Effect of Expiration or Termination of the Agreement. Promptly following the termination of the Agreement, and, except as otherwise expressly agreed to by the Company in writing: (a) Executive shall immediately resign from any and all other positions or committees which Executive holds or is a member of with the Company or any affiliate of the Company, including, but not limited to, as an officer and director of the Company or any affiliate of the Company. (b) Executive shall provide the Company with all reasonable assistance necessary to permit the Company to continue its business operations without interruption and in a manner consistent with reasonable business practices; provided, however, that such transition period shall not exceed thirty (30) days after termination nor require more than twenty (20) hours of Executive’s time per week and Executive shall be promptly paid for such time (at an hourly rate commensurate with a pro rata portion of his Salary) as if his employment were not terminated and shall be reimbursed for all out-of-pocket expenses. (c) Executive shall deliver to the Company possession of any and all property owned or leased by the Company which may then be in Executive’s possession or under his control, including, but not limited to, any and all such keys, credit cards, automobiles, equipment, supplies, books, records, files, computer equipment, computer software and other such tangible and intangible property of any description whatsoever. If, following the expiration or termination of the Term, Executive shall receive any mail addressed to the Company, then Executive shall immediately deliver such mail, unopened and in its original envelope or package, to the Company. (d) Other than as provided in this Section 7, the Company shall cease all other benefits and/or entitlements to participate in programs or benefits, if any, as of the effective date of termination, except medical insurance coverage that may be continued at Executive’s own expense as provided by applicable law or written Company policy. (e) Upon termination of Executive’s employment on account of Executive’s death pursuant to Section 6(a)(i) above, the Company shall pay to Executive’s estate a lump sum amount (the “Death Payment”) equal to the sum of (i) one year’s Salary as then in effect; (ii) the Annual Bonus with respect to the calendar year during which such death occurs, at target, prorated to reflect the number of days during such calendar year during which Executive was employed; (iii) the portion of any outstanding LTI Award that would have otherwise vested during the performance period in which such death occurs, at target, prorated to reflect the number of days during such calendar year during which Executive was employed (for the avoidance of doubt, in the case of an annual performance period, one (1) year, and, in the case of a three (3) cumulative performance period, three (3) years); (iv) any outstanding Retention Bonus that would have otherwise vested during the semi-annual period in which such death occurs, prorated to reflect the number of days during such period during which Executive was employed; (v) any accrued but unpaid Salary through the date of such death; (vi) any accrued but unused paid time off through the date of such death; and (vii) any unpaid Annual Bonus, LTI Award or Retention Bonus, in each case that was earned or vested prior to the date of such death. The Death Payment shall be paid to Executive not later than thirty (30) days after such death occurs. (f) Upon termination of Executive’s employment pursuant to Section 6(a)(ii) above with Cause, Section 6(b)(i) above without Good Reason or Section 2 above on account of Executive’s non-renewal of this Agreement, the Company shall pay Executive any accrued but unpaid Salary through the date of such termination and any accrued but unused paid time off through the date of such termination. (g) Upon termination of Executive’s employment pursuant to Section 6(a)(iii) above without Cause or Section 6(b)(ii) above for Good Reason or Section 2 above on account of the Company’s non-renewal of this Agreement, the Company shall provide Executive with the following payments and benefits (the “Severance”): (i) payments made in equal consecutive installments in accordance with the Company’s regular payroll practices during the twelve (12) months following such termination in an aggregate amount equal to the sum of (A) two (2) times the Salary at the highest annual rate in effect during the Term; (B) two (2) times (x) the Annual Bonus, if any, earned by Executive for the calendar year immediately preceding such termination or (y) if Executive was not eligible to earn an Annual Bonus with respect to such year, the Target Annual Bonus; plus (C) the balance of all outstanding unvested LTI Awards, at target, and any outstanding unvested Retention Bonus; (ii) payment of any unpaid Annual Bonus, LTI Award or Retention Bonus, in each case that was earned or vested prior to the date of such termination; and (iii) Company-paid COBRA coverage for Executive and his eligible dependents which shall be substantially equivalent to that provided by the Company prior to termination of Executive’s employment, until the earlier of (A) twenty-four (24) months after the date of such termination or (B) Executive’s acceptance of replacement coverage from a third-party employer. The Company’s obligation to provide the Severance is subject to Executive’s execution and non-revocation of a release of claims against the Company and its affiliates in substantially the form on Exhibit B attached hereto. In addition, upon Executive’s breach of any of the covenants set forth in Sections 8, 9 or 10 below, the Company’s obligation to provide the Severance shall immediately cease. In addition, the Company shall pay Executive any accrued but unpaid Salary through the date of such termination and any accrued but unused paid time off through the date of such termination. These accrued payments, together with the payment described in Section 6(g)(ii) above, shall be paid to Executive not later than thirty (30) days after the date of such termination. (h) For the avoidance of doubt, Executive acknowledges that, upon the effectiveness of this Agreement, he shall not have any right to terminate his employment for Good Reason (for this Section 7(h) only, as defined in the Existing Employment Agreement) and receive any payments and benefits in connection therewith. (i) If the Company or the Company’s accountants determine that any payment called for under this Agreement either alone or in conjunction with any other payments or benefits made available to Executive by the Company will result in Executive being subject to an excise tax (“Excise Tax”) under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or if an Excise Tax is assessed against Executive as a result of such payment or other payments and benefits, the Company shall make a Gross-Up Payment (as defined below) to or on behalf of Executive as and when such determination(s) and assessment(s), as appropriate, are made, subject to the conditions of this subsection (i). A “Gross-Up Payment” shall mean a payment to or on behalf of Executive that shall be sufficient to pay (x) any Excise Tax in full, (y) any federal, state and local income tax and Social Security or other employment tax on the payment made to pay such Excise Tax as well as any additional Excise Tax on the Gross-Up Payment and (z) any interest or penalties assessed by the Internal Revenue Service or any other applicable taxing authority on Executive if such interest or penalties are attributable to the Company’s failure to comply with its obligations under this subsection (i) or applicable law. Any determination under this subsection (i) by the Company or the Company’s accountants shall be made in accordance with Section 280G of the Code (including any applicable related regulations (whether proposed, temporary or final), any related Internal Revenue Service rulings and any related case law), and shall assume that Executive shall pay Federal income taxes at the highest marginal rate in effect for the year in which the Gross-Up Payment is made and state and local income taxes at the highest marginal rate in effect in the state of Executive’s residence for such year. Executive shall take such action (other than waiving Employee’s right to any payments or benefits) as the Company reasonably requests under the circumstances to mitigate or challenge such tax. If the Company reasonably requests that Executive take action to mitigate or challenge any such tax or assessment and Executive complies with such request, the Company shall provide Executive with such information and such expert advice and assistance from the Company’s accountants, lawyers and other advisors as Executive may reasonably request and shall pay for all expenses incurred in effecting such compliance and any related fines, penalties, interest and other assessments. Subject to the provisions of this subsection (i), all determinations required to be made under this subsection (i), including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by an independent public accounting firm retained by the Company (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and Executive within thirty (30) business days of the receipt of notice from the Company or Executive, with a copy to the other party, that there has been a payment that could trigger a Gross-Up Payment, or such earlier time as is requested by the Company (collectively, the “Determination”), which shall be binding upon the Company and Executive. All fees and expenses of the Accounting Firm shall be borne solely by the Company and the Company shall enter into any agreement reasonably requested by the Accounting Firm in connection with the performance of the services hereunder. The Gross-Up Payment under this subsection (i) shall be made no later than sixty (60) days following such payments; provided that the Gross-Up Payment shall in all events be paid no later than the end of Executive’s taxable year next following the Executive’s taxable year in which the Excise Tax (and any income or other related taxes or interest or penalties thereon) on a payment are remitted to the Internal Revenue Service or any other applicable taxing authority. As a result of any uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”) or Gross-Up Payments are made by the Company which should not have been made (“Overpayment”), consistent with the calculations required to be made hereunder. In the event that Executive thereafter is required to make payment of any additional Excise Tax, any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the benefit of Executive. In the event the amount of the Gross-Up Payment exceeds the amount necessary to reimburse Executive for his Excise Tax as herein set forth, such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by Executive to or for the benefit of the Company. Executive shall cooperate, to the extent Executive’s expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax. The Company’s obligation to provide the Gross-Up Payment is subject to Executive’s execution and non-revocation of a release of claims against the Company and its affiliates in substantially the form on Exhibit B attached hereto.
Appears in 3 contracts
Samples: Employment Agreement (Sciele Pharma, Inc.), Employment Agreement (Sciele Pharma, Inc.), Employment Agreement (Sciele Pharma, Inc.)
Effect of Expiration or Termination of the Agreement. Promptly following the termination of the Agreement, and, except as otherwise expressly agreed to by the Company in writing:
(a) Executive shall immediately resign from any and all other positions or committees which Executive holds or is a member of with the Company or any affiliate of the Company, including, but not limited to, as an officer and director of the Company or any affiliate of the Company.
(b) Executive shall provide the Company with all reasonable assistance necessary to permit the Company to continue its business operations without interruption and in a manner consistent with reasonable business practices; provided, however, that such transition period shall not exceed thirty (30) days after termination nor require more than twenty (20) hours of Executive’s time per week and Executive shall be promptly paid for such time (at an hourly rate commensurate with a pro rata portion of his Salary) as if his employment were not terminated and shall be reimbursed for all out-of-pocket expenses.
(c) Executive shall deliver to the Company possession of any and all property owned or leased by the Company which may then be in Executive’s possession or under his control, including, but not limited to, any and all such keys, credit cards, automobiles, equipment, supplies, books, records, files, computer equipment, computer software and other such tangible and intangible property of any description whatsoever. If, following the expiration or termination of the Term, Executive shall receive any mail addressed to the Company, then Executive shall immediately deliver such mail, unopened and in its original envelope or package, to the Company.
(d) Other than as provided in this Section 7, the Company shall cease all other benefits and/or entitlements to participate in programs or benefits, if any, as of the effective date of termination, except medical insurance coverage that may be continued at Executive’s own expense as provided by applicable law or written Company policy.
(e) Upon termination of Executive’s employment on account of Executive’s death pursuant to Section 6(a)(i) above, the Company shall pay to Executive’s estate a lump sum amount (the “Death Payment”) equal to the sum of (i) one year’s Salary as then in effect; (ii) the Annual Bonus with respect to the calendar year during which such death occurs, at target, prorated to reflect the number of days during such calendar year during which Executive was employed; (iii) the portion of any outstanding LTI Award that would have otherwise vested during the performance period in which such death occurs, at target, prorated to reflect the number of days during such calendar year during which Executive was employed (for the avoidance of doubt, in the case of an annual performance period, one (1) year, and, in the case of a three (3) cumulative performance period, three (3) years); (iv) any outstanding Retention Bonus that would have otherwise vested during the semi-annual period in which such death occurs, prorated to reflect the number of days during such period during which Executive was employed; (v) any accrued but unpaid Salary through the date of such death; (vi) any accrued but unused paid time off through the date of such death; and (vii) any unpaid Annual Bonus, LTI Award or Retention Bonus, in each case that was earned or vested prior to the date of such death. The Death Payment shall be paid to Executive not later than thirty (30) days after such death occurs.
(f) Upon termination of Executive’s employment pursuant to Section 6(a)(ii) above with Cause, Section 6(b)(i) above without Good Reason or Section 2 above on account of Executive’s non-renewal of this Agreement, the Company shall pay Executive any accrued but unpaid Salary through the date of such termination and any accrued but unused paid time off through the date of such termination.
(g) Upon termination of Executive’s employment pursuant to Section 6(a)(iii) above without Cause or Section 6(b)(ii) above for Good Reason or Section 2 above on account of the Company’s non-renewal of this Agreement, the Company shall provide Executive with the following payments and benefits (the “Severance”):
(i) payments made in equal consecutive installments in accordance with the Company’s regular payroll practices during the twelve (12) months following such termination in an aggregate amount equal to the sum of (A) two (2) times the Salary at the highest annual rate in effect during the Term; (B) two (2) times (x) the Annual Bonus, if any, earned by Executive for the calendar year immediately preceding such termination or (y) if Executive was not eligible to earn an Annual Bonus with respect to such year, the Target Annual Bonus; plus (C) the balance of all outstanding unvested LTI Awards, at target, and any outstanding unvested Retention Bonus;
(ii) payment of any unpaid Annual Bonus, LTI Award or Retention Bonus, in each case that was earned or vested prior to the date of such termination; and
(iii) Company-paid COBRA coverage for Executive and his eligible dependents which shall be substantially equivalent to that provided by the Company prior to termination of Executive’s employment, until the earlier of (A) twenty-four (24) months after the date of such termination or (B) Executive’s acceptance of replacement coverage from a third-party employer. The Company’s obligation to provide the Severance is subject to Executive’s execution and non-revocation of a release of claims against the Company and its affiliates in substantially the form on Exhibit B attached hereto. In addition, upon Executive’s breach of any of the covenants set forth in Sections 8, 9 or 10 below, the Company’s obligation to provide the Severance shall immediately cease. In addition, the Company shall pay Executive any accrued but unpaid Salary through the date of such termination and any accrued but unused paid time off through the date of such termination. These accrued payments, together with the payment described in Section 6(g)(ii) above, shall be paid to Executive not later than thirty (30) days after the date of such termination.
(h) For the avoidance of doubt, Executive acknowledges that, upon the effectiveness of this Agreement, he shall not have any right to terminate his employment for Good Reason (for this Section 7(h) only, as defined in the Existing Employment Agreement) and receive any payments and benefits in connection therewith.
(i) If the Company or the Company’s accountants determine that any payment called for under this Agreement either alone or in conjunction with any other payments or benefits made available to Executive by the Company will result in Executive being subject to an excise tax (“Excise Tax”) under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or if an Excise Tax is assessed against Executive as a result of such payment or other payments and benefits, the Company shall make a Gross-Up Payment (as defined below) to or on behalf of Executive as and when such determination(s) and assessment(s), as appropriate, are made, subject to the conditions of this subsection (i). A “Gross-Up Payment” shall mean a payment to or on behalf of Executive that shall be sufficient to pay (x) any Excise Tax in full, (y) any federal, state and local income tax and Social Security or other employment tax on the payment made to pay such Excise Tax as well as any additional Excise Tax on the Gross-Up Payment and (z) any interest or penalties assessed by the Internal Revenue Service or any other applicable taxing authority on Executive if such interest or penalties are attributable to the Company’s failure to comply with its obligations under this subsection (i) or applicable law. Any determination under this subsection (i) by the Company or the Company’s accountants shall be made in accordance with Section 280G of the Code (including any applicable related regulations (whether proposed, temporary or final), any related Internal Revenue Service rulings and any related case law), and shall assume that Executive shall pay Federal income taxes at the highest marginal rate in effect for the year in which the Gross-Up Payment is made and state and local income taxes at the highest marginal rate in effect in the state of Executive’s residence for such year. Executive shall take such action (other than waiving Employee’s right to any payments or benefits) as the Company reasonably requests under the circumstances to mitigate or challenge such tax. If the Company reasonably requests that Executive take action to mitigate or challenge any such tax or assessment and Executive complies with such request, the Company shall provide Executive with such information and such expert advice and assistance from the Company’s accountants, lawyers and other advisors as Executive may reasonably request and shall pay for all expenses incurred in effecting such compliance and any related fines, penalties, interest and other assessments. Subject to the provisions of this subsection (i), all determinations required to be made under this subsection (i), including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by an independent public accounting firm retained by the Company (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and Executive within thirty (30) business days of the receipt of notice from the Company or Executive, with a copy to the other party, that there has been a payment that could trigger a Gross-Up Payment, or such earlier time as is requested by the Company (collectively, the “Determination”), which shall be binding upon the Company and Executive. All fees and expenses of the Accounting Firm shall be borne solely by the Company and the Company shall enter into any agreement reasonably requested by the Accounting Firm in connection with the performance of the services hereunder. The Gross-Up Payment under this subsection (i) shall be made no later than sixty (60) days following such payments; provided that the Gross-Up Payment shall in all events be paid no later than the end of Executive’s taxable year next following the Executive’s taxable year in which the Excise Tax (and any income or other related taxes or interest or penalties thereon) on a payment are remitted to the Internal Revenue Service or any other applicable taxing authority. As a result of any uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”) or Gross-Up Payments are made by the Company which should not have been made (“Overpayment”), consistent with the calculations required to be made hereunder. In the event that Executive thereafter is required to make payment of any additional Excise Tax, any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the benefit of Executive. In the event the amount of the Gross-Up Payment exceeds the amount necessary to reimburse Executive for his Excise Tax as herein set forth, such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by Executive to or for the benefit of the Company. Executive shall cooperate, to the extent Executive’s expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax. The Company’s obligation to provide the Gross-Up Payment is subject to Executive’s execution and non-revocation of a release of claims against the Company and its affiliates in substantially the form on Exhibit B attached hereto.defined
Appears in 3 contracts
Samples: Employment Agreement (Sciele Pharma, Inc.), Employment Agreement (Sciele Pharma, Inc.), Employment Agreement (Sciele Pharma, Inc.)
