three fiscal years completed ending immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding in which occurs the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent bonus caused by an adverse change in the Executive's bonus plan participation, which adverse constitutes an event of Good Reason) or, if higher, immediately prior to a the fiscal year in which occurs the Change in Control if such or (B) the Executive's target annual bonus for the fiscal year in which occurs the Date of Termination (without giving effect to any reduction in bonus caused by an adverse change in the Executive's bonus plan participation, which adverse change constitutes an event of Good Reason); Notwithstanding any other provision of this Agreement) or, if higher, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under fiscal year in which occurs the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2Change in Control.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax________________________ [ ] month period (or, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Paymentif less, the Executive shall be deemed to pay federal income taxes at the highest marginal rate number of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on months between the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount scheduled date of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deductionRetirement) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day immediately following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay arrange to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive and his dependents with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations includinglife, without limitationdisability, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.accident and
Appears in 1 contract
Sources: Management Continuity Agreement (Cooper Industries Inc)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of 2.1 If the Executive's employment following a Change in Control and is terminated during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is Term (ia) by the Company for Cause, without Cause (iias defined below) or (b) by reason of death or Disability more than six months following the Change in Control(as defined below), or (iii) by and the Executive without Good Reason. The executes a separation agreement with a release of claims agreeable to the Company (to the extent the Executive is physically and mentally capable to execute such an agreement), then the Company shall pay the Executive the Severance Payments upon termination of amounts, and provide the Executive's employment following a Potential Change in Control but before a Change in Control and during Executive the term of this Agreementbenefits, in addition to the payments and benefits described in Section 5 hereof, if:
2.2 (i) the termination "Severance Payments"). Company's requirement to relocate and Executive's refusal is initiated, caused or directed by any Person who has initiated not deemed "for cause" and will be considered a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in Controlvoluntary resignation.
(Aa) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the The Company shall pay to the Executive a lump sum severance paymentas severance, an amount in cash, cash equal to the Applicable Multiplier times one hundred percent (100%) of the sum of (i) the highest of the Executive's annual base salary in effect immediately prior at the time such termination occurs, to be paid in equal semi-monthly installments over the occurrence of the event or circumstance upon which the Notice of Termination is based, or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in ControlNon-Competition Period (as defined below), and (ii) the higher of (x) annual bonus to which the target bonus for Executive is entitled with respect to the fiscal year in which the Notice of Termination is provided termination occurs under any annual bonus or (y) incentive plan maintained by the highest company in an amount determined as if the Company had achieved 100% of the actual bonuses applicable performance goals set by the Board of Directors of the company for such fiscal year, which shall be paid or payable to the Executive for any on or before the December 31st following the end of such fiscal year. Notwithstanding the foregoing, if payment in accordance with the preceding sentence would subject the Executive to tax under section 409A of the five years completed immediately prior Internal Revenue Code of 1986, as amended, then payment will be suspended until the first date as of which payment can be made without subjecting the Executive to the occurrence of the event or circumstance upon which the Notice of Termination is basedsuch tax.
2.2 (B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(Cb) For (i) a twelve (the 12) -month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Companyimmediately following such termination, the Company shall arrange to provide the Executive with life, disability, accident and his dependents health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which provided to the Executive is receiving immediately prior and his dependents by the Company. Executive must elect COBRA coverage and make timely payments in accordance with the terms outlined in the COBRA notice, to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of receive this Agreementbenefit. Should Executive elect COBRA, the Company shall continue to fund agrees that the Executive and/or eligible members of Executive's split-dollar life insurance arrangement until dividends payable under family shall pay no more than the policy are sufficient rate charged to its employees by the company at the time of such payments for a period of twelve (12) months, and that the Company shall pay premiums under for the policyemployer portion of providing such Healthcare coverage. Benefits otherwise Health Benefit contributions pursuant to this Section 2.2(b) shall cease immediately upon the discovery by the Company of the Executive's breach of the covenants contained in Sections 5 or 6 hereof. In addition, Company contributions for health benefits receivable by the Executive pursuant to this Section 6.1(C2.2(b) shall be reduced to the extent comparable benefits of the same type are actually received by or made available to the Executive without cost during the above12-referenced period. In addition, month period following the Executive's termination of employment (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, that the Company shall pay reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive on over such day an estimatecost immediately prior to the date of termination.
2.3 Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, as determined in good faith by the Company of the minimum amount of such payments state, or local law and any additional withholding to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)agreed.
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of 2.4 If the Executive's employment following a Change in Control and with the Company terminates during the term of this Agreement (including all such fees and expensesTerm, if any, incurred the Executive shall not be required to seek other employment or to attempt in disputing in good faith any such termination or in seeking in good faith way to obtain or enforce reduce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding amounts payable to the extent attributable Executive by the Company pursuant to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require2.
Appears in 1 contract
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of If the Executive's ’s employment is terminated either during the Initial Term or otherwise following a Change in Control and during within two (2) years after a Change in Control (provided that such termination of employment constitutes a “separation from service” within the term meaning of this AgreementSection 409A of the Code), in addition to the payments and benefits described in Section 5 hereof, unless such termination is either event other than (iA) by the Company for Cause, (iiB) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments upon termination Payments”) and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's ’s employment shall be deemed to have been terminated following a Potential Change in Control but before a Change in Control and during by the term of this AgreementCompany without Cause or by the Executive with Good Reason, in addition to the payments and benefits described in Section 5 hereof, if:
if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination is initiated, caused was at the request or directed by any direction of a Person who has initiated a transaction entered into an agreement with the Company the consummation of which would result in constitute a Change in Control; and
, or (ii) the termination would have been by the Executive terminates his employment for Good Reason or by the Company without Cause if prior to a Change in Control had occurred on (whether or not a Change in Control ever occurs) and the date circumstance or event which constitutes Good Reason occurs at the request or direction of such Person. For purposes of any determination regarding the applicability of the Potential Change in Controlimmediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that such position is not correct.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier one (1) times the sum of (i) the Executive’s highest of the Executive's annual base salary as in effect during the three-year period ending immediately prior to the occurrence Date of Termination (including, if the Date of Termination occurs within three years after the effective date of the event Existing CIC Agreement, salary paid in respect of employment by Temple-Inland Inc. (“Temple-Inland”) or circumstance upon which the Notice of Termination is based, or its Affiliates during such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, three-year period) and (ii) the higher Executive’s target annual bonus pursuant to any annual bonus or incentive plan maintained by the Company in respect of (x) the target bonus for the fiscal year in which occurs the Notice Date of Termination is provided or (y) or, if higher, the highest greatest actual annual bonus in respect of the actual bonuses paid or payable to the Executive for any of the five three preceding fiscal years completed immediately prior (including as applicable, with respect to years ending at or before the occurrence effective date of the event or circumstance upon which the Notice of Termination is basedExisting CIC Agreement, annual bonuses paid by Temple-Inland)).
(B) Notwithstanding For an additional one-year period immediately following the end of the two-year period provided for in Section 6.1(B) of the Existing CIC Agreement, the Company shall arrange to provide the Executive and his dependents life, accidental death and dismemberment, medical and dental benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date or occurrence; provided, however, that such health and welfare benefits shall be provided through an arrangement that satisfies the requirements of Sections 105 and 106 of the Code. To the extent that health and welfare benefits of the same type are received by or made available to the Executive during the three-year period following the Executive’s Date of Termination (which such benefits received by or made available to the Executive shall be reported by the Executive to the insurance company or other appropriate party in accordance with any provision applicable coordination of benefits provisions), the benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be made secondary to such benefits; provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason.
(C) Vesting shall accelerate and restrictions shall lapse on all unvested or restricted equity or equity-based awards in respect of the Company held by the Executive, if any, as of the Date of Termination and each stock option to acquire common stock of the Company and each stock appreciation right in respect of the Company held by the Executive as of the Date of Termination shall remain exercisable following the Date of Termination for the full term of such option or stock appreciation right. This Section 6.1(C) shall not be applicable to any bonus planequity or equity-based awards in respect of Temple-Inland.
(D) In addition to the benefits to which the Executive is entitled under any defined contribution Pension Plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus the amount which has that would have been allocated contributed thereto or awarded credited thereunder by the Company on the Executive’s behalf during an additional one (1) year period immediately following the end of the two-year period provided for in Section 6.1(E) of the Existing CIC Agreement (but not including as amounts that would have been contributed or credited an amount equal to the Executive for a completed fiscal year amount of any reduction in base salary, bonus or other measuring compensation that would have occurred in connection with such contribution or credit), determined (x) as if the Executive made the maximum permissible contributions thereto or credits thereunder during such additional one-year period, (y) as if the Executive earned compensation during such additional one-year period preceding at a rate equal to the Date Executive’s highest rate of Termination but has not yet been paid compensation (pursuant to Section 5.2 hereof or otherwiseas defined in the defined contribution Pension Plan) and (ii) a pro rata portion during the three-year period ending immediately prior to the Date of Termination Termination, and (z) without regard to any amendment to the defined contribution Pension Plan made subsequent to the effective date of the aggregate value of all contingent bonus awards Existing CIC Agreement and on or prior to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after , which amendment adversely affects in any manner the Date computation of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Taxthereunder, and (ii) the value excess, if any, of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3(x) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on ’s account balance under the Pension Plan as of the Date of Termination over (or y) the portion of such other time as account balance that is hereinafter described), net nonforfeitable under the terms of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxesdefined contribution Pension Plan.
(CE) In For an additional one-year period immediately following the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination end of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Grosstwo-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments year period provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B6.1(H) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this sectionExisting CIC Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expensesperquisites, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding that were applicable immediately prior to the extent attributable Date of Termination or, if more favorable, immediately prior to the application first occurrence of section 4999 an event or circumstance constituting Good Reason, provided that in no event shall the amount of perquisites to which the Executive is entitled under this Section 6.1(E) for any taxable year of the Code Executive affect the amount of perquisites to any payment or benefit provided hereunder). For purposes of which the Executive is entitled under this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (56.1(E) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may requireany other taxable year.
Appears in 1 contract
Sources: Change in Control/Severance Agreement (Guaranty Financial Group Inc.)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "“Severance Payments"”) upon the termination of the Executive's ’s employment following a Change in Control and during the term of this Agreement, Agreement (in addition to the any payments and benefits described in to which the Executive is entitled under Section 5 and 8 hereof), unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of the Executive's employment with Good Reason following a Potential Change in Control but before if (i) the Executive’s employment is terminated without Cause prior to a Change in Control which actually occurs during the term of this Agreement and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment with Good Reason prior to a Change in Control which actually occurs during the term of this Agreement and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason prior to a Change in Control and the Executive reasonably demonstrates that such termination is otherwise in connection with or in anticipation of a Change in Control which actually occurs during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
or (iiv) the termination Executive’s employment is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company terminated without Cause if after a Potential Change in Control had occurred on the date of the type described in paragraph (I) of the definition of “Potential Change in Control”.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier two (2) times the sum of (i) the highest higher of the Executive's ’s annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such the Executive’s highest annual base salary in effect during the three (3) completed fiscal years immediately prior to preceding the Change in Control, or such salary in effect immediately prior to a Potential Control (the “Change in ControlControl Salary”), and (ii) the higher of the highest annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three (x3) the target bonus for completed fiscal years immediately preceding the year in which the Notice Date of Termination is provided occurs or (y) the highest annual bonus so earned in respect of the actual bonuses paid or payable to three (3) completed fiscal years immediately preceding the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon year in which the Notice of Termination is basedChange in Control occurs (the “Change in Control Bonus”).
(B) Notwithstanding any provision of any bonus planannual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within incentive award under such plan for the performance range established with respect to then uncompleted period under such plan, calculated by multiplying the Executive’s target award by the fraction obtained by dividing the number of full months and basing such pro-rata portion upon the any fractional portion of the a month during such performance award period that has elapsed as of through the Date of Termination;Termination by the total number of months contained in such performance award period.
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after immediately following the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive (which includes the Executive’s eligible dependents for purposes of this paragraph (C)) with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is was receiving immediately prior to the Notice of Termination (without giving effect to any reduction in amendment to such benefits made subsequent to the earlier of a Potential Change in Control or a Change in Control if which amendment adversely affects in any manner the Executive’s entitlement to or the amount of such reduction constitutes Good Reasonbenefits); Notwithstanding any other provision of this Agreementprovided, however, that, unless the Company Executive consents to a different method, such health insurance benefits shall continue to fund Executive's splitbe provided through a third-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policyparty insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits (including continued coverage for any preexisting medical condition of any person covered by the benefits provided to the Executive and his eligible dependents immediately prior to the Notice of Termination) are actually received by or made available to the Executive by a subsequent employer without cost during the abovetwenty-referenced period. In addition, four (24) month period following the Executive’s Date of Termination (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive).
6.2. (A) Whether Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or not distribution (or any acceleration of any payment, award, benefit or distribution) by the Company to or for the benefit of the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments paid or benefits received payable or to be received by the Executive in connection with a Change in Control distributed or the Executive's termination of employment, whether distributable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in otherwise) (a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall “Payment”) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of imposed on the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the retains an amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable equal to the Excise Tax and federal, state and local income tax imposed on upon the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Sources: Executive Employment Agreement (Inspire Pharmaceuticals Inc)
Severance Payments. 6.1. The 6.1 Subject to Section 6.2 hereof, the Company shall pay the Executive the payments described in this Section 6.1 (the "“Severance Payments"”) upon the termination of the Executive's ’s employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death death, Disability or Disability more than six months following the Change in ControlRetirement, or (iii) by the Executive without Good Reason. The Company shall pay To be a valid termination of employment by the Executive under this Agreement for Good Reason, the Severance Payments upon date of the actual termination of the Executive's ’s employment due to any of the Good Reason acts or conditions set forth in Sections 14.11(a) through 14.11(f) below must occur within a period of two years following the initial existence of such Good Reason act or condition which arose without the consent of the Executive. The Executive’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason if the Executive’s employment is terminated prior to a Change in Control without Cause at the direction of a Person who (i) has entered into an agreement with the Company the consummation of which will constitute a Change in Control or (ii) has caused a Potential Change in Control but before to occur, or if the Executive terminates his employment with Good Reason prior to a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed determined by any Person who has initiated treating a transaction the consummation of which would result in a Potential Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if Control as a Change in Control had occurred on in applying the date definition of Good Reason) if the Potential Change in Controlcircumstance or event which constitutes Good Reason occurs at the direction of such Person.
(Aa) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times [200%][250%]of the sum of (i) the highest higher of the Executive's ’s annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (x) the target bonus for amount which the Executive could have earned under the Company’s annual incentive plan in the year in which the Notice Date of Termination is provided occurs or (y) such target amount in the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon year in which the Notice of Termination is basedChange in Control occurs.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(Cb) For an eighteen (i) a twelve (1218) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall, at its cost (provided that Executive shall continue to be responsible to pay the standard employee portion of such cost), arrange to provide the Executive with life, disability, accident accident, health and health dental insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such which reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C6.1(b) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive by a new employer of the Executive without cost during the above-referenced period. In addition, eighteen (18) month period following the Executive’s termination of employment (and any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not ). If the benefits provided to the Executive becomes entitled under this Section 6.1(b) shall result in a decrease, pursuant to Section 6.2, in the Severance Payments and these Section 6.1(b) benefits are thereafter reduced pursuant to the Severance Payments, if any immediately preceding sentence because of the Total Payments will be subject to the Excise Taxreceipt of comparable benefits, the Company shall shall, at the time of such reduction, pay to the Executive an additional the lesser of (A) the amount (of the "Gross-Up Payment") such that decrease made in the net amount retained by the Executive, after deduction of any Excise Tax on the Total Severance Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this pursuant to Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
or (B) For purposes the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of determining whether any Section 280G of the Total Payments will be subject to Code.
6.2 Notwithstanding any other provisions of this Agreement (except the Excise Tax and provisions of Section 6.5 below), in the amount of such Excise Tax, (i) event that any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, the Executive’s employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the "Severance Payments, being hereinafter called “Total Payments"”) would not be deductible (in whole or part), shall be treated by the Company, an affiliate or any Person making such payment or providing such benefit as "parachute payments" (within the meaning a result of section 280G(b)(2) Section 280G of the Code, then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement), (A) unlessthe cash Severance Payments shall first be reduced (if necessary, to zero), and (B) all other non-cash Severance Payments shall next be reduced (if necessary, to zero). For purposes of this limitation, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have effectively waived in writing prior to the Date of Termination shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which in the opinion of tax counsel selected by the Company's ’s independent auditors and reasonably, reasonably acceptable to the Executive, such payments or benefits (in whole or in part) do Executive does not constitute a “parachute paymentspayment” within the meaning of Section 280G(b)(2) of the Code, including by reason of section Section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within iii) the meaning of section 280G(b)(1) of the Code) Severance Payments shall be treated as subject reduced only to the Excise Tax unless, extent necessary so that the Total Payments (other than those referred to in the opinion of such tax counsel, such excess parachute payments clauses (i) or (ii)) in whole or in part) represent their entirety constitute reasonable compensation for services actually rendered (within the meaning of section Section 280G(b)(4)(B) of the Code), Code or are otherwise not subject to disallowance as deductions, in the Excise Tax, opinion of the tax counsel referred to in clause (ii); and (iiiv) the value of any noncash benefits non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's ’s independent auditors in accordance with the principles of actions Sections 280G(d)(3) and (4) of the Code. For purposes If it is established pursuant to a final determination of determining a court or an Internal Revenue Service proceeding that, notwithstanding the amount good faith of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company in applying the terms of this Section 6.2, the aggregate “parachute payments” paid to or for the Executive’s benefit are in an amount that would result in any portion of such “parachute payments” not being deductible by reason of Section 280G of the Code, then the Executive shall each reasonably cooperate with have an obligation to pay the other in connection with any administrative or judicial proceedings concerning the existence or Company upon demand an amount of liability for Excise Tax with respect equal to the Total Payments. If an Executive who remains in the employ excess of the Company becomes entitled aggregate “parachute payments” paid to or for the payment provided Executive’s benefit over the aggregate “parachute payments” that could have been paid to or for the Executive’s benefit without any portion of such “parachute payments” not being deductible by this paragraph, such payment shall be made no later than reason of Section 280G of the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially dueCode.
6.3. 6.3 The payments provided for in Section 6.1 hereof (other than Section 6.1(C6.1(b)), in Section 6.2 hereof, and in Section 5.5 ) hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, that if the amounts of such payments, and the limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company Company, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined by the Company within six (6) months after payment to have been due, such excess shall constitute a loan be paid by the Company Executive to the ExecutiveCompany, payable on no later than the fifth thirtieth (5th30th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code)Company. At the time that payments are made under this sectionSection, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The 6.4 Following a Change in Control (or a termination described in the second sentence of Section 6.1), the Company also shall pay to the Executive all legal fees and related expenses (including costs of experts, evidence and counsel) incurred in good faith by the Executive as a result of any dispute in connection with a termination of the Executive's employment following a Change ’s employment, whether or not such dispute is resolved in Control and during the term of this Agreement Executive’s favor, but only if the dispute is pursued by the Executive in good faith (including all such fees and expenses, if any, incurred in disputing in good faith respect of a dispute relating to any such termination or in the Executive seeking in good faith to obtain or enforce any benefit or right provided by this Agreement (or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits) or in connection with any tax audit or proceeding to the extent attributable to the application of section Section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made to the Executive within five (5) business days after delivery of the Executive's ’s written request requests for payment accompanied with such by evidence of fees and expenses incurred as the Company reasonably may requireincurred.
Appears in 1 contract
Sources: Severance Protection Agreement (Vanguard Health Systems Inc)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of If the Executive's employment is terminated on or following the date of a Change in Control and during the term of this AgreementTerm, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The , then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 ("Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before a Change in Control Payments") and during the term of this AgreementSection 6.2, in addition to the any payments and benefits described in to which the Executive is entitled under Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in Control.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier three times the sum of (i) the highest of the Executive's annual base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is basedor, or such salary if higher, in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, Control and (ii) the higher of (x) the Executive's target bonus incentive compensation for the year in which occurs the Notice Date of Termination is provided or (y) the highest of Executive's target incentive compensation for the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is basedCompany's 1998 fiscal year.
(B) Notwithstanding any provision The coverage period for the purpose of any bonus plan, the Company group health continuation requirements of Section 4980B of the Code shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding commence on the Date of Termination but has not yet been paid (pursuant Termination. The Executive shall also have the right to Section 5.2 hereof or otherwise) exercise his rights, if any, to convert his group life, disability and (ii) a pro rata portion accident insurance benefits to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed corresponding individual insurance coverage as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, . In each case the Company shall arrange waive or pay, as applicable, the premiums with respect to provide the Executive with such life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which coverage for the Executive is receiving and his dependents (as such term was applied by the Company immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if Control) for a period of eighteen (18) months immediately following the Date of Termination, so that such reduction constitutes Good Reason); Notwithstanding any other provision coverage is provided at no greater cost to the Executive than the cost to the Executive immediately prior to the Date of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policyTermination. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C6.1(B) shall be reduced to the extent comparable benefits of the same type are actually received by or made available to the Executive without cost during the above-referenced period. In addition, eighteen (18) month period following the Executive's termination of employment (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if If any of the payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (such payments or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the "Total Payments Payments") will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and employment taxes and Excise Tax upon the payment provided for by this Section 6.2Gross-Up Payment, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the The amount of the Gross-Up Payment, the Executive if any, shall be deemed determined by Parent or any person or entity designated by Parent. The Total Payments will be subject to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be madeall applicable federal, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described)employment taxes. Any applicable federal, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local income and employment taxes, as well as any applicable Excise Tax, shall be withheld by the Company in accordance with applicable law.
(CB) In the event that the Excise Tax is subsequently finally determined to be less than the amount taken into account hereunder at in calculating the time of termination of the Executive's employment (or such other time as is hereinafter described)Gross-Up Payment, the Executive shall repay to the Company, at within ten (10) business days following the time that the amount of such reduction in the Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax and employment taxes imposed on the Gross-Up Payment being repaid by the Executive Executive, to the extent that such repayment results in a reduction in the Excise Tax or and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state or and local income tax deduction) and employment taxes), plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) 120% of the Codesemiannual compounding short term Applicable Federal Rate published with respect to the month in which occurs the Date of Termination. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at in calculating the time of the termination of the Executive's employment (or such other time as is hereinafter described) Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition additions payable by the Executive with respect to such excess) at within ten (10) business days following the time that the amount of such excess is finally determined. .
(C) The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total PaymentsPayments and each shall use reasonable best efforts to ensure prompt resolution of any such proceedings. If an Executive who remains The Company shall select counsel, exercise control, and bear and pay directly all costs and expenses (including legal fees and additional interest and penalties) incurred in the employ of the Company becomes entitled connection with any such claim or proceeding, in each case to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject extent related to the Excise Tax Tax, and (ii) twenty days prior to shall indemnify and hold the date Executive harmless, on which the an after-tax basis, as provided in Section 6.2(A), for any Excise Tax is initially dueor income or employment tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.
6.3. 6.3 The payments provided for in subsection (A) of Section 6.1 hereof and in subsection (other than Section 6.1(C)), in A) of Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day as soon as practicable following the Date of TerminationTermination but, unless Executive elects a in any event no later date than 10 business days immediately following the expiration of payment for all or any part thereof; provided, however, thatthe revocation period, if the amounts of such payments cannot be finally determined on or before such dayany, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company applicable to the Executive's release, payable described in Section 6.5, and interest shall accrue on such payments, to the fifth (5th) business day after demand by extent the Company (together with interest fails to make such payments when due, at the rate provided in section 1274(b)(2)(9) 120% of the Code)semiannual compounding short term Applicable Federal Rate published for the month in which occurs the date of the expiration of such period. At the time that payments are made under this sectionAgreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)calculated.
6.4. 6.4 The Company also shall pay to the Executive all reasonable legal fees and expenses incurred in good faith by the Executive in pursuing any claim arising under this Agreement in which the Executive prevails in all material respects.
6.5 The Executive shall not be entitled to receive Severance Payments or other benefits pursuant to this Agreement unless he shall have executed a written release substantially in the form attached as Exhibit A hereto.
6.6 If the Executive receives Severance Payments hereunder, he shall not, for a period of three months immediately following the Date of Termination, work in any capacity for, or otherwise participate as a result director, officer, member, partner, employee, consultant, representative or advisor of, a competitor of a termination the Company or any member of the Parent Group.
6.7 The Company shall provide the Executive with outplacement services suitable to the Executive's employment following position, for a Change in Control and during period ending on the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 first anniversary of the Code to any payment Date of Termination, or benefit provided hereunder)if sooner, on the date the Executive obtains employment. For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that At the Executive's action resulting option and for a period ending on the first anniversary of the Date of Termination, the Company shall provide the Executive, at a mutually agreed location other than the Company's premises, office space and secretarial services similar to those provided to the Executive immediately prior to the Date of Termination. In the event the Executive elects to have the Company provide such office space and secretarial services to the Executive, the Company may reduce, in such legal fees its reasonable judgment, the value of and expenses was excessiveextent to which outplacement services are provided to the Executive as described above. Such payments No cash option shall be made within five (5) business days after delivery available with respect to such outplacement services or office space and secretarial service arrangement.
6.8 The Company shall provide the Executive, for a period ending on the first anniversary of the Executive's written request for payment accompanied with such evidence Date of fees and expenses incurred as Termination, or sooner if Executive so requests, security services substantially similar to those provided to him by the Company reasonably may requireimmediately prior to the Date of Termination.
Appears in 1 contract
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of If the Executive's employment following a Change in Control and is terminated during the term of this AgreementTerm, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiiC) by the Executive without Good Reason, and ▇▇▇▇▇ ▇. The ▇▇▇▇▇▇▇ is not the Chief Executive Officer of the Company upon the Date of Termination, then the Company shall pay the Executive the Severance Payments upon termination of amounts, and provide the Executive's employment following a Potential Change in Control but before a Change in Control and during Executive the term of this Agreementbenefits, in addition to the payments and benefits described in this Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in Control."Severance Payments"):
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cashcash ("Cash Severance Payment"), equal to the Applicable Multiplier two times the sum of (i) the highest of the Executive's annual base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is basedor, or such salary if higher, in effect immediately prior to the Change in Control, first occurrence of an event or such salary in effect immediately prior to a Potential Change in Controlcircumstance constituting Good Reason, and (ii) the higher Executive's target annual bonus under any annual bonus or annual incentive plan maintained by the Company in respect of (x) the target bonus for the fiscal year in which occurs the Notice Date of Termination is provided or (y) or, if higher, the highest of fiscal year in which occurs the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the first event or circumstance upon which the Notice of Termination is basedconstituting Good Reason.
(B) Notwithstanding any provision the foregoing provisions of any bonus planthis Section 5, the Company shall not be obligated to pay the Severance Payments to the Executive unless the Executive shall have signed a lump sum amountrelease of claims (other than with respect to claims arising under this Agreement, in cash, equal to that certain letter from the sum of (i) any bonus amount which has been allocated or awarded Company to the Executive for a completed fiscal year or other measuring period preceding dated the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Companydate hereof, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up PaymentEmployment Letter") such that or any documents evidencing grants or awards of equity based compensation, existing rights to indemnification or coverage under the net amount retained by Company's liability insurance policies, and rights under the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or Company's benefits received or to be received by the Executive in connection plans not inconsistent with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with Agreement) in favor of the Company, any Person whose actions result Company in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall form to be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected prescribed by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the CodeBoard, and all "excess parachute payments" (within applicable rescission periods provided by law shall have expired. The Company shall pay the meaning of section 280G(b)(1) of the Code) shall be treated as subject Cash Severance Payment to the Excise Tax unless, in Executive on or before the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than thirtieth day after the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later (ii) the date of payment for all or any part thereof; providedthe Notice of Termination, however, that, if and (iii) the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to date upon which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided conditions set forth in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (55(C) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may requireare satisfied.
Appears in 1 contract
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this 6.1 Subject to Section 6.1 6.2 hereof, if (the "Severance Payments"i) upon the termination of the Executive's employment is terminated following a Change in Control and during the term of this AgreementTerm, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death death, Disability or Disability more than six months following the Change in ControlRetirement, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 ("Severance Payments upon termination Payments") and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive's employment is terminated by the Company without Cause after the occurrence of a Potential Change in Control but before and prior to a Change in Control (whether or not a Change in Control ever occurs) and during such termination was at the term request or direction of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any a Person who has initiated a transaction entered into an agreement with the Company the consummation of which would result in constitute a Change in Control; and
Control or (ii) the termination would have been by the Executive terminates his employment for Good Reason or by after the Company without Cause if occurrence of a Potential Change in Control and prior to a Change in Control had occurred on the date of the Potential (whether or not a Change in ControlControl ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to _____________ [three in the Applicable Multiplier case of the Chief Executive Officer, Chief Operating Officer and Senior and Executive Vice Presidents and two in the case of other key executives] (or, if less, the number of full and partial years between the Date of Termination and the Executive's scheduled date of Retirement) times the sum of (i) the highest of the Executive's annual base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is based(without giving effect to any reduction in base salary, or such salary which reduction constitutes an event of Good Reason) or, if higher, in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (xA) the target average annual bonus for earned by the year Executive pursuant to the annual bonus or incentive plan maintained by the Company in which the Notice of Termination is provided or (y) the highest respect of the actual bonuses paid or payable to the Executive for any of the five three fiscal years completed ending immediately prior to the occurrence of fiscal year in which occurs the event or circumstance upon which the Notice Date of Termination is based(without giving effect to any reduction in bonus caused by an adverse change in the Executive's bonus plan participation, which adverse constitutes an event of Good Reason) or, if higher, immediately prior to the fiscal year in which occurs the Change in Control or (B) the Executive's target annual bonus for the fiscal year in which occurs the Date of Termination (without giving effect to any reduction in bonus caused by an adverse change in the Executive's bonus plan participation, which adverse change constitutes an event of Good Reason) or, if higher, the fiscal year in which occurs the Change in Control.
(B) For the ______________ [thirty-six in the case of the Chief Executive Officer, Chief Operating Officer and Senior and Executive Vice Presidents and twenty-four in the case of other key executives] month period (or, if less, the number of months between the Date of Termination and the Executive's scheduled date of Retirement) immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination (without giving effect to any reduction in benefits, which reduction constitutes an event of Good Reason) or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the Change in Control, at no greater cost to the Executive than the cost to the Executive immediately prior to such date; provided, however, that, unless the Executive consents to a different method (after taking into account the effect of such method on the calculation of "parachute payments" pursuant to Section 6.2 hereof), such health insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1 (B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the ______________ [thirty-six in the case of the Chief Executive Officer, Chief Operating Officer and Senior and Executive Vice Presidents and twenty-four in the case of other key executives] (or, if less, the number of months between the Date of Termination and the Executive's scheduled date of Retirement) month period following the Executive's termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the date on which the Change in Control occurs. If the Severance Payments shall be decreased pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Executive the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code. In the event the Executive receives health insurance benefits during the _______________ [thirty-six in the case of the Chief Executive Officer, Chief Operating Officer and Senior and Executive Vice Presidents and twenty-four in the case of other key executives]-month period following the Date of Termination pursuant to the foregoing provisions of this Section 6.1(B), the Executive and his or her dependents shall continue to be eligible for health insurance benefits for up to an additional sixty (60) months, provided however, that no benefits will be provided (i) if health insurance benefits are available to the Executive through another employer during such period, or (ii) after the insured individual reaches age 65. Such health insurance benefits shall be substantially similar to, and have no greater cost to the Executive than those in effect for the [NUMBER]-month period following the Date of Termination.
(C) Notwithstanding any provision of any bonus planannual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum product of (i) any the target bonus amount to which has been allocated or awarded to the Executive for a completed fiscal would have been entitled under the Company's annual incentive plan in respect of the year or other measuring period preceding in which the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) occurs and (ii) a pro rata portion fraction, the numerator of which shall be the number of months (including fractions thereof) from the first day of the fiscal year during which the Date of Termination occurs to the Date of Termination Termination, and the denominator of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a which shall be twelve (12) month period after ); provided, however, that if the Date of Termination if Executive has one occurs during the same year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyChange in Control, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable payment under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to offset by any payments received under the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any Company's annual incentive plan in connection with such benefits actually received by the Executive shall be reported to the Company by the ExecutiveChange in Control.
(AD) Whether or not In addition to the retirement benefits to which the Executive becomes is entitled to the Severance Payments, if under each Pension Plan or any of the Total Payments will be subject to the Excise Taxsuccessor plan thereto, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executivea lump sum amount, after deduction of any Excise Tax on the Total Payments and any federalin cash, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess sum of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the pay related credits the Executive in connection with a Change in Control or would have accrued under the Executive's termination Salaried Employees' Retirement Plan of employment▇▇▇▇▇▇ Industries, whether pursuant to Inc. and the terms of this Agreement or any other plan▇▇▇▇▇▇ Industries, arrangement or agreement with the CompanyInc., any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, Supplemental Excess Defined Benefit Plan; and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, Matching Contributions the Executive shall be deemed to pay federal income taxes at would have accrued under the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made▇▇▇▇▇▇ Industries, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of paymentInc., Savings and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive Stock Ownership Plan and the Company shall each reasonably cooperate with ▇▇▇▇▇▇ Industries, Inc., Supplemental Excess Defined Contribution Plan (the other plans referred to in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of subsections (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code"The Plans"). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.,
Appears in 1 contract
Sources: Management Continuity Agreement (Cooper Industries LTD)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this 6.1 Subject to Section 6.1 6.2 hereof, if (the "Severance Payments"i) upon the termination of the Executive's ’s employment is terminated following a Change in Control and during the term of this AgreementTerm, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death death, Disability or Disability more than six months following the Change in ControlRetirement, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments upon termination Payments”) and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's ’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause after the occurrence of a Potential Change in Control but before and prior to a Change in Control (whether or not a Change in Control ever occurs) and during such termination was at the term request or direction of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any a Person who has initiated a transaction entered into an agreement with the Company the consummation of which would result in constitute a Change in Control; and
Control or (ii) the termination would have been by the Executive terminates his employment for Good Reason or by after the Company without Cause if occurrence of a Potential Change in Control and prior to a Change in Control had occurred on the date of the Potential (whether or not a Change in ControlControl ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to [ ] (or, if less, the Applicable Multiplier number of full and partial years between the Date of Termination and the Executive’s scheduled date of Retirement) times the sum of (i) the highest of the Executive's ’s base annual base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is based(without giving effect to any reduction in base annual salary, or such salary which reduction constitutes an event of Good Reason) or, if higher, in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (xA) the average annual bonus earned by the Executive pursuant to the annual bonus or incentive plan maintained by the Company in respect of the three fiscal years ending immediately prior to the fiscal year in which occurs the Date of Termination (without giving effect to any reduction in bonus caused by an adverse change in the Executive’s bonus plan participation, which adverse constitutes an event of Good Reason) or, if higher, immediately prior to the fiscal year in which occurs the Change in Control or (B) the Executive’s target annual bonus for the fiscal year in which occurs the Date of Termination (without giving effect to any reduction in bonus caused by an adverse change in the Executive’s bonus plan participation, which adverse change constitutes an event of Good Reason) or, if higher, the fiscal year in which occurs the Change in Control.
(B) For the [ ] month period (or, if less, the number of months between the Date of Termination and the Executive’s scheduled date of Retirement) immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination (without giving effect to any reduction in benefits, which reduction constitutes an event of Good Reason) or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the Change in Control, at no greater cost to the Executive than the cost to the Executive immediately prior to such date; provided, however, that, unless the Executive consents to a different method (after taking into account the effect of such method on the calculation of “parachute payments” pursuant to Section 6.2 hereof), such health insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1 (B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the [ ] (or, if less, the number of months between the Date of Termination and the Executive’s scheduled date of Retirement) month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the date on which the Change in Control occurs. If the Severance Payments shall be decreased pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Executive the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code. In the event the Executive receives health insurance benefits during the [ ] month period following the Date of Termination pursuant to the foregoing provisions of this Section 6.1(B), the Executive and his or her dependents shall continue to be eligible for health insurance benefits for up to an additional sixty (60) months, provided however, that no benefits will be provided (i) if health insurance benefits are available to the Executive through another employer during such period, or (ii) after the insured individual reaches age 65. Such health insurance benefits shall be substantially similar to, and have no greater cost to the Executive than those in effect for the [ ] month period following the Date of Termination. Any benefits provided pursuant to this Section 6.1(B) in any one taxable year will not affect the amount of benefits to be provided in any other taxable year and no such benefits may be liquidated or exchanged for any other benefit. In the event any such benefits constitute reimbursement for expenses, such reimbursement must be made before the end of the calendar year following the calendar year in which the Notice expense was incurred. In the event any such benefits constitute a deferral of Termination is provided or (y) the highest compensation under Section 409A of the actual bonuses paid or payable to Code, such benefits will only be provided if the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is basedhas incurred a Separation from Service.
(BC) Notwithstanding any provision of any bonus planannual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum product of (i) any the target bonus amount to which has been allocated or awarded to the Executive for a completed fiscal would have been entitled under the Company’s annual incentive plan in respect of the year or other measuring period preceding in which the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) occurs and (ii) a pro rata portion fraction, the numerator of which shall be the number of months (including fractions thereof) from the first day of the fiscal year during which the Date of Termination occurs to the Date of Termination Termination, and the denominator of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a which shall be twelve (12) month period after ); provided, however, that if the Date of Termination if Executive has one occurs during the same year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyChange in Control, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable payment under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced offset by any payments received under the Company’s annual incentive plan in connection with such Change in Control.
(D) In addition to the extent comparable retirement benefits are actually received by to which the Executive is entitled under each Pension Plan or made available any successor plan thereto, the Company shall pay the Executive a lump sum amount, in cash, equal to the sum of (i) the contributions that would have been made by the Company to the Executive’s account in the ▇▇▇▇▇▇ Retirement Savings and Stock Ownership Plan; and (ii) the pay-related credits that would have been made to the Executive’s account in the ▇▇▇▇▇▇ Supplemental Executive without cost Retirement Plan (the plans referred to in subsections (i) and (ii) hereof, “The Plans”), in each case, during the above[ ] month (or, if less, the number of months between the Date of Termination and the Executive’s scheduled date of Retirement) period immediately following the Executive’s Date of Termination based upon: (1) the terms and provisions of The Plans as in effect immediately prior to the Change in Control; (2) the lump sum payment set forth in Section 6.1(A) hereof, which lump sum shall be deemed to have been earned ratably over such period; and (3) the assumption that the Executive was making the maximum allowable pre-referenced tax contributions under The Plans during such period. In addition.
(E) The Company shall provide the Executive with outplacement services suitable to the Executive’s position for a period of one year or, any such benefits actually received if earlier, until the first acceptance by the Executive of an offer of employment.
(F) ▇▇▇▇▇▇ shall continue to maintain officers’ indemnification insurance for the Executive for a period of five years following the Date of Termination, the terms and conditions of which shall be reported no less favorable than the terms and conditions of the officers’ indemnification insurance maintained by ▇▇▇▇▇▇ for the Executive immediately prior to the Company by date on which the ExecutiveChange in Control occurs.
(G) No payment will be made pursuant to this Section 6.1 unless Executive has incurred a Separation from Service, and the aggregate amount of payments payable pursuant to this Section 6.1 constituting a deferral of compensation (for purposes of Section 409A of the Code) that are provided in the six-month period following such Separation from Service shall not exceed the amount set forth in Treasury Regulation §1.409A-1(b)(9)(iii)(A). To the extent the aggregate amount of such payments would exceed such amount, such excess shall be deferred until the first day of the seventh month following such Separation from Service. If any payments (or portion thereof) are required to be deferred pursuant to the preceding sentence, the order of deferred payments shall be the payments specified in paragraphs (E), (D), (C), and (A) respectively.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits benefit received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, the Executive’s employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the "Severance Payments, being hereinafter called “Total Payments"), shall ”) will be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits subject (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and then, subject to the provisions of subsection (iiB) of this Section 6.2, the value Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction of any noncash benefits or Excise Tax on the Total Payments and any deferred payment or benefit federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be determined by equal to the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the CodeTotal Payments. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's ’s residence on the Date of Termination (or such other time as if there is hereinafter describedno Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of this Section 6.2), net of the maximum reduction in federal income taxes tax which could be obtained from deduction of such state and local taxes.
(CB) In the event that the amount of the Total Payments does not exceed 110% of the largest amount that would result in no portion of the Total Payments being subject to the Excise Tax (the “Safe Harbor”), then subsection (A) of this Section 6.2 shall not apply and the noncash Severance Payments shall first be reduced (if necessary, to zero), and the cash Severance Benefits shall thereafter be reduced (if necessary, to zero) so that the amount of the Total Payments is equal to the Safe Harbor.
(C) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute payments” within the meaning of section 280G(b)(2) of the Code, unless in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, ▇▇▇▇▇▇’▇ independent auditor (the “Auditor”), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments” within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its calculation of the amounts referred to in this Section 6.2(C) and such supporting materials as are reasonably necessary for the Executive to evaluate the Company’s calculations. If the Executive disputes the Company’s calculations (in whole or in part), the reasonable opinion of Tax Counsel with respect to the matter in dispute shall prevail.
(D) In the event that (i) amounts are paid to the Executive pursuant to subsection (A) of this Section 6.2, (ii) the Excise Tax is subsequently finally determined to be less than the amount taken into account hereunder at in calculating the time Gross-Up Payment, and (iii) after giving effect to such redetermination, the Severance Payments are to be reduced pursuant to subsection (B) of termination of the Executive's employment (or such other time as is hereinafter described)this Section 6.2, the Executive shall repay to the Company, at within five (5) business days following the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax and employment taxes imposed on the Gross-Up Payment being repaid by the Executive Executive), to the extent that such repayment results in (i) no portion of the Total Payments being subject to the Excise Tax and (ii) a dollar-for-dollar reduction in Excise Tax or a the Executive’s taxable income and wages for purposes of federal, state or and local income tax deductionand employment taxes) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(31274(b)(2)(B) of the Code. In the event that (x) the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's ’s employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment)) and (y) after giving effect to such redetermination, the Severance Payments should not have been reduced pursuant to subsection (B) of this Section 6.2, the Company shall make an additional Gross-Up Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to which the Company had not previously made a Gross-Up Payment (plus any interest, penalties or addition additions payable by the Executive with respect to such excessexcess and such portion) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of following the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.time
Appears in 1 contract
Sources: Management Continuity Agreement (Cooper Industries LTD)
Severance Payments. 6.1. The 6.1 If the Executive's employment terminates following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon and Section 6.2, in addition to any payments and benefits to which the termination Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive's employment is terminated by the Company without Cause prior to a Change in Control which actually occurs during the term of this Agreement and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment with Good Reason prior to a Change in Control which actually occurs during the term of this Agreement and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive's employment is terminated by the Company without Cause prior to a Change in Control and the Executive reasonably demonstrates that such termination is otherwise in connection with or in anticipation of a Change in Control which actually occurs during the term of this Agreement. For purposes of any determination regarding the applicability of the immediately preceding sentence, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) any position taken by the Executive without Good Reason. The shall be presumed to be correct unless the Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before a Change in Control and during the term of this Agreement, in addition establishes to the payments Committee by clear and benefits described in Section 5 hereof, if:
(i) the termination convincing evidence that such position is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in Controlnot correct.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier three times the sum of (i) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, or such based and the Executive's annual base salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the product of (a) the amount determined under clause (i) above and (b) the higher of (x) the target average percentage of base salary paid to or earned by the Executive pursuant to any annual bonus for or incentive plan maintained by the year Company in respect of the three years immediately preceding that in which the Date of Termination occurs or the average percentage of base salary paid to or earned by the Executive in respect of the three years immediately preceding that in which the Change in Control occurs.
(B) For the thirty-six (36) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits and Company-provided perquisites (including, but not limited to a Company car and club membership dues), in each case substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination is (without giving effect to any amendment to such benefits or perquisites made subsequent to a Change in Control which amendment adversely affects in any manner the Executive's entitlement to or the amount of such benefits); PROVIDED, HOWEVER, that, such health insurance benefits shall be provided through a third-party insurer. Benefits and perquisites otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent comparable benefits or (y) the highest of the actual bonuses paid perquisites are actually received by or payable made available to the Executive for without cost during the thirty-six (36) month period following the Executive's termination of employment (and any of the five years completed immediately prior such benefits and perquisites actually received by or made available to the occurrence of Executive shall be reported to the event or circumstance upon which Company by the Notice of Termination is basedExecutive).
(BC) Notwithstanding any provision of any bonus planannual or long-term incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date or otherwise has not yet been paid (pursuant to Section 5.2 hereof or otherwise) paid, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus incentive compensation awards to the Executive for all then uncompleted periods under any such plan, calculated as to each such award by multiplying the award that the Executive would have earned on the last day of the performance award period, assuming the achievement achievement, at the target level, of the target individual and corporate performance level within the performance range goals established with respect to such award award, by the fraction obtained by dividing the number of full months and basing such pro-rata portion upon the any fractional portion of the a month during such performance award period that has elapsed through the Date of Termination by the total number of months contained in such performance award period.
(D) In addition to the retirement benefits to which the Executive is entitled under each Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the excess of (i) the actuarial equivalent of the aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the date (but in no event earlier than the third anniversary of the Date of Termination) as of which the actuarial equivalent of such annuity is greatest) which the Executive would have accrued under the terms of all Pension Plans (without regard to any amendment to any Pension Plan made subsequent to a Change in Control and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of retirement benefits thereunder), determined as if the Executive were fully vested thereunder and had accumulated (after the Date of Termination) thirty-six (36) additional months of service credit thereunder and had been credited under each Pension Plan during such period with compensation at the higher of (i) the Executive's compensation (as defined in such Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or (ii) the Executive's compensation (as defined in such Pension Plan) during the twelve (12) months immediately preceding the Change in Control, over (ii) the actuarial equivalent of the aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the date (but in no event earlier than the Date of Termination) as of which the actuarial equivalent of such annuity is greatest) which the Executive had accrued pursuant to the provisions of the Pension Plans as of the Date of Termination;. For purposes of this Section 6.1(D), "actuarial equivalent" shall be determined using the same assumptions utilized under the Stone Container Corporation Salaried Employees Retirement Plan immediately prior to the Date of Termination.
(CE) For (i) a twelve (12) month period after If the Executive would have become entitled to benefits under the Company's post-retirement health care or life insurance plans, as in effect immediately prior to the Change in Control or the Date of Termination if Executive has one year or less (whichever is more favorable to the Executive), had the Executive's employment terminated at any time during the period of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period months after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with life, disability, accident and such post-retirement health care or life insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence dependents commencing on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following date on which such coverage would have first become available and (ii) the date on which the Executive notifies the Company that he is subject to the Excise Tax and benefits described in subsection (iiB) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.6.1
Appears in 1 contract
Severance Payments. 6.1. 6.1 The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death death, Disability or Disability more than six months following the Change in ControlRetirement, or (iii) by the Executive without Good Reason. The Company shall pay For purposes of the Executive the Severance Payments upon immediately preceding sentence, if a termination of the Executive's employment occurs prior to a Change in Control, but following a Potential Change in Control but before in which a Person has entered into an agreement with Energy East Corporation ("Energy East") the consummation of which will constitute a Change in Control, such termination shall be deemed to have followed a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
have been (i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause, if the Executive's employment is terminated without Cause at the direction of such Person, or (ii) by the Executive with Good Reason, if a the Executive terminates his employment with Good Reason and the act (or failure to act) which constitutes Good Reason occurs following such Potential Change in Control had occurred on and at the date direction of the Potential Change in Controlsuch Person.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier two (2) times the sum of (i) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such the Executive's annual base salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (x) (the target bonus for amount paid to the Executive pursuant to the Company's Annual Executive Incentive Plan, or any successor annual executive incentive compensation plan, as the case may be, in the fiscal year preceding that in which the Notice Date of Termination is provided occurs, or (y) the highest of average amount so paid in the actual bonuses paid or payable to the Executive for any of the five three fiscal years completed immediately prior to the occurrence of the event or circumstance upon preceding that in which the Notice of Termination is basedChange in Control occurs.
(B) Notwithstanding any provision of any bonus planthe Company's Annual Executive Incentive Plan or successor annual executive incentive compensation plan (but provided that there shall be no duplication of the benefits under such plans), the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under the Annual Executive Incentive Plan, or any successor annual executive incentive compensation plan, as the case may be, but has not yet been either (x) paid (pursuant to Section 5.2 hereof or otherwise) or (y) deferred pursuant to the Deferred Compensation Plan for Salaried Employees, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all any contingent bonus awards incentive compensation award to the Executive for all any uncompleted periods fiscal year under the Annual Executive Incentive Plan, or any successor annual executive incentive compensation plan, calculated as to each such award by assuming the achievement in accordance with Article XI (A) (iii) of the target performance level within Annual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan.
(C) In determining the performance range established with respect retirement benefits to which the Executive is entitled under the Company's Supplemental Executive Retirement Plan (or any successor plan), the Executive shall be given an additional two (2) years of service credit at the Executive's highest annual rate of compensation during the twelve (12) months immediately preceding the Date of Termination and shall be deemed to be two (2) years older than he is; such award benefits shall be determined without regard to any amendment to the Supplemental Executive Retirement Plan (or any successor plan) made subsequent to a Change in Control and basing such pro-rata portion upon the portion of the award period that has elapsed as of on or prior to the Date of Termination;, which amendment adversely affects in any manner the computation of retirement benefits thereunder.
(CD) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C6.1(D) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the abovetwenty-referenced period. In addition, four (24) month period following the Executive's termination of employment (and any such benefits actually received by the Executive shall be reported to the Company by the Executive). If the benefits provided to the Executive under this Section 6.1(D) shall result in a Gross-Up Payment, pursuant to Section 6.2, and these Section 6.1(D) benefits are thereafter reduced pursuant to the immediately preceding sentence because of the receipt of comparable benefits, the Gross-Up Payment shall be recalculated so as to reflect that reduction, and the Executive shall refund to the Company an amount equal to any calculated reduction in the Gross-Up Payment, but only if and to the extent, the Executive receives a refund of any Excise Tax previously paid to the Executive pursuant to Section 6.2 hereof.
(AE) Whether or not For a period equal to the lesser of (i) the period from the Date of Termination to the date on which the Executive becomes entitled to commences employment with another employer or (ii) the Severance Payments, if any twenty-four (24) month period immediately following the Date of the Total Payments will be subject to the Excise TaxTermination, the Company shall pay arrange to provide the Executive with outplacement counseling; provided, however, that the aggregate cost of such counseling shall not exceed five percent (5%) of the Executive's annual base salary in effect immediately prior to the Executive an additional amount occurrence of the event or circumstance upon which the Notice of Termination is based.
6.2 (A) Anything in this Agreement to the "Gross-Up Payment") such contrary notwithstanding, in the event it shall be determined that the net amount retained any payment or distribution by the Executive, after deduction of any Excise Tax on Company to or for the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess benefit of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes Executive on account of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employmentControl, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in otherwise (a Change in Control or any Person affiliated with the Company or such Person (the "Total PaymentsPayment"), shall would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment ("Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes and Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of imposed upon the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the retains an amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable equal to the Excise Tax and federal, state and local income tax imposed on upon the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of If the Executive's ’s employment is terminated on or within two years following a Change in Control and during the term of this AgreementControl, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The , the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments upon termination Payments”), and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's ’s employment shall be deemed to have been terminated following a Potential Change in Control but before a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control had occurred on (whether or not a Change in Control ever occurs) and such termination was at the date request or direction of the Potential a Person who has indicated an intention or taken steps reasonably calculated to effect a Change in Control, or (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person. Notwithstanding any other provision of this Agreement to the contrary, the Severance Payments shall be payable to the Executive if and only if the Executive signs and does not revoke a release of claims agreement in a form provided by the Company (the “Release”), and the Release becomes effective and irrevocable no later than the 60th day following the Date of Termination. If these conditions are not satisfied, then Executive will forfeit any right to the Severance Payments. To become effective and irrevocable, the Release must be executed by the Executive and any revocation periods (as required by statute, regulation, or otherwise) must have expired without Executive having revoked the Release.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay to the Executive Executive, on the first day of the seventh month following the month in which occurs the Executive’s Separation from Service, a lump sum severance payment, in cash, equal to the Applicable Multiplier [one and one half]/[two]/[two and one half] times the sum of (i) the highest of the Executive's annual ’s base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is basedor, or such salary if higher, in effect immediately prior to the Change in Control, first occurrence of an event or such salary in effect immediately prior to a Potential Change in Controlcircumstance constituting Good Reason, and (ii) the higher Executive’s target annual bonus pursuant to any annual bonus or incentive plan maintained by the Company in respect of (x) the target bonus for the fiscal year in which occurs the Notice Date of Termination is provided or, if higher, the fiscal year in which occurs the first event or (ycircumstance constituting Good Reason. The amount payable pursuant to this Section 6.1(A) the highest shall be in lieu of the actual bonuses paid any cash severance or salary continuation benefit payable to the Executive for under any other plan, policy or program of the Company or any of the five years completed immediately prior to the occurrence of the event or circumstance upon its Affiliates (for which the Notice Executive shall be deemed ineligible if amounts are payable hereunder) or any written employment agreement between the Executive and the Company or any of Termination is basedits Affiliates.
(B) Subject to the limitations specified below in this Section 6.1(B), for the 18 month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason. The Company will provide these life and accident insurance benefits at no greater cost to the Executive than the cost to the Executive immediately prior to the date or occurrence specified in the first sentence of this Section 6.1(B). The Company will either pay directly, or reimburse the Executive for, the entire cost otherwise payable by the Executive for these health insurance benefits. Unless the Executive consents to a different method (after taking into account the effect of such method on the calculation of “parachute payments” pursuant to Section 6.2 hereof), such life, accident and health insurance benefits shall be provided through a third-party insurer and the premiums for that insurance (to the extent paid directly by the Company or reimbursed by the Company to the Executive) will be included in the Executive’s income for tax purposes to the extent required by applicable law. The Company may withhold from any such direct payment or reimbursement an amount sufficient to cover the amount of required withholding. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive by another employer during the 18 month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. Notwithstanding anything in this Section 6.1(B) to the contrary, with respect to the first six months following the Executive’s Separation from Service, if the premiums payable by the Company for group term life insurance on the Executive’s life exceeds the amount of the “limited payments” exemption set forth in Section 1.409A-1(b)(9)(v)(B) of the Income Tax Regulations (or any successor provision thereto), then, to the extent required in order to comply with Code Section 409A, the Executive, in advance, shall pay to the Company an amount equal to the premiums for any such life insurance policy, other than with respect to life insurance coverage to which the Executive would be entitled independent of this Agreement. Promptly following the end of such six month period, the Company will make a cash payment to the Executive equal to the difference between the aggregate amount paid by the Executive for such coverage and the amount that the Executive would have paid for such life insurance coverage if such cost had been determined pursuant to this Section 6.1(B) other than the preceding sentence.
(C) Unless payable to the Executive under the terms of any bonus annual incentive plan, the Company shall pay to the Executive Executive, on the first day of the seventh month following the month in which occurs the Executive’s Separation from Service, a lump sum amount, in cash, equal to the sum of (i) any unpaid annual bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to Section 5.2 hereof or otherwise) a subsequent date, and (ii) a pro rata portion of the annual bonus awarded to the Executive for the fiscal year in which the Date of Termination occurs, calculated by multiplying the award that the Executive would have earned on the last day of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by fiscal year, assuming the achievement achievement, at the target level, of the target individual and corporate performance level within the performance range goals established with respect to the annual bonus, by the fraction obtained by dividing the number of days during such award fiscal year through the Date of Termination by 365. Notwithstanding the forgoing, if and basing to the extent the Executive had elected to defer receipt of any such pro-rata portion upon unpaid annual bonus, and if the portion of the award period that has elapsed Executive’s deferral election is irrevocable as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date Termination for purposes of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyCode Section 409A, the Company amount calculated above shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior be credited to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable ’s account under the policy are sufficient applicable deferred compensation plan in lieu of being distributed directly to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(AD) Whether The benefits then accrued by or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay payable to the Executive an additional amount (under the "Gross-Up Payment") Company’s 2010 Supplemental Executive Retirement Plan, 2010 Pension Parity Plan, Savings Parity Plan or any successor to any such that plan, and the net amount retained benefits then accrued by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal or payable to the excess Executive under any other nonqualified plan providing supplemental retirement or deferred compensation benefits shall become fully vested as of the Total Payments over Date of Termination notwithstanding any eligibility conditions that would otherwise apply with respect to such benefits and the payment provided for by this Section 6.2benefit, as so vested, will be paid in accordance with the terms of the applicable plan or program.
(BE) For purposes of determining whether any of The Company shall reimburse the Total Payments will be subject Executive for expenses incurred for outplacement services suitable to the Excise Tax and Executive’s position for a period of twelve months following the Executive’s Separation from Service (or, if earlier, until the first acceptance by the Executive of an offer of employment) in an amount not exceeding $50,000.
6.2 Notwithstanding any other provisions of such Excise Taxthis Agreement, (i) in the event that any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, the Executive’s employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the "Severance Payments, being hereinafter called “Total Payments"”) would be subject (in whole or part), to the Excise Tax, the Total Payments shall be reduced to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments) is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments).
(A) The reduction of Total Payments under this Section 6.2, if applicable, shall be treated made by first reducing any Total Payments due under Section 6.1(A) hereof, and then any Total Payments due under Section 6.1(C) hereof, and then any Total Payments due under Section 6.1(E) hereof, and then any other Total Payments due in the following order: (i) reduction of cash Total Payments, (ii) cancellation of accelerated vesting of performance-based equity awards (based on the reverse order of the date of grant), (iii) cancellation of accelerated vesting of other equity awards (based on the reverse order of the date of grant), and (iv) reduction of any other Total Payments due to the Executive (with benefits or payments in any group having different payment terms being reduced on a pro-rata basis).
(B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as "parachute payments" (not to constitute a “payment” within the meaning of section 280G(b)(2Section 280G(b) of the CodeCode shall be taken into account, (ii) unlessno portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the Company's independent auditors and reasonablyaccounting firm (the “Auditor”) which was, acceptable immediately prior to the ExecutiveChange in Control, such payments or benefits the Company’s independent auditor (in whole or in partA) do does not constitute a “parachute payments, payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of section Section 280G(b)(4)(A) of the Code, and all "excess parachute payments" ) or (within the meaning of section 280G(b)(1B) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent constitutes reasonable compensation for services actually rendered (rendered, within the meaning of section Section 280G(b)(4)(B) of the Code), or are otherwise not subject in excess of the Base Amount allocable to the Excise Taxsuch reasonable compensation, and (iiiii) the value of any noncash benefits non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditors Auditor in accordance with the principles of actions Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this sectionAgreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counselTax Counsel, auditors the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.46.3 The payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made on the first day of the seventh month following the month in which occurs the Executive’s Separation from Service. At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4 The Company also shall pay to reimburse the Executive for all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such issue hereunder relating to the termination or of the Executive’s employment (provided that the Executive prevails on at least one material claim disputed by the Company), in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement (provided that the Executive prevails on at least one material claim disputed by the Company) or in connection with any tax audit or proceeding to the extent attributable to the application of section Section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's ’s written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require, or if required in order to comply with Section 409A of the Code, the first day of the seventh month following the month in which occurs the Executive’s Separation from Service; provided that no reimbursement pursuant to this Section 6.4 shall be made later than the end of the calendar year following the calendar year in which such fee or expense was incurred.
6.5 Notwithstanding any other provision of this Agreement, the Executive’s rights to special vesting of stock options, restricted shares, restricted stock units and performance shares that were awarded to the Executive prior to the Effective Date (the “Prior Awards”) as those rights were set forth in the Prior Agreement shall continue in effect on the same terms and conditions that governed such vesting under the Prior Agreement, as if that Prior Agreement continued in effect and this Agreement had not been entered into by the parties, except that, to the extent any such vesting of the Prior Awards was subject to the Executive’s continued compliance with the covenants set forth in Section 4.2 of the Prior Agreement, such vesting will instead be subject to the Executive’s continued compliance with the covenants set forth in Section 4.2 of this Agreement.
Appears in 1 contract
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death death, Disability or Disability more than six months following the Change in ControlRetirement, or (iii) by the Executive without Good Reason. The Company shall pay For purposes of the Executive the Severance Payments upon immediately preceding sentence, if a termination of the Executive's employment occurs prior to a Change in Control, but following a Potential Change in Control but before in which a Person has entered into an agreement with the Company the consummation of which will constitute a Change in Control, such termination shall be deemed to have followed a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
have been (i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause, if the Executive's employment is terminated without Cause at the direction of such Person, or (ii) by the Executive with Good Reason, if a the Executive terminates his employment with Good Reason and the act (or failure to act) which constitutes Good Reason occurs following such Potential Change in Control had occurred on and at the date direction of the Potential Change in Controlsuch Person.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump lump-sum severance payment, in cash, equal to the Applicable Multiplier two (2) times the sum of (i) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such the Executive's annual base salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (x) the target bonus amount paid to the Executive pursuant to the Company's Annual Executive Incentive Compensation Plan, Annual Executive Incentive Plan, or any successor annual executive incentive compensation plan, as the case may be, for the fiscal year preceding that in which the Notice Date of Termination is provided occurs, or (y) the highest of average amount so paid for the actual bonuses paid or payable to the Executive for any of the five three fiscal years completed immediately prior to the occurrence of the event or circumstance upon preceding that in which the Notice of Termination is basedChange in Control occurs.
(B) Notwithstanding any provision of the Company's Annual Executive Incentive Plan or successor annual executive incentive compensation plan (but provided that there shall be no duplication of the benefits under any bonus plansuch plans), the Company shall pay to the Executive a lump lump-sum amount, in cash, equal to the sum of (i) any bonus amount incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under the Annual Executive Incentive Plan, or any successor annual executive incentive compensation plan, as the case may be, but has not yet been either (x) paid (pursuant to Section 5.2 hereof or otherwise) or (y) deferred pursuant to the Deferred Compensation Plan for Salaried Employees, and (ii) a pro pro-rata portion to the Date of Termination of the aggregate value of all any contingent bonus awards incentive compensation award to the Executive for all any uncompleted periods fiscal year under the Annual Executive Incentive Plan or any successor annual executive incentive compensation plan, calculated as to each such award by assuming the achievement in accordance with Article XI(A)(iii) of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of TerminationAnnual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan;
(C) For In determining the retirement benefits to which the Executive is entitled under the Company's Supplemental Executive Retirement Plan, the Executive shall be given an additional two (i2) a years of service credit at the Executive's highest annual rate of compensation during the twelve (12) month period after months immediately preceding the Date of Termination if and shall be deemed to be two (2) years older than he is; such benefits shall be determined without regard to any amendment to the Supplemental Executive has one year Retirement Plan made subsequent to a Change in Control and on or less prior to the Date of continuous service as an employee Termination, which amendment adversely affects in any manner the computation of the Company, retirement benefits thereunder.
(iiD) For a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C6.1(D) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the abovetwenty-referenced period. In addition, four (24) month period following the Executive's termination of employment (and any such benefits actually received by the Executive shall be reported to the Company by the Executive). If the benefits provided to the Executive under this Section 6.1(D) shall result in a Gross-Up Payment pursuant to Section 6.2, and these Section 6.1(D) benefits are thereafter reduced pursuant to the immediately preceding sentence because of the receipt of comparable benefits, the Gross-Up Payment shall be recalculated so as to reflect that reduction, and the Executive shall refund to the Company an amount equal to any calculated reduction in the Gross-Up Payment, but only if, and to the extent, the Executive receives a refund of any Excise Tax previously paid by the Executive pursuant to Section 6.2 hereof.
(E) For a period equal to the lesser of (i) the period from the Date of Termination to the date on which the Executive commences employment with another employer or (ii) the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive with outplacement counseling; provided, however, that the aggregate cost of such counseling shall not exceed five percent (5%) of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(A) Whether Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or not distribution by the Company to or for the benefit of the Executive becomes entitled to the Severance Payments, if any on account of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employmentControl, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in otherwise (a Change in Control or any Person affiliated with the Company or such Person (the "Total PaymentsPayment"), shall would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment ("Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes and Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of imposed upon the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the retains an amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable equal to such reduction the Excise Tax imposed upon the Payments.
(plus that portion B) Subject to the provisions of the Section 6.2(C) hereof, all determinations required to be made under this Section 6.2, including whether a Gross-Up Payment attributable to is required and the Excise Tax and federal, state and local income tax imposed on the amount of such Gross-Up Payment being repaid and the assumptions to be used in arriving at such determinations, shall be made by the Executive Company's principal outside accounting firm (the "Accounting Firm") which shall provide detailed supporting calculations both to the extent Board and the Executive within fifteen (15) business days of the Date of Termination and/or such earlier date(s) as may be requested by the Company or the Executive (each such date and the Date of Termination shall be referred to as a "Determination Date", for purposes of this Section 6.2(B) and Section 6.3 hereof). All fees and expenses of the Accounting Firm shall be borne solely by the Company. The initial Gross-Up Payment, if any, as determined pursuant to this Section 6.2(B), shall be paid by the Company to the Executive within five (5) days of the receipt of the Accounting Firm's determination. If the Accounting Firm determines that such repayment results in a reduction in no Excise Tax or is payable by the Executive, it shall furnish the Executive with a federal, state or local written opinion that failure to report the Excise Tax on the Executive's applicable federal income tax deductionreturn would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm under this Section 6.2(B) plus interest on shall be binding upon the amount Company and the Executive. As a result of such repayment the uncertainty in the application of Section 4999 of the Code at the rate provided in section 1274(b)(2)(3) time of the Codeinitial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 6.2(C) and the Executive thereafter is required to make a payment of any Excise Tax is determined to exceed Tax, the Accounting Firm shall determine the amount taken into account hereunder at the time of the termination Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive's employment .
(C) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of an Underpayment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the twenty-four (24) day period following the date on which he gives such notice to the Company (or such other shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the Company relating to such claim,
(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time as is hereinafter describedto time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to contest such claim, and
(iv) permit the Company to participate in any proceeding relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including by reason additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of any such representation and payment of costs and expenses. Without limitation on the existence or amount foregoing provisions of which cannot be determined at the time of the Gross-Up Paymentthis Section 6.2(C), the Company shall make an additional Gross-Up Payment control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such excess (plus claim and may, at its sole option, either direct the Executive to pay the tax claimed and ▇▇▇ for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and ▇▇▇ for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or addition payable by with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such excesscontested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(D) at If, after the time that receipt by the Executive of an amount advanced by the Company pursuant to Section 6.2(C) hereof, the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 6.2(C) hereof) promptly pay to the Company the amount of such excess refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 6.2(C) hereof, a determination is finally determined. The made that the Executive shall not be entitled to any refund with respect to such claim and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which does not notify the Executive notifies the Company that he is subject in writing of its intent to the Excise Tax and (ii) twenty days contest such denial of refund prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof expiration of twenty-four (other than Section 6.1(C))24) days after such determination, in Section 6.2 hereof, and in Section 5.5 hereof then such advance shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments canforgiven and shall not be finally determined on or before such day, the Company shall pay required to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)repaid.
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Sources: Severance Agreement (New York State Electric & Gas Corp)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of If the Executive's ’s employment is terminated either during the Initial Term or otherwise following a Change in Control and during within two (2) years after a Change in Control (provided that such termination of employment constitutes a “separation from service” within the term meaning of this AgreementSection 409A of the Code), in addition to the payments and benefits described in Section 5 hereof, unless such termination is either event other than (iA) by the Company for Cause, (iiB) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments upon termination Payments”) and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's ’s employment shall be deemed to have been terminated following a Potential Change in Control but before a Change in Control and during by the term of this AgreementCompany without Cause or by the Executive with Good Reason, in addition to the payments and benefits described in Section 5 hereof, if:
if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination is initiated, caused was at the request or directed by any direction of a Person who has initiated a transaction entered into an agreement with the Company the consummation of which would result in constitute a Change in Control; and
, or (ii) the termination would have been by the Executive terminates his employment for Good Reason or by the Company without Cause if prior to a Change in Control had occurred on (whether or not a Change in Control ever occurs) and the date circumstance or event which constitutes Good Reason occurs at the request or direction of such Person. For purposes of any determination regarding the applicability of the Potential Change in Controlimmediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that such position is not correct.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier two (2) times the sum of (i) the Executive’s highest of the Executive's annual base salary as in effect during the three-year period ending immediately prior to the occurrence Date of Termination (including, if the Date of Termination occurs within three years after the Effective Date, salary paid in respect of employment by Temple-Inland or its Affiliates during such three-year period) and (ii) the Executive’s target annual bonus pursuant to any annual bonus or incentive plan maintained by the Company in respect of the event or circumstance upon fiscal year in which occurs the Notice Date of Termination is based(or, if higher, the greatest actual annual bonus in respect of any of the three preceding fiscal years (including as applicable, with respect to years ending at or such salary in effect before the Effective Date, annual bonuses paid by Temple-Inland)).
(B) For the two-year period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, accidental death and dismemberment, medical and dental benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Change in ControlDate of Termination or, or such salary in effect if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date or occurrence; provided, however, that such health and welfare benefits shall be provided through an arrangement that satisfies the requirements of Sections 105 and 106 of the Code. To the extent that health and welfare benefits of the same type are received by or made available to the Executive during the two-year period following the Executive’s Date of Termination (which such benefits received by or made available to the Executive shall be reported by the Executive to the insurance company or other appropriate party in accordance with any applicable coordination of benefits provisions), the benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be made secondary to such benefits; provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason.
(C) Vesting shall accelerate and restrictions shall lapse on all unvested or restricted equity or equity-based awards in respect of either the Company or Temple-Inland held by the Executive as of the Date of Termination and each stock option to acquire common stock of the Company or Temple-Inland and each stock appreciation right in respect of either the Company or Temple-Inland held by the Executive as of the Date of Termination shall remain exercisable following the Date of Termination for the full term of such option or stock appreciation right. The Company also shall cause the subsidiary holding Temple-Inland’s financial services operations to provide that vesting shall accelerate and restrictions shall lapse on all unvested or restricted equity or equity-based awards in respect of such company held by the Executive as of the Date of Termination and that each stock option to acquire common stock of such company and each stock appreciation right in respect of such company held by the Executive as of the Date of Termination shall remain exercisable following the Date of Termination for the full term of such option or stock appreciation right.
(D) For purposes of determining the amount of any benefit payable to the Executive and the Executive’s right to any benefit otherwise payable under a Potential Change Pension Plan, and except to the extent it would result in Controla duplication of benefits under Section 6.1(E) hereof, the Executive shall be treated as if he had accumulated (after the Date of Termination) twenty-four (24) additional months of service credit thereunder and had been credited during such period with compensation at the highest rate in effect during the three-year period ending immediately prior to the Date of Termination.
(E) In addition to the benefits to which the Executive is entitled under any defined contribution Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the sum of (i) the amount that would have been contributed thereto or credited thereunder by the Company on the Executive’s behalf during the two (2) years immediately following the Date of Termination (but not including as amounts that would have been contributed or credited an amount equal to the amount of any reduction in base salary, bonus or other compensation that would have occurred in connection with such contribution or credit), determined (x) as if the Executive made the maximum permissible contributions thereto or credits thereunder during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s highest rate of compensation (as defined in the Pension Plan) during the three-year period ending immediately prior to the Date of Termination, and (z) without regard to any amendment to the Pension Plan made subsequent to the Effective Date and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of benefits thereunder, and (ii) the higher excess, if any, of (x) the target bonus for Executive’s account balance under the year in which Pension Plan as of the Notice Date of Termination is provided or over (y) the highest portion of such account balance that is nonforfeitable under the terms of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is basedPension Plan.
(BF) Notwithstanding any provision of any bonus planannual or long-term incentive plan (exclusive of equity-based plans) to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period bonus cycle preceding the Date of Termination but has not yet been paid (pursuant under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to Section 5.2 hereof or otherwise) a subsequent date, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus incentive compensation awards to the Executive for all the uncompleted periods period under any such plan, calculated as to each such award by multiplying the award that the Executive would have earned on the last day of the performance award period, assuming the achievement of achievement, at the target level, of any individual and corporate performance level within the performance range goals established with respect to such award award, multiplied by the fraction obtained by dividing the number of full months and basing such pro-rata portion upon the any fractional portion of the a month during such performance award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after through the Date of Termination by the total number of months contained in such performance award period (or if such fraction is greater than 1/2, multiplied by one (1)).
(G) The Company shall reimburse the Executive has for expenses incurred for outplacement services suitable to the Executive’s position for a period of one (1) year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after following the Date of Termination (or, if earlier, until the first acceptance by the Executive has more than one year but of an offer of employment) in an amount not more than two years of continuous service as an employee exceeding 15% of the Company, and (iii) a thirtysum of the Executive’s highest annual base rate of salary as in effect during the three-six (36) month year period after ending immediately prior to the Date of Termination (including, if Executive has more than two the Date of Termination occurs within three years after the Effective Date, salary paid in respect of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's splitemployment by Temple-dollar life insurance arrangement now in effectInland or its Affiliates during such three-year period), and all other material benefits the greatest target annual bonus pursuant to any annual bonus or perquisites substantially similar to those incentive plan maintained by the Company in respect of the fiscal year in which occurs the Executive is receiving immediately prior to the Notice Date of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control or, if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreementhigher, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if highest actual annual bonus in respect of any of the Total Payments will three preceding fiscal years (including as applicable, with respect to years ending at or before the Effective Date, annual bonuses paid by Temple-Inland)), which payment shall be subject made as soon as practicable but in any event within thirty (30) business days following the date of request for reimbursement. Subject to the Excise Taxforegoing, the Company in no event shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by described in this Section 6.2, shall 6.1(G) be equal to made after the excess end of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in calendar year following the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxesexpenses were incurred.
(CH) In For the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Grosstwo-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day year period immediately following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with perquisites (such as any use of a written statement setting forth the manner in which such payments Company provided automobile, club membership fee reimbursements, income tax preparation and financial advisory services) that were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached applicable immediately prior to the statement).
6.4. The Company also shall pay Date of Termination or, if more favorable, immediately prior to the Executive all legal fees and expenses incurred first occurrence of an event or circumstance constituting Good Reason, provided that in good faith by no event shall the amount of perquisites to which the Executive as a result of a termination is entitled under this Section 6.1(H) for any taxable year of the Executive's employment following a Change in Control and during Executive affect the term amount of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith perquisites to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to which the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of Executive is entitled under this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (56.1(H) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may requireany other taxable year.
Appears in 1 contract
Sources: Change in Control/Severance Agreement (Forestar Real Estate Group LLC)
Severance Payments. 6.1. The 6.1 Subject to Section 6.2 hereof, the Company shall pay the Executive the payments described in this Section 6.1 (the "Severance PaymentsSEVERANCE PAYMENTS") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death death, Disability or Disability more than six months following the Change in ControlRetirement, or (iii) by the Executive without Good Reason. The Executive's employment shall be deemed to have been terminated following a Change in Control by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of with Good Reason if the Executive's employment following is terminated prior to a Change in Control without Cause at the direction of a Person who (i) has entered into an agreement with the Company the consummation of which will constitute a Change in Control or (ii) has caused a Potential Change in Control but before to occur, or if the Executive terminates his employment with Good Reason prior to a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed determined by any Person who has initiated treating a transaction the consummation of which would result in a Potential Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if Control as a Change in Control had occurred on in applying the date definition of Good Reason) if the Potential Change in Controlcircumstance or event which constitutes Good Reason occurs at the direction of such Person.
(Aa) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times [200% or 250%] of the sum of (i) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (x) the target bonus for amount which the Executive could have earned under the Company's annual incentive plan in the year in which the Notice Date of Termination is provided occurs or (y) such target amount in the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon year in which the Notice of Termination is basedChange in Control occurs.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(Cb) For an eighteen (i) a twelve (1218) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall, at its cost (provided that Executive shall continue to be responsible to pay the standard employee portion of such cost), arrange to provide the Executive with life, disability, accident accident, health and health dental insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such which reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C6.1(b) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive by a new employer of the Executive without cost during the above-referenced period. In addition, eighteen (18) month period following the Executive's termination of employment (and any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not ). If the benefits provided to the Executive becomes entitled under this Section 6.1(b) shall result in a decrease, pursuant to Section 6.2, in the Severance Payments and these Section 6.1(b) benefits are thereafter reduced pursuant to the Severance Payments, if any immediately preceding sentence because of the Total Payments will be subject to the Excise Taxreceipt of comparable benefits, the Company shall shall, at the time of such reduction, pay to the Executive an additional the lesser of (A) the amount (of the "Gross-Up Payment") such that decrease made in the net amount retained by the Executive, after deduction of any Excise Tax on the Total Severance Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this pursuant to Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
or (B) For purposes the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of determining whether any Section 280G of the Total Payments will be subject to Code.
6.2 Notwithstanding any other provisions of this Agreement (except the Excise Tax and provisions of Section 6.5 below), in the amount of such Excise Tax, (i) event that any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's termination of employment, employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the Severance Payments, being hereinafter called "Total PaymentsTOTAL PAYMENTS") would not be deductible (in whole or part), shall be treated by the Company, an affiliate or any Person making such payment or providing such benefit as "parachute payments" (within the meaning a result of section 280G(b)(2) Section 280G of the Code, then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement), (A) unlessthe cash Severance Payments shall first be reduced (if necessary, to zero), and (B) all other non-cash Severance Payments shall next be reduced (if necessary, to zero). For purposes of this limitation, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have effectively waived in writing prior to the Date of Termination shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which in the opinion of tax counsel selected by the Company's independent auditors and reasonably, reasonably acceptable to the Executive, such payments or benefits (in whole or in part) do Executive does not constitute parachute paymentsa "PARACHUTE PAYMENT" within the meaning of Section 280G(b)(2) of the Code, including by reason of section Section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within iii) the meaning of section 280G(b)(1) of the Code) Severance Payments shall be treated as subject reduced only to the Excise Tax unless, extent necessary so that the Total Payments (other than those referred to in the opinion of such tax counsel, such excess parachute payments clauses (i) or (ii)) in whole or in part) represent their entirety constitute reasonable compensation for services actually rendered (within the meaning of section Section 280G(b)(4)(B) of the Code), Code or are otherwise not subject to disallowance as deductions, in the Excise Tax, opinion of the tax counsel referred to in clause (ii); and (iiiv) the value of any noncash benefits non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditors in accordance with the principles of actions Sections 280G(d)(3) and (4) of the Code. For purposes If it is established pursuant to a final determination of determining a court or an Internal Revenue Service proceeding that, notwithstanding the amount good faith of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company in applying the terms of this Section 6.2, the aggregate "parachute payments" paid to or for the Executive's benefit are in an amount that would result in any portion of such "parachute payments" not being deductible by reason of Section 280G of the Code, then the Executive shall each reasonably cooperate with have an obligation to pay the other in connection with any administrative or judicial proceedings concerning the existence or Company upon demand an amount of liability for Excise Tax with respect equal to the Total Payments. If an Executive who remains in the employ excess of the Company becomes entitled aggregate "parachute payments" paid to or for the payment provided Executive's benefit over the aggregate "parachute payments" that could have been paid to or for the Executive's benefit without any portion of such "parachute payments" not being deductible by this paragraph, such payment shall be made no later than reason of Section 280G of the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially dueCode.
6.3. 6.3 The payments provided for in Section 6.1 hereof (other than Section 6.1(C6.1(b)), in Section 6.2 hereof, and in Section 5.5 ) hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, that if the amounts of such payments, and the limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company Company, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined by the Company within six (6) months after payment to have been due, such excess shall constitute a loan be paid by the Company Executive to the ExecutiveCompany, payable on no later than the fifth thirtieth (5th30th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code)Company. At the time that payments are made under this sectionSection, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The 6.4 Following a Change in Control (or a termination described in the second sentence of Section 6.1), the Company also shall pay to the Executive all legal fees and related expenses (including costs of experts, evidence and counsel) incurred in good faith by the Executive as a result of any dispute in connection with a termination of the Executive's employment following a Change employment, whether or not such dispute is resolved in Control and during the term of this Agreement Executive's favor, but only if the dispute is pursued by the Executive in good faith (including all such fees and expenses, if any, incurred in disputing in good faith respect of a dispute relating to any such termination or in the Executive seeking in good faith to obtain or enforce any benefit or right provided by this Agreement (or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits) or in connection with any tax audit or proceeding to the extent attributable to the application of section Section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made to the Executive within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such by evidence of fees and expenses incurred as the Company reasonably may requireincurred.
Appears in 1 contract
Sources: Severance Protection Agreement (VHS of Anaheim Inc)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "“Severance Payments"”) upon the termination of the Executive's ’s employment following a Change in Control and during the term of this Agreement, Agreement (in addition to the any payments and benefits described in to which the Executive is entitled under Section 5 and 8 hereof), unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of the Executive's employment with Good Reason following a Potential Change in Control but before if (i) the Executive’s employment is terminated without Cause prior to a Change in Control which actually occurs during the term of this Agreement and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment with Good Reason prior to a Change in Control which actually occurs during the term of this Agreement and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason prior to a Change in Control and the Executive reasonably demonstrates that such termination is otherwise in connection with or in anticipation of a Change in Control which actually occurs during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
or (iiv) the termination Executive’s employment is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company terminated without Cause if after a Potential Change in Control had occurred on the date of the type described in paragraph (I) of the definition of “Potential Change in Control”.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier one (1) times the sum of (i) the highest higher of the Executive's ’s annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such the Executive’s highest annual base salary in effect during the three (3) completed fiscal years immediately prior to preceding the Change in Control, or such salary in effect immediately prior to a Potential Control (the “Change in ControlControl Salary”), and (ii) the higher of the highest annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three (x3) the target bonus for completed fiscal years immediately preceding the year in which the Notice Date of Termination is provided occurs or (y) the highest annual bonus so earned in respect of the actual bonuses paid or payable to three (3) completed fiscal years immediately preceding the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon year in which the Notice of Termination is basedChange in Control occurs (the “Change in Control Bonus”).
(B) Notwithstanding any provision of any bonus planannual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within incentive award under such plan for the performance range established with respect to then uncompleted period under such plan, calculated by multiplying the Executive’s target award by the fraction obtained by dividing the number of full months and basing such pro-rata portion upon the any fractional portion of the a month during such performance award period that has elapsed as of through the Date of Termination;Termination by the total number of months contained in such performance award period.
(C) For (i) a twelve (12the twelve(12) month period after immediately following the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive (which includes the Executive’s eligible dependents for purposes of this paragraph (C)) with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is was receiving immediately prior to the Notice of Termination (without giving effect to any reduction in amendment to such benefits made subsequent to the earlier of a Potential Change in Control or a Change in Control if which amendment adversely affects in any manner the Executive’s entitlement to or the amount of such reduction constitutes Good Reasonbenefits); Notwithstanding any other provision of this Agreementprovided, however, that, unless the Company Executive consents to a different method, such health insurance benefits shall continue to fund Executive's splitbe provided through a third-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policyparty insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits (including continued coverage for any preexisting medical condition of any person covered by the benefits provided to the Executive and his eligible dependents immediately prior to the Notice of Termination) are actually received by or made available to the Executive by a subsequent employer without cost during the above-referenced period. In addition, twelve (12) month period following the Executive’s Date of Termination (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive).
6.2. (A) Whether Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or not distribution (or any acceleration of any payment, award, benefit or distribution) by the Company to or for the benefit of the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments paid or benefits received payable or to be received by the Executive in connection with a Change in Control distributed or the Executive's termination of employment, whether distributable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in otherwise) (a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall “Payment”) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to the excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of imposed on the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the retains an amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable equal to the Excise Tax and federal, state and local income tax imposed on upon the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Sources: Change in Control Agreement (Inspire Pharmaceuticals Inc)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this 6.1 Subject to Section 6.1 (the "Severance Payments") upon the termination of 6.2 and Section 6.3 hereof, if the Executive's employment is terminated following a Change in Control and during the term of this AgreementTerm either by the Company or by the Executive, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (ia) by the Company for Cause, (iib) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiic) by the Executive without Good Reason. The , (any such employment termination being hereafter sometimes referred to as a "Compensable Termination"), then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 ("Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before a Change in Control and during the term of this AgreementPayments"), in addition to the any payments and benefits described to which the Executive is entitled under Sections 5 and 6.3 hereof. Notwithstanding the foregoing, the Executive shall not be eligible to receive any payment or benefit provided for in this Section 5 hereof, if:
6.1 unless the Executive shall have executed (i) a release substantially in the termination is initiatedform of Exhibit A hereto, caused or directed by any Person who has initiated and a transaction covenant not to compete substantially in the consummation form of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on Exhibit B hereto, effective as of the date of the Potential Change in Control.
(A) In lieu of any further salary payments to the Executive for periods Compensable Termination or a date subsequent to the Date of Termination thereto and shall not have revoked said release. The Severance Payments are in lieu of any severance benefit benefits that would otherwise be payable or provided pursuant to any severance plan or practice of the Company.
(i) The Company shall pay the Executive, at the time provided in Section 6.2 below, his annual bonus for the fiscal year of the Company shall pay preceding the fiscal year of the Company in which the Compensable Termination occurs, if unpaid at the time of the Compensable Termination, the amount of such bonus to be determined by the Compensation Committee of the Board on a basis no less favorable to the Executive a lump sum severance payment, in cash, equal than its bonus determinations with respect to the Applicable Multiplier times the sum of (i) the highest of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, or such salary in effect immediately Executive prior to the Change in Control, or such salary in effect immediately prior unless the Committee made no bonus determinations with respect to a Potential the Executive before the Change in Control, and in which case on a basis no less favorable to the Executive than its bonus determinations with respect to other executives of comparable rank before the Change in Control.
(ii) the higher of (x) the target bonus for the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the The Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of Section 6.2 below, a prorated annual bonus for the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ fiscal year of the Company becomes entitled to in which the payment provided for by this paragraphCompensable Termination occurs, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject prorated bonus to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than by multiplying the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive “Applicable Average Bonus” as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.defined below in
Appears in 1 contract
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 If (the "Severance Payments"i) upon the termination of the Executive's employment is terminated following a Change in Control and during the term of this AgreementTerm, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death death, Disability or Disability more than six months following the Change in ControlRetirement, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 ("Severance Payments upon termination Payments") and Section 6.4, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if, during the Term, (i) the Executive's employment is terminated by the Company without Cause after the occurrence of a Potential Change in Control but before and prior to a Change in Control (whether or not a Change in Control ever occurs) and during such termination was at the term request or direction of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any a Person who has initiated a transaction entered into an agreement with the Company the consummation of which would result in constitute a Change in Control; and
Control or (ii) the termination would have been by the Executive terminates his employment for Good Reason or by after the Company without Cause if occurrence of a Potential Change in Control and prior to a Change in Control had occurred on the date of the Potential (whether or not a Change in ControlControl ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person.
(A2) In lieu For the [ ] month period immediately following the Date of any further salary payments Termination (or, if less, the number of months between the Date of Termination and the Executive's scheduled date of Retirement) (the "Continuation Period"), the Company shall arrange to provide the Executive (and, if applicable, his dependents) with benefits substantially similar to those provided to the Executive for periods subsequent (and, if applicable, his dependents) under the Benefit Plans immediately prior to the Date of Termination and (without giving effect to any reduction in lieu benefits, which reduction constitutes an event of any severance benefit otherwise payable Good Reason) or, if more favorable to the Executive, the Company shall pay those provided to the Executive a lump sum severance payment(and, in cashif applicable, equal to his dependents) under the Applicable Multiplier times the sum of (i) the highest of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, or such salary in effect Benefit Plans immediately prior to the Change in Control, or such salary in effect at no greater cost to the Executive than the cost to the Executive immediately prior to a Potential Change in Controlsuch date. For purposes of determining Executive's rights under any such Benefit Plans applicable to retired employees, and (ii) the higher of (x) the target bonus for the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses paid or payable to the Executive for any of shall be treated as having remained in employment through the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is basedContinuation Period.
(B3) Notwithstanding any provision of any bonus plan, the The Company shall pay to the Executive a lump sum amount, in cash, equal to the sum pro rata portion of (i) any bonus amount the Executive's annual incentive compensation for the calendar year in which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid occurs, such amount to be determined by multiplying the Executive's annual incentive compensation amount (determined pursuant to Section 5.2 hereof or otherwise6.1(1)(ii) and (iiabove) by a pro rata portion to fraction, the Date numerator of Termination which is the number of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each days in such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has calendar year which had elapsed as of the Date of Termination;
(CTermination and the denominator of which is 365; PROVIDED, HOWEVER, that this Section 6.1(3) For (i) a twelve (12) month period after shall have effect only if the Date of Termination if Executive has one occurs in a calendar year or less of continuous service as an employee of following the Company, calendar year in which occurs a Change in Control.
(ii4) a twenty-four (24) month period after In addition to the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange retirement benefits to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable entitled under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by Pension Plans or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Taxsuccessor plans thereto, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executivea lump sum amount, after deduction of any Excise Tax on the Total Payments and any federalin cash, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess present value as of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or calculated at a discount rate equal to the discount rate used at the Date of Termination (or, if more favorable to the Executive, immediately prior to the Change in Control) for computing the present value of commuted payments under the Qualified Plan) of (a) the lump sum value (determined as of the Executive's Normal Retirement Age, using the same methods and assumptions used at the Date of Termination (or, if more favorable to the Executive, immediately prior to the Change in Control) for purposes of the Qualified Plan) of the retirement pension to which the Executive would have been entitled under the terms of the Pension Plans (as in effect on the Date of Termination) as if the Executive's employment had continued through the Continuation Period at Base Salary and incentive compensation levels equal to those set forth in Section 6.1(1) above (and including any other compensation, if any, which is to be considered under the formulas applicable to such other time as is hereinafter describedplans), net assuming commencement of payment of the maximum reduction Executive's pension at Normal Retirement Age, reduced by (b) the lump sum value (determined as of the Executive's Normal Retirement Age using the methods and assumptions hereinabove specified) of the retirement pension, if any, to which the Executive will be entitled under the terms of the Pension Plans (as in federal income taxes which could be obtained from deduction effect on the Date of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of Termination), based upon termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion Date of the Gross-Up Payment attributable to the Excise Tax Termination and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount assuming commencement of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination payment of the Executive's employment pension benefits at Executive's Normal Retirement Age. The lump sum value to be calculated under clause (or such other time as is hereinafter describeda) (including by reason of any payment the existence or amount of which cannot immediately preceding sentence shall be determined (y) under the assumption that the Executive is fully vested in his retirement pension under each Pension Plan and (z) without regard to any termination of or amendments to any of such plans, which termination or amendments are adopted on or after the date of a Change in Control, to the extent any such termination or amendments adversely affect in any manner the computation of benefits thereunder or are otherwise adverse to the Executive.
(5) The Company shall provide the Executive, at the time Company's sole cost and expense, with the services of the Gross-Up Payment), an outplacement firm mutually agreed upon between the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable and the Executive and suitable to the Executive's position until the first acceptance by the Executive with respect of an offer of employment.
(6) The Company shall continue to such excessmaintain officers' indemnification insurance for the Executive for a period of not less than four (4) at years following the time that Date of Termination, the amount terms and conditions of such excess is finally determined. The Executive which shall be no less favorable than the terms and conditions of the officers' indemnification insurance maintained by the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days immediately prior to the date on which the Excise Tax is initially dueChange in Control occurs.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of 6.3 If the Executive's employment is terminated following a Change in Control and during the term Term by reason of this Agreement (including all such fees and expenseshis death, if any, incurred in disputing in good faith any such termination or in seeking in good faith the Company shall pay to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall representatives or estate, or as may be made within five (5) business days after delivery directed by the legal representatives of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred his estate, as the Company reasonably case may requirebe, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof, a cash lump sum equal to the amounts determined under Sections 6.1(1) and (3) above.
Appears in 1 contract
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 If (the "Severance Payments"i) upon the termination of the Executive's ’s employment is terminated following a Change in Control and during the term of this Agreementwithin two (2) years after a Change in Control, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiiC) by the Executive without Good Reason. The , or (ii) the Executive voluntarily terminates his employment for any reason during the 30 day period commencing on the first anniversary of a Change in Control, then, in either such case, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments upon termination Payments”), and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's ’s employment shall be deemed to have been terminated following a Potential Change in Control but before a Change in Control and during by the term of this AgreementCompany without Cause or by the Executive with Good Reason, in addition to the payments and benefits described in Section 5 hereof, if:
if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination is initiated, caused was at the request or directed by any direction of a Person who has initiated a transaction entered into an agreement with the Company the consummation of which would result in constitute a Change in Control; and
, or (ii) the termination would have been by the Executive terminates his employment for Good Reason or by the Company without Cause if prior to a Change in Control had occurred on (whether or not a Change in Control ever occurs) and the date circumstance or event which constitutes Good Reason occurs at the request or direction of such Person. For purposes of any determination regarding the applicability of the Potential Change in Controlimmediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that such position is not correct.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay to the Executive Executive, on the first day of the seventh (7th) month following the month in which occurs the Executive’s Separation from Service, a lump sum severance payment, in cash, equal to the Applicable Multiplier one and one half (11/2) times the sum of (i) the highest of the Executive's annual ’s base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is basedor, or such salary if higher, in effect immediately prior to the Change in Control, first occurrence of an event or such salary in effect immediately prior to a Potential Change in Controlcircumstance constituting Good Reason, and (ii) the higher Executive’s target annual bonus pursuant to any annual bonus or incentive plan maintained by the Company in respect of (x) the target bonus for the fiscal year in which occurs the Notice Date of Termination is provided or, if higher, the fiscal year in which occurs the first event or (ycircumstance constituting Good Reason. The amount payable pursuant to this Section 6.1(A) shall be reduced by the highest amount of the actual bonuses any cash severance or salary continuation benefit paid or payable to the Executive for under any other plan, policy or program of the Company or any of its Affiliates or any written employment agreement between the five years completed immediately prior to Executive and the occurrence Company or any of the event or circumstance upon which the Notice of Termination is basedits Affiliates.
(B) For the 18 month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method (after taking into account the effect of such method on the calculation of “parachute payments” pursuant to Section 6.2 hereof), such health and life insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the 18 month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. Notwithstanding anything in this Section 6.1(B) to the contrary, with respect to the first six (6) months following the Executive’s Separation from Service, if the premiums payable by the Company for group term life insurance on the Executive’s life exceeds the amount of the “limited payments” exemption set forth in Section 1.409A-1(b)(9)(v)(B) of the Income Tax Regulations (or any successor provision thereto), then, to the extent required in order to comply with Code Section 409A, the Executive, in advance, shall pay to the Company an amount equal to the premiums for any such life insurance policy, other than with respect to life insurance coverage to which the Executive would be entitled independent of this Agreement. Promptly following the end of such six (6) month period, the Company will make a cash payment to the Executive equal to the difference between the aggregate amount paid by the Executive for such coverage and the amount that the Executive would have paid for such life insurance coverage if such cost had been determined pursuant to this Section 6.1(B) other than the preceding sentence.
(C) Each option to purchase shares of common stock of the Company outstanding as of the Date of Termination shall become fully vested and exercisable as of such date and shall remain exercisable during the shorter of (i) the remaining term of such option (such remaining term to be determined as if the Executive were still actively employed) or (ii) ten (10) years from the date on which the option originally was granted, and each grant of restricted stock or similar grant, the award of which is contingent only upon the continued employment of the Executive to a subsequent date, shall become fully vested as of the Date of Termination.
(D) Unless payable to the Executive under the terms of any bonus annual or long-term incentive plan, the Company shall pay to the Executive on the first day of the seventh (7th) month following the month in which occurs the Executive’s Separation from Service, a lump sum amount, in cash, equal to the sum of (i) any bonus amount unpaid incentive compensation (including performance share awards) which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to Section 5.2 hereof or otherwise) a subsequent date, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus incentive compensation awards (including performance share awards) to the Executive for all then uncompleted periods under any such plan, calculated as to each such award by multiplying the award that the Executive would have earned on the last day of the performance award period, assuming the achievement achievement, at the target level (or if higher, at the then projected actual final level), of the target individual and corporate performance level within the performance range goals established with respect to such award award, by the fraction obtained by dividing the number of full months and basing such pro-rata portion upon the any fractional portion of the a month during such performance award period that has elapsed through the Date of Termination by the total number of months contained in such performance award period. Notwithstanding the forgoing, if and to the extent the Executive had elected to defer receipt of any such award, and if the Executive’s deferral election is irrevocable as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date Termination for purposes of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyCode Section 409A, the Company amount calculated above shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior be credited to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable ’s account under the policy are sufficient applicable deferred compensation plan in lieu of being distributed directly to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(AE) Whether The benefits then accrued by or not payable to the Executive becomes entitled under the Company’s Supplemental Executive Retirement Plan, Executive Separation Allowance Plan, Deferred Compensation Plan, Pension Parity Plan, or any successor to any such plan, and the benefits then accrued by or payable to the Severance PaymentsExecutive under any other nonqualified plan providing supplemental retirement or deferred compensation benefits shall become fully vested notwithstanding any eligibility conditions that would otherwise apply with respect to such benefits and the benefit, if any as so vested, will be paid in accordance with the terms of the Total Payments applicable plan or program; provided that if the Executive has not attained fifty-five (55) years of age, the Executive’s benefit under the Executive Separation Allowance Plan will commence to be subject paid upon the Executive’s attainment of age fifty-five (55). With respect to the Excise TaxSupplemental Executive Retirement Plan, Executive Separation Allowance Plan, and any other nonqualified nonaccount balance plan or portion of a plan providing supplemental retirement or deferred compensation benefits, the Company shall transfer an amount in cash sufficient to pay all benefits then accrued by or payable to the Executive under the terms of such plans into an additional amount irrevocable grantor trust (a so-called “Rabbi Trust”) whose trustee shall be an entity unaffiliated with and independent of the "Gross-Up Payment"Company, which trust shall be required to pay such benefits in accordance with and subject to the applicable terms of each plan (as modified by this Agreement) and the trust instrument; provided that if such that transfer to the net amount retained by Rabbi Trust would be treated, under Code Sections 83 and 409A(b), as a taxable transfer to the Executive, after deduction such transfer to the Rabbi Trust shall not be made until such time as the transfer will not be treated as a taxable event under Code Sections 83 and 409A; and provided further, that any amendment or termination of any Excise Tax such plan on or after the Total Payments and any federal, state and local income tax and Excise Tax upon Change in Control date the payment provided for by this Section 6.2, effect of which would be to reduce or eliminate the benefit payable to the Executive shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2disregarded.
(BF) The Company shall reimburse the Executive for expenses incurred for outplacement services suitable to the Executive’s position for a period of two (2) years following the Executive’s Separation from Service, (or, if earlier, until the first acceptance by the Executive of an offer of employment) in an amount not exceeding 25% of the sum of the Executive’s annual base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstances constituting Good Reason, and target annual bonus pursuant to any annual bonus or incentive plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination or, if higher, the fiscal year in which occurs the first event or circumstance constituting Good Reason.
(G) For purposes the six (6) month period immediately following the Date of determining whether Termination, the Company shall provide the Executive with the use of any of Company provided automobile on the Total Payments will be subject same terms and conditions that were applicable immediately prior to the Excise Tax and Date of Termination or, if more favorable, immediately prior to the amount first occurrence of such Excise Taxan event or circumstance constituting Good Reason. The Executive’s right to use a Company provided automobile cannot be exchanged for cash or another benefit.
(A) Notwithstanding any other provisions of this Agreement, (i) in the event that any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, the Executive’s employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the Severance Payments, being hereinafter called “Total Payments”) would be subject (in whole or part), to the Excise Tax, then, after taking into account any reduction in the Total Payments provided by reason of section 280G of the Code in such other plan, arrangement or agreement, the cash Severance Payments shall first be reduced, and the noncash Severance Payments shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (A) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments) is greater than or equal to (B) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments); provided, however, that the Executive may elect to have the noncash Severance Payments reduced (or eliminated) prior to any reduction of the cash Severance Payments.
(B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm (the "Total Payments")“Auditor”) which was, shall be treated as "immediately prior to the Change in Control, the Company’s independent auditor, does not constitute a “parachute payments" (payment” within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits Code (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code) and, and all "excess parachute payments" (within in calculating the meaning Excise Tax, no portion of section 280G(b)(1) of the Code) such Total Payments shall be treated as subject to the Excise Tax unlesstaken into account which, in the opinion of such tax counselTax Counsel, such excess parachute payments (in whole or in part) represent constitutes reasonable compensation for services actually rendered (rendered, within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject in excess of the Base Amount allocable to the Excise Taxsuch reasonable compensation, and (iiiii) the value of any noncash benefits non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditors Auditor in accordance with the principles of actions sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this sectionAgreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counselTax Counsel, auditors the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). If the Executive objects to the Company’s calculations, the Company shall pay to the Executive such portion of the Severance Payments (up to 100% thereof) as the Executive determines is necessary to result in the proper application of subsection (A) of this Section 6.2.
6.3 The payments provided in subsections (A) and (D) of Section 6.1 hereof shall be made on the first day of the seventh (7th) month following the month in which occurs the Executive’s Separation from Service. At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. 6.4 The Company also shall pay to reimburse the Executive for all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such issue hereunder relating to the termination or of the Executive’s employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.pr
Appears in 1 contract
Severance Payments. 6.1. 6.1 The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death death, Disability or Disability more than six months following the Change in ControlRetirement, or (iii) by the Executive without Good Reason. The Company shall pay For purposes of the Executive the Severance Payments upon immediately preceding sentence, if a termination of the Executive's employment occurs prior to a Change in Control, but following a Potential Change in Control but before in which a Person has entered into an agreement with the Company the consummation of which will constitute a Change in Control, such termination shall be deemed to have followed a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
have been (i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause, if the Executive's employment is terminated without Cause at the direction of such Person, or (ii) by the Executive with Good Reason, if a the Executive terminates his employment with Good Reason and the act (or failure to act) which constitutes Good Reason occurs following such Potential Change in Control had occurred on and at the date direction of the Potential Change in Controlsuch Person.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier two (2) times the sum of (i) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such the Executive's annual base salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (x) the target bonus for amount paid to the Executive pursuant to the Company's Annual Executive Incentive Plan, or any successor annual executive incentive compensation plan, as the case may be, in the fiscal year preceding that in which the Notice Date of Termination is provided occurs, or (y) the highest of average amount so paid in the actual bonuses paid or payable to the Executive for any of the five three fiscal years completed immediately prior to the occurrence of the event or circumstance upon preceding that in which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executiveoccurs.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Severance Payments. 6.1. The Company shall pay In the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination event of the Executive's ’s termination of employment following a Change in Control and during by the term of this AgreementCompany without Cause pursuant to Section 4(a)(iv) or by the Executive for Good Reason pursuant to Section 4(a)(v), in addition to the payments and benefits described in Section 5 hereof5(a) above, unless such termination is (i) by the Company for Causeshall, subject to Section 21 and Section 5(c) and subject to Executive’s execution and non-revocation of a waiver and release of claims agreement in the Company’s customary form (ii) by reason of death or Disability more than six months following the Change in Controla “Release”), or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination as of the Executive's employment following a Potential Change in Control but before a Change in Control and during the term of this AgreementRelease Expiration Date, in addition to the payments and benefits described in accordance with Section 5 hereof, if:21(c):
(i) Continue to pay Executive’s Annual Base Salary during the termination is initiatedperiod beginning on the Date of Termination and ending on the one (1) year anniversary of the Date of Termination (the “Severance Period”) in accordance with the Company’s regular payroll practice as of the Date of Termination. Notwithstanding the foregoing, caused or directed by any Person who has initiated a transaction in the consummation event that within twelve (12) months of which would result in a Change in Controlof Control of the Company, the Executive is terminated by the Company without Cause pursuant to Section 4(a)(iv) or by the Executive for Good Reason pursuant to Section 4(a)(v) (a “Change of Control Termination”), then the Company shall continue to pay the Executive’s Annual Base Salary during the period beginning on the Date of Termination and ending on the two (2) year anniversary of the Date of Termination (the “Change of Control Severance Period”); and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in Control.
Pay (A) In lieu the Annual Bonus for any completed fiscal year as of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (i) the highest that has not yet been paid as of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is based(the “Prior Year Bonus”), or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Controlif any, and (iiB) a pro-rated portion of the higher of (x) the target bonus Annual Bonus for the year in which the Notice Date of Termination is provided or (y) occurs, with such proration being based on the highest number of the actual bonuses paid or payable to full months for which the Executive for any of the five years completed immediately was employed during such year prior to the occurrence of the event or circumstance upon which the Notice such Date of Termination is based.
(B) Notwithstanding any provision of any bonus plansuch pro-rated bonus, the Company “Pro-Rated Bonus” and, collectively with the Prior Year Bonus, the “Bonus Severance Payment”). Notwithstanding the foregoing, upon a Change of Control Termination, the Bonus Severance Payment shall pay to the Executive a lump sum amount, in cash, instead be equal to the sum of (iX) any bonus amount which has been allocated or awarded the Prior Year Bonus, if any, and (Y) the product of (I) two (2), multiplied by (II) the Pro-Rated Bonus The bonuses described in this Section 5(b)(ii) shall be payable, to the Executive for a completed extent earned, on, or at such date as is determined by the Board within 120 days following, the last day of the fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed which it relates, as of the Date of Termination;set forth in Section 3(b).
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after During the Date Severance Period, or the Change of Termination if Executive has more than two years of continuous service Control Severance Period, as an employee of the Companyapplicable, the Company shall arrange to provide will continue all the Executive with lifeEmployee’s coverage under the Company’s group health plan under the same terms and conditions that existed for the term of employment until the end of the Severance Period, disabilityor the Change of Control Severance Period, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect)as applicable. After the Severance Period or the Change of Control Severance Period, and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreementas applicable, the Company shall continue to fund Executive's split-dollar life insurance arrangement will, until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced reaches age 65 and to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected permitted by the Company's independent auditors ’s group health plan and reasonablyapplicable law, acceptable to continue all the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by Employee’s coverage under the Company's independent auditors ’s group health plan if the Executive elects to continue coverage under the Company’s group health plan in accordance with the principles Consolidated Omnibus Budget Reconciliation Act of actions 280G(d)(3) and 1985, as amended (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described“COBRA”), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined Executive elects to exceed the amount taken into account hereunder continue with COBRA coverage, such coverage will be at the time of the termination sole expense of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event Employee obtains other employment that the amount of the estimated payments exceeds the amount subsequently determined to have been dueoffers group health benefits, such excess shall constitute a loan continuation of COBRA coverage by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company Section 5(b)(iii) shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)immediately cease.
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Severance Payments. 6.1. The 6.1 Subject to Section 6.2 hereof, the Company shall pay the Executive the payments described in this Section 6.1 (the "“Severance Payments"”) upon the termination of the Executive's ’s employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death death, Disability or Disability more than six months following the Change in ControlRetirement, or (iii) by the Executive without Good Reason. The Executive’s employment shall be deemed to have been terminated following a Change in Control by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of with Good Reason if the Executive's ’s employment following is terminated prior to a Change in Control without Cause at the direction of a Person who (i) has entered into an agreement with the Company the consummation of which will constitute a Change in Control or (ii) has caused a Potential Change in Control but before to occur, or if the Executive terminates his employment with Good Reason prior to a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed determined by any Person who has initiated treating a transaction the consummation of which would result in a Potential Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if Control as a Change in Control had occurred on in applying the date definition of Good Reason) if the Potential Change in Controlcircumstance or event which constitutes Good Reason occurs at the direction of such Person.
(Aa) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times 250% of the sum of (i) the highest higher of the Executive's ’s annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (x) the target bonus for amount which the Executive could have earned under the Company’s annual incentive plan in the year in which the Notice Date of Termination is provided occurs or (y) such target amount in the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon year in which the Notice of Termination is basedChange in Control occurs.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(Cb) For an eighteen (i) a twelve (1218) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall, at its cost (provided that Executive shall continue to be responsible to pay the standard employee portion of such cost), arrange to provide the Executive with life, disability, accident accident, health and health dental insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such which reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C6.1(b) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive by a new employer of the Executive without cost during the above-referenced period. In addition, eighteen (18) month period following the Executive’s termination of employment (and any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not ). If the benefits provided to the Executive becomes entitled under this Section 6.1(b) shall result in a decrease, pursuant to Section 6.2, in the Severance Payments and these Section 6.1(b) benefits are thereafter reduced pursuant to the Severance Payments, if any immediately preceding sentence because of the Total Payments will be subject to the Excise Taxreceipt of comparable benefits, the Company shall shall, at the time of such reduction, pay to the Executive an additional the lesser of (A) the amount (of the "Gross-Up Payment") such that decrease made in the net amount retained by the Executive, after deduction of any Excise Tax on the Total Severance Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this pursuant to Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
or (B) For purposes the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of determining whether any Section 280G of the Total Payments will be subject to Code.
6.2 Notwithstanding any other provisions of this Agreement (except the Excise Tax and provisions of Section 6.5 below), in the amount of such Excise Tax, (i) event that any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, the Executive’s employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the "Severance Payments, being hereinafter called “Total Payments"”) would not be deductible (in whole or part), shall be treated by the Company, an affiliate or any Person making such payment or providing such benefit as "parachute payments" (within the meaning a result of section 280G(b)(2) Section 280G of the Code, then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement), (A) unlessthe cash Severance Payments shall first be reduced (if necessary, to zero), and (B) all other non-cash Severance Payments shall next be reduced (if necessary, to zero). For purposes of this limitation, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have effectively waived in writing prior to the Date of Termination shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which in the opinion of tax counsel selected by the Company's ’s independent auditors and reasonably, reasonably acceptable to the Executive, such payments or benefits (in whole or in part) do Executive does not constitute a “parachute paymentspayment” within the meaning of Section 280G(b)(2) of the Code, including by reason of section Section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within iii) the meaning of section 280G(b)(1) of the Code) Severance Payments shall be treated as subject reduced only to the Excise Tax unless, extent necessary so that the Total Payments (other than those referred to in the opinion of such tax counsel, such excess parachute payments clauses (i) or (ii)) in whole or in part) represent their entirety constitute reasonable compensation for services actually rendered (within the meaning of section Section 280G(b)(4)(B) of the Code), Code or are otherwise not subject to disallowance as deductions, in the Excise Tax, opinion of the tax counsel referred to in clause (ii); and (iiiv) the value of any noncash benefits non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's ’s independent auditors in accordance with the principles of actions Sections 280G(d)(3) and (4) of the Code. For purposes If it is established pursuant to a final determination of determining a court or an Internal Revenue Service proceeding that, notwithstanding the amount good faith of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company in applying the terms of this Section 6.2, the aggregate “parachute payments” paid to or for the Executive’s benefit are in an amount that would result in any portion of such “parachute payments” not being deductible by reason of Section 280G of the Code, then the Executive shall each reasonably cooperate with have an obligation to pay the other in connection with any administrative or judicial proceedings concerning the existence or Company upon demand an amount of liability for Excise Tax with respect equal to the Total Payments. If an Executive who remains in the employ excess of the Company becomes entitled aggregate “parachute payments” paid to or for the payment provided Executive’s benefit over the aggregate “parachute payments” that could have been paid to or for the Executive’s benefit without any portion of such “parachute payments” not being deductible by this paragraph, such payment shall be made no later than reason of Section 280G of the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially dueCode.
6.3. 6.3 The payments provided for in Section 6.1 hereof (other than Section 6.1(C6.1(b)), in Section 6.2 hereof, and in Section 5.5 ) hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, that if the amounts of such payments, and the limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company Company, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined by the Company within six (6) months after payment to have been due, such excess shall constitute a loan be paid by the Company Executive to the ExecutiveCompany, payable on no later than the fifth thirtieth (5th30th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code)Company. At the time that payments are made under this sectionSection, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The 6.4 Following a Change in Control (or a termination described in the second sentence of Section 6.1), the Company also shall pay to the Executive all legal fees and related expenses (including costs of experts, evidence and counsel) incurred in good faith by the Executive as a result of any dispute in connection with a termination of the Executive's employment following a Change ’s employment, whether or not such dispute is resolved in Control and during the term of this Agreement Executive’s favor, but only if the dispute is pursued by the Executive in good faith (including all such fees and expenses, if any, incurred in disputing in good faith respect of a dispute relating to any such termination or in the Executive seeking in good faith to obtain or enforce any benefit or right provided by this Agreement (or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits) or in connection with any tax audit or proceeding to the extent attributable to the application of section Section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made to the Executive within five (5) business days after delivery of the Executive's ’s written request requests for payment accompanied with such by evidence of fees and expenses incurred as the Company reasonably may requireincurred.
Appears in 1 contract
Sources: Severance Protection Agreement (Vanguard Health Systems Inc)
Severance Payments. 6.1. The Company shall pay Subject to the Executive provisions of (d) below and the payments described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control other terms and during the term conditions of this Agreementletter, in addition to the payments and benefits described in Section 5 hereof, unless such termination is event (i) by the Company for Causeterminates Executive’s employment without cause, (ii) by reason Executive terminates her employment within 30 days following the date of any Change of Control that is consummated on or prior to 18 months after the date of this agreement, (iii) within twelve months after a Change of Control Executive terminates her employment with good reason, (iv) Executive’s employment terminates as a result of Executive’s death or Disability more than six months following the Change in Controldisability, or (iiiv) by the Executive without Good Reason. The Company shall pay fails to devote, during the Executive six month period following the Severance Payments upon termination Commencement Date, a reasonably sufficient amount of capital to begin to enter into the lab services business or otherwise does not in good faith attempt to launch such business prior to the six month anniversary of the Executive's Commencement Date and Executive terminates her employment following a Potential Change in Control but before a Change in Control and on account thereof during the term 30 day period immediately following the six month anniversary of the Commencement Date (provided that this Agreement, in addition to the payments clause (v) shall not apply (and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would shall not result in a Change Severance Termination) if Executive fails to devote her full business time and attention to assisting in Control; and
the development and implementation of the Company’s business plan with respect to lab services) (ii) any of the termination would have been by the Executive for Good Reason or by foregoing being a “Severance Termination”), the Company without Cause if a Change will provide Executive the following benefits, which shall be the only severance benefits or other payments with respect to Executive’s employment with the Company to which Executive shall be entitled. Without limiting the generality of the foregoing, these benefits are in Control had occurred lieu of all salary (except for salary for periods ending on the date of termination), accrued vacation and other rights Executive may have against the Potential Change in ControlCompany or its affiliates.
(Aa) In lieu After a Severance Termination, Executive will receive payment of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, an amount equal to one month of her base salary in effect at the Applicable Multiplier times time of the sum Severance Termination multiplied by the greater of (i) the highest of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (x) the target bonus for the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month minus the number of months served under this agreement, or (ii) six (6). 3
(b) Upon a Severance Termination, Executive will be able to exercise any options which have become exercisable on or before the termination date until the earlier of (a) the first anniversary of the date of termination or (b) the expiration date of the option.
(c) Upon a Severance Termination, Executive will receive continued coverage under the Company’s medical and health plans in accordance with COBRA rules and regulations following the termination date (including any period after the Date of Termination as may be required by law), provided that coverage will end if Executive has more than one year but obtains comparable coverage from a subsequent employer or otherwise ceases to be eligible for COBRA benefits. If Executive ceases to be eligible for COBRA because the Company does not more than two years of continuous service as an employee pay the premiums for its existing or group insurance policy or the Company ceases to have a group healthcare plan, the Company will pay Executive, for any portion of the period referred to above during which Executive’s COBRA eligibility ceases for such reasons, the amount of the premium it would have had to pay for Executive’s coverage under the then existing, or if none, the most recently existing, healthcare insurance policy. Executive should consult with the Company’s Manager of Human Resources concerning the process for assuming ownership of and continued premium payments for any life insurance policy. Executive will be reimbursed in accordance with Company policies promptly for all of Executive’s reasonable and necessary business expenses incurred on behalf of the Company prior to Executive’s termination date.
(d) All compensation and benefits described above in (a) through (c) of this Section 6 will be contingent upon (i) Executive’s execution of a release of all claims against the Company substantially in the form of Exhibit A and expiration of the seven-day revocation period referred to in the release, (ii) Executive’s not engaging in any Competition (as defined in Section 7 of this Agreement) with the Company during the period of his employment by the Company or the period referred to in paragraph (a) above and (iii) Executive’s not engaging in any Solicitation (as defined in Section 7 of this Agreement) during the period of his employment by the Company or the period referred to in paragraph (a) above.
(e) The Company will pay Executive the amount described in (a) above in equal monthly installments with the first payment being payable on the date when the seven-day revocation period referred to below with respect to the release expires. The Company will prepare the final release (which will be substantially in the form attached as Exhibit A to this letter) and deliver it to Executive within five business days of Executive’s termination of employment. Executive will have twenty-one (21) days in which to consider the release although Executive may execute it sooner. Please note that the release has a thirty-six revocation period of seven days.
(36f) month period after Subject to the Date provisions of Termination if Executive has more than two years of continuous service as an employee of the Companyparagraph (d) above, the Company shall arrange to provide will pay interest on payments that are more than ten days past due at the Executive with lifeprime rate at the Company’s principal bank (or, disabilityif none, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(CCitibank N.A.) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced periodplus two percentage points compounded monthly. In addition, the Company will pay all reasonable costs and expenses (including reasonable attorney’s fees and all costs of arbitration or court proceedings) incurred by Executive to enforce this agreement or any obligation hereunder but only if Executive is the prevailing party in any such benefits actually received by the Executive shall be reported to proceeding. If the Company by is the Executive.
(A) Whether or not the prevailing party, Executive becomes entitled to the Severance Payments, if any will pay all of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount Company’s reasonable costs and expenses (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, reasonable attorneys’ fees and all "excess parachute payments" (within the meaning costs of section 280G(b)(1arbitration or court proceedings) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other incurred in connection with any administrative or judicial proceedings concerning such proceeding.
(g) In this letter, the existence or amount of liability for Excise Tax with respect term “cause” means (a) Executive’s failure to the Total Payments. If an Executive who remains in the employ adhere to any written policy of the Company becomes entitled if Executive has been given a reasonable opportunity to the payment provided comply with such policy and cure Executive’s failure to comply (which reasonable opportunity to cure must be granted for by this paragraph, such payment shall be made no later than the later a period of ten days); (ib) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and Executive’s appropriation (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(Battempted appropriation) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.4
Appears in 1 contract
Sources: Employment Agreement (Chromavision Medical Systems Inc)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this 6.1 Subject to Section 6.1 6.2 hereof, if (the "Severance Payments"i) upon the termination of the Executive's ’s employment is terminated following a Change in Control and during the term of this AgreementTerm, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death death, Disability or Disability more than six months following the Change in ControlRetirement, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments upon termination Payments”) and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's ’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause after the occurrence of a Potential Change in Control but before and prior to a Change in Control (whether or not a Change in Control ever occurs) and during such termination was at the term request or direction of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any a Person who has initiated a transaction entered into an agreement with the Company the consummation of which would result in constitute a Change in Control; and
Control or (ii) the termination would have been by the Executive terminates his employment for Good Reason or by after the Company without Cause if occurrence of a Potential Change in Control and prior to a Change in Control had occurred on the date of the Potential (whether or not a Change in ControlControl ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two (2) (or, if less, the Applicable Multiplier number of full and partial years between the Date of Termination and the Executive’s scheduled date of Retirement) times the sum of (i) the highest of the Executive's ’s base annual base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is based(without giving effect to any reduction in base annual salary, or such salary which reduction constitutes an event of Good Reason) or, if higher, in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (xA) the average annual bonus earned by the Executive pursuant to the annual bonus or incentive plan maintained by the Company in respect of the three fiscal years ending immediately prior to the fiscal year in which occurs the Date of Termination (without giving effect to any reduction in bonus caused by an adverse change in the Executive’s bonus plan participation, which adverse constitutes an event of Good Reason) or, if higher, immediately prior to the fiscal year in which occurs the Change in Control or (B) the Executive’s target annual bonus for the fiscal year in which occurs the Date of Termination (without giving effect to any reduction in bonus caused by an adverse change in the Executive’s bonus plan participation, which adverse change constitutes an event of Good Reason) or, if higher, the fiscal year in which occurs the Change in Control.
(B) For the twenty-four (24) month period (or, if less, the number of months between the Date of Termination and the Executive’s scheduled date of Retirement) immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination (without giving effect to any reduction in benefits, which reduction constitutes an event of Good Reason) or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the Change in Control, at no greater cost to the Executive than the cost to the Executive immediately prior to such date; provided, however, that, unless the Executive consents to a different method (after taking into account the effect of such method on the calculation of “parachute payments” pursuant to Section 6.2 hereof), such health insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1 (B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the twenty-four (24) (or, if less, the number of months between the Date of Termination and the Executive’s scheduled date of Retirement) month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the date on which the Change in Control occurs. If the Severance Payments shall be decreased pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Executive the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code. In the event the Executive receives health insurance benefits during the twenty-four (24) month period following the Date of Termination pursuant to the foregoing provisions of this Section 6.1(B), the Executive and his or her dependents shall continue to be eligible for health insurance benefits for up to an additional sixty (60) months, provided however, that no benefits will be provided (i) if health insurance benefits are available to the Executive through another employer during such period, or (ii) after the insured individual reaches age 65. Such health insurance benefits shall be substantially similar to, and have no greater cost to the Executive than those in effect for the twenty-four (24) month period following the Date of Termination. Any benefits provided pursuant to this Section 6.1(B) in any one taxable year will not affect the amount of benefits to be provided in any other taxable year and no such benefits may be liquidated or exchanged for any other benefit. In the event any such benefits constitute reimbursement for expenses, such reimbursement must be made before the end of the calendar year following the calendar year in which the Notice expense was incurred. In the event any such benefits constitute a deferral of Termination is provided or (y) the highest compensation under Section 409A of the actual bonuses paid or payable to Code, such benefits will only be provided if the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is basedhas incurred a Separation from Service.
(BC) Notwithstanding any provision of any bonus planannual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the product of (i) the target bonus to which the Executive would have been entitled under the Company’s annual incentive plan in respect of the year in which the Date of Termination occurs and (ii) a fraction, the numerator of which shall be the number of months (including fractions thereof) from the first day of the fiscal year during which the Date of Termination occurs to the Date of Termination, and the denominator of which shall be twelve (12); provided, however, that if the Date of Termination occurs during the same year as the Change in Control, the payment under this Section 6.1(C) shall be offset by any payments received under the Company’s annual incentive plan in connection with such Change in Control.
(D) In addition to the retirement benefits to which the Executive is entitled under each Pension Plan or any successor plan thereto, the Company shall pay the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has the contributions that would have been allocated or awarded made by the Company to the Executive’s account in the ▇▇▇▇▇▇ Retirement Savings and Stock Ownership Plan; and (ii) the pay-related credits that would have been made to the Executive’s account in the ▇▇▇▇▇▇ Supplemental Executive for a completed fiscal year or other measuring period preceding Retirement Plan (the Date of Termination but has not yet been paid plans referred to in subsections (pursuant to Section 5.2 hereof or otherwisei) and (ii) a pro rata portion to hereof, “The Plans”), in each case, during the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after (or, if less, the number of months between the Date of Termination if Executive has more than one year but not more than two years and the Executive’s scheduled date of continuous service as an employee of Retirement) period immediately following the Company, and (iii) a thirty-six (36) month period after the Executive’s Date of Termination if based upon: (1) the terms and provisions of The Plans as in effect immediately prior to the Change in Control; (2) the lump sum payment set forth in Section 6.1(A) hereof, which lump sum shall be deemed to have been earned ratably over such period; and (3) the assumption that the Executive has more than two years of continuous service as an employee of was making the Company, the maximum allowable pre-tax contributions under The Plans during such period.
(E) The Company shall arrange to provide the Executive with lifeoutplacement services suitable to the Executive’s position for a period of one year or, disabilityif earlier, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which until the first acceptance by the Executive is receiving of an offer of employment.
(F) ▇▇▇▇▇▇ shall continue to maintain officers’ indemnification insurance for the Executive for a period of five years following the Date of Termination, the terms and conditions of which shall be no less favorable than the terms and conditions of the officers’ indemnification insurance maintained by ▇▇▇▇▇▇ for the Executive immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a date on which the Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive occurs.
(G) No payment will be made pursuant to this Section 6.1(C6.1 unless Executive has incurred a Separation from Service, and the aggregate amount of payments payable pursuant to this Section 6.1 constituting a deferral of compensation (for purposes of Section 409A of the Code) that are provided in the six-month period following such Separation from Service shall not exceed the amount set forth in Treasury Regulation §1.409A-1(b)(9)(iii)(A). To the extent the aggregate amount of such payments would exceed such amount, such excess shall be reduced deferred until the first day of the seventh month following such Separation from Service. If any payments (or portion thereof) are required to be deferred pursuant to the extent comparable benefits are actually received by or made available to preceding sentence, the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive order of deferred payments shall be reported to the Company by the Executivepayments specified in paragraphs (E), (D), (C), and (A) respectively.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits benefit received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, the Executive’s employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the "Severance Payments, being hereinafter called “Total Payments"), shall ”) will be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits subject (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and then, subject to the provisions of subsection (iiB) of this Section 6.2, the value Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction of any noncash benefits or Excise Tax on the Total Payments and any deferred payment or benefit federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be determined by equal to the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the CodeTotal Payments. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's ’s residence on the Date of Termination (or such other time as if there is hereinafter describedno Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of this Section 6.2), net of the maximum reduction in federal income taxes tax which could be obtained from deduction of such state and local taxes.
(CB) In the event that the amount of the Total Payments does not exceed 110% of the largest amount that would result in no portion of the Total Payments being subject to the Excise Tax (the “Safe Harbor”), then subsection (A) of this Section 6.2 shall not apply and the noncash Severance Payments shall first be reduced (if necessary, to zero), and the cash Severance Benefits shall thereafter be reduced (if necessary, to zero) so that the amount of the Total Payments is equal to the Safe Harbor.
(C) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute payments” within the meaning of section 280G(b)(2) of the Code, unless in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, ▇▇▇▇▇▇’▇ independent auditor (the “Auditor”), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments” within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its calculation of the amounts referred to in this Section 6.2(C) and such supporting materials as are reasonably necessary for the Executive to evaluate the Company’s calculations. If the Executive disputes the Company’s calculations (in whole or in part), the reasonable opinion of Tax Counsel with respect to the matter in dispute shall prevail.
(D) In the event that (i) amounts are paid to the Executive pursuant to subsection (A) of this Section 6.2, (ii) the Excise Tax is subsequently finally determined to be less than the amount taken into account hereunder at in calculating the time Gross-Up Payment, and (iii) after giving effect to such redetermination, the Severance Payments are to be reduced pursuant to subsection (B) of termination of the Executive's employment (or such other time as is hereinafter described)this Section 6.2, the Executive shall repay to the Company, at within five (5) business days following the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax and employment taxes imposed on the Gross-Up Payment being repaid by the Executive Executive), to the extent that such repayment results in (i) no portion of the Total Payments being subject to the Excise Tax and (ii) a dollar-for-dollar reduction in Excise Tax or a the Executive’s taxable income and wages for purposes of federal, state or and local income tax deductionand employment taxes) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(31274(b)(2)(B) of the Code. In the event that (x) the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's ’s employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment)) and (y) after giving effect to such redetermination, the Severance Payments should not have been reduced pursuant to subsection (B) of this Section 6.2, the Company shall make an additional Gross-Up Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to which the Company had not previously made a Gross-Up Payment (plus any interest, penalties or addition additions payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.exce
Appears in 1 contract
Sources: Management Continuity Agreement (Cooper Industries PLC)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of If the Executive's employment following a Change in Control and is terminated during the term of this AgreementTerm, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the Severance Payments upon termination of amounts, and provide the Executive's employment following a Potential Change in Control but before a Change in Control and during Executive the term of this Agreementbenefits, in addition to the payments and benefits described in this Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in Control."Severance Payments"):
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cashcash ("Cash Severance Payment"), equal to the Applicable Multiplier two times the sum of (i) the highest of the Executive's annual base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is basedor, or such salary if higher, in effect immediately prior to the Change in Control, first occurrence of an event or such salary in effect immediately prior to a Potential Change in Controlcircumstance constituting Good Reason, and (ii) the higher Executive's target annual bonus under any annual bonus or annual incentive plan maintained by the Company in respect of (x) the target bonus for the fiscal year in which occurs the Notice Date of Termination is provided or (y) or, if higher, the highest of fiscal year in which occurs the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the first event or circumstance upon which the Notice of Termination is basedconstituting Good Reason.
(B) Notwithstanding any provision of any bonus plan, For the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after immediately following the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with and his dependents life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which provided to the Executive is receiving and his dependents immediately prior to the Notice Date of Termination (without giving effect or, if more favorable to any reduction in such benefits subsequent the Executive, those provided to a Change in Control if such reduction constitutes the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason); Notwithstanding any other provision of this Agreement, at no greater after-tax cost to the Company shall continue Executive than the after-tax cost to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient Executive immediately prior to pay premiums under the policysuch date or occurrence. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C5 (B) shall be reduced to terminated in the extent comparable event that benefits of the same type are actually received by or made available to the Executive without cost during the above-referenced period. In addition, twelve (12) month period following the Executive's termination of employment (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In Notwithstanding the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time foregoing provisions of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment)this Section 5, the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by not be obligated to pay the Severance Payments to the Executive unless the Executive shall have signed a release of claims (other than with respect to such excess) at claims arising under this Agreement, that certain letter agreement between the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate dated as of August 5, 2004 (the "Offer Letter") or any documents evidencing grants or awards of equity based compensation, existing rights to indemnification or coverage under the Company's liability insurance policies, and rights under the Company's benefits plans not inconsistent with the other terms of this Agreement) in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ favor of the Company becomes entitled in a form to be prescribed by the Board, and all applicable rescission periods provided by law shall have expired. The Company shall pay the Cash Severance Payment to the payment provided for by this paragraph, such payment shall be made no later than Executive on or before the thirtieth day after the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later (ii) the date of payment for all or any part thereof; providedthe Notice of Termination, however, that, if and (iii) the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to date upon which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided conditions set forth in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (55(C) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may requireare satisfied.
Appears in 1 contract
Severance Payments. 6.1. The Subject to Section 6.2 hereof, the Company shall pay the Executive the payments and benefits described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement), in addition to the applicable payments and benefits described in Section 5 hereof, unless such upon any termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before after a Change in Control and during by the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused Company Without Cause or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in ControlReason.
(Ai) In lieu Within 15 days of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ExecutiveTermination, the Company shall pay make a lump sum cash payment to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (ia) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, (b) the highest annualized (for a partial year of service) annual aggregate bonuses paid, or such salary accrued to be paid if not then yet paid (or, in effect immediately prior to the event that the Executive has been recently hired and has not had a Potential Change in Controlfull fiscal year of employment and Profit Incentive Plan opportunity, and (ii) then the higher of (x) the target amount paid in the prior year, recalculated as if the Executive had been employed for the full entire year, or the planned amount of Profit Incentive Plan bonus payout for the Executive for the year in which the Notice termination occurs) to the Executive under the Profit Incentive Plan or its successor plan or by vote of Termination is the Board of Directors (or a committee thereof) or bonuses of Sales Incentive Compensation or other bonuses excluding any bonuses paid as part of the hiring process, in each case determined (except as provided or above with respect to a recently hired Executive) over the period beginning with the fifth (y5th) year preceding the year in which occurs the Change in Control and ending with the period in which occurs the Date of Termination, and (c) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of or Termination is basedbased or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as Within 15 days of the Date of Termination;
, the Company shall make an additional lump sum cash severance payment to the Executive equal to the annual level of contributions, credits or other benefits the Executive was receiving (Cor that were being made or were required to be made for the Executive's benefit) For for the most recent applicable plan period prior to the Change in Control or prior to the Notice of Termination (whichever is more favorable to the Executive under any employee benefits plan then existing including the SARP, the ESOP, the "excess benefit" restoration account under the Company's Supplemental Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella Pension Plan, the Company's matching contribution under its 401(k) plan applicable to the Executive and (subject to the following sentence) the LTDCIP (and in each case any successor plan or arrangement), in each case based on the levels of compensation taken into account under Section 6.1(i). In the case of the LTDCIP the payment shall equal to an amount equal to the award credit that would have been credited to the Executive's account under the LTDCIP for the calendar year in which the Date of Termination occurs, assuming for such year, (i) a the Company's Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount projected for the applicable year as Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case" provided to the Company's investment banker prior the Change in Control (or if not available, the best equivalent), and (ii) the Executive's percentage award opportunity had equaled the percentage award opportunity which was the Executive's most recent award level preceding the Change in Control. For the period of twelve (12) month period after months following the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with lifeany employee welfare benefits including health, dental, disability, life, and accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving on the same premium cost share basis as was applicable to the Executive immediately prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive (without utilizing or limiting the Executive's subsequent resort to COBRA rights under applicable laws and without giving effect to any reduction in such benefits subsequent to a Change in Control if such which reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive under any employee welfare benefits including health, dental, disability, life, and accident insurance pursuant to this Section 6.1(C6.1(ii) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost or at a lower cost than was charged to the Executive prior to the Change in Control or the Notice of Termination (whichever is more favorable to the Executive) during the above-referenced period. In addition, twelve (12) month period following the Executive's termination of employment (and any such benefits actually received or made available by the Executive shall be reported to the Company by the Executive.
(A) Whether or not ). In the event that the Company self-insures with respect to one of these benefits, such as for example dental benefits, then the Executive becomes entitled shall be reimbursed for all dental expenses during the 12- month period that would have been reimbursed under the self-funded policy in effect prior to the Notice of Termination or the Change in Control, whichever is more favorable to the Executive. If the benefits provided to the Executive under this Section 6.1(ii) shall result in a decrease, pursuant to Section 6.2, in the Severance Payments, if any Payments and as a result the Section 6.1(ii) benefits are thereafter reduced pursuant to the immediately preceding sentence because of the Total Payments will be subject to the Excise Taxreceipt or availability of comparable benefits, the Company shall shall, at the time of such reduction, pay to the Executive an additional the lesser of (a) the amount (of the "Gross-Up Payment") such that decrease made in the net amount retained by the Executive, after deduction of any Excise Tax on the Total Severance Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this pursuant to Section 6.2, shall or (b) the maximum amount which can be equal paid to the excess Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Total Payments over the payment provided for by this Section 6.2Code.
(B) For purposes 6.2. Notwithstanding any other provisions of determining whether this Agreement, in the event that any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments payment or benefits benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's termination of employment, employment (whether or not received pursuant to the terms of this Agreement or any other planotherwise) (all such payments and benefits, arrangement or agreement with including option benefits and the CompanySeverance Payments, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (being hereinafter called the "Total Payments"), shall ) would be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (subject in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject part to the Excise Tax unlessTax, in then the opinion of such tax counselSeverance Payments shall be reduced to the extent, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within but only to the meaning of section 280G(b)(4)(B) extent, necessary so that no portion of the Code), or are otherwise not Total Payments is subject to the Excise Tax; provided, and (ii) the value of any noncash benefits or any deferred payment or benefit that no such reduction shall be determined by effected unless the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the net amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of Total Payments after such reduction in Excise Tax is finally determined, the portion Severance Payments and after deduction of the Gross-Up Payment attributable to such reduction (plus that portion net amount of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed taxes on such reduced Total Payments would be greater than the Gross-Up Payment being repaid by excess of (A) the Executive net amount of the Total Payments without such reduction in the Severance Payments but after deduction of the net amount of federal, state and local income taxes (other than the Excise Tax) on such unreduced Total Payments, over (b) the Excise Tax to which the extent that such repayment results in Total Payments are subject. The determination as to whether a reduction in Excise Tax or a federalSeverance Payments is to be made under this Section 6.2 and, state or local income tax deduction) plus interest on if so, the amount of any such repayment at reduction shall be made by the rate provided firm of certified public accountants that had been acting as the Company's auditors prior to the Change in section 1274(b)(2)(3) Control or by such other firm of certified public accountants, benefits consulting firm or legal counsel as the Code. In Board may designate for such purpose, with the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination approval of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3Change in Control. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner auditor's calculations of the amounts referred to in which this Section 6.2 and such payments were calculated and supporting materials as are reasonably necessary for the basis for such calculations including, without limitation, any opinions or other advice Executive to evaluate the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)Company's calculations.
6.46.3. The In the event of a termination following a Change in Control, the Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any payment, benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
6.4. During the period of one year from the Termination Date, the Company shall engage, at the request of the Executive, made in writing in the Termination Notice or within ten days of receipt by the Executive of a Notice of Termination, a mutually agreed upon, full executive outplacement counseling service of national reputation, reasonably proximate to the Executive's home or home office, to assist the Executive in obtaining employment.
Appears in 1 contract
Sources: Cic Agreement (BNS Co)
Severance Payments. 6.1. The 6.1 Subject to Section 6.2 hereof, the Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company or the Bank for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlRetirement, or (iii) by the Executive without Good Reason. The Executive's employment shall be deemed to have been terminated following a Change in Control by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of with Good Reason if the Executive's employment following is terminated prior to a Change in Control without Cause at the direction of a Person who has entered into an agreement with the Company the consummation of which will constitute a Change in Control or if the Executive terminates his employment with Good Reason prior to a Change in Control (determined by treating a Potential Change in Control but before as a Change in Control and during in applying the term definition of this Agreement, in addition to Good Reason) if the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in Control.circum-
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit benefits otherwise payable to the ExecutiveExecutive under any then existing broad- based employee severance plan, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier three (3) times the sum of (i) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, Control and (ii) the higher of (x) the target bonus for the year in which the Notice of Termination is provided or (y) the highest average of the actual bonuses annual amounts paid to, or payable approved for, the Executive pursuant to the Executive for Performance Recognition Opportunity Plan, or any successor plan, with respect to the three (3) years (or the number of the five years completed employed, if less) immediately prior to preceding (a) the occurrence of the event or circumstance upon which the Notice of Termination is basedbased or (b) the Change in Control.
(B) Notwithstanding any provision In lieu of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with further life, disability, accident and health insurance benefits benefits
(and specifically C) The Executive shall continue to accrue service credit (for all purposes, including Executive's split-dollar life insurance arrangement now in effect)without limitation benefit accrual) under the Pension Plan, and all other material benefits Thrift Plan, the Bonus SERP, the Excess SERP or perquisites substantially similar to those which any successor plans thereto, at the Executive is receiving immediately prior compensation level equal to the Notice amount determined in accordance with Section 6.1(A) hereof for a period of Termination three (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); 3) years.
6.2 Notwithstanding any other provision provisions of this Agreement, in the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by event that any payment or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's termination of employment, employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the Severance Payments, being hereinafter called "Total Payments") would be subject (in whole or part) to the Excise Tax, then the Severance Payments shall be reduced to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (after taking into account any reduction in the Total Payments provided by reason of section 280G of the Code in such other plan, arrangement or agreement) if (A) the net amount of such Total Payments, as so reduced (and after deduction of the net amount of federal, state and local income tax on such reduced Total Payments), is greater than (B) the excess of (i) the net amount of such Total Payments, without reduction (but after deduction of the net amount of federal, state and local income tax on such Total Payments) over (ii) the amount of Excise Tax to which the Executive would be subject in respect of such Total Payments. For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have effectively waived in writing prior to the Date of Termination shall be treated as "parachute payments" taken into account, (within the meaning of section 280G(b)(2ii) no portion of the Code) unlessTotal Payments shall be taken into account which, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, reasonably acceptable to the Executive, such payments or benefits (in whole or in part) do does not constitute a "parachute paymentspayment" within the meaning of section 280G(b)(2) of the Code, (including by reason of section 280G(b)(4)(A) of the Code) and, and all "excess parachute payments" (within in calculating the meaning Excise Tax, no portion of section 280G(b)(1) of the Code) such Total Payments shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent taken into account which constitutes reasonable compensation for services actually rendered (rendered, within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject in excess of the Base Amount allocable to the Excise Taxsuch reasonable compensation, and (iiiii) the value of any noncash benefits non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditors Company in accordance with the principles of actions sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay Prior to the Company, at the time that the amount of such reduction payment date set forth in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment)Section 6.3 hereof, the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by provide the Executive with respect its calculation of the amounts referred to in this Section and such excess) at supporting materials as are reasonably necessary for the time that Executive to evaluate the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total PaymentsCompany's calculations. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.objects to
6.3. 6.3 The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments, and the limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company Executive, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).Company
6.4. 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or Agreement, in connection accordance with any tax audit or proceeding Section 14 hereof (including without limitation fees and expenses incurred in seeking to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that secure the Executive's action resulting in such legal fees and expenses was excessiverights provided by Section 14 hereof). Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Sources: Executive Employment Agreement (Bank of Boston Corp)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The Executive's employment shall be deemed to have been terminated, following a Change in Control by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of with Good Reason if the Executive's employment following is terminated prior to a Change in Control without Cause after consultation with a Person who has entered into an agreement with the Company the consummation of which will constitute a Change in Control or if the Executive terminates his employment with Good Reason prior to a Change in Control (determined by treating a Potential Change in Control but before as a Change in Control and during in applying the term definition of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason under Section 15(M)(i) through (vii) hereof) if the circumstance or by event that constitutes Good Reason occurs at the Company without Cause if a Change in Control had occurred on the date direction of the Potential Change in Controlsuch Person.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (i) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (x) the target bonus for the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses bonus paid or payable to the Executive pursuant to the Company's Bonus Plan or any successor thereto (the "Bonus Plan") for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus planthe Bonus Plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under the Bonus Plan but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods under the Bonus Plan calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), ) shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, reasonably acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(31274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section section 6.1 hereof (other than Section 6.1(C)), ) and in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(91274(b)(2)(B) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessivefrivolous. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Sources: Severance Agreement (Systems & Computer Technology Corp)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of If the Executive's employment following a Change in Control and is terminated during the term of this AgreementTerm, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the Severance Payments upon termination of amounts, and provide the Executive's employment following a Potential Change in Control but before a Change in Control and during Executive the term of this Agreementbenefits, in addition to the payments and benefits described in this Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in Control."Severance Payments"):
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cashcash ("Cash Severance Payment"), equal to the Applicable Multiplier two times the sum of (i) the highest of the Executive's annual base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is basedor, or such salary if higher, in effect immediately prior to the Change in Control, first occurrence of an event or such salary in effect immediately prior to a Potential Change in Controlcircumstance constituting Good Reason, and (ii) the higher Executive's target annual bonus under any annual bonus or annual incentive plan maintained by the Company in respect of (x) the target bonus for the fiscal year in which occurs the Notice Date of Termination is provided or (y) or, if higher, the highest of fiscal year in which occurs the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the first event or circumstance upon which the Notice of Termination is basedconstituting Good Reason.
(B) Notwithstanding any provision of any bonus plan, For the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after immediately following the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with and his dependents life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which provided to the Executive is receiving and his dependents immediately prior to the Notice Date of Termination (without giving effect or, if more favorable to any reduction in such benefits subsequent the Executive, those provided to a Change in Control if such reduction constitutes the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason); Notwithstanding any other provision of this Agreement, at no greater after-tax cost to the Company shall continue Executive than the after-tax cost to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient Executive immediately prior to pay premiums under the policysuch date or occurrence. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C5 (B) shall be reduced to terminated in the extent comparable event that benefits of the same type are actually received by or made available to the Executive without cost during the above-referenced period. In addition, twelve (12) month period following the Executive's termination of employment (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In Notwithstanding the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time foregoing provisions of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment)this Section 5, the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by not be obligated to pay the Severance Payments to the Executive unless the Executive shall have signed a release of claims (other than with respect to such excess) at claims arising under this Agreement, that certain letter agreement between the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate dated as of January 1, 2004 (the "Offer Letter") or any documents evidencing grants or awards of equity based compensation, existing rights to indemnification or coverage under the Company's liability insurance policies, and rights under the Company's benefits plans not inconsistent with the other terms of this Agreement) in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ favor of the Company becomes entitled in a form to be prescribed by the Board, and all applicable rescission periods provided by law shall have expired. The Company shall pay the Cash Severance Payment to the payment provided for by this paragraph, such payment shall be made no later than Executive on or before the thirtieth day after the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later (ii) the date of payment for all or any part thereof; providedthe Notice of Termination, however, that, if and (iii) the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to date upon which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided conditions set forth in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (55(C) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may requireare satisfied.
Appears in 1 contract
Severance Payments. 6.1. The 6.1 Subject to Section 6.2 hereof, the Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company or the Bank for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlRetirement, or (iii) by the Executive without Good Reason. The Executive's employment shall be deemed to have been terminated following a Change in Control by the Company shall pay without Cause or by the Executive the Severance Payments upon termination of with Good Reason if the Executive's employment following is terminated prior to a Change in Control without Cause at the direction of a Person who has entered into an agreement with the Company the consummation of which will constitute a Change in Control or if the Executive terminates his employment with Good Reason prior to a Change in Control (determined by treating a Potential Change in Control but before as a Change in Control and during in applying the term definition of this Agreement, in addition to Good Reason) if the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused circum- stance or directed by any Person who has initiated a transaction the consummation of event which would result in a Change in Control; and
(ii) the termination would have been by the Executive for constitutes Good Reason or by occurs at the Company without Cause if a Change in Control had occurred on the date direction of the Potential Change in Controlsuch Person.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit benefits otherwise payable to the ExecutiveExecutive under any then existing broad-based employee severance plan, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier two (2) times the sum of (i) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, Control and (ii) the higher of the average of the annual amounts paid to, or approved for, the Executive pursuant to the Performance Recognition Opportunity Plan, or any successor plan, with respect to the three (x3) years (or the number of years employed, if less) immediately preceding (a) the target bonus for the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence occur rence of the event or circumstance upon which the Notice of Termination is basedbased or (b) the Change in Control.
(B) Notwithstanding any provision In lieu of any bonus planfurther life, disability, accident and health insurance benefits otherwise due to the Executive, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded cost to the Executive for a completed fiscal year or other measuring period preceding Company (as determined by the Date Company in good faith with reference to its most recent actual experience) of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion providing such benefits, to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period extent that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving eligible to receive such benefits immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such which reduction constitutes Good Reason); , for a period of two (2) years commencing on the Date of Termination.
(C) The Executive shall continue to accrue service credit (for all purposes, including without limitation benefit accrual) under the Pension Plan, Thrift Plan, the Bonus SERP, the Excess SERP or any successor plans thereto, at the compensation level equal to the amount determined in accordance with Section 6.1(A) hereof for a period of two (2) years.
6.2 Notwithstanding any other provision provisions of this Agreement, in the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by event that any payment or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's termination of employment, employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the Severance Payments, being hereinafter called "Total Payments") would be subject (in whole or part) to the Excise Tax, then the Severance Payments shall be reduced to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (after taking into account any reduction in the Total Payments provided by reason of section 280G of the Code in such other plan, arrangement or agreement) if (A) the net amount of such Total Payments, as so reduced (and after deduction of the net amount of federal, state and local income tax on such reduced Total Payments), is greater than (B) the excess of (i) the net amount of such Total Payments, without reduction (but after deduction of the net amount of federal, state and local income tax on such Total Payments) over (ii) the amount of Excise Tax to which the Executive would be subject in respect of such Total Payments. For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have effectively waived in writing prior to the Date of Termination shall be treated as "parachute payments" taken into account, (within the meaning of section 280G(b)(2ii) no portion of the Code) unlessTotal Payments shall be taken into account which, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, reasonably acceptable to the Executive, such payments or benefits (in whole or in part) do does not constitute a "parachute paymentspayment" within the meaning of section 280G(b)(2) of the Code, (including by reason of section 280G(b)(4)(A) of the Code) and, and all "excess parachute payments" (within in calculating the meaning Excise Tax, no portion of section 280G(b)(1) of the Code) such Total Payments shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent taken into account which constitutes reasonable compensation for services actually rendered (rendered, within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject in excess of the Base Amount allocable to the Excise Taxsuch reasonable compensation, and (iiiii) the value of any noncash benefits non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditors Company in accordance with the principles of actions sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay Prior to the Company, at the time that the amount of such reduction payment date set forth in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment)Section 6.3 hereof, the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by provide the Executive with respect its calculation of the amounts referred to in this Section and such excess) at supporting materials as are reasonably necessary for the time that Executive to evaluate the amount of such excess is finally determinedCompany's calculations. The If the Executive and objects to the Company's calculations, the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect pay to the Total Payments. If an Executive who remains such portion of the Severance Payments (up to 100% thereof) as the Executive determines is necessary to result in the employ Executive receiving the greater of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of clauses (iA) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (iiB) twenty days prior to the date on which the Excise Tax is initially dueof this Section.
6.3. 6.3 The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments, and the limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company Executive, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(91274(b)(2)(B) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or Agreement, in connection accordance with any tax audit or proceeding Section 14 hereof (including without limitation fees and expenses incurred in seeking to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that secure the Executive's action resulting in such legal fees and expenses was excessiverights provided by Section 14 hereof). Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Sources: Executive Employment Agreement (Bank of Boston Corp)
Severance Payments. 6.1(A) Not in Connection with a Change in Control. The Company shall pay In the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of event that the Executive's ’s employment with the Corporation and its Affiliates terminates during the term of this Agreement and such termination does not occur coincident with or within one year following a Change in Control Control, the terms of this Paragraph (A) of Section 4 shall apply.
(i) By the Corporation for Cause or by Executive without Good Reason. f the Corporation terminates Executive’s employment for Cause or Executive terminates his or her employment with the Corporation without Good Reason, then the Corporation shall pay to Executive Executive’s base salary and any accrued vacation pay through the Date of Termination to the extent not theretofore paid, and such amount shall be paid in a lump sum within 30 days following the Date of Termination.
(ii) By the Corporation not for Cause or by Executive with Good Reason. If the Corporation terminates Executive’s employment not for Cause or Executive terminates his or her employment with the Corporation with Good Reason, then the Corporation shall pay to Executive:
(a) Executive’s base salary and any accrued vacation pay through the Date of Termination to the extent not theretofore paid and such amount shall be paid in a lump sum within 30 days following the Date of Termination;
(b) within (I) 30 days following the Date of Termination or (II) any earlier date as required by the Annual Incentive Plan, and subject to Sections 7 and 10 of this Agreement, the amount of any incentive compensation that has been allocated to, accrued to, earned by, or awarded to Executive for a completed fiscal year or other completed measuring period preceding the occurrence of the Date of Termination under any incentive compensation plan that has not yet been paid to Executive;
(c) Commencing on the first payroll date on or immediately following the 60th day following the Date of Termination, subject to Sections 7 and 10 of this Agreement, the Corporation shall pay to Executive an amount equal to the product of: (I) 1.5 (one and one-half) multiplied by (II) the sum of (x) Executive’s annual base salary in effect on the Date of Termination and (y) the average of the bonus payments paid to Executive under an Annual Incentive Plan during the three years (or lesser period if the Executive has been employed fewer than three full fiscal years) preceding the year in which the Date of Termination occurs. This amount will be paid to Executive in equal installments over a period of 1 year. Such installment payments will be made to Executive in accordance with the Corporation’s customary payroll practices; and
(d) Commencing on the first payroll date on or immediately following the 60th day following the Date of Termination and continuing for a period of 1 year, and subject to Sections 7 and 10 of this Agreement the Corporation shall pay to Executive, in equal installments over the course of the applicable payment period, an amount equal to the product of (I) Executive’s monthly premium for health, vision and dental insurance continuation coverage for Executive and Executive’s family under the Consolidated Omnibus Budget Reconciliation Act of 1985, based on the monthly premium rate for such coverage in effect on the Date of Termination, multiplied by (II) 12 months. The installment payments will be made to Executive in accordance with the Corporation’s customary payroll practices.
(B) Coincident with or within one year following a Change in Control. In the event that Executive’s employment with the Corporation and its Affiliates terminates during the term of this Agreement and such termination occurs coincident with or within one year following a Change in Control, the terms of this Paragraph (B) of Section 4 shall apply: 4871-5083-7000.3
(i) By the Corporation for Cause or by Executive without Good Reason. If the Corporation terminates Executive’s employment for Cause or Executive terminates his or her employment without Good Reason, then the Corporation shall pay to Executive Executive’s base salary and any accrued vacation pay through the Date of Termination to the extent not theretofore paid, and such amount shall be paid in a lump sum within 30 days following the Date of Termination.
(ii) Upon the occurrence of a Payment Trigger. If a Payment Trigger occurs during the term of this Agreement, in addition then the Corporation shall provide to Executive:
(a) within 30 days following the Date of Termination, Executive’s base salary and accrued vacation pay through the Date of Termination to the payments and benefits described in Section 5 hereof, unless such termination is extent not theretofore paid;
(ib) within (I) 30 days following the Date of Termination or (II) any earlier date as required by the Company for CauseAnnual Incentive Plan, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before a Change in Control and during the term subject to Sections 7 and 10 of this Agreement, in addition the amount of any incentive compensation that has been allocated to, accrued to, earned by, or awarded to Executive for a completed fiscal year or other completed measuring period preceding the occurrence of the Date of Termination under any incentive compensation plan that has not yet been paid to Executive;
(c) within (I) the 30-day period commencing on the 60th day following the Date of Termination, or (II) such later period as required by Section 6, and subject to Sections 7 and 10 of this Agreement, a lump sum payment equal to the payments product of (x) the Annual Incentive Target in effect immediately prior to the Payment Trigger and benefits described (y) a fraction, the numerator of which is the number of calendar days in Section 5 hereofthe current fiscal year through the Date of Termination, if:and the denominator of which is 365, reduced by the amount, if any, paid to Executive under the Annual Incentive Plan’s terms with respect to the fiscal year during which the Date of Termination occurs;
(id) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred Commencing on the first payroll date of on or immediately following the Potential Change in Control.
(A) In lieu of any further salary payments to the Executive for periods subsequent to 60th day following the Date of Termination and in lieu continuing for a period of any severance benefit otherwise payable 1 year, or within such other period as required by Section 6, and subject to the ExecutiveSections 7 and 10 of this Agreement, the Company Corporation shall pay to the Executive a lump sum severance paymentExecutive, in cashequal installments over the course of the applicable payment period, an amount equal to the Applicable Multiplier times product of: (I) two multiplied by, (II) the sum of: (x) the higher of (i1) the highest of the Executive's ’s annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, or such Change in Control and (2) Executive’s annual base salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, Payment Trigger; and (iiy) the higher average of the bonus payments paid to Executive under an Annual Incentive Plan during the three years (xor lesser period if the Executive has been employed fewer than three full fiscal years) the target bonus for preceding the year in which the Notice Date of Termination is provided or (y) occurs. The installment payments will be made to Executive in accordance with the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.Corporation’s customary payroll practices;
(Be) Notwithstanding any provision of any bonus plan, Commencing on the Company shall pay to first payroll date on or immediately following the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding 60th day following the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) continuing for a pro rata portion to the Date period of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company1 year, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange subject to provide the Executive with life, disability, accident Sections 7 and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision 10 of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company Corporation shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction in equal installments over the course of any Excise Tax on the Total Payments and any federalapplicable payment period, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be an amount equal to the excess product of (I) Executive’s monthly premium for health, vision and dental insurance continuation coverage for Executive and Executive’s family under the Total Payments over Consolidated Omnibus Budget Reconciliation Act of 1985, based on the payment provided monthly premium rate for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base coverage in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless multiplied by (II) 24 months. The installment payments will be made to Executive elects in accordance with the Corporation’s customary payroll practices; and
(f) subject to Sections 7 and 10 of this Agreement, up to $25,000 for executive transition/outplacement services received by Executive (I) prior to the expiration of the Non-Interference / Assistance Period (II) through a later date of payment for all or any part thereof; provided, however, that, if the amounts third party professional provider of such payments cannot services identified and retained by Executive. Such payment will be finally determined on or before paid directly to such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith third-party provider by the Company Corporation promptly following its receipt of an invoice from such provider confirming the minimum amount provision of such payments services to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of TerminationExecutive. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.4871-5083-7000.3
Appears in 1 contract
Severance Payments. 6.1. In the event that during the Term of Employment (i) Executive's employment is terminated by the Company for any reason except due to a termination by the Company for Cause (as defined in Section 6(d)), or (ii) Executive terminates his own employment hereunder for Good Reason or Retirement (as such terms are defined in Section 6(d)), the following severance benefits shall be provided to Executive or, in the event of his death before receiving all such benefits, to his Designated Beneficiary (as defined in Section 6(d)) following his death:
(1) The Company shall pay the to Executive the payments described in this Section 6.1 as additional compensation (the "Severance PaymentsAdditional Payment"), an amount which is equal to "Total Cash" (defined below). "Total Cash" means 1.5 times the sum of (A) upon Executive's annual Base Salary (as in effect immediately prior to his Termination Date) plus (B) Executive's current annual incentive target Bonus (Section 2(b)) for the full year in which the termination of employment occurred; provided, in the Executive's employment following event of a Change in Control and during the term a termination of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) Executive by the Company for without Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by for Retirement within the Company without Cause if six (6) months preceding or the 12 months following a Change in Control had occurred on the date of the Potential Change in Control.
, "Total Cash" shall be calculated as two (A2) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (iA) the highest of the Executive's annual base salary Base Salary (as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of his Termination is based, or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and Date) plus (iiB) the higher of (x) the Executive's current annual incentive target bonus Bonus (Section 2(b)) for the full year in which the Notice termination of Termination is provided employment occurred or (y) the highest of the actual bonuses paid or payable annual incentive Bonus received by Executive with respect to the Executive for any of the five years last three completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the fiscal years. The Company shall pay make the Additional Payment to the Executive in a cash lump sum amountnot later than 60 calendar days following the Termination Date and, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established if applicable with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(Cthat occurs within six (6) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, months after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment)Date, the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect a payment equal to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expensespositive difference, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by of the Additional Payment due under this Agreement or in connection with any tax audit or proceeding Section 6(b) applicable to the extent attributable Change in Control less the Additional Payment previously made pursuant to this Section 6(b) prior to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted Change in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may requireControl.
Appears in 1 contract
Severance Payments. 6.1. The 6.1 Subject to Section 6.2 hereof, if the Executive's employment terminates following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon ), in addition to any payments and benefits to which the termination Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive's employment is terminated by the Company without Cause prior to a Change in Control which actually occurs during the term of this Agreement and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment with Good Reason prior to a Change in Control which actually occurs during the term of this Agreement and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive's employment is terminated by the Company without Cause prior to a Change in Control and the Executive reasonably demonstrates that such termination is otherwise in connection with or in anticipation of a Change in Control which actually occurs during the term of this Agreement. For purposes of any determination regarding the applicability of the immediately preceding sentence, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in Control, or (iii) any position taken by the Executive without Good Reason. The shall be presumed to be correct unless the Company shall pay the Executive the Severance Payments upon termination of the Executive's employment following a Potential Change in Control but before a Change in Control and during the term of this Agreement, in addition establishes to the payments Committee by clear and benefits described in Section 5 hereof, if:
(i) the termination convincing evidence that such position is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in Controlnot correct.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier three times the sum of (i) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, or such based and the Executive's annual base salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the product of (a) the amount determined under clause (i) above and (b) the higher of (x) the target average percentage of base salary paid to or earned by the Executive pursuant to any annual bonus for or incentive plan maintained by the year Company in respect of the three years immediately preceding that in which the Date of Termination occurs or the average percentage of base salary paid to or earned by the Executive in respect of the three years immediately preceding that in which the Change in Control occurs.
(B) For the thirty-six (36) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits and Company-provided perquisites (including, but not limited to a Company car and club membership dues), in each case substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination is (without giving effect to any amendment to such benefits or perquisites made subsequent to a Change in Control which amendment adversely affects in any manner the Executive's entitlement to or the amount of such benefits); PROVIDED, HOWEVER, that, such health insurance benefits shall be provided through a third-party insurer. Benefits and perquisites otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent comparable benefits or (y) the highest of the actual bonuses paid perquisites are actually received by or payable made available to the Executive for without cost during the thirty-six (36) month period following the Executive's termination of employment (and any such benefits and perquisites actually received by or made available to the Executive shall be reported to the Company by the Executive). If the Severance Payments shall be decreased pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits or perquisites which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence because of the five years completed immediately prior receipt or availability of comparable benefits or perquisites, the Company shall, at the time of such reduction, pay to the occurrence Executive the least of (a) the amount of the event decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits or circumstance upon perquisites, or (c) the maximum amount which can be paid to the Notice Executive without being, or causing any other payment to be, nondeductible by reason of Termination is basedsection 280G of the Code.
(BC) Notwithstanding any provision of any bonus planannual or long-term incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date or otherwise has not yet been paid (pursuant to Section 5.2 hereof or otherwise) paid, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus incentive compensation awards to the Executive for all then uncompleted periods under any such plan, calculated as to each such award by multiplying the award that the Executive would have earned on the last day of the performance award period, assuming the achievement achievement, at the target level, of the target individual and corporate performance level within the performance range goals established with respect to such award award, by the fraction obtained by dividing the number of full months and basing such pro-rata portion upon the any fractional portion of the a month during such performance award period that has elapsed through the Date of Termination by the total number of months contained in such performance award period.
(D) In addition to the retirement benefits to which the Executive is entitled under each Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the excess of (i) the actuarial equivalent of the aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the date (but in no event earlier than the third anniversary of the Date of Termination) as of which the actuarial equivalent of such annuity is greatest) which the Executive would have accrued under the terms of all Pension Plans (without regard to any amendment to any Pension Plan made subsequent to a Change in Control and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of retirement benefits thereunder), determined as if the Executive were fully vested thereunder and had accumulated (after the Date of Termination) thirty-six (36) additional months of service credit thereunder and had been credited under each Pension Plan during such period with compensation at the higher of (i) the Executive's compensation (as defined in such Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or (ii) the Executive's compensation (as defined in such Pension Plan) during the twelve (12) months immediately preceding the Change in Control, over (ii) the actuarial equivalent of the aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the date (but in no event earlier than the Date of Termination) as of which the actuarial equivalent of such annuity is greatest) which the Executive had accrued pursuant to the provisions of the Pension Plans as of the Date of Termination;. For purposes of this Section 6.1(D), "actuarial equivalent" shall be determined using the same assumptions utilized under the Stone Container Corporation Salaried Employees Retirement Plan immediately prior to the Date of Termination.
(CE) For (i) a twelve (12) month period after If the Executive would have become entitled to benefits under the Company's post-retirement health care or life insurance plans, as in effect immediately prior to the Change in Control or the Date of Termination if Executive has one year or less (whichever is more favorable to the Executive), had the Executive's employment terminated at any time during the period of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period months after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with life, disability, accident and such post-retirement health care or life insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by and the Executive's dependents commencing on the later of (i) the date on which such coverage would have first become available and (ii) the date on which benefits described in subsection (B) of this Section 6.1 terminate.
(A) Whether Notwithstanding any other provisions of this Agreement, in the event that any payment or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's termination of employment, employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the Severance Payments, being hereinafter called "Total Payments") would be subject (in whole or part), to the Excise Tax, then, after taking into account any reduction in the Total Payments provided by reason of section 280G of the Code in such other plan, arrangement or agreement, the cash Severance Payments shall first be reduced, and the noncash Severance Payments shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (A) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments) is greater than (B) the excess of (i) the net amount of such Total Payments, without reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments), over (ii) the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments; PROVIDED, HOWEVER, that the Executive may elect (at any time prior to the delivery of a Notice of Termination hereunder) to have the noncash Severance Payments reduced (or eliminated) prior to any reduction of the cash Severance Payments.
(B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have effectively waived at such time and manner so that such portion does not constitute a "payment" within the meaning of section 280G(b) of the Code shall be treated as taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel reasonably acceptable to the Executive and selected by the accounting firm (the "Auditor") which was, immediately prior to the Change in Control, the Company's independent auditor, does not constitute a "parachute paymentspayment" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits Code (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code) and, and all "excess parachute payments" (within in calculating the meaning Excise Tax, no portion of section 280G(b)(1) of the Code) such Total Payments shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent taken into account which constitutes reasonable compensation for services actually rendered (rendered, within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject in excess of the Base Amount allocable to the Excise Taxsuch reasonable compensation, and (iiiii) the value of any noncash benefits non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditors Auditor in accordance with the principles of actions sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation .
6.3 The payments provided in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination subsections (or such other time as is hereinafter describedA), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment and (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3D) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination; PROVIDED, unless Executive elects a later date of payment for all or any part thereof; providedHOWEVER, however, that, that if the amounts of such payments, and the limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company Executive, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(91274(b)(2)(B) of the Code). At the time that payments are made under this sectionSection, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counselTax Counsel, auditors the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such issue hereunder relating to the termination or of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement, Agreement (in addition to the any payments and benefits described in to which the Executive is entitled under Section 5 and 8 hereof), unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The Company shall pay the Executive the Severance Payments upon termination For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated by the Company without Cause or by the Executive with Good Reason following a Potential Change in Control but before if (i) the Executive's employment is terminated without Cause prior to a Change in Control which actually occurs during the term of this Agreement and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment with Good Reason prior to a Change in Control which actually occurs during the term of this Agreement and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, (iii) the Executive's employment is terminated by the Company without Cause or by the Executive for Good Reason prior to a Change in Control and the Executive reasonably demonstrates that such termination is otherwise in connection with or in anticipation of a Change in Control which actually occurs during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
or (iiv) the termination Executive's employment is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been by the Executive for Good Reason or by the Company terminated without Cause if after a Potential Change in Control had occurred on the date of the type described in paragraph (I) of the definition of "Potential Change in Control".
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier two (2) times the sum of (i) the highest higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, based or such the Executive's highest annual base salary in effect during the three (3) completed fiscal years immediately prior to preceding the Change in Control, or such salary in effect immediately prior to a Potential Control (the "Change in ControlControl Salary"), and (ii) the higher of the highest annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three (x3) the target bonus for completed fiscal years immediately preceding the year in which the Notice Date of Termination is provided or (y) occurs, the highest annual bonus so earned in respect of the actual bonuses paid three (3) completed fiscal years immediately preceding the year in which the Change in Control occurs, or payable to the maximum of the bonus opportunity range for the Executive for any of the five years completed in effect immediately prior to the Date of Termination, or if higher, immediately prior to the first occurrence of the event or circumstance upon which constituting Good Reason (the Notice of Termination is based"Change in Control Bonus").
(B) Notwithstanding any provision of any bonus planannual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within incentive award under such plan for the performance then uncompleted period under such plan, calculated by multiplying the maximum of the bonus opportunity range established with respect to such award for the Executive by the fraction obtained by dividing the number of full months and basing such pro-rata portion upon the any fractional portion of the a month during such performance award period that has elapsed as of through the Date of Termination;Termination by the total number of months contained in such performance award period.
(C) For the two (i2) a twelve (12) month year period after immediately following the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive (which includes the Executive's eligible dependents for purposes of this paragraph (C)) with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is was receiving immediately prior to the Notice of Termination (without giving effect to any reduction in amendment to such benefits made subsequent to the earlier of a Potential Change in Control or a Change in Control if which amendment adversely affects in any manner the Executive's entitlement to or the amount of such reduction constitutes Good Reasonbenefits); Notwithstanding any other provision of this Agreementprovided, however, that, unless the Company Executive consents to a different method, such health insurance benefits shall continue to fund Executive's splitbe provided through a third-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policyparty insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits (including continued coverage for any preexisting medical condition of any person covered by the benefits provided to the Executive and his eligible dependents immediately prior to the Notice of Termination) are actually received by or made available to the Executive by a subsequent employer without cost during the above-referenced period. In addition, two (2) year period following the Executive's Date of Termination (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive). The applicable benefit continuation period for the Executive and the Executive's qualifying dependents under the Consolidated Omnibus Budget Reconciliation Act of 1984, as amended ("COBRA"), shall commence at the expiration of the period of continued benefits referenced above in this Section 6.1(C).
(D) Following a Change in Control, the Company shall provide the Executive with outplacement services suitable to the Executive's position for a period of one (1) year commencing on the date the Executive first uses such outplacement services; provided, however, such first use must occur during the two (2) year period following the Executive's Date of Termination.
(A) Whether Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or not distribution (or any acceleration of any payment, award, benefit or distribution) by the Company to or for the benefit of the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments paid or benefits received payable or to be received by the Executive in connection with a Change in Control distributed or the Executive's termination of employment, whether distributable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with otherwise) (a "Payment") would be subject to the Company, any Person whose actions result in a Change in Control excise tax imposed by Section 4999 of the Code or any Person affiliated interest or penalties are incurred by the Executive with respect to the Company or excise tax (such Person (excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Total PaymentsExcise Tax"), then the Executive shall be treated as entitled to receive an additional payment (a "parachute payments" (within the meaning of section 280G(b)(2Gross-Up Payment") of the Code) unless, in the opinion of tax counsel selected an amount such that after payment by the Company's independent auditors Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and reasonably, acceptable to the Executive, such payments or benefits (in whole or in partany interest and penalties imposed with respect thereto) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of imposed on the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the retains an amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable equal to such reduction the Excise Tax imposed upon the Payments.
(plus that portion B) Subject to the provisions of the Section 6.2(C), all determinations required to be made under this Section 6.2, including whether and when a Gross-Up Payment attributable to the Excise Tax is required and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the rate provided in section 1274(b)(2)(3Company (the "Accounting Firm") of which shall provide detailed supporting calculations both to the CodeCompany and the Executive within fifteen (15) business days after there has been a Payment, or such earlier time as requested by the Company. In the event that the Excise Tax Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to exceed this Section 6, shall be paid by the amount taken into account hereunder Company to the Executive within five (5) days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the termination initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 6.2(C) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive's employment .
(or such other time as is hereinafter describedC) (including by reason The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the existence or amount of which cannot be determined at the time Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which it gives such notice to the Company (or such shorter period ending on the date any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: give the Company any information reasonably requested by the Company relating to such claim; take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company; cooperate with the Company in good faith in order effectively to contest such claim; and permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 6.2(C), the Company shall make an additional Gross-Up Payment control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such excess claim and may, at its sole option, either direct the Executive to pay the tax claimed and ▇▇▇ for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and ▇▇▇ for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (plus including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any interest, penalties or addition payable by imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such excesscontested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(D) at If, after the time that receipt by the Executive of an amount advanced by the Company pursuant to Section 6.2(C), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 6.2(C)) promptly pay to the Company the amount of such excess refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 6.2(C), a determination is finally determined. The made that the Executive shall not be entitled to any refund with respect to such claim and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which does not notify the Executive notifies the Company that he is subject in writing of its intent to the Excise Tax and (ii) twenty days contest such denial of refund prior to the date on which expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the Excise Tax is initially dueamount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
6.3. The payments provided for in subsections (A), (B) and (C) of Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth thirtieth (30th) day following the Date of Termination, Termination unless Executive elects payable at a later date at the election of payment for all or any part thereofthe Executive in accordance with Section 17 hereof; provided, however, that, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company Executive of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at one hundred twenty percent (120%) of the rate provided in section Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth sixtieth (30th60th) day after the Date of Termination; provided, however, that in the event the Executive becomes entitled to Severance Payments pursuant to the second sentence of Section 6.1 (except for a termination occurring with respect to clause (iv) of such sentence, which shall be paid as set forth above) such payments shall be due and payable within thirty (30) days following the actual Change in Control that triggered the Severance Payments unless payable at a later date at the election of the Executive in accordance with Section 17 hereof. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at one hundred twenty percent (120%) of the rate provided in section 1274(b)(2)(9Section 1274(b)(2)(B) of the Code). At In the time that payments are made event the Company should fail to pay when due the amounts described in subsections (A), (B) and (C) of Section 6.1 hereof, the Executive shall also be entitled to receive from the Company an amount representing interest on any unpaid or untimely paid amounts from the due date, as determined under this sectionSection 6.3 (without regard to any extension of the Date of Termination pursuant to Section 7.3 hereof), the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement)date of payment at a rate equal to one hundred twenty (120%) of the rate provided in Section 1274(b)(2)(B) of the Code.
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such issue hereunder relating to the termination or of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section Section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.accom
Appears in 1 contract
Sources: Executive Employment Agreement (Inspire Pharmaceuticals Inc)
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this 6.1 Subject to Section 6.1 (the "Severance Payments") upon the termination of 6.2 hereof, if the Executive's employment is terminated following a Change in Control and during the term of this AgreementTerm, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 ("Severance Payments upon termination Payments"), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Potential Change in Control but before a Change in Control and during by the term of this AgreementCompany without Cause or by the Executive with Good Reason, in addition to the payments and benefits described in Section 5 hereof, if:
if (i) the Executive's employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination is initiated, caused was at the request or directed by any direction of a Person who has initiated a transaction entered into an agreement with the Company the consummation of which would result in constitute a Change in Control; and
, (ii) the termination would have been by the Executive for Good Reason or by the Company without Cause if a Change in Control had occurred on the date of the Potential Change in Control.terminates his employment for
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier [three] [one] times the sum of (i) the highest of the Executive's annual base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is basedor, or such salary if higher, in effect immediately prior to the Change in Control, first occurrence of an event or such salary in effect immediately prior to a Potential Change in Controlcircumstance constituting Good Reason, and (ii) the higher of (x) the target highest annual bonus for the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses paid or payable to earned by the Executive for pursuant to any annual bonus or incentive plan maintained by the Company in respect of any of the five three fiscal years completed ending immediately prior to the occurrence fiscal year in which occurs the Date of Termination or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance upon which the Notice of Termination is basedconstituting Good Reason.
(B) Notwithstanding any provision of any bonus plan, For the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a [thirty-six (36) )] [twelve (12)] month period after immediately following the Date of Termination if Executive has more than two years of continuous service as an employee of the CompanyTermination, the Company shall arrange to provide the Executive with and his dependents life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which provided to the Executive is receiving and his dependents immediately prior to the Notice Date of Termination (without giving effect or, if more favorable to any reduction in such benefits subsequent the Executive, those provided to a Change in Control if such reduction constitutes the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater cost to the Executive than the cost to the Executive immediately prior to such date
(C) If the Executive would have become entitled to benefits under the Company's post-retirement health care or life insurance plans, as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, had the Executive's employment terminated at any time during the period of [thirty-six (36); Notwithstanding any other provision ] [twelve (12)] months after the Date of this AgreementTermination, the Company shall continue to fund Executive's splitprovide such post-dollar retirement health care or life insurance arrangement until dividends payable under benefits to the policy are Executive
(D) The Company shall (i) either prepay all remaining premiums, or establish an irrevocable grantor trust holding an amount of assets sufficient to pay all such remaining premiums (which trust shall be required to pay such premiums), under any insurance policy insuring the policy. Benefits otherwise receivable by life of the Executive pursuant to this Section 6.1(Cunder any "split-dollar" insurance arrangement in effect between the Executive and the Company, and (ii) shall be reduced to the extent comparable benefits are actually received by or made available transfer to the Executive without any and all rights and incidents of ownership in such arrangements at no cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether Notwithstanding any other provisions of this Agreement, in the event that any payment or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's termination of employment, employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person Person) (all such payments and benefits, including the Severance Payments, being hereinafter called "Total Payments") would not be deductible (in whole or part), by the Company, an affiliate or Person making such payment or providing such benefit as a result of section 280G of the Code, then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments provided by reason of section 280G of the Code in such other plan, arrangement or agreement), the cash Severance Payments shall first be reduced (if necessary, to zero), and all other Severance Payments shall thereafter be reduced (if necessary, to zero); PROVIDED, HOWEVER, that the Executive may elect to have the noncash Severance Payments reduced (or eliminated) prior to any reduction of the cash Severance Payments.
(B) For purposes of this limitation, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a "payment" within the meaning of section 280G(b) of the Code shall be treated as taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, the Company's independent auditor (the "Auditor"), does not constitute a "parachute paymentspayment" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within iii) the meaning of section 280G(b)(1) of the Code) Severance Payments shall be treated as subject reduced only to the Excise Tax unless, extent necessary so that the Total Payments (other than those referred to in the opinion of such tax counsel, such excess parachute payments clauses (i) or (ii)) in whole or in part) represent their entirety constitute reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), Code or are otherwise not subject to disallowance as deductions by reason of section 280G of the Excise TaxCode, in the opinion of Tax Counsel, and (iiiv) the value of any noncash benefits benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditors Auditor in accordance with the principles of actions sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that, notwithstanding the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination good faith of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with in applying the other terms of this Section 6.2, the Total Payments paid to or for the Executive's benefit are in connection with an amount that would result in any administrative or judicial proceedings concerning the existence or amount portion of liability for Excise Tax with respect such Total Payments being subject to the Total Payments. If an Executive who remains Excise Tax, then, if such repayment would result in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) no portion of the fifth day following the date on which the Executive notifies the Company that he is remaining Total Payments being subject to the Excise Tax and (ii) twenty days prior a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, the Executive shall have an obligation to pay the Company upon demand an amount equal to the date on which sum of (i) the excess of the Total Payments paid to or for the Executive's benefit over the Total Payments that could have been paid to or for the Executive's benefit without any portion of such Total Payments being subject to the Excise Tax is initially dueTax; and (ii) interest on the amount set forth in clause (i) of this sentence at the rate provided in section 1274(b)(2)(B) of the Code from the date of the Executive's receipt of such excess until the date of such payment.
6.3. 6.3 The payments provided for in subsections (A) and (D) of Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination; PROVIDED, unless Executive elects a later date of payment for all or any part thereof; providedHOWEVER, however, that, that if the amounts of such payments, and the limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(91274(b)(2)(B) of the Code). At the time that payments are made under this sectionAgreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counselTax Counsel, auditors the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such issue hereunder relating to the termination or of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
Appears in 1 contract
Severance Payments. 6.1Upon any termination of the Executive’s employment by the Company without Cause or by the Executive for Good Reason, the Company shall pay as severance to the Executive an amount (the “Cash Severance Amount”) equal to one month of severance for each completed month of service (if the Company terminates the Executive’s employment within one year of the Executive’s start date), severance equal to the Executive’s then-current base salary, less any applicable withholdings. If the Company terminates the Executive’s employment on or after one year of the Executive’s start date for any reason other than for Cause, the Executive’s will be eligible for twelve months of severance equal to the Executive’s base salary, less any applicable withholdings; provided that the aggregate Cash Severance Amount shall not exceed the sum of twelve (12) months of the Executive’s Base Salary in effect immediately prior to the Date of Termination. The Company shall pay the Executive Cash Severance Amount over a number of months immediately following the payments described Date of Termination equal to the Employment Years (the “Severance Period”), in equal installments as nearly as practicable, on the normal payroll dates for employees of the Company generally but in no event less frequently than monthly. Any amounts payable pursuant to this Section 6.1 6(a) shall not be paid until the first scheduled payment date following the date the release contemplated in Section 6(d) is executed and no longer subject to revocation, with the first such payment being in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the Date of Termination if such deferral had not been required; provided, however, that any such amounts that constitute nonqualified deferred compensation within the meaning of Code Section 409A shall not be paid until the sixtieth (60th) day following such termination to the "Severance Payments"extent necessary to avoid adverse tax consequences under Code Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which the Executive would otherwise have been entitled during the period following the Date of Termination if such deferral had not been required; provided, further, that, if the Executive is a “specified employee” within the meaning of Code Section 409A, any amounts payable to the Executive under this Section 6(a) upon during the first six (6) months and one (1) day following the Date of Termination that constitute nonqualified deferred compensation within the meaning of Code Section 409A shall not be paid until the date that is six (6) months and one (1) day following such termination to the extent necessary to avoid adverse tax consequences under Code Section 409A, and, if such payments are required to be so deferred, the first payment shall be in an amount equal to the total amount to which the Executive would otherwise have been entitled to during the period following the Date of Termination if such deferral had not been required.
(a) In the event of any termination of the Executive's ’s employment following a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, or (ii) by reason of due to the Executive’s death or Disability more than six months following the Change in ControlDisability, or (iii) by the Executive without Good Reason. The shall not be entitled to any severance or other payments or benefits as of the Date of Termination (except as required by applicable law) and all rights to receive a salary, benefits or other compensation shall termination as of the Date of Termination except as set forth in Section 7.
(b) If the Executive breaches any provision of Sections 8 through 11 hereof, the Company shall pay the Executive the Severance Payments no longer be obligated to make any payments or reimbursements or provide any benefits pursuant to this Section 6.
(c) The Company’s obligations under this Section 6 shall be contingent upon termination of the Executive's employment following a Potential Change in Control but before a Change in Control and during the term of this Agreement, in addition to the payments and benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any Person who has initiated a transaction the consummation of which would result in a Change in Control; and
(ii) the termination would have been delivery by the Executive for Good Reason or by the Company without Cause if of a Change complete release in Control had occurred on the date favor of the Potential Change Company, its subsidiaries, affiliates, and respective officers, directors, employees, principals, managers, partners, members, attorneys and representatives, in Control.
substantially the form attached hereto as Annex A, within twenty-one (A21) In lieu of any further salary payments to the Executive for periods subsequent to days after the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier times the sum of (i) the highest of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based, or such salary in effect immediately prior to the Change in Control, or such salary in effect immediately prior to a Potential Change in Control, and (ii) the higher of (x) the target bonus for the year in which the Notice of Termination is provided or (y) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is basednot revoking such release.
(B) Notwithstanding any provision of any bonus plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any bonus amount which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or otherwise) and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards to the Executive for all uncompleted periods calculated as to each such award by assuming the achievement of the target performance level within the performance range established with respect to such award and basing such pro-rata portion upon the portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (the "Total Payments"), shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, and all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of actions 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(Cd) In the event that the Excise Tax is subsequently determined Company fails to be less than the amount taken into account hereunder at the time of termination pay any of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for amounts set forth in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B6(a) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery the date when due, the overdue amounts shall accrue interest at a rate equal to five (5%) per year until such overdue amounts and interest are paid. If the Executive dies during the postponement period prior to the payment in full of amounts set forth in Section 6(a), the unpaid amounts shall be paid to the personal representative of the Executive's written request for payment accompanied with such evidence of fees estate when due.
(e) The payments provided in Section 6(a) shall be in addition to the payments and expenses incurred as the Company reasonably may requirebenefits set forth in Section 7 hereof.
Appears in 1 contract
Severance Payments. 6.1. The Company shall pay the Executive the payments described in this 6.1 Subject to Section 6.1 6.2 hereof, if (the "Severance Payments"i) upon the termination of the Executive's ’s employment is terminated following a Change in Control and during the term of this AgreementTerm, in addition to the payments and benefits described in Section 5 hereof, unless such termination is other than (iA) by the Company for Cause, (iiB) by reason of death or Disability more than six months following the Change in ControlDisability, or (iiiC) by the Executive without Good Reason. The , then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments upon termination Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's ’s employment shall be deemed to have been terminated following a Potential Change in Control but before a Change in Control and during by the term of this AgreementCompany without Cause or by the Executive with Good Reason, in addition to the payments and benefits described in Section 5 hereof, if:
if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (but only if a Change in Control occurs no later than six (6) months following the Executive’s termination is initiated, caused of employment) and such termination was at the request or directed by any direction of a Person who has initiated a transaction entered into an agreement with the Company the consummation of which would result in constitute a Change in Control; and
, (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (but only if a Change in Control occurs no later than six (6) months following the Executive’s termination would have been of employment) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or by the Company without Cause circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (but only if a Change in Control had occurred on occurs no later than six (6) months following the date Executive’s termination of the Potential Change in Controlemployment).
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the Applicable Multiplier one times the sum of (i) the highest of the Executive's annual ’s base salary as in effect immediately prior to the occurrence of the event or circumstance upon which the Notice Date of Termination is basedor, or such salary if higher, in effect immediately prior to the Change in Control, first occurrence of an event or such salary in effect immediately prior to a Potential Change in Controlcircumstance constituting Good Reason, and (ii) the higher Executive’s target annual bonus under any annual bonus or incentive plan maintained by the Company in respect of (x) the target bonus for the fiscal year in which occurs the Notice Date of Termination is or, if higher, the fiscal year in which occurs the first event or circumstance constituting Good Reason.
(B) For the twelve month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, disability, accident and health insurance benefits substantially similar to those provided or (y) the highest of the actual bonuses paid or payable to the Executive for any of the five years completed and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of the an event or circumstance upon which constituting Good Reason, at no greater after-tax cost to the Notice Executive than the after-tax cost to the Executive immediately prior to such date or occurrence. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the twelve month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the after tax cost of such benefits to the Executive over such cost immediately prior to the Date of Termination is basedor, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason.
(BC) Notwithstanding any provision of any bonus planannual incentive plan to the contrary, the Company shall pay to the Executive a lump sum an amount, in cash, equal to the sum of (i) any bonus amount unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to Section 5.2 hereof or otherwise) a subsequent date, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent bonus awards Amount the Executive would have earned with respect to the year in which the Date of Termination occurs, calculated by multiplying the award that the Executive would have earned for all uncompleted periods calculated as to each such award by assuming year, based upon the actual level of achievement of the target performance level within the performance range goals established with respect to such award award, by the fraction obtained by dividing the number of full months and basing such pro-rata portion upon the any fractional portion of the award period that has elapsed as of the Date of Termination;
(C) For (i) a twelve (12) month period after during such year through the Date of Termination if Executive has one year or less of continuous service as an employee of the Company, by twelve (ii) a twenty-four (24) month period after the Date of Termination if Executive has more than one year but not more than two years of continuous service as an employee of the Company, and (iii) a thirty-six (36) month period after the Date of Termination if Executive has more than two years of continuous service as an employee of the Company, the Company shall arrange to provide the Executive with life, disability, accident and health insurance benefits (and specifically including Executive's split-dollar life insurance arrangement now in effect12), and all other material benefits or perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control if such reduction constitutes Good Reason); Notwithstanding any other provision of this Agreement, the Company shall continue to fund Executive's split-dollar life insurance arrangement until dividends payable under the policy are sufficient to pay premiums under the policy. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the above-referenced period. In addition, any such benefits actually received by the Executive shall be reported to the Company by the Executive.
(A) Whether Notwithstanding any other provisions of this Agreement, in the event that any payment or not the Executive becomes entitled to the Severance Payments, if any of the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section 6.2, shall be equal to the excess of the Total Payments over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or benefits benefit received or to be received by the Executive (including any payment or benefit received in connection with a Change in Control or the Executive's termination of the Executive’s employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with agreement) (all such payments and benefits, including the CompanySeverance Payments, any Person whose actions result in a Change in Control or any Person affiliated with being hereinafter referred to as the Company or such Person (the "“Total Payments"”) would be subject (in whole or part), to the Excise Tax, then, after taking into account any reduction in the Total Payments provided by reason of section 280G of the Code in such other plan, arrangement or agreement, the portion of the Total Payments that does not constitute deferred compensation within the meaning of section 409A of the Code shall first be reduced and the portion of the Total Payments that does constitute deferred compensation within the meaning of section 409A of the Code shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (A) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (B) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).
(B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of section 280G(b) of the Code shall be treated as "taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive, does not constitute a “parachute payments" (payment” within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably, acceptable to the Executive, such payments or benefits Code (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code) and, and all "excess parachute payments" (within in calculating the meaning Excise Tax, no portion of section 280G(b)(1) of the Code) such Total Payments shall be treated as subject to the Excise Tax unlesstaken into account which, in the opinion of such tax counselTax Counsel, such excess parachute payments (in whole or in part) represent constitutes reasonable compensation for services actually rendered (rendered, within the meaning of section 280G(b)(4)(B) of the Code), or are otherwise not subject in excess of the Base Amount allocable to the Excise Taxsuch reasonable compensation, and (iiiii) the value of any noncash benefits non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditors in accordance with the principles of actions sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, FICA taxes at the highest rate applicable with respect to wages in excess of the Social Security taxable wage base in effect for the year of payment, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or such other time as is hereinafter described), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment (or such other time as is hereinafter described), the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (or such other time as is hereinafter described) (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or addition payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. If an Executive who remains in the employ of the Company becomes entitled to the payment provided for by this paragraph, such payment shall be made no later than the later of (i) the fifth day following the date on which the Executive notifies the Company that he is subject to the Excise Tax and (ii) twenty days prior to the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made not later than the fifth day following the Date of Termination, unless Executive elects a later date of payment for all or any part thereof; provided, however, that, if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at the rate provided in section 1274(b)(2)(9) of the Code). At the time that payments are made under this sectionAgreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors Tax Counsel or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). If the Executive objects to the Company’s calculations, the Company shall pay to the Executive such portion of the Severance Payments (up to 100% thereof) as the Executive determines is necessary to result in the proper application of subsection A of this Section 6.2.
6.46.3 Subject to the provisions of Section 15 hereof, the payment provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth day following the Date of Termination. Notwithstanding the above, to the extent the Executive is terminated (i) following a Change in Control but prior to a change in ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company (within the meaning of section 409A of the Code) or (ii) prior to a Change in Control in a manner described in Section 6.1, to the extent required to avoid accelerated or additional tax under section 409A of the Code, amounts payable to the Executive hereunder, to the extent not in excess of the amount that the Executive would have received under any other pre-Change in Control severance plan or arrangement with the Company had such plan or arrangement been applicable, shall be paid at the time and in the manner provided by such plan or arrangement and the remainder shall be paid to the Executive in accordance with the provisions of this Section 6.3.
6.4 The Company also shall pay to the Executive all legal fees and expenses incurred in good faith by the Executive as a result of a termination of the Executive's employment following a Change in Control and during the term of this Agreement (including all such fees and expenses, if any, incurred in disputing in good faith any such issue hereunder relating to the termination or of the Executive’s employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to have acted in good faith unless an arbitrator finds that the Executive's action resulting in such legal fees and expenses was excessive. Such payments shall be made within five (5) business days after delivery of the Executive's ’s written request requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require; provided that in no event will payment be made for requests that are submitted later than December 15th of the year following the year in which the expense is incurred.
Appears in 1 contract
Sources: Severance Agreement (Covisint Corp)