Restructuring Compensation Clause Samples
The Restructuring Compensation clause defines how compensation will be handled in the event of a company restructuring, such as mergers, acquisitions, or significant organizational changes. Typically, this clause outlines the conditions under which employees or contractors may receive severance, bonuses, or adjusted pay, and may specify eligibility criteria or calculation methods for such payments. Its core practical function is to provide clarity and predictability regarding financial entitlements during periods of organizational change, thereby protecting both parties from disputes and uncertainty.
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Restructuring Compensation. (i) Employee and Employer agree that, in addition to all other cash compensation specified herein, Employee shall be entitled to an additional cash award equal to seventy-three and thirty-five hundredths percent (73.35%) of his Base Salary (the “Restructuring Award”) subject to Employee’s continued employment by Employer on (and not having delivered a notice of resignation other than for good reason prior to) the effective date of the Restructuring, or if Section 3(h)(v) below applies, the effective date of the closing of the Sale During Restructuring (in either case such date, as applicable, the “Restructuring Award Vesting Date”). The Restructuring Award shall be payable on the Restructuring Award Vesting Date.
(ii) Employee and Employer agree that, in connection with the Restructuring, Employer shall establish a customary management incentive plan (the “MIP”) under which officers and other key employees of Employer, including Employee, shall be eligible to receive, in the aggregate, (a) awards denominated or payable in shares of the new common stock of the restructured Employer and (b) New Notes (as defined in the RSA or the term sheet attached thereto) convertible into shares of the new common stock of the restructured Employer. The shares reserved under the MIP, whether granted directly under the MIP or issuable upon conversion of New Notes granted under the MIP (the “MIP Aggregate Equity”), shall be equal in the aggregate to ten percent (10%) of the equity of the restructured Employer as of the effective date of the Restructuring on a fully diluted basis (exclusive of any shares of new common stock issuable upon conversion of any New Notes issued to purchasers for new money in the Rights Offering (as defined in the RSA or the term sheet attached thereto) but including any shares of new common stock attributable to original issue discount or the Put Option Payment (as defined in the RSA or the term sheet attached thereto)). Employer and Employee agree that the MIP shall provide for a grant of sixty percent (60%) of the MIP Aggregate Equity (inclusive of the New Notes portion) on the effective date of the Restructuring (the “Initial 60% Award”) and that forty percent (40%) the MIP Aggregate Equity under the MIP shall be reserved for issuance in respect of awards to be granted pursuant to the MIP following the Restructuring, in the discretion of the Board (such reserved amount, plus any granted but unvested shares or New Notes that for any reason in acc...