Severance Payments. 6.1 If the Executive incurs a “separation from service” (within the meaning of section 409A) 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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 shall be deemed to have incurred a separation from service 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 (whether or not a Change in Control occurs) 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 for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A. (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 times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Severance Agreement (Stanley Black & Decker, Inc.)

Severance Payments. ~~6.1~~ 5.1 If the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive’s employment is terminated 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~~ then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section ~~6.1~~ 5.1 (“Severance Payments”)) and Section 5.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 4 hereof. ~~For~~ Solely for purposes of determining whether termination occurred following a Change in Control pursuant to this ~~Agreement~~Agreement (and without any implication that a Change in Control has in fact occurred), the ~~Executive~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ 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 ~~(whether or not a Change in Control occurs)~~ and such termination was at the ~~request~~ request, direction or ~~direction~~ suggestion, directly or indirectly, of a Person who has entered into an agreement or with whom the Company contemplates will enter into an agreement with the Company the consummation of which would constitute a Change in ~~Control~~Control or, (ii) the Executive terminates his employment for Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the ~~request~~ request, direction or ~~direction~~ suggestion of such ~~Person, or~~ Person described in clause (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occursi). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the average cash value of annual bonus (whether paid in cash or stock) earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason; provided, that if the Executive has not participated in an annual bonus or incentive plan maintained by the Company for the entirety of such three-year period, the amount referred to in this clause (ii) shall be calculated using such lesser number of bonuses as have been actually earned by the Executive in respect of such lesser period. (B) For the twenty-four (24) 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 and perquisites (including, but not limited to, executive life insurance, club memberships, financial planning and tax preparation, annual physical examination and charitable contributions), in each case, 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~method (after taking into account the effect of such method on the calculation of “parachute payments” pursuant to Section 5.2 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~~5.1(B) shall be reduced to the extent benefits of the same type are received by the Executive under any individual or group policy or program, or made available to the Executive under a group plan whether by reason of the employment of the Executive or the employment of the spouse of the Executive, during the ~~twenty~~thirty-~~four~~ six (2436) 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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) ~~In addition to~~ Notwithstanding any provision of the ~~benefits to which~~ Company’s management incentive compensation plan (the ~~Executive is entitled under the DC Pension~~ “Annual Incentive Plan”), the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the ~~amount that would have been contributed thereto by~~ Executive for a completed fiscal year or other measuring period preceding the ~~Company on~~ Date of Termination under the ~~Executive’s behalf during the twenty-four (24) months immediately following~~ Annual Incentive Plan and which, as of the Date of Termination, ~~determined (x) as if~~ is contingent only upon the continued employment of the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder~~subsequent date, and (ii) ~~the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the~~ a pro rata portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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~~ of the aggregate value of all contingent incentive compensation awards to the ~~Executive~~Executive for all then uncompleted periods under the Annual Incentive Plan, calculated as ~~in effect immediately prior~~ to each such award by multiplying the ~~first occurrence~~ award that the Executive would have earned as of ~~an event or circumstance constituting Good Reason~~the last day of the performance award period, ~~had~~ assuming the ~~Executive’s employment terminated~~ achievement, at the expected value target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any ~~time~~ fractional portion of a month during ~~the~~ such performance award period ~~of twenty-four (24) months after~~ through the Date of ~~Termination~~Termination by the total number of months contained in such performance award period; provided, however, that if such termination of employment occurs during the same year in which the Change in Control occurs, the ~~Company shall provide such post~~pro-~~retirement health care and/or life insurance benefits~~ rata bonus payment referred to ~~the Executive and the Executive’s dependents commencing on the later of (i) the date on which such coverage would have first become available and~~ in clause (ii) above shall be offset by any payments received under the ~~date on which benefits described~~ Annual Incentive Plan in ~~subsection (B) of this Section 6.1 terminate~~connection with such Change in Control. (ED) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar~~ one year ~~following such Date of Termination~~ or, if earlier, until the first acceptance by the Executive of an offer of employment~~, provided, however, that~~ . (E) The Executive shall have a fully nonforfeitable interest in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s ~~Date of Termination~~benefits accrued, if any, under the ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Supplemental Retirement Plan and the ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Supplemental Executive Retirement Plan. 5.2 (FA) ~~For the twenty-four (24) month period immediately following the Date of Termination~~ Whether or ~~until~~ not the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior entitled to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this AgreementSeverance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) ~~would~~ will be subject ~~(in whole or part),~~ to the Excise Tax, ~~then~~the Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments provided by reason of section 280G of the Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and ~~after subtracting the net amount of~~ any federal, ~~state, municipal~~ state and local income and employment taxes ~~on such reduced Total Payments~~ and ~~after taking into account~~ Excise Tax upon the ~~phase out~~Gross-Up Payment, ~~if any, of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or~~ shall be equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a~~ “~~payment~~parachute payments” (within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii~~Code) ~~no portion of the Total Payments will be taken into account which~~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, the Company’s independent auditor (the “Auditor”), ~~does~~ such payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all “excess parachute payments” within the meaning of section 280G(b)(1) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ such excess parachute payments (in whole or in part) represent reasonable compensation for services actually ~~rendered,~~ 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~~ section 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 tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made 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 if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of this Section 5.2), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (C) ~~All determinations required by this Section 6.2 (or requested by either~~ In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Executive or shall repay to the ~~Company~~ Company, within five (5) business days following the time that the amount of such reduction in ~~connection with this Section 6.2) will be at~~ the ~~expense~~ Excise Tax is fully determined, the portion of the ~~Company. The fact~~ 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 and employment taxes imposed on the Gross-Up Payment being repaid by the Executive, to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive’s ~~right~~ taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to ~~payments or benefits may be reduced~~ exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the ~~limitations contained in this Section 6.2 will~~ existence or amount of which cannot ~~of itself limit or otherwise affect any other rights~~ 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 additions payable by the Executive ~~under this Agreement~~with respect to such excess) 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. ~~6.3 Subject to Section 6.4, the~~ 5.3 The payments provided in ~~subsections~~ subsection (A) and (C) of Section ~~6.1~~ 5.1 hereof and in Section 5.2 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination; 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 Executive or, in the case of payments under Section 5.2 hereof, in accordance with Section 5.2 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 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)(B) of the Code), but only to the extent such amount has not been paid by the Executive pursuant to Section 5.2(C) above. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following 5.4 If the Executive’s ~~separation from service (~~employment with the ~~“Delayed Payments”)~~ Company is terminated following a Change in Control and ~~benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”)~~ during the ~~six-month period immediately following the Executive’s separation from service (such period~~Term, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall ~~also reimburse~~ pay to the Executive ~~for the after-tax cost~~ all legal fees and expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive’s employment, ~~such reimbursement~~ 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. Such payments shall be made ~~on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount~~ within five (5) business days after delivery of ~~reimbursements or in-kind benefits to be provided in any other taxable year, nor shall~~ the Executive’s ~~right to reimbursement or in-kind benefits be subject to liquidation or exchange~~ written requests for ~~another benefit~~payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Stewart & Stevenson Services Inc)

Severance Payments. ~~6.1 If~~ 10.1 The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 10.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a ~~Change in~~ Change- in-Control and ~~during~~ prior to the ~~Term~~end of the Change-in-Control Protective Period, ~~other than~~ in addition to the payments and benefits described in Sections 6 and 7 hereof, unless such termination is (Ai) by the Company for Cause, (Bii) by reason of ~~death~~ death, Disability or ~~Disability~~Retirement, or (Ciii) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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 shall be deemed to have incurred a separation from service following a Change in Control by the Company without Cause or by the Executive with Good Reason~~immediately preceding sentence, if ~~(i)~~ a termination of the Executive’s 's employment ~~is terminated by the Company without Cause~~ occurs prior to a ~~Change~~ Change-in-Control, but following a Potential Change-in-Control in ~~Control (whether or not a Change in Control occurs) and such termination was at the request or direction of~~ which a Person ~~who~~ has entered into an agreement with the Company the consummation of which ~~would~~ will constitute a ~~Change in~~ Change-in-Control, such termination shall be deemed to have followed a Change-in-Control and to have been (iii) by the ~~Executive terminates his~~ Company without Cause, if the Executive's employment ~~for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) and the circumstance or event which constitutes Good Reason occurs~~ is terminated without Cause at the ~~request or~~ direction of such Person, or (~~iii~~ii) ~~the Executive’s employment is terminated by the Company without Cause or~~ by the Executive ~~for~~ with Good Reason, if the Executive terminates his employment with Good Reason and ~~such termination~~ the act (or ~~the circumstance or event~~ failure to act) which constitutes Good Reason ~~is otherwise in connection with or in anticipation~~ occurs following such Potential Change-in-Control and at the direction of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such ~~termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~Person. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of ~~Termination~~ Termination, in lieu of any lump sum payment with respect to aggregate Base Salary otherwise payable pursuant to Section 8 hereof, 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~~ three (3) times the sum of of: (i) the higher of the Executive~~’s base salary as~~ 's annual Base Salary in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Executive's annual Base Salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change-in-Control, ~~and~~ and (ii) the ~~average annual bonus earned by~~ incentive compensation award the Executive ~~pursuant to any annual bonus or incentive plan maintained by~~ would have received under the ~~Company in respect of~~ Annual Executive Incentive Plan for the ~~three fiscal years ending immediately prior to the fiscal~~ year in which ~~occurs~~ the Date of Termination oroccurs calculated by assuming that the Target Performance goals of such plan for that year have been met, ~~if higher, immediately prior~~ and (iii) the amount the Company agreed to pay in connection with the ~~fiscal year~~ Life Insurance Policy referred to in ~~which occurs~~ the ~~first event or circumstance constituting Good Reason~~third paragraph of Section 5.2 hereof. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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 Notwithstanding any provision of the ~~same type are received by or made available to the~~ Company's Annual Executive during the twenty-four (24) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Incentive Plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any incentive compensation which has been allocated or awarded to the ~~amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Executive for a completed fiscal year preceding the Date of ~~Termination~~Termination under the Annual Executive Incentive Plan, ~~determined~~ but has not yet been either (x) ~~as if the Executive made the maximum permissible contributions thereto during such period,~~ paid (pursuant to Section 6.2 hereof or otherwise) or (y) ~~as if~~ 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 any contingent incentive compensation award to the Executive ~~earned compensation during~~ for any uncompleted fiscal year under the Annual Executive Incentive Plan calculated as to each such ~~period~~ award by assuming the Target Performance goals of such plan have been met. (C) 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 (2) years of service credit at ~~a rate equal to~~ the Executive’s 's highest annual rate of compensation ~~(as defined in the DC Pension Plan)~~ during the twelve (12) months immediately preceding the Date of Termination orand shall be deemed to be two (2) years older than he is; provided that if the Executive does not have at least ten (10) years of service credit under the Company's Supplemental Executive Retirement Plan after such additional two (2) years of service credit, ~~if higher, during~~ the ~~twelve months immediately prior~~ Executive shall be deemed to have at least ten (10) years of service credit under the ~~first occurrence of an event or circumstance constituting Good Reason, and (z)~~ Supplemental Executive Retirement Plan; such benefits shall be determined without regard to any amendment to the ~~DC Pension~~ Supplemental Executive Retirement Plan made subsequent to a ~~Change in~~ 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, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) ~~If the Executive would have become entitled to benefits under the Company’s post~~For a thirty-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 six (36) month period ~~of twenty-four (24) months~~ after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue arrange to provide the Executive with ~~all perquisites provided by~~ life (other than the ~~Company~~ Life Insurance Policy), disability, accident and health insurance benefits substantially similar to those which the Executive is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or,~~ (without giving effect to any reduction in such benefits subsequent to a Change-in-Control if ~~more favorable~~ the Executive terminated his employment for Good Reason or was terminated without Cause). Benefits otherwise receivable by the Executive pursuant to this Section 10.1(D) shall be reduced to the ~~Executive, immediately prior~~ extent comparable benefits are actually received by or made available to the ~~first occurrence~~ Executive without cost during the thirty-six (36) month period following the Executive's termination of ~~an event or circumstance constituting Good Reason~~ employment (~~including, without limitation, automobile, financial planning, annual physical~~ and ~~executive whole life insurance). 6.2 (1) Notwithstanding~~ any ~~other provisions in this Agreement, if any of the payments or~~ such benefits ~~received or to be~~ actually received by the Executive shall be reported to the Company by the Executive). If the benefits provided to the Executive under this Section 10.1(D) shall result in a Gross-Up Payment pursuant to Section 10.2, and these Section 10.1(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. (~~including~~ A) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or ~~benefits received in connection with~~ distribution by the Company to or for the benefit of the Executive on account of a ~~Change in Control or the Executive’s termination of employment~~Change-in-Control, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Code or any ~~other plan~~interest or penalties with respect to such excise tax (such excise tax, ~~program~~together with any such interest and penalties, ~~arrangement or agreement) (all such payments and benefits, being~~ are hereinafter collectively referred to as the ~~“Total Payments”) would be subject (in whole or part~~"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~~Tax imposed upon the Gross-Up Payment, ~~then, after taking into account any reduction in~~ the ~~Total Payments provided by reason of section 280G~~ Executive retains an amount of the ~~Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject~~ Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (B) Subject to the provisions of Section 10.2(C) hereof, all determinations required to be made under this Section 10.2, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determinations, shall be made by the Company's principal outside accounting firm (the "Accounting Firm") which shall provide detailed supporting calculations both to the Board and the Executive within fifteen (15) business days of the Date of Termination. 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 10.2(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 no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm under this Section 10.2(B) 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 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 10.2(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. (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 ~~no event~~ 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 ~~less than zero~~be paid. The Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which he gives such notice to the Company (or such 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 to 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 ~~Total Payments will only be reduced if~~ Company shall bear and pay directly all costs and expenses (iincluding additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the ~~net amount~~ 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 ~~Total Payments, as so reduced (~~representation and ~~after subtracting~~ payment of costs and expenses. Without limitation on the ~~net amount~~ foregoing provisions of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total Paymentsthis Section 10.2(C), ~~is greater than~~ the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or ~~equal to (ii)~~ forgo any and all administrative appeals, proceedings, hearings and conferences with the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject taxing authority in respect of such ~~unreduced Total Payments~~ claim and ~~after taking into account~~ may, at its sole option, either direct the ~~phase out~~Executive to pay the tax claimed and sue for a refund or contest the claim in any permissi▇▇▇ 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 ~~any~~the Company directs the Executive to pay such claim and sue for a refund, ~~of itemized deductions~~ the Company shall advance the amoun▇ ▇f such payment to the Executive, on an interest-free basis and ~~personal exemptions attributable~~ 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 ~~unreduced Total Payments)~~advance or 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 contested 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. (AD) In If, after the ~~case~~ receipt by the Executive of ~~a reduction in~~ an amount advanced by the ~~Total Payments~~Company pursuant to Section 10.2(C) hereof, the ~~Total Payments will be reduced in~~ Executive becomes entitled to receive any refund with respect to such claim, the ~~following order:~~ Executive shall (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the ~~Excise Tax and~~ Company's complying with the requirements of Section 10.2(C) hereof) promptly pay to the Company the amount of such ~~Excise Tax:~~ refund (~~i) no portion of the Total Payments~~ together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt ~~or enjoyment~~ by the Executive of ~~which~~ an amount advanced by the Company pursuant to Section 10.2(C) hereof, a determination is made that the Executive shall ~~have waived at~~ not be entitled to any refund with respect to such ~~time~~ claim and ~~in such manner as~~ the Company does not to constitute a “payment” within the meaning of section 280G(b) of the Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to notify the Executive ~~and selected by the accounting firm which was, immediately~~ in writing of its intent to contest such denial of refund prior to the ~~Change in Control~~expiration of thirty (30) days after such determination, the Company’s independent auditor (the “Auditor”), does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of then such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; and (iii) the value of any noncash benefits or any deferred payment or benefit advance shall be ~~determined by the Auditor~~ forgiven and shall not be required to be repaid. 10.3 The payments provided for in ~~accordance with the principles of sections 280G(d)(3~~Section 10.1 hereof (other than Section 10.1(C) and (4D)) of the Code. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination~~. At~~ , provided, however, that if the ~~time that~~ amounts of such payments ~~are made under this Agreement~~cannot be finally determined on or before such day, the Company shall ~~provide~~ pay to the Executive ~~with a written statement setting forth~~ on such day an estimate, as determined by the ~~manner in which~~ Executive, of the minimum amount of 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 to which ~~are in writing shall be attached to the statement). (A) Notwithstanding any provisions of this Agreement to the contrary, if~~ the Executive is ~~a “specified employee”~~ clearly entitled and shall pay the remainder of such payments (~~within the meaning of section 409A and determined pursuant to procedures adopted by the Company)~~ together with interest at the ~~time of his separation from service and if any portion~~ rate provided in Section 1274(b)(2)(B) of the ~~payments or benefits to~~ Code) as soon as the amount thereof can be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive determined but in no event later than ~~December 31~~ the thirtieth (30th) day after the Date of Termination. In the event that the amount of the ~~year following~~ estimated payments exceeds the ~~year~~ 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 ~~which~~ Section 1274(b)(2)(B) of the Code). 10.4 The Company also shall pay to the Executive ~~incurs~~ all legal fees and expenses incurred by the ~~related expenses; provided, that with respect to reimbursement relating~~ Executive as a result of a termination which entitles the Executive to the ~~Additional Delayed Payments~~Severance Payments (including all such fees and expenses, if any, incurred in disputing any such ~~reimbursement~~ 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). Such payments shall be made on within five (5) business days after delivery of the ~~Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by~~ Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitreasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Employment Agreement (New York State Electric & Gas Corp)

Severance Payments. 6.1 If the Executive incurs a “separation from service” (within the meaning of section 409A) 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 amounts, and provide the Executive the ~~benefits,~~ benefits described in this Section 6.1 (“Severance 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 shall be deemed to have incurred a separation from service 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 (whether or not a Change in Control occurs) 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 for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of ~~Section~~ Sections 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A. (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 and one-half times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the ~~twenty-four~~ thirty (2430) month period immediately following the Date of Termination, the Company provide, or shall arrange to ~~provide~~ provide, to the Executive and his dependents 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 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence~~; provided, however, that, unless the Executive consents to a different method, 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~~ thirty (2430) month period following the Executive’s termination of ~~employment~~ employment, such as pursuant to the benefit plans of a subsequent employer (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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the ~~twenty-four~~ thirty (2430) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 ~~twenty-four~~ thirty (2430) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second ~~calendar~~ year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third calendar year following the year of the Executive’s Date of Termination. . (F) For the ~~twenty-four~~ thirty (2430) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination; 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 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 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) calendar 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 be payable by the Executive to the Company 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)(B) of the Code). 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the ~~after-tax~~ cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payc

Appears in 1 contract

Sources: Change in Control Severance Agreement (Stanley Black & Decker, Inc.)

Severance Payments. ~~6.1 If~~ a. If (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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~~ or (ii) the Executive voluntarily terminates his employment for any reason during the one-month period commencing on the first anniversary of the 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~~ 6 (“"Severance Payments”)") and Section 7, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s '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 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 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, or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A. (A) In lieu of any ~~further salary payments to~~ determination regarding 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 times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect applicability of the ~~three fiscal years ending~~ immediately ~~prior to the fiscal year in which occurs the Date of Termination or~~preceding sentence, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, such health insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable any position taken 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) month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be ~~reported~~ presumed to be correct unless the Company establishes to the ~~Company~~ Board by ~~the Executive); provided, however,~~ clear and convincing evidence that ~~the Company shall promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason~~position is not correct. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Aura Systems Inc)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, if the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ 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 ~~amounts, and provide the Executive the benefits,~~ payments described in this Section 6.1 (“the "Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s 's employment is terminated by the Company without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 's employment is terminated by the Company without Cause ~~or by~~ prior to a Change in Control and the Executive ~~for Good Reason and~~ reasonably demonstrates that such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control occurs)~~which actually occurs during the term of this Agreement. For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (i) the higher of the Executive’s 's annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based and the Executive's annual base salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change in Control, and (ii) the product of (a) the amount determined under clause (i) above and (b) the higher of the average ~~annual bonus~~ percentage of base salary paid to or earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three ~~fiscal~~ years ~~ending~~ immediately ~~prior to the fiscal year~~ preceding that in which ~~occurs~~ the Date of Termination ~~or, if higher,~~ occurs or the average percentage of base salary paid to or earned by the Executive in respect of the three years immediately ~~prior to the fiscal year~~ preceding that in which ~~occurs~~ the ~~first event or circumstance constituting Good Reason~~Change in Control occurs. (B) For the twenty-four (24) month period 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 and Company-provided perquisites (including, but not limited to a Company car and club membership dues), in each case substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (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, 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, howeverHOWEVER, that~~, unless the Executive consents to a different method~~, 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 ~~of the same type~~ or perquisites are actually received by or made available to the Executive without cost during the twenty-four (24) month period following the Executive’s '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)~~; provided~~. If the Severance Payments shall be decreased pursuant to Section 6.2 hereof, ~~however~~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 receipt or availability of comparable benefits or perquisites, ~~that~~ the Company shall, at the time of 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 perquisites, 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. (C) Notwithstanding any provision of any annual or long-term incentive plan to the contrary, the Company shall ~~promptly reimburse~~ pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the ~~excess~~Date of Termination under any such plan and which, ~~if any,~~ as of the ~~after tax cost~~ Date of ~~such benefits to~~ Termination, is contingent only upon the continued employment of the Executive ~~over such cost immediately prior~~ to a subsequent date or otherwise has not been paid, and (ii) a pro rata portion to the Date of Termination ~~or, if more favorable~~ of the aggregate value of all contingent incentive compensation awards to the ~~Executive~~Executive for all then uncompleted periods under any such plan, calculated as to each such award by multiplying the ~~first occurrence~~ award that the Executive would have earned on the last day of ~~an event or circumstance constituting Good Reason~~the performance award period, assuming the achievement, at the target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (CD) In addition to the retirement benefits to which the Executive is entitled under ~~the DC~~ each Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ excess of (i) the ~~amount that would have been contributed thereto by~~ actuarial equivalent of the ~~Company on~~ aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the ~~Executive’s behalf during~~ date (but in no event earlier than the ~~twenty-four (24) months immediately following~~ second anniversary of the Date of Termination~~, determined (x~~) as if of which the actuarial equivalent of such annuity is greatest) which the Executive ~~made~~ would have accrued under the ~~maximum permissible contributions thereto during such period,~~ terms of all Pension Plans (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to ~~the DC~~ 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) twenty-four (24) 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 ~~excess~~Executive's compensation (as defined in such Pension Plan) during the twelve (12) months immediately preceding the Change in Control, ~~if any, of~~ over (xii) the ~~Executive’s~~ actuarial equivalent of the aggregate retirement pension (taking into account ~~balance under~~ any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the DC 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 ~~Plan~~ Plans as of the Date of ~~Termination over (y)~~ Termination. For purposes of this Section 6.1(D), "actuarial equivalent" shall be determined using the ~~portion of such account balance that is nonforfeitable~~ same assumptions utilized under the ~~terms~~ Stone Container Corporation Salaried Employees Retirement Plan immediately prior to the Date of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC PlanTermination. (DE) If the Executive would have become entitled to benefits under the Company’s 's post-retirement health care or life insurance plans, as in effect immediately prior to the Change in Control or the Date of Termination ~~or, if~~ (whichever is 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 's employment terminated at any time during the period of twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive and the Executive’s '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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) Notwithstanding any other provisions in of this Agreement, if in the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter ~~referred to as the “~~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, ~~program,~~ arrangement or agreement, the ~~Company will reduce~~ cash Severance Payments shall first be reduced, and the ~~Total~~ 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 ~~in no event to less than zero); provided, however, that the Total Payments will~~ only ~~be reduced~~ if (iA) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, ~~state, municipal~~ state and local income taxes on such reduced Total ~~Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total~~ Payments), ) is greater than ~~or equal to~~ (iiB) the excess of (i) the net amount of such Total ~~Payments~~ Payments, without ~~such~~ reduction (but after subtracting the net amount of federal, ~~state, municipal~~ state and local income taxes on such Total ~~Payments and~~ Payments), over (ii) the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total ~~Payments and after taking into account~~ Payments; PROVIDED, HOWEVER, that the ~~phase out, if any, of itemized deductions and personal exemptions attributable~~ Executive may elect (at any time prior to ~~such unreduced Total Payments). (A) In~~ the ~~case~~ delivery of a ~~reduction in~~ Notice of Termination hereunder) to have the ~~Total Payments, the Total~~ noncash Severance Payments ~~will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be~~ reduced (~~if necessary,~~ or eliminated) prior to ~~zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of~~ any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of the cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensationSeverance Payments. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise ~~Tax and the amount of such 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 in manner so that such ~~manner as~~ portion does not to constitute a “"payment” " within the meaning of section 280G(b) of the Code ~~will~~ shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ 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 "Auditor") which was, immediately prior to the Change in Control, the Company’s 's independent ~~auditor (the “Auditor”)~~auditor, does not constitute a “"parachute payment” " within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments ~~will~~ shall be taken into account ~~which, in the opinion of Tax Counsel,~~ which constitutes 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; , and (iii) 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 Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. ~~(C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company.~~ 6.3 The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A), (C) and (CD) of Section 6.1 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination; 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 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)(B) of the Code). At the time that payments are made under this ~~Agreement~~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 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). ~~(A) Notwithstanding any provisions of this Agreement~~ 6.4 The Company also shall pay to the ~~contrary, if the~~ Executive ~~is a “specified employee” (within the meaning of section 409A~~ all legal fees and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive's employment, ~~such reimbursement~~ 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. Such payments shall be made on within five (5) business days after delivery of the ~~Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by~~ Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitreasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Stone Container Corp)

Severance Payments. 6.1 If the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive’s employment is terminated 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ 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 (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs no later than six (6) months following the Executive’s termination of employment) 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 for Good Reason prior to a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs no later than six (6) months following the Executive’s termination 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs). For purposes of Section 5 and 6 of this Agreement,~~ occurs no ~~payment that would otherwise be made and no benefit that would otherwise be provided upon a~~ later than six (6) months following the Executive’s termination of ~~employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~employment). (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 times~~ the sum of (i) an amount equal to [three (3) / two (2)] times the Executive’s 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 circumstance constituting Good Reason, ~~and~~ (ii) a pro rata portion of the ~~average~~ Executive’s target annual bonus ~~earned by the Executive pursuant to~~ under any annual bonus or incentive plan maintained by the Company in respect of the ~~three fiscal years ending immediately prior to the fiscal year~~ period in which ~~occurs~~ the Date of Termination oroccurs, ~~if higher, immediately prior~~ and (iii) any earned but unpaid annual or incentive bonus owing to the Executive for the fiscal year preceding the year in which ~~occurs~~ the ~~first event or circumstance constituting Good Reason~~Date of Termination occurred. (B) For the [thirty-six (36) / twenty-four (24) )] month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents ~~life, disability, accident~~ medical and ~~health~~ life 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 ~~after~~ after-tax cost to the Executive than the ~~after~~ after-tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, such ~~health~~ medical 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 (36) / twenty-four (24) )] 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 ~~promptly~~ reimburse the Executive for the excess, if any, of the ~~after~~ after-tax 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) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) If the Executive would have become entitled to benefits under the Company’s post-retirement ~~health care or life insurance~~ medical 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) / twenty-four (24) )] months after the Date of Termination, the Company shall provide such post-retirement ~~health care and/or life insurance~~ medical benefits to the Executive 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. (ED) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination~~ [three (3) / two (2)] years or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (FE) For ~~the twenty-four (24) month~~ a period ~~immediately following the Date~~ of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 one (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day year following the Date of Termination~~. At the time that payments are made under this Agreement~~, the Company shall provide the Executive with ~~a written statement setting forth~~ such perquisites as 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 Executive was entitled to receive immediately prior to the ~~statement)~~Date of Termination. 6.2 Subject to the provisions of Section 16 hereof, (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or and benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to ~~this Agreement~~ Section 6.1 hereof shall be provided only if the Executive shall have executed a general release of claims substantially in the form set forth in Exhibit A hereto and the release of claims shall have become irrevocable not later than thirty (~~the “Delayed Benefits”~~30) ~~during the six-month period immediately~~ days following the ~~Executive’s separation from service~~ Date of Termination, and (~~such period~~B) the cash Severance Payments shall be paid thirty (30) days following the Date of Termination; provided, however, that if certain group termination provisions of the Age Discrimination in Employment Act and Older Workers’ Benefit Protection Act apply, the ~~“Delay Period”~~release of claims shall become irrevocable not later than sixty (60) days following the Date of Termination and the cash Severance Payments shall ~~instead~~ be paid ~~or made available on the earlier of~~ sixty (i60) ~~the first (1st) business day of the seventh month~~ days following the ~~date~~ Date of ~~the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”).~~ Termination. 6.3 The Company also shall ~~also reimburse~~ pay to the Executive ~~for the after-tax cost~~ all legal fees and expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any ~~Delayed Benefits (~~issue hereunder relating to the ~~“Additional Delayed Payments”). (B) With respect~~ termination 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 ~~amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses~~ payment or benefit provided hereunder. Such payments shall be ~~reimbursed by~~ made within five (5) business days after delivery of the Executive’s written requests for payment accompanied with such evidence of fees and expenses incurred as the Company ~~within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but~~ reasonably may require; provided, however, that in no event will payment be made for requests that are submitted later than December 31 15th of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitexpense is incurred. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Severance Agreement (Bureau of National Affairs Inc)

Severance Payments. 6.1 If (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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~~ or (ii) the Executive voluntarily terminates his employment for any reason during the one-month period commencing on the first anniversary of the Change in Control, then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“"Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s '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 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 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~~Person described in clause (i), or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to ~~two~~ three times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason.in (B) For the ~~twenty~~thirty-~~four~~ six (2436) 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 and perquisites (including, but not limited to, executive life insurance, club memberships, financial planning and tax preparation, annual physical examination and charitable contributions), in each case, 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~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~~thirty-~~four~~ six (2436) month period following the Executive’s '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 ~~promptly~~ reimburse the (C) Notwithstanding any provision of the Bake▇ ▇▇▇h▇▇ Incorporated 1995 Employee Annual Incentive Compensation Plan (the "Annual Incentive Plan"), the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the ~~excess~~Date of Termination under the Annual Incentive Plan and which, ~~if any,~~ as of the ~~after tax cost~~ Date of ~~such benefits to~~ Termination, is contingent only upon the continued employment of the Executive ~~over such cost immediately prior~~ to a subsequent date, and (ii) a pro rata portion to the Date of Termination ~~or, if more favorable~~ of the aggregate value of all contingent incentive compensation awards to the ~~Executive~~Executive for all then uncompleted periods under the Annual Incentive 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, at the expected value target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period; provided, however, that if such termination of employment occurs during the same year in which the Change in Control occurs, the ~~first occurrence of an event or circumstance constituting Good Reason~~pro-rata bonus payment referred to in clause (ii) above shall be offset by any payments received under the Annual Incentive Plan in connection with such Change in Control. (CD) In addition to the retirement benefits to which the Executive is entitled under the ~~DC Pension~~ Company's Thrift Plan (the "Thrift Plan") and the Company's Supplemental Retirement Plan ( the "SRP"), the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ present value of ~~(i)~~ the ~~amount that~~ employer-provided contributions, deferrals and allocations the Executive would have ~~been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ received had he continued to participate, after the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Pension Thrift 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan.and (DE) If the Executive would have become entitled to benefits under the Company’s '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 's employment terminated at any time during the period of ~~twenty~~thirty-~~four~~ six (2436) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive and the Executive’s '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. (EF) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s 's position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination~~ three years or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) ~~Notwithstanding any other provisions in this Agreement~~Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise ~~Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. At the time that payments are made under this Agreement, the Company shall ~~provide~~ pay to 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service an additional amount (the ~~“Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six~~"Gross-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payUp

Appears in 1 contract

Sources: Severance Agreement (Baker Hughes Inc)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, the Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ "Severance Payments") upon the ~~meaning~~ termination of ~~section 409A)~~ the Executive's employment following a Change in Control ~~and~~ during the ~~Term~~term of this Agreement, ~~other than~~ in addition to the payments and benefits described in Section 5.0 hereof, unless such termination is (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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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~~ The Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good ~~Reason,~~ Reason if ~~(i)~~ the Executive’s 's employment is terminated ~~by the Company without Cause~~ prior to a Change in Control ~~(whether or not a Change in Control occurs) and such termination was~~ without Cause at the ~~request~~ direction (or ~~direction~~ action which constitutes a direction) of a Person who has entered into an agreement with the Company the consummation of which ~~would~~ will constitute a Change in ~~Control, (ii)~~ Control or if the Executive terminates his employment ~~for~~ with Good Reason prior to a Change in Control (~~whether or not~~ determined by treating a Potential Change in Control as a Change in Control ~~occurs~~in applying the definition of Good Reason) ~~and~~ if the circumstance or event which constitutes Good Reason occurs at the ~~request~~ direction (or ~~direction~~ action which constitutes a direction) of such Person. (i) Subsequent to the Date of Termination, ~~or (iii) the Executive’s employment is terminated by~~ the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A. (A) In lieu of any further salary shall make cash severance 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~~ over a lump sum severance payment, in cash, equal to two times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) month period in substantially equal bi-weekly installments, in an amount equal to two (2) times the sum of (a) the higher of the Executive's annual base salary in effect immediately ~~following~~ prior to the occurrence of the event or circumstance upon which the Notice of Termination is based or in effect immediately prior to the Change in Control, and (b) the higher of the highest annual bonus paid to the Executive in the three years preceding the year in which the Date of Termination occurs or paid in the three years preceding the year in which the Change in Control occurs. (ii) For a twenty-four (24) month period after the Date of Termination, the Company shall arrange to provide the Executive with medical and ~~his dependents life, disability, accident and health~~ dental insurance benefits substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to ~~the Executive, those provided~~ any reduction in such benefits subsequent to ~~the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting~~ a Change in Control which reduction constitutes Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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~~6.1(ii) 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 twenty-four (24) month period following the Executive’s '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~~ . If the ~~Company shall promptly reimburse the Executive for the excess, if any, of the after tax cost of such~~ benefits provided to the Executive ~~over such cost immediately prior~~ 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 ~~Date~~ immediately preceding sentence because of ~~Termination or, if more favorable to~~ the ~~Executive, the first occurrence~~ receipt of ~~an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plan~~comparable benefits, the Company ~~shall~~ shall, at the time of such reduction, pay to the Executive ~~a lump sum amount, in cash, equal to~~ the ~~sum~~ lesser of (ia) the amount ~~that would have been contributed thereto by~~ of the ~~Company on~~ decrease made in the ~~Executive’s behalf during the twenty-four~~ Severance Payments pursuant to Section 6.2, or (24b) ~~months immediately following the Date of Termination, determined (x) as if the Executive made~~ the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Pension Plan made subsequent to a Change in Control and on or prior to the Date of Termination, amount which amendment adversely affects in any manner the computation of benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall can be paid to the Executive ~~within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31~~ without being, or causing any other payment to be, nondeductible by reason of section 28OG of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance)Code. 6.2 ~~(1)~~ Notwithstanding any other provisions in of this Agreement, if in the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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 plan, program, arrangement or agreement~~Agreement) (all such payments and benefits, including but not limited to the Severance Payments, being hereinafter ~~referred to as~~ called the “"Total Payments”") would be subject (in whole or ~~part),~~ in part to the Excise Tax, ~~then, after taking into account any reduction in~~ then the ~~Total~~ Severance Payments ~~provided by reason of section 280G of the Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments~~ shall be reduced to the ~~extent~~ extent, but only to the extent, necessary so that no portion of the Total Payments is subject to the Excise ~~Tax (but in no event to less than zero)~~Tax; provided, ~~however,~~ that ~~the Total Payments will only~~ no such reduction shall be ~~reduced if (i)~~ effected unless the net amount of the Total Payments after such ~~Total Payments, as so reduced (~~reduction in the Severance Payments and after ~~subtracting~~ deduction of the net amount of federal, ~~state, municipal~~ state and local income taxes on such reduced Total Payments ~~and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total Payments), is~~ would be greater than ~~or equal to~~ the excess of (iia) the net amount of ~~such~~ the Total Payments without such reduction (in the Severance Payments but after ~~subtracting~~ deduction of the net amount of federal, ~~state, municipal~~ state and local income taxes (other than the Excise Tax) on such unreduced Total ~~Payments and~~ Payments, over (b) 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, if any, of itemized deductions and personal exemptions attributable~~ are subject. The determination as to ~~such unreduced Total Payments). (A) In the case of~~ whether a reduction in ~~the Total Payments, the Total~~ Severance Payments ~~will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary,~~ is to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made ~~in the following manner: first~~under this Section 6.2 and, ~~a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A~~if so, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of any such ~~Excise Tax: (i) no portion of the Total Payments the receipt or enjoyment of which the Executive~~ reduction 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 will~~ be ~~taken into account; (ii) no portion of the Total Payments will be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected~~ made by the ~~accounting~~ Company's auditors or by such other firm ~~which was~~of certified public accountants, ~~immediately~~ benefits consulting firm or legal counsel as the Board may designate prior to the Change in Control, . The Company shall provide the ~~Company’s independent auditor (the “Auditor”), does not constitute a “parachute payment” within the meaning of section 280G(b)(2)~~ executive with its calculations of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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 amounts referred to such reasonable compensation; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 ~~will not of itself limit or otherwise affect any other rights of~~ and such supporting materials as are reasonably necessary for the Executive ~~under~~ to evaluate the Company's calculations. 6.3 The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive as a result of a termination which entitles the Executive to the Severance Payments (including all such fees and expenses, if any, incurred in disputing any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this ~~Agreement. The Executive and the Company shall each reasonably cooperate with the other~~ Agreement or in connection with any ~~administrative~~ tax audit or ~~judicial proceedings concerning the existence or amount of liability for Excise Tax with respect~~ proceeding to the ~~Total Payments. 6.3 Subject~~ extent attributable to ~~Section 6.4,~~ the application of section 4999 of the Code to any payment or benefit provided hereunder). Such payments ~~provided in subsections (A) and (C) of Section 6.1 hereof~~ shall be made ~~not later than the fifth~~ within five (~~5th~~5) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date days after delivery of the Executive~~’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive~~ 's written requests for ~~the after-tax cost~~ payment accompanied with such evidence of fees and expenses incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by as the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitreasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Executive Officer Change in Control Agreement (Picturetel Corp)

Severance Payments. 6.1 If [(i)] the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated following a Change in Control and ~~during the Term~~within [three (3)][two (2)] years after a Change in Control, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, ~~then~~ [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”)") [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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s '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 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, 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, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive~~Termination, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to [three (3)] [two (2)] [one and one half (1 1/2)] times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) the ~~average~~ Executive's target annual bonus ~~earned by the Executive~~ pursuant to any 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 or, if higher, ~~immediately prior to~~ the fiscal year in which occurs the first event or circumstance constituting Good Reason. The amount payable pursuant to this Section 6.1(A) shall be reduced by the amount of any cash severance or salary continuation benefit paid or payable to the Executive under any other plan, policy or program of the Company or any of its Affiliates or any written employment agreement between the Executive and the Company or any of its Affiliates. (B) For the ~~twenty-four (~~[36] [24) ] [18] 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 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~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 (~~[36] [24) ] [18] month period following the Executive’s '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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) ~~In addition~~ 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 remaining term of such option. (D) Notwithstanding any provision of any annual or long-term incentive plan to the ~~benefits to which the Executive is entitled under the DC Pension Plan~~contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the ~~amount that would have been contributed thereto by~~ Executive for a completed fiscal year or other measuring period preceding the ~~Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Date of Termination under any such plan and which, as of the Date of Termination, ~~determined (x) as if~~ is contingent only upon the continued employment of the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder~~subsequent date, and (ii) ~~the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the~~ a pro rata portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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~~ of the aggregate value of all contingent incentive compensation awards to the ~~Executive~~Executive for all then uncompleted periods under any such plan, calculated as ~~in effect immediately prior~~ to each such award by multiplying the ~~first occurrence~~ award that the Executive would have earned on the last day of ~~an event~~ the performance award period, assuming the achievement, at the target level (or ~~circumstance constituting Good Reason~~if higher, ~~had~~ at the ~~Executive’s employment terminated at~~ then projected actual final level), of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any ~~time~~ fractional portion of a month during ~~the~~ such performance award period ~~of twenty-four (24) months after~~ through the Date of ~~Termination,~~ Termination by the ~~Company shall provide~~ total number of months contained in such post-retirement health care and/or life insurance benefits to the Executive 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 terminateperformance award period. (E) The Company shall ~~provide~~ transfer an amount in cash sufficient to pay all benefits then accrued by the Executive under the Company's Supplemental Executive Retirement Plan into an irrevocable grantor trust (a so-called "Rabbi Trust") whose trustee shall be an entity unaffiliated with ~~third-party~~ and independent of the Company, which trust shall be required to pay such benefits in accordance with and subject to the terms of the Supplemental Executive Retirement Plan and the trust instrument. (F) The Company shall reimburse the Executive for expenses incurred for outplacement services suitable to the Executive’s 's position for ~~the~~ a period of [three (3)] [two (2)] years following the ~~Executive’s~~ Date of Termination ~~and ending on December 31 of the second calendar year following such Date of Termination~~ (or, if earlier, until the first acceptance by the Executive of an offer of employment~~, provided, however, that~~ ) in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 an amount not exceeding 25% of the ~~third year following the year~~ sum of the Executive’s 's annual base salary as in effect immediately prior to the Date of ~~Termination~~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. (FG) For the ~~twenty-four~~ six (246) month period immediately following the Date of ~~Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier~~Termination, the Company shall ~~continue to~~ provide the Executive with ~~all perquisites~~ the use of any Company provided by automobile and with country club membership fee reimbursements, in each case on the ~~Company~~ same terms and conditions that were applicable immediately prior to the Date of Termination or, if more ~~favorable to the Executive~~favorable, immediately prior to the first occurrence of an event or circumstance constituting Good ~~Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance)~~Reason. 6.2 [(1A) ~~Notwithstanding any other provisions in this Agreement~~Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which 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 ~~and the amount of such Excise Tax: (i) no portion of~~ on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon 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 will be taken into account; (ii) no portion of the Total Payments will be taken into account whichGross-Up Payment, 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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 equal to the Total Payments. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Agreement (Visteon Corp)

Severance Payments. 6.1 ~~If the Executive incurs a “separation from service”~~ Subject to Section 6.2 hereof, if (~~within the meaning of section 409A~~1) ~~following~~ a Change in Control occurs on or prior to December 31, 2004, and ~~during~~ (2) the ~~Term,~~ Executive's employment is terminated (other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, ) and the Date of Termination in connection therewith occurs within three (3) years after such Change in Control then the Company shall pay the Executive the amounts, and provide the Executive the benefits, hereinafter described in this Section 6.1 (“"Severance Payments”"), together with any payments that may be due under Section 6.2 hereof, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ 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 (whether or not a Change in Control occurs) 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 for Good Reason ~~prior to a Change~~ if (a) in ~~Control (whether or not a Change in Control occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction~~ connection with Executive's termination of ~~such Person, or (iii) the Executive’s~~ employment ~~is terminated~~ by the Company without Cause or by the Executive for Good Reason determined by treating the event or transaction hereinafter described as the Change in Control), a Notice of Termination is furnished following an event or transaction described in Section 15(G)(1)(x) or Section 15(G)(3)(x) which occurs on or prior to December 31, 2004, and ~~such termination or the circumstance or event which constitutes Good Reason is otherwise~~ (b) a Management Change occurs in connection with or ~~in anticipation~~ within twelve (12) months following such event or transaction and subsequent to, but not more than six (6) months after, the furnishing of ~~a Change in Control (whether or not a Change in Control occurs). For purposes~~ such Notice of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.Termination. (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 by the Company or any of its subsidiaries to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to (1) if the Date of Termination occurs on or prior to the second anniversary of the Change in Control, two and one-quarter (2.25) times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason~~Change in Control (the "Base Salary"), ~~and~~ plus (ii) the ~~average~~ target annual bonus ~~earned by~~ established for the Executive ~~pursuant to any annual~~ under the 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 (or, if higher, ~~immediately prior to~~ in respect of the fiscal year in which occurs the ~~first event~~ Change in Control), or ~~circumstance constituting Good Reason~~(2) if the Date of Termination occurs after the second anniversary of the Change in Control, one (1.0) times the sum of such Base Salary plus such target annual bonus. If, notwithstanding the foregoing provision that the lump sum severance is to be in lieu of any severance benefit otherwise payable, the Company or any of its subsidiaries is required by applicable law to pay such a benefit, the Company's obligation to pay such lump sum severance hereunder shall be offset and reduced by the amount of the benefit required to be paid by applicable law. (B) For the ~~twenty~~27-~~four (24)~~ month period 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 (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~~Change in Control), at no greater ~~after tax~~ cost to the Executive on an after-tax basis than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, ~~that, unless~~ that the ~~Executive consents to a different method, such health insurance~~ foregoing benefits shall be provided ~~through~~ for a ~~third-party insurer~~period of only twelve (12) months if the Date of Termination occurs after the second anniversary of the Change in Control. 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 at no greater cost by a subsequent employer during the ~~twenty-four (24) month~~ applicable period ~~following the Executive’s termination of employment~~ set forth above (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive)~~; provided~~. If the Severance Payments shall be decreased pursuant to Section 6.2(B) hereof, ~~however~~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, ~~that~~ the Company ~~shall promptly reimburse the Executive for the excess~~shall, ~~if any~~no later than five (5) business days following such reduction, ~~of the after tax cost of such benefits~~ pay to the Executive ~~over such cost immediately prior~~ 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 ~~Date~~ Executive without being, or causing any other payment to be, nondeductible by reason of ~~Termination or, if more favorable to~~ section 280G of the ~~Executive, the first occurrence of an event or circumstance constituting Good Reason~~Code. (C) ~~In addition~~ Notwithstanding any provision of any incentive, stock, retirement, savings or other plan to the ~~benefits to which~~ contrary, as of the Date of Termination, (i) the Executive ~~is entitled~~ shall be fully vested in (1) all then outstanding options to acquire stock of the Company (or if such options have been assumed by, or replaced with options for shares of, a parent, surviving or acquiring company, such assumed or replacement options), and all then outstanding restricted shares of stock of the Company (or the stock of any parent, surviving or acquiring company into which such restricted shares have been converted or for which they have been exchanged) held by the Executive, (2) all accrued basic match and incremental match employer contributions under the ~~DC Pension Plan~~Company's Capital Appreciation Plan (but not deemed participation match contributions thereunder), and (3) to the extent permissible under the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all amounts credited to his account under the Company's 401(k) Savings and Investment Plan which are attributable to employer contributions; and (ii) all stock options referred to in clause (i) above shall remain exercisable until the earlier of (x) the third anniversary of the Date of Termination or (y) the otherwise applicable expiration date of such option. To the extent that the full vesting of the Executive under clause (i)(3) of the preceding sentence would violate either ERISA or the Code, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount which cannot become fully vested. (D) The Company shall pay to the Executive a lump sum ~~of (i)~~ amount, in cash, equal to the ~~amount that would have been contributed thereto~~ Executive's target annual bonus under the bonus plan maintained by the Company on in respect of the ~~Executive’s behalf during~~ fiscal year in which occurs the ~~twenty-four~~ Date of Termination (24or, if higher, in respect of the fiscal year in which occurs the Change of Control) ~~months immediately following~~ multiplied by a fraction, the numerator of which is the number of days in such fiscal year through and including the Date of Termination, ~~determined~~ and the denominator of which is 365. For purposes of this clause (~~x) as if the Executive made the maximum permissible contributions thereto during such period~~D), ~~(y) as if the Executive earned compensation during such period at a rate equal to~~ the Executive~~’s compensation~~ 's target annual bonus in respect of 2001 shall be deemed to be 150% of his actual target annual bonus in respect of 2001 (~~as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or~~less, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 previously paid to the Executive, as 60% of his actual target annual bonus in ~~effect immediately prior to the first occurrence~~ respect of an event or circumstance constituting Good Reason, had the Executive’s employment terminated at any time during the period of twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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 terminate2001). (EA) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination orExcept as otherwise provided in Section 6.2(B), if ~~earlier, until~~ the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination Severance Payments together with any payment or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, program, arrangement or agreement~~otherwise) (all such payments and benefits, excluding the Gross- Up Payment, being hereinafter ~~referred to as the “~~called "Total Payments”") ~~would~~ will be subject (in whole or part), ) to the Excise Tax, ~~then~~then the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments ~~provided by reason~~ and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes of ~~section 280G~~ determining the amount of the ~~Code in such other plan, program, arrangement or agreement~~Gross-Up Payment, the ~~Company will reduce~~ 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 and state and local income taxes at the highest marginal rate of taxation in the state and localities of the Executive's residence and employment, as applicable, on the Date of Termination, net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes. (B) If the Total Payments would (but for this Section 6.2(B)) be subject (in whole or part) to the ~~extent necessary so that no~~ Excise Tax, but the aggregate value of the portion of the Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is ~~subject to the Excise Tax (but in no event to~~ less than ~~zero); provided~~330% of the Executive's Base Amount, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). then subsection (A) In of this Section 6.2 shall not apply, and the ~~case of a reduction in the Total Payments, the Total~~ cash Severance Payments ~~will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will~~ shall be reduced (if necessary, to zero), ~~with amounts that are payable last~~ and all other Severance Payments shall thereafter be reduced ~~first;~~ (~~ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1~~if necessary, ~~Q&A 24(a~~to zero), ~~with~~ to the ~~highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next~~ extent necessary to cause the Total Payments not to be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to ~~section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation~~the Excise Tax. (BC) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a “payment”~~ "parachute payments" within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which~~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, the Company’s 's independent auditor (the “"Auditor”"), ~~does~~ such other payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of ~~Tax Counsel~~the Auditor, ~~constitutes~~ 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 the Auditor with respect to the matter in dispute shall prevail. (CI) ~~All determinations required by this Section 6.2~~ In the event that (~~or requested by either~~ 1) amounts are paid to the Executive or pursuant to Section 6.2(A), (2) there is a Final Determination that the ~~Company~~ Excise Tax is less than the amount taken into account hereunder in ~~connection with this~~ calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are to be reduced pursuant to Section ~~6.2~~6.2(B), the Executive shall repay to the Company, within five (5) ~~will be at~~ business days following the ~~expense~~ date of the ~~Company. The fact~~ Final Determination, the Gross-Up Payment and the amount of the reduction in the Severance Payments, plus interest on the amount of such repayments at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (II) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the ~~Executive’s right~~ Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to ~~payments or benefits may~~ such Final Determination, the Severance Payments are not to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, 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 and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (III) Except as otherwise provided in clause (IV) below, in the event there is a Final Determination that the Excise Tax exceeds the amount taken into account hereunder in determining the Gross-Up Payment (including by reason of ~~the limitations contained in this Section 6.2 will not of itself limit or otherwise affect~~ any other rights of the Executive under this Agreement. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning payment the existence or amount of ~~liability for~~ which cannot be determined at the time of the Gross-Up Payment), the Company shall pay to the Executive, within five (5) business days following the date of the Final Determination, the sum of (1) a 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, including a Gross-Up Payment in respect of any Excise Tax attributable to amounts payable under clauses (2) and (3) of this paragraph (III) (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion), (2) if Severance Payments were reduced pursuant to Section 6.2(B) but after giving effect to such Final Determination, the Severance Payments should not have been reduced pursuant to Section 6.2(B), the amount by which the Severance Payments were reduced pursuant to Section 6.2(B), and (3) interest on such amounts at 120% of the rate provided in section 1274(b)(2) of the Code. (IV) In the event that (1) Severance Payments were reduced pursuant to Section 6.2(B) and (2) the aggregate value of Total ~~Payments~~Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is subsequently redetermined in a Final Determination, but such redetermined value still does not exceed 330% of the Executive's Base Amount, then, within five (5) business days following such Final Determination, (x) the Company shall pay to the Executive the amount (if any) by which the reduced Severance Payments (after taking the Final Determination into account) exceeds the amount of the reduced Severance Payments actually paid to the Executive, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code, or (y) the Executive shall pay to the Company the amount (if any) by which the reduced Severance Payments actually paid to the Executive exceeds the amount of the reduced Severance Payments (after taking the Final Determination into account), plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code. 6.3 ~~Subject to Section 6.4, the~~ The payments provided in ~~subsections~~ subsection (A) and (D) (and to the extent applicable, subsection (C)) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the ~~fifth~~ fifteenth (~~5th~~15th) ~~business~~ day following the Date of Termination, provided, however, that if the amounts of such payments, and the potential 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 or, in the case of payments under Section 6.2 hereof, in accordance with said Section 6.2, 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 sixtieth (60th) day after the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Chiquita Brands International Inc)

Severance Payments. ~~6.1~~ 5.1 If the ~~Executive incurs a “separation from service”~~ Executive's employment is terminated during the thirty-six (~~within the meaning of section 409A~~36) month period following a Change in ~~Control and during the Term~~Control, 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 amounts, and provide the Executive the ~~benefits,~~ benefits described in this Section ~~6.1~~ 5 (“"Severance Payments~~”),~~ ") in addition to any payments and benefits to which the Executive is entitled under Section ~~5 hereof~~4 of this Agreement. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated by the Company following a Change in ~~Control by the Company~~ Control, without Cause or by the Executive with Good Reason, if (i) the Executive’s 's employment is terminated by the Company without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 for Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in ~~Control (whether or not a Change in Control occurs)~~Control. For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~not correct. (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 ~~two times~~ the sum of (i) two (2) times the Executive’s 's base salary as in effect immediately prior to the Date of Termination or, if ~~higher, in effect immediately prior to the first occurrence of~~ Section 15 (o)(II) is applicable as an event or circumstance constituting Good Reason, the rate in effect immediately prior to such event or circumstance, and (ii) two (2) times the ~~average~~ annual bonus ~~earned by~~ actually paid for the ~~Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three~~ fiscal ~~years~~ year ending immediately prior to the fiscal year in which occurs the Date of ~~Termination or~~Termination, ~~if higher, immediately prior~~ pursuant to any annual bonus or incentive plan maintained by the ~~fiscal year in which occurs the first event or circumstance constituting Good Reason~~Company. (Bb) For the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents ~~life~~medical, ~~disability~~dental, ~~accident~~ and ~~health insurance~~ accidental death and disability 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence~~; provided, however, that, unless the Executive consents to a different method, 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~~5.1(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) month period following the ~~Executive’s termination~~ Date of ~~employment~~ Termination (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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (Cc) Notwithstanding any provision to the contrary in any plan or agreement maintained by the Company pursuant to which the Executive has been granted restricted stock, stock options or stock appreciation rights, effective on the Date of Termination, (i) all restrictions with respect to any restricted stock shall lapse, and (ii) all stock appreciation rights and stock options shall become fully vested and then canceled in exchange for a cash payment equal to the excess of the fair market value of the shares of Company stock subject to the stock appreciation right or stock option on the date of the Change in Control, over the exercise price(s) of such stock appreciation rights or stock options. (d) In addition to the retirement benefits to which the Executive is entitled under ~~the DC Pension Plan~~any tax-qualified, ~~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~~ supplemental or excess benefit pension plan maintained by the Company on and any other plan or agreement entered into between the ~~Executive’s behalf during~~ Executive and the ~~twenty-four~~ Company which is designed to provide the Executive supplemental retirement benefits (24the "Pension Plans") ~~months immediately following~~ or any successor plan thereto, effective upon the Date of Termination, ~~determined (x) as if~~ the Executive ~~made~~ shall receive vesting credit under the ~~maximum permissible contributions thereto during such period,~~ Kaman Corporation Supplemental Employees Retirement Plan (y"SERP") ~~as if the Executive earned compensation during such period at a rate~~ equal to ~~the Executive’s compensation~~ two years of Continuous and Credited Service (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Kaman Corporation Employees' Pension Plan ~~made subsequent~~ to ~~a Change in Control and on or prior to~~ which the Date of Termination, which amendment adversely affects in any manner the computation of benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that SERP is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plansupplemental). (De) If the Executive would have become entitled to benefits under the Company’s '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 's employment terminated at any time during the period of twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or life insurance~~ benefits to the Executive and the Executive’s '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~~ Section 5.1 (Bb) ~~of this Section 6.1~~ terminate. (Ef) 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 maintained by the Company insuring the life of the Executive, that is in effect; and (ii) shall transfer to the Executive any and all rights and incidents of ownership in such arrangements at no cost to the Executive. (g) The Company shall provide the Executive with ~~third-party~~ reimbursement for outplacement services ~~suitable~~ received by the Executive for up to ~~the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or~~Thirty Thousand Dollars ($30,000), ~~if earlier,~~ but only until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (Fh) ~~For~~ The Company shall provide the ~~twenty-four (24) month period immediately following~~ Executive with his Company automobile. The book value then attributed to it by the leasing company will be considered "fringe benefit" income and that amount will be subject to tax during the calendar year in which the Date of Termination occurs. 5.2 (A) Whether or ~~until~~ not the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior entitled to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this AgreementSeverance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which 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 ~~and the amount of such Excise Tax: (i) no portion of~~ on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon 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 will be taken into account; (ii) no portion of the Total Payments will be taken into account whichGross-Up Payment, 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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 equal to the Total Payments. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Employment Agreement (Kaman Corp)

Severance Payments. 6.1 If (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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~~ or (ii) the Executive voluntarily terminates his employment for any reason during the one-month period commencing on the first anniversary of the Change in Control, then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“"Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s '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 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 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~~Person described in clause (i), or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to ~~two~~ three times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason; provided, that if the Executive has not participated in an annual bonus or incentive plan maintained by the Company for the entirety of such three-year period, the amount referred to in this clause (ii) shall be calculated using such lesser number of bonuses as have been actually earned by the Executive in respect of such lesser period. (B) For the ~~twenty~~thirty-~~four~~ six (2436) 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 and perquisites (including, but not limited to, executive life insurance, club memberships, financial planning and tax preparation, annual physical examination and charitable contributions), in each case, 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~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~~thirty-~~four~~ six (2436) month period following the Executive’s '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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) Notwithstanding any provision of the Bake▇ ▇▇▇h▇▇ Incorporated 1995 Employee Annual Incentive Compensation Plan (the "Annual Incentive Plan"), the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any 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 under the Annual Incentive Plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent incentive compensation awards to the Executive for all then uncompleted periods under the Annual Incentive 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, at the expected value target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period; provided, however, that if such termination of employment occurs during the same year in which the Change in Control occurs, the pro-rata bonus payment referred to in clause (ii) above shall be offset by any payments received under the Annual Incentive Plan in connection with such Change in Control. (D) In addition to the retirement benefits to which the Executive is entitled under the ~~DC Pension~~ Company's Thrift Plan (the "Thrift Plan") and the Company's Supplemental Retirement Plan (the "SRP"), the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ present value of ~~(i)~~ the ~~amount that~~ employer-provided contributions, deferrals and allocations the Executive would have ~~been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ received had he continued to participate, after the Date of Termination, ~~determined~~ in the Thrift Plan and the SRP for three (x3) ~~as if the Executive made the maximum permissible contributions thereto during such period~~additional years, assuming for this purpose that (yi) ~~as if~~ the Executive earned compensation for purposes of the Thrift Plan and SRP during such three-year period ~~at a rate equal~~ the amount used to calculate the Executive~~’s compensation~~ 's severance payment under subparagraph (~~as defined in the DC Pension Plan~~A) ~~during the twelve (12) months immediately preceding the Date~~ of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunderthis Section 6.1, and (ii) the ~~excess~~percentages of contributions, ~~if any, of (x) the Executive’s account balance~~ deferrals and allocations made under the ~~DC Pension~~ Thrift Plan as and the SRP by or on behalf of the Executive during such three-year period are the same percentages of contributions, deferrals and allocations in effect on the date of the Change in Control or the Date of ~~Termination over (y)~~ Termination, whichever is more favorable to the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC PlanExecutive. (DE) If the Executive would have become entitled to benefits under the Company’s '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 's employment terminated at any time during the period of ~~twenty~~thirty-~~four~~ six (2436) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive and the Executive’s '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. (EF) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s 's position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination~~ three years or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) ~~Notwithstanding any other provisions in this Agreement~~Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “"Total Payments”") ~~would~~ will be subject ~~(in whole or part),~~ to the Excise Tax, ~~then~~the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments provided by reason of section 280G of the Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and ~~after subtracting the net amount of~~ any federal, ~~state, municipal~~ state and local income and employment taxes ~~on such reduced Total Payments~~ and ~~after taking into account~~ Excise Tax upon the ~~phase out~~Gross-Up Payment, ~~if any, of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or~~ shall be equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a “payment”~~ "parachute payments" (within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii~~Code) ~~no portion of the Total Payments will be taken into account which~~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, the Company’s 's independent auditor (the “"Auditor”"), ~~does~~ such payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ such excess parachute payments (in whole or in part) represent reasonable compensation for services actually ~~rendered,~~ 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. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made 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 if there is no 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 which could be obtained from deduction of such state and local taxes. (C) ~~All determinations required by this Section 6.2 (or requested by either~~ In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Executive or shall repay to the ~~Company~~ Company, within five (5) business days following the time that the amount of such reduction in ~~connection with this Section 6.2) will be at~~ the ~~expense~~ Excise Tax is finally determined, the portion of the ~~Company~~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 and employment taxes imposed on the Gross-Up Payment being repaid by the Executive, to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. ~~The fact~~ In the event that the ~~Executive’s right~~ Excise Tax is determined to ~~payments or benefits may be reduced~~ exceed the amount taken into account hereunder in calculating the Gross- Up Payment (including by reason of any payment the ~~limitations contained in this Section 6.2 will~~ existence or amount of which cannot ~~of itself limit or otherwise affect any other rights~~ 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 additions payable by the Executive ~~under this Agreement~~with respect to such excess) 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. 6.3 ~~Subject to Section 6.4, the~~ The payments provided in subsections (A), (C) and (CD) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination; 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 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 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)(B) of the Code), but only to the extent such amount has not been paid by the Executive pursuant to Section 6.2(C) above. 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). ~~(A) Notwithstanding any provisions of this Agreement~~ 6.4 The Company also shall pay to the ~~contrary, if the~~ Executive ~~is a “specified employee” (within the meaning of section 409A~~ all legal fees and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive's employment, ~~such reimbursement~~ 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. Such payments shall be made on within five (5) business days after delivery of the ~~Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by~~ Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitreasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Baker Hughes Inc)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, if the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive’s employment is terminated 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof; provided, however, that, in the case of clauses (A), (B), and (C), below, Executive shall have complied with the requirements of Section 9 regarding execution and delivery of a general release. For purposes of this Agreement, the ~~Executive~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ 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 (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs no later than six (6) months following the Executive’s termination of employment) 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~~ Executive’s employment for Good Reason prior to a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs no later than six (6) months following the Executive’s termination 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs). For purposes of Section 5 and 6 of this Agreement,~~ occurs no ~~payment that would otherwise be made and no benefit that would otherwise be provided upon a~~ later than six (6) months following the Executive’s termination of ~~employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~employment). (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~~ one and one-half (1.5) times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the ~~average~~ Executive’s target annual bonus ~~earned by~~ under the ~~Executive pursuant to~~ “Management Incentive Plan - Executive” or any other annual ~~bonus or~~ incentive compensation plan ~~maintained~~ adopted by the Company in which the Executive participates in respect of ~~the three fiscal years ending immediately prior to~~ the fiscal year in which occurs the Date of Termination or, if higher, such target annual bonus in effect immediately prior to the ~~fiscal year in which occurs the~~ first occurrence of an event or circumstance constituting Good Reason. (B) For the ~~twenty-~~twenty four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and ~~his~~ Executive’s dependents life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and ~~his~~ Executive’s dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and ~~his~~ Executive’s dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater ~~after~~ after-tax cost to the Executive than the ~~after~~ after-tax cost to the Executive immediately prior to such date or occurrence; provided, however, ~~that,~~ that (i) the Executive’s and Executive’s qualified dependents’ COBRA eligibility period shall include the period during which the Company is providing benefits under this subsection (B); (ii) unless the Executive consents to a different ~~method~~method (or elects COBRA coverage at applicable COBRA rates), such health insurance benefits shall be provided through a third-party insurer; and (iii) the Executive shall be responsible for the payment of premiums for such benefits in the same amount as active employees of the Company. 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) 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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. Notwithstanding the foregoing, in the event that the Executive’s employment is terminated under circumstances described in the second sentence of Section 6.1, on the sixtieth (60th) day following the Change in Control the Company shall pay or reimburse the Executive for any amounts or benefits it would have been required to pay or provide to the Executive under this Section 6.1(C) during the period prior to the Change in Control, determined as if the Change in Control occurred on the Date of Termination. (C) ~~In addition~~ Notwithstanding any provision of any annual incentive plan to the ~~benefits to which the Executive is entitled under the DC Pension Plan~~contrary, the Company shall pay to the Executive ~~a lump sum~~ an amount, in cash, equal to any unpaid incentive compensation which has been allocated or awarded to the ~~sum~~ Executive for a completed fiscal year preceding the Date of ~~(i) the amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Termination under any such plan and which, as of the Date of Termination, ~~determined (x) as if~~ is contingent only upon the continued employment of the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plansubsequent date. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) Notwithstanding any other provisions in of this Agreement, if in the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive (including any payment or ~~benefits~~ benefit received in connection with a Change in Control or the termination of the Executive’s ~~termination of~~ employment, whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or agreement) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as 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, ~~program,~~ arrangement or agreement, the ~~Company will reduce~~ 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 ~~in no event to less than zero); provided, however, that the Total Payments will~~ only ~~be reduced~~ if (iA) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, ~~state, municipal~~ state and local income taxes on such reduced Total Payments and after taking into account the phase ~~out, if any,~~ out of itemized deductions and personal exemptions attributable to such reduced Total Payments), ) is greater than or equal to (iiB) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, ~~state, municipal~~ 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, if any,~~ out of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise ~~Tax and the amount of such 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 ~~will~~ shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ 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 “Auditor”) which was, immediately prior to the Change in Control, the Company’s independent ~~auditor (the “Auditor”)~~auditor, does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments ~~will~~ shall be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of section ~~280G(b)(4)(B~~280G(b) (4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation; , and (iii) 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 Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). . If the Executive objects in writing 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) ~~Notwithstanding any~~ of this Section 6.2. 6.3 Subject to the provisions of ~~this Agreement~~ Section 17 hereof and the requirement set forth in Section 9 to execute and deliver a general release, the payments provided for in subsections (A) and (C) of Section 6.1 hereof shall be made on the sixtieth (60th) day following the Date of Termination; and in the event the Executive becomes entitled to Severance Payments due to a termination described in the second sentence of Section 6.1, such payments shall be made on the sixtieth (60th) day following the Change in Control. Notwithstanding the above, to the ~~contrary, if~~ extent the Executive is terminated (i) following a ~~“specified employee”~~ 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 ~~and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion~~ of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”Code) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) ~~Executive’s death (~~prior to a Change in Control in a manner described in the ~~applicable date~~second sentence of Section 6.1, to the ~~“Permissible Payment Date”).~~ extent required to avoid accelerated taxation and/or tax penalties 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 ~~also reimburse~~ pay to the Executive ~~for the after-tax cost~~ all reasonable legal fees and expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any ~~Delayed Benefits (~~issue hereunder relating to the ~~“Additional Delayed Payments”). (B) With respect~~ termination 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 ~~amount~~ payment or benefit provided hereunder. Such payments shall be made upon delivery of ~~expenses eligible~~ periodic ▇▇▇▇▇▇▇▇ for ~~reimbursement~~ same, provided that (i) Executive shall promptly repay all amounts paid under ~~Sections 6.1 (B)~~this Section 6.4 at the conclusion of such dispute if the resolution thereof includes a finding that Executive did not act in good faith in the matter in dispute or in the dispute proceeding itself, ~~(D)~~ and (~~F), such~~ ii) no claim for expenses of representation shall be ~~reimbursed~~ submitted by Executive unless made in writing to the ~~Company~~ Board within ~~thirty~~ ninety (3090) ~~calendar~~ days ~~following the date on which the Company receives the applicable invoice from the Executive but~~ after receipt of billing for such representation. Any such payment shall be made promptly, and in any event no ~~event~~ later than ~~December 31~~ the end of the calendar year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitexpense was incurred. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Severance Agreement (TCF Financial Corp)

Severance Payments. 6.1 If (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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~~ or (ii) the Executive voluntarily terminates his employment for any reason during the one-month period commencing on the first anniversary of the 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”)") 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s '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 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 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, or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~not correct. (A) In lieu of any further salary payments to the Executive for periods ~~subsequent~~ subse- quent 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~~ three times the sum of (i) the ~~Executive’s~~ Execu tive's 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 circumstance constituting Good Reason, and (ii) the ~~average annual~~ Executive's "target bonus" (i.e., the Executive's "opportunity incentive target" bonus ~~earned~~ multiplied by the ~~Executive~~ "target" factor, which for 1998 is 1.4) pursuant to the Company's Management Compensation Plan or any ~~annual bonus or incentive plan maintained by the Company~~ successor thereto in respect of ~~the three fiscal years ending immediately prior to~~ the 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 constituting Good Reason. (B) For the ~~twenty~~thirty-~~four~~ six (2436) 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 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~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~~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~~thirty-~~four~~ six (2436) month period following the Executive’s 's termination of employment (and any such benefits received by or made available to the Executive shall be ~~reported~~ re ported to the Company by the Executive); provided, however, that the Company shall ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the retirement benefits to which the Executive is entitled under ~~the DC~~ each Pension ~~Plan~~Plan or any successor plan thereto, the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ excess of (i) the ~~amount that would have been contributed thereto by~~ actuarial equivalent of the ~~Company on~~ aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the ~~Executive’s behalf during~~ date (but in no event earlier than the ~~twenty-four (24) months immediately following~~ third anniversary of the Date of Termination~~, determined (x~~) as if of which the actuarial equivalent of such annuity is greatest) which the Executive ~~made~~ would have accrued under the ~~maximum permissible contributions thereto during such period,~~ terms of all Pension Plans (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to ~~the DC~~ 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 (~~ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of~~ after the Date of ~~Termination over~~ Termination) thirty-six (y36) additional months of service credit thereunder and had been credited under each Pension Plan during such period with compensation equal to the ~~portion of~~ Executive's compensation (as defined in such ~~account balance that is nonforfeitable under the terms of the DC~~ Pension Plan~~. The payments provided in this Section 6.1(C~~) ~~are in addition to any payment~~ during the ~~Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan.~~ twelve (D12) ~~If the Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans, as in effect~~ months immediately ~~prior to the~~ preceding Date of Termination or, if ~~more favorable to~~ higher, during the ~~Executive, as in effect~~ twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, ~~had~~ over (ii) the ~~Executive’s employment terminated~~ 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 ~~any time during~~ the ~~period of twenty-four~~ date (~~24) months after~~ but in no event earlier than the Date of Termination, ) as of which the ~~Company shall provide~~ actuarial equivalent of such ~~post-retirement health care and/or life insurance benefits~~ annuity is greatest) which the Executive had accrued pursuant to the ~~Executive and~~ provisions of the ~~Executive’s dependents commencing on~~ Pension Plans as of the ~~later~~ Date of ~~(i) the date on which such coverage would have first become available and (ii) the date on which benefits described in subsection (B)~~ Termination. For purposes of this Section 6.1 terminate. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or6.1(C), if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder "actuarial equivalent" shall be ~~paid to~~ determined using the ~~Executive within thirty (30) calendar days following~~ same assumptions utilized under the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company Company's Salaried Employees' Pension Plan immediately prior to the Date of ~~Termination~~ Termination. or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good ~~Reason~~ Reason." (~~including~~D) The Company shall provide the Executive with outplacement services suitable to the Executive's position for a period of three years or, ~~without limitation~~if earlier, ~~automobile, financial planning, annual physical and executive whole life insurance)~~until the first acceptance by the Executive of an offer of employment. 6.2 (1A) ~~Notwithstanding any other provisions in this Agreement~~Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “"Total Payments”") ~~would~~ will be subject ~~(in whole or part),~~ to the Excise Tax, ~~then~~the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments provided by reason of section 280G of the Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and ~~after subtracting the net amount of~~ any federal, ~~state, municipal~~ state and local income and employment taxes ~~on such reduced Total Payments~~ and ~~after taking into account~~ Excise Tax upon the ~~phase out~~Gross-Up Payment, ~~if any, of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or~~ shall be equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a “payment”~~ "parachute payments" (within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii~~Code) ~~no portion of the Total Payments will be taken into account which~~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, the Company’s 's independent auditor (the “"Auditor”"), ~~does~~ such payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ such excess parachute payments (in whole or in part) represent reasonable compensation for services actually ~~rendered,~~ 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. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made 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 if there is no 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 which could be obtained from deduction of such state and local taxes. (C) ~~All determinations required by this Section 6.2 (or requested by either~~ In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Executive or shall repay to the ~~Company~~ Company, within five (5) business days following the time that the amount of such reduction in ~~connection with this Section 6.2) will be at~~ the ~~expense~~ Excise Tax is finally determined, the portion of the ~~Company~~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 and employment taxes imposed on the Gross-Up Payment being repaid by the Executive, to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. ~~The fact~~ In the event that the ~~Executive’s right~~ Excise Tax is determined to ~~payments or benefits may be reduced~~ exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the ~~limitations contained in this Section 6.2 will~~ existence or amount of which cannot ~~of itself limit or otherwise affect any other rights~~ 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 additions payable by the Executive ~~under this Agreement~~with respect to such excess) 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. 6.3 ~~Subject to Section 6.4, the~~ The payments provided in subsections (A) and (C) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination; 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 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 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)(B) of the Code). 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). ~~(A) Notwithstanding any provisions of this Agreement~~ 6.4 The Company also shall pay to the ~~contrary, if the~~ Executive ~~is a “specified employee” (within the meaning of section 409A~~ all legal fees and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive's employment, ~~such reimbursement~~ 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. Such payments shall be made on within five (5) business days after delivery of the ~~Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by~~ Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitreasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Management Severance Agreement (Donaldson Co Inc)

Severance Payments. ~~6.1 If the Executive incurs a “separation from service”~~ (~~within the meaning of section 409A~~a) ~~following a Change in Control~~ From 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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 shall be deemed to have incurred a separation from service 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 (whether or not a Change in Control occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company after the consummation of ~~which would constitute~~ a Change ~~in Control, (ii)~~ of Control and subject to the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 other provisions of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A. (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 ExecutiveSection 1, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (i) the Executive’s base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of Employee an event or circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, amount equal to the ~~sum~~ Employee’s then-current base salary for a period of one year (ithe “Severance Payment”) if (X) the amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that Employee is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided employed by the Company immediately prior to the ~~Date~~ consummation of ~~Termination or, if more favorable to~~ a Change of Control and (Y) (i) upon consummation of such Change of Control the ~~Executive,~~ Employee is not hired by the Buyer or retained by the Company on substantially similar terms of employment as those enjoyed by the Employee immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount consummation of such ~~Total Payments~~Change of Control, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), Employee’s employment with the ~~highest values reduced first~~ Company or the Buyer, as applicable, is terminated without Cause (as ~~such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24~~defined below) ~~will next be reduced; (iii) payments that are payable in cash that are valued~~ at ~~less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of~~ any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 first anniversary of the consummation of such Change in of Control, the Company’s independent auditor (the “Auditor”), does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; and or (iii) the ~~value~~ Employee resigns with Good Reason (as defined below) from employment with the Company or the Buyer, as applicable, at any time prior to the first anniversary of ~~any noncash benefits or any deferred payment or benefit~~ the consummation of such Change of Control. The Severance Payment shall be ~~determined by~~ made in one lump sum upon the ~~Auditor in accordance~~ effective date of the termination of such Employee’s employment with the ~~principles of sections 280G(d)(3) and (4) of~~ Company or the ~~Code~~Buyer, as the case may be. (Cb) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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 Notwithstanding anything else to the ~~Total Payments. 6.3 Subject to Section 6.4~~contrary herein, if upon termination, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive Employee is a “specified employee” (within the meaning attributed thereto by Section 409A of ~~section 409A~~ the Code and ~~determined pursuant to procedures adopted by~~ the regulations thereunder) of Company~~) at the time of his separation from service~~ , and if ~~any portion of~~ the payments ~~or benefits to be received by the Executive upon separation from service~~ would be ~~considered deferred compensation~~ subject to excise tax under ~~section 409A, amounts that would otherwise be payable pursuant to this Agreement during~~ Code Section 409A because such payments are made within the ~~six~~6-month period ~~immediately following~~ commencing upon the ~~Executive~~Employee’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the effective date of ~~the Executive’s separation from service or (ii) Executive’s death (the applicable date~~termination, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), then such ~~expenses~~ payments shall be ~~reimbursed by the Company within thirty (30) calendar days~~ delayed for 6 months following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefittermination. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change of Control Agreement (Molecular Insight Pharmaceuticals, Inc.)

Severance Payments. 6.1 If (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by reason of ~~death or Disability~~death, or (C) by the Executive without Good Reason, ~~then~~ or (ii) the Executive voluntarily terminates his employment for any reason during the one-month period commencing on the first anniversary of the 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”)") 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s '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 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 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, or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~not correct. ~~(A)~~ 6.2 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 two point five (2.5) times the sum of (i) the Executive’s '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 circumstance constituting Good Reason, ~~and~~ (ii) the average of the annual ~~bonus~~ bonuses earned by the Executive pursuant to any annual bonus or incentive ~~plan~~ plan, other than the Long Term Incentive Plan, maintained by the Company in respect of the ~~three~~ two fiscal ~~years~~ years, or if higher, the bonus earned in respect to the fiscal year, ending immediately prior to the fiscal year in which ~~occurs~~ the Date of Termination occurs or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good ~~Reason.~~ Reason and (Biii) ~~For~~ the ~~twenty-four (24) month period immediately~~ taxable value of the benefit of a company car and the value of any pension benefits that the Executive would have been entitled to should the Executive have remained in service for 1 year 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In ~~addition to the benefits to which the Executive is entitled under the DC Pension Plan~~addition, the Company shall pay in accordance with relevant Swedish law all relevant social costs attributable to the ~~Executive a~~ lump sum amount, in cash, equal to the sum of (i) the amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined severance payment described in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. previous sentence. 6.3 The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination~~. At~~ ; PROVIDED, HOWEVER, that if the ~~time that~~ amounts of such payments ~~are made under this Agreement~~cannot be finally determined on or before such day, the Company shall ~~provide~~ pay to the Executive ~~with a written statement setting forth~~ on such day an estimate, as determined in good faith by the ~~manner in which~~ Company of the minimum amount of 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 to which ~~are in writing shall be attached to the statement). (A) Notwithstanding any provisions of this Agreement to the contrary, if~~ the Executive is ~~a “specified employee”~~ clearly entitled and shall pay the remainder of such payments (~~within~~ together with interest on the ~~meaning of section 409A and determined pursuant~~ unpaid remainder (or on all such payments to ~~procedures adopted by~~ the ~~Company~~extent the Company fails to make such payments when due) at ~~the time of his separation from service and if any portion~~ 120% of the ~~payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under~~ rate provided in section ~~409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”~~1274(b)(2)(B) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the ~~seventh month following~~ Code) as soon as the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount ~~of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall~~ thereof can be ~~reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive~~ determined but in no event later than ~~December 31~~ the thirtieth (30th) day after the Date of Termination. In the event that the amount of the ~~year following~~ estimated payments exceeds the ~~year~~ 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 ~~which~~ section 1274(b)(2)(B) of the Code). 6.4 The Company also shall pay to the Executive ~~incurs~~ all legal fees and expenses incurred by the ~~related expenses; provided, that with respect to reimbursement~~ Executive in disputing in good faith any issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive's employment, ~~such reimbursement~~ 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 attributable to any payment or benefit provided hereunder. Such payments shall be made on within five (5) business days after delivery of the ~~Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by~~ Executive's written request for payment accompanied with such evidence of fees and expenses incurred as the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitreasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Autoliv Inc)

Severance Payments. 6.1 If (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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~~ or (ii) the Executive voluntarily terminates his employment for any reason during the one-month period commencing on the first anniversary of the Change in Control, then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“"Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s '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 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 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~~Person described in clause (i), or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to ~~two~~ three times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason.in (B) For the ~~twenty~~thirty-~~four~~ six (2436) 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 and perquisites (including, but not limited to, executive life insurance, club memberships, financial planning and tax preparation, annual physical examination and charitable contributions), in each case, 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~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~~thirty-~~four~~ six (2436) month period following the Executive’s '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,~~ provided however, that the Company shall ~~promptly~~ reimburse the (C) Notwithstanding any provision of the Bake▇ ▇▇▇h▇▇ Incorporated 1995 Employee Annual Incentive Compensation Plan (the "Annual Incentive Plan"), the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the ~~excess~~Date of Termination under the Annual Incentive Plan and which, ~~if any,~~ as of the ~~after tax cost~~ Date of ~~such benefits to~~ Termination, is contingent only upon the continued employment of the Executive ~~over such cost immediately prior~~ to a subsequent date, and (ii) a pro rata portion to the Date of Termination ~~or, if more favorable~~ of the aggregate value of all contingent incentive compensation awards to the ~~Executive~~Executive for all then uncompleted periods under the Annual Incentive 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, at the expected value target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period; provided, however, that if such termination of employment occurs during the some year in which the Change in Control occurs, the ~~first occurrence of an event or circumstance constituting Good Reason~~pro-rata bonus payment referred to in clause (ii) above shall be offset by any payments received under the Annual Incentive Plan in connection with such Change in Control. (CD) In addition to the retirement benefits to which the Executive is entitled under the ~~DC Pension~~ Company's Thrift Plan (the "Thrift Plan") and the Company's Supplemental Retirement Plan ( the "SRP"), the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ present value of ~~(i)~~ the ~~amount that~~ employer-provided contributions, deferrals and allocations the Executive would have ~~been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ received had he continued to participate, after the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Pension Thrift 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan.and (DE) If the Executive would have become entitled to benefits under the Company’s '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 's employment terminated at any time during the period of ~~twenty~~thirty-~~four~~ six (2436) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive and the Executive’s '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. (EF) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s 's position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination~~ three years or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) ~~Notwithstanding any other provisions in this Agreement~~Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise ~~Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. At the time that payments are made under this Agreement, the Company shall ~~provide~~ pay to 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service an additional amount (the ~~“Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six~~"Gross-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payUp

Appears in 1 contract

Sources: Severance Agreement (Baker Hughes Inc)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, and subject to the limitations specified in Sections 15.G.V, 15.O, in the case of an impacted Executive ~~incurs a “separation from service” (within~~ which - provisions shall control over the ~~meaning~~ provisions of ~~section 409A)~~ these Sections 6.1 and 6.2 if the Executive's employment is terminated following a Change in Control or Potential Change in Control and during the Term, other than (A) by ~~the Company~~ Sierra for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then ~~the Company~~ Sierra shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“"Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by ~~the Company~~ Sierra without Cause or by the Executive with Good Reason, if (i) the Executive’s 's employment is terminated by ~~the Company~~ Sierra without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) 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 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, or (iii) the Executive’s 's employment is terminated by ~~the Company~~ Sierra without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct undess the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 ~~Executive~~Executive under or pursuant to any contract or plan, except for any severance benefits relating to or resulting from the Supplemental Executive Retirement Plan (provided the Executive is a participant in the Plan), whether as a consequence of a Change in Control or otherwise, and subject to the provisions of Section 6.2(a), the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) the ~~average~~ target annual ~~bonus earned by~~ cash incentive award applicable to the Executive pursuant to any annual cash bonus or annual cash incentive plan maintained by ~~the Company~~ Sierra in respect of the ~~three~~ fiscal ~~years~~ year ending immediately prior to the 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 constituting Good Reason. (B) For the twenty-four (24) 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 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a -------- ------- different ~~method~~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) month period following the Executive’s '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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. 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. (C) Notwithstanding any provision of any annual 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 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 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, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent 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, at the target level of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period 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 ~~the DC~~ each Pension ~~Plan~~Plan or any successor plan thereto, the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ excess of (i) the ~~amount that would have been contributed thereto by~~ actuarial equivalent of the ~~Company on~~ aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the ~~Executive’s behalf during~~ date (but in no event earlier than the ~~twenty-four (24) months immediately following~~ third anniversary of the Date of Termination~~, determined (x~~) as if of which the actuarial equivalent of such annuity is greatest) which the Executive ~~made~~ would have accrued under the ~~maximum permissible contributions thereto during such period,~~ terms of all Pension Plans (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to ~~the DC~~ 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) twenty-four (24) additional months of service credit thereunder and had been credited under each Pension Plan during such period with compensation equal to the Executive's compensation (as defined in such Pension Plan) during the twelve (12) months immediately preceding the Date of Termination gr, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, over (ii) the ~~excess, if any,~~ actuarial equivalent of the aggregate retirement pension (xtaking 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 ~~Executive’s account balance under~~ actuarial equivalent of such annuity is greatest) which the DC Executive had accrued pursuant to the provisions of the Pension ~~Plan~~ Plans as of the Date of ~~Termination over (y)~~ Termination. For purposes of this Section 6.1(D), "actuarial equivalent" shall be determined using the ~~portion of such account balance that is nonforfeitable~~ same assumptions utilized under the ~~terms~~ Sierra Pacific Power Company Retirement Plan immediately prior to the Date of Termination. or, if more favorable to the ~~DC Pension Plan. The payments provided in this Section 6.1(C) are in addition~~ Executive, immediately prior to ~~any payment~~ the ~~Executive would otherwise receive under the applicable DC Plan and are not intended to offset~~ first occurrence of an event or ~~reduce any payment under such DC Plan~~circumstance constituting Good Reason. (DE) If the Executive would have become entitled to benefits under ~~the Company’s~~ Sierra'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 's employment terminated at any time during the period of twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive and the Executive’s '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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay6.1

Appears in 1 contract

Sources: Change in Control Agreement (Nevada Power Co)

Severance Payments. 6.1 If The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is then entitled under Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death, Disability or Retirement, or (iii) by the Executive without Good Reason. Additionally, during the one-month period beginning with the first day of the month immediately following the first anniversary of the Change in Control, the Executive may voluntarily terminate his employment for any reason and, upon such termination, the Company shall pay the Executive the Severance Payments and the Gross-Up Payment, in addition to any payments and benefits to which the Executive is then entitled under Section 5 hereof. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s 's employment is terminated by the Company without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s 's employment is terminated by the Company without Cause ~~or by~~ prior to a Change in Control and the Executive ~~for Good Reason and~~ reasonably demonstrates that such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.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 two times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payto

Appears in 1 contract

Sources: Severance Agreement (Safeco Corp)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, if (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“"Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s 's employment is terminated by the Company without Cause prior to a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs no later than six (6) months following the Executive’s termination of employment) 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 for Good Reason prior to a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs no later than six (6) months following the Executive’s termination 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 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs). For purposes of Section 5 and 6 of this Agreement,~~ occurs no ~~payment that would otherwise be made and no benefit that would otherwise be provided upon a~~ later than six (6) months following the Executive’s termination of ~~employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~employment). (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~~ one times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) the ~~average~~ Executive’s target annual bonus ~~earned by the Executive pursuant to~~ under any 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 or, if higher, ~~immediately prior to~~ the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the ~~twenty-four (24)~~ 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 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 ~~after~~ after-tax cost to the Executive than the ~~after~~ after-tax cost to the Executive immediately prior to such date or occurrence~~; provided, however, that, unless the Executive consents to a different method, 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)~~ twelve month period following the Executive’s '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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or ~~circumstance~~ circumstance constituting Good Reason. (C) ~~In addition~~ Notwithstanding any provision of any annual incentive plan to the ~~benefits to which the Executive is entitled under the DC Pension Plan~~contrary, the Company shall pay to the Executive ~~a lump sum~~ an amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the ~~amount that would have been contributed thereto by~~ Executive for a completed fiscal year preceding the ~~Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Date of Termination under any such plan and which, as of the Date of Termination, ~~determined (x) as if~~ is contingent only upon the continued employment of the Executive ~~made the maximum permissible contributions thereto during such period~~to a subsequent date, and (yii) ~~as if the Executive earned compensation during such period at~~ a ~~rate equal~~ pro rata portion to ~~the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding~~ the Date of Termination ~~or, if higher, during~~ of the ~~twelve months immediately prior~~ Amount the Executive would have earned with respect to the ~~first occurrence~~ year in which the Date of ~~an event~~ Termination occurs, calculated by multiplying the award that the Executive would have earned for such year, based upon the actual level of achievement of the performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such year through the Date of Termination by twelve (12). (D) Notwithstanding any provision of the Company's Amended and Restated Long Term Incentive Plan, any other long term incentive plan, or ~~circumstance constituting Good Reason~~any award agreement entered into thereunder, (i) all unvested stock options held by the Executive on the Date of Termination shall vest and ~~(z) without regard to any amendment to the DC Pension Plan made subsequent to a Change in Control and~~ become exercisable on ~~or prior to~~ the Date of Termination, ~~which amendment adversely affects in any manner~~ and all stock options held by the ~~computation of benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of~~ Executive on the Date of Termination ~~over~~ shall remain outstanding until their regularly-scheduled expiration date, determined as if the Executive's employment had not terminated; (yii) ~~the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment~~ all unvested restricted stock units held by the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 on the Date of Termination ~~or, if more favorable to~~ shall vest on the ~~Executive, as in effect immediately prior to~~ Date of Termination; and (iii) all long-term cash awards held by the ~~first occurrence~~ Executive on the Date of ~~an event or circumstance constituting Good Reason, had the Executive’s employment terminated at any time during the period of twenty-four (24) months after~~ Termination shall vest on the Date of Termination, with the ~~Company shall provide such post-retirement health care and/or life insurance benefits~~ amount to be vested to be determined as if all applicable performance metrics had been achieved at the Executive 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 terminatetarget level. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) Notwithstanding any other provisions of this Agreement, in ~~this Agreement, if~~ the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive (including any payment or ~~benefits~~ 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, ~~program,~~ arrangement or agreement) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as 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, ~~program,~~ arrangement or agreement, the ~~Company will reduce~~ 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 ~~in no event to less than zero); provided, however, that the Total Payments will~~ only ~~be reduced~~ if (iA) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, ~~state, municipal~~ state and local income taxes on such reduced Total Payments and after taking into account the phase ~~out, if any,~~ out of itemized deductions and personal exemptions attributable to such reduced Total Payments), ) is greater than or equal to (iiB) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, ~~state, municipal~~ 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, if any,~~ out of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise ~~Tax and the amount of such 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 ~~will~~ shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ 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”)~~Executive, does not constitute a “"parachute payment” " within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments ~~will~~ shall be taken into account which, in the opinion of Tax Counsel, constitutes 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; , and (iii) 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 Auditor~~ in accordance with the principles of sections 280G(d)(3) and (4) of the Code. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. At the time that payments are made under this ~~Agreement~~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~~ calculations including, without limitation, any opinions or other advice the Company has received from Tax ~~Counsel, the Auditor~~ 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. 6.3 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 ~~any provisions of this Agreement~~ the above, to the ~~contrary, if~~ extent the Executive is terminated (i) following a ~~“specified employee”~~ 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 ~~and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion~~ of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”Code) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) ~~Executive’s death (~~prior to a Change in Control in a manner described in Section 6.1, to the ~~applicable date~~extent required to avoid accelerated or additional tax under section 409A of the Code, amounts payable to the ~~“Permissible Payment Date”).~~ 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 ~~also reimburse~~ pay to the Executive ~~for the after-tax cost~~ all legal fees and expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any ~~Delayed Benefits (~~issue hereunder relating to the ~~“Additional Delayed Payments”). (B) With respect~~ termination 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 ~~amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses~~ payment or benefit provided hereunder. Such payments shall be ~~reimbursed by~~ made within five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company ~~within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but~~ reasonably may require; provided that in no event will payment be made for requests that are submitted later than December 31 15th of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitexpense is incurred. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Compuware Corp)

Severance Payments. 6.1 ~~If the Executive incurs a “separation from service”~~ Subject to Section 6.2 hereof, if (~~within the meaning of section 409A~~1) ~~following~~ a Change in Control occurs on or prior to December 31, 2004, and ~~during~~ (2) the ~~Term,~~ Executive's employment is terminated (other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, ) and the Date of Termination in connection therewith occurs within three (3) years after such Change in Control then the Company shall pay the Executive the amounts, and provide the Executive the benefits, hereinafter described in this Section 6.1 (“"Severance Payments”"), together with any payments that may be due under Section 6.2 hereof, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ 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 (whether or not a Change in Control occurs) 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 for Good Reason ~~prior to a Change~~ if (a) in ~~Control (whether or not a Change in Control occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction~~ connection with Executive's termination of ~~such Person, or (iii) the Executive’s~~ employment ~~is terminated~~ by the Company without Cause or by the Executive for Good Reason determined by treating the event or transaction hereinafter described as the Change in Control), a Notice of Termination is furnished following an event or transaction described in Section 15(G)(1)(x) or Section 15(G)(3)(x) which occurs on or prior to December 31, 2004, and ~~such termination or the circumstance or event which constitutes Good Reason is otherwise~~ (b) a Management Change occurs in connection with or ~~in anticipation~~ within twelve (12) months following such event or transaction and subsequent to, but not more than six (6) months after, the furnishing of ~~a Change in Control (whether or not a Change in Control occurs). For purposes~~ such Notice of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.Termination. (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 by the Company or any of its subsidiaries to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to (1) if the Date of Termination occurs on or prior to the second anniversary of the Change in Control, two and three-quarters (2.75) times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason~~Change in Control (the "Base Salary"), ~~and~~ plus (ii) the ~~average~~ target annual bonus ~~earned by~~ established for the Executive ~~pursuant to any annual~~ under the 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 (or, if higher, ~~immediately prior to~~ in respect of the fiscal year in which occurs the ~~first event~~ Change in Control), or ~~circumstance constituting Good Reason~~(2) if the Date of Termination occurs after the second anniversary of the Change in Control, one (1) times the sum of such Base Salary plus such target annual bonus. If, notwithstanding the foregoing provision that the lump sum severance is to be in lieu of any severance benefit otherwise payable, the Company or any of its subsidiaries is required by applicable law to pay such a benefit, the Company's obligation to pay such lump sum severance hereunder shall be offset and reduced by the amount of the benefit required to be paid by applicable law. (B) For the ~~twenty~~33-~~four (24)~~ month period 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 (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~~Change in Control), at no greater ~~after tax~~ cost to the Executive on an after-tax basis than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, ~~that, unless~~ that the ~~Executive consents to a different method, such health insurance~~ foregoing benefits shall be provided ~~through~~ for a ~~third-party insurer~~period of only twelve (12) months if the Date of Termination occurs after the second anniversary of the Change in Control. 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 at no greater cost by a subsequent employer during the ~~twenty-four (24) month~~ applicable period ~~following the Executive’s termination of employment~~ set forth above (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive)~~; provided~~. If the Severance Payments shall be decreased pursuant to Section 6.2(B) hereof, ~~however~~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, ~~that~~ the Company ~~shall promptly reimburse the Executive for the excess~~shall, ~~if any~~no later than five (5) business days following such reduction, ~~of the after tax cost of such benefits~~ pay to the Executive ~~over such cost immediately prior~~ 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 ~~Date~~ Executive without being, or causing any other payment to be, nondeductible by reason of ~~Termination or, if more favorable to~~ section 280G of the ~~Executive, the first occurrence of an event or circumstance constituting Good Reason~~Code. (C) ~~In addition~~ Notwithstanding any provision of any incentive, stock, retirement, savings or other plan to the ~~benefits to which~~ contrary, as of the Date of Termination, (i) the Executive ~~is entitled~~ shall be fully vested in (1) all then outstanding options to acquire stock of the Company (or if such options have been assumed by, or replaced with options for shares of, a parent, surviving or acquiring company, such assumed or replacement options), and all then outstanding restricted shares of stock of the Company (or the stock of any parent, surviving or acquiring company into which such restricted shares have been converted or for which they have been exchanged) held by the Executive, (2) all accrued basic match and incremental match employer contributions under the ~~DC Pension Plan~~Company's Capital Appreciation Plan (but not deemed participation match contributions thereunder), and (3) to the extent permissible under the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all amounts credited to his account under the Company's 401(k) Savings and Investment Plan which are attributable to employer contributions; and (ii) all stock options referred to in clause (i) above shall remain exercisable until the earlier of (x) the third anniversary of the Date of Termination or (y) the otherwise applicable expiration date of such option. To the extent that the full vesting of the Executive under clause (i)(3) of the preceding sentence would violate either ERISA or the Code, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount which cannot become fully vested. (D) The Company shall pay to the Executive a lump sum ~~of (i)~~ amount, in cash, equal to the ~~amount that would have been contributed thereto~~ Executive's target annual bonus under the bonus plan maintained by the Company on in respect of the ~~Executive’s behalf during~~ fiscal year in which occurs the ~~twenty-four~~ Date of Termination (24or, if higher, in respect of the fiscal year in which occurs the Change of Control) ~~months immediately following~~ multiplied by a fraction, the numerator of which is the number of days in such fiscal year through and including the Date of Termination, ~~determined~~ and the denominator of which is 365. For purposes of this clause (~~x) as if the Executive made the maximum permissible contributions thereto during such period~~D), ~~(y) as if the Executive earned compensation during such period at a rate equal to~~ the Executive~~’s compensation~~ 's target annual bonus in respect of 2001 shall be deemed to be 150% of his actual target annual bonus in respect of 2001 (~~as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or~~less, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 previously paid to the Executive, as 60% of his actual target annual bonus in ~~effect immediately prior to the first occurrence~~ respect of an event or circumstance constituting Good Reason, had the Executive’s employment terminated at any time during the period of twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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 terminate2001). (EA) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination orExcept as otherwise provided in Section 6.2(B), if ~~earlier, until~~ the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination Severance Payments together with any payment or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, program, arrangement or agreement~~otherwise) (all such payments and benefits, excluding the Gross- Up Payment, being hereinafter ~~referred to as the “~~called "Total Payments”") ~~would~~ will be subject (in whole or part), ) to the Excise Tax, ~~then~~then the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments ~~provided by reason~~ and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes of ~~section 280G~~ determining the amount of the ~~Code in such other plan, program, arrangement or agreement~~Gross-Up Payment, the ~~Company will reduce~~ 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 and state and local income taxes at the highest marginal rate of taxation in the state and localities of the Executive's residence and employment, as applicable, on the Date of Termination, net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes. (B) If the Total Payments would (but for this Section 6.2(B)) be subject (in whole or part) to the ~~extent necessary so that no~~ Excise Tax, but the aggregate value of the portion of the Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is ~~subject to the Excise Tax (but in no event to~~ less than ~~zero); provided~~330% of the Executive's Base Amount, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). then subsection (A) In of this Section 6.2 shall not apply, and the ~~case of a reduction in the Total Payments, the Total~~ cash Severance Payments ~~will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will~~ shall be reduced (if necessary, to zero), ~~with amounts that are payable last~~ and all other Severance Payments shall thereafter be reduced ~~first;~~ (~~ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1~~if necessary, ~~Q&A 24(a~~to zero), ~~with~~ to the ~~highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next~~ extent necessary to cause the Total Payments not to be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to ~~section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation~~the Excise Tax. (BC) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a “payment”~~ "parachute payments" within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which~~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, the Company’s 's independent auditor (the “"Auditor”"), ~~does~~ such other payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of ~~Tax Counsel~~the Auditor, ~~constitutes~~ 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 the Auditor with respect to the matter in dispute shall prevail. (CI) ~~All determinations required by this Section 6.2~~ In the event that (~~or requested by either~~ 1) amounts are paid to the Executive or pursuant to Section 6.2(A), (2) there is a Final Determination that the ~~Company~~ Excise Tax is less than the amount taken into account hereunder in ~~connection with this~~ calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are to be reduced pursuant to Section ~~6.2~~6.2(B), the Executive shall repay to the Company, within five (5) ~~will be at~~ business days following the ~~expense~~ date of the ~~Company. The fact~~ Final Determination, the Gross-Up Payment and the amount of the reduction in the Severance Payments, plus interest on the amount of such repayments at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (II) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the ~~Executive’s right~~ Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to ~~payments or benefits may~~ such Final Determination, the Severance Payments are not to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, 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 and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (III) Except as otherwise provided in clause (IV) below, in the event there is a Final Determination that the Excise Tax exceeds the amount taken into account hereunder in determining the Gross-Up Payment (including by reason of ~~the limitations contained in this Section 6.2 will not of itself limit or otherwise affect~~ any other rights of the Executive under this Agreement. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning payment the existence or amount of ~~liability for~~ which cannot be determined at the time of the Gross-Up Payment), the Company shall pay to the Executive, within five (5) business days following the date of the Final Determination, the sum of (1) a 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, including a Gross-Up Payment in respect of any Excise Tax attributable to amounts payable under clauses (2) and (3) of this paragraph (III) (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion), (2) if Severance Payments were reduced pursuant to Section 6.2(B) but after giving effect to such Final Determination, the Severance Payments should not have been reduced pursuant to Section 6.2(B), the amount by which the Severance Payments were reduced pursuant to Section 6.2(B), and (3) interest on such amounts at 120% of the rate provided in section 1274(b)(2) of the Code. (IV) In the event that (1) Severance Payments were reduced pursuant to Section 6.2(B) and (2) the aggregate value of Total ~~Payments~~Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is subsequently redetermined in a Final Determination, but such redetermined value still does not exceed 330% of the Executive's Base Amount, then, within five (5) business days following such Final Determination, (x) the Company shall pay to the Executive the amount (if any) by which the reduced Severance Payments (after taking the Final Determination into account) exceeds the amount of the reduced Severance Payments actually paid to the Executive, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code, or (y) the Executive shall pay to the Company the amount (if any) by which the reduced Severance Payments actually paid to the Executive exceeds the amount of the reduced Severance Payments (after taking the Final Determination into account), plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code. 6.3 ~~Subject to Section 6.4, the~~ The payments provided in ~~subsections~~ subsection (A) and (D) (and to the extent applicable, subsection (C)) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the ~~fifth~~ fifteenth (~~5th~~15th) ~~business~~ day following the Date of Termination, provided, however, that if the amounts of such payments, and the potential 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 or, in the case of payments under Section 6.2 hereof, in accordance with said Section 6.2, 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 sixtieth (60th) day after the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay,

Appears in 1 contract

Sources: Severance Agreement (Chiquita Brands International Inc)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, the Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a Change in Control and during the ~~Term, other than (A) by the Company for Cause, (B) by reason~~ term of ~~death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in~~ this ~~Section 6.1 (“Severance Payments”)~~Agreement, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of the Executive's death or Disability, or (iii) by the Executive without Good Reason. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service following a Change in Control~~ been terminated by the Company without Cause or by the Executive with Good ~~Reason~~Reason following a Change in Control if, if following a Potential Change in Control, (i) the Executive’s 's employment is terminated ~~by the Company~~ without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s 's employment is terminated ~~by the Company~~ without Cause ~~or by the Executive for Good Reason~~ prior to a Change in Control and such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control~~ which actually occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and 6 convincing evidence that such position is not correct. Notwithstanding the foregoing, if the Executive terminates employment with the Company by means of ~~this Agreement~~a Discretionary Termination, ~~no payment that would otherwise~~ he shall be ~~made and no benefit that would otherwise be provided upon a termination~~ entitled to 50% of ~~employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined~~ the Severance Benefits set forth in ~~accordance with section 409A.~~(A) - (F) below. (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~~ three (3) times the sum of (i) the greater of the Executive’s 's annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Executive's annual base salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change in Control, and (ii) the greater of the average of the annual ~~bonus~~ bonuses earned or received by the Executive ~~pursuant to any annual bonus or incentive plan maintained by~~ from the Company or its subsidiaries in respect of the ~~three~~ two (2) consecutive fiscal years ~~ending~~ immediately ~~prior to the fiscal year~~ preceding that in which ~~occurs~~ the Date of Termination ~~or, if higher,~~ occurs or the average of the annual bonuses so earned or received in respect of the two (2) consecutive fiscal years immediately ~~prior to the fiscal year~~ preceding that in which ~~occurs~~ the ~~first event or circumstance constituting Good Reason~~Change in Control occurs. (B) Notwithstanding any provision of any annual 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 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 any such plan but 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 been paid, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent 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, at the target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (C) Notwithstanding any provision of the Company's supplemental pension and thrift plans (the "Supplemental Plans") to the contrary, upon the termination of the Executive's employment by the Executive for Good Reason or by the Company, in either case at any time following the occurrence of a Change in Control and during the term of this Agreement, the Executive shall be deemed to have an additional thirty-six (36) months of benefit credit under each of the Supplemental Plans and shall be entitled to receive such additional credit either (1) as part of the benefit otherwise payable under the Supplemental Plan or (2) as a lump sum. (D) For the ~~twenty~~thirty-~~four~~ six (2436) month period 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~~ which the Executive ~~and his dependents~~ is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to any amendment to such benefits made subsequent to a Change in Control which amendment adversely affects in any manner the Executive~~, those provided~~ 's entitlement to or the ~~Executive and his dependents immediately prior to the first occurrence~~ amount of ~~an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to~~ such ~~date or occurrence~~benefits); provided, however, that, unless the Executive consents to a different ~~method~~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~~ though a third-party insurer. Benefits otherwise receivable by the Executive pursuant to this Section ~~6.1(B~~6.1(D) 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 ~~twenty~~thirty-~~four~~ six (2436) month period following the Executive’s '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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (DE) If the Executive would have become entitled to benefits under the Company’s '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, plans had the Executive’s employment terminated at any time during the period of twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of 's employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Executive Employment Agreement (Union Pacific Resources Group Inc)

Severance Payments. ~~6.1~~ 5.1 If the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive’s employment is terminated 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~~ then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section ~~6.1~~ 5.1 (“Severance Payments”)) and Section 5.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 4 hereof. ~~For~~ Solely for purposes of determining whether termination occurred following a Change in Control pursuant to this ~~Agreement~~Agreement (and without any implication that a Change in Control has in fact occurred), the ~~Executive~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ 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 ~~(whether or not a Change in Control occurs)~~ and such termination was at the ~~request~~ request, direction or ~~direction~~ suggestion, directly or indirectly, of a Person who has entered into an agreement or with whom the Company contemplates will enter into an agreement with the Company the consummation of which would constitute a Change in ~~Control~~Control or, (ii) the Executive terminates his employment for Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the ~~request~~ request, direction or ~~direction~~ suggestion of such ~~Person, or~~ Person described in clause (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occursi). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason$2,250,000. (B) For the ~~twenty~~thirty-~~four~~ six (2436) 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 and perquisites (including, but not limited to, executive life insurance, club memberships, financial planning and tax preparation, annual physical examination and charitable contributions), in each case, 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~method (after taking into account the effect of such method on the calculation of “parachute payments” pursuant to Section 5.2 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~~5.1(B) shall be reduced to the extent benefits of the same type are received by the Executive under any individual or group policy or program, or made available to the Executive under a group plan whether by reason of the employment of the Executive or the employment of the spouse of the Executive, during the ~~twenty~~thirty-~~four~~ six (2436) 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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) ~~In addition to~~ Notwithstanding any provision of that certain Employment Agreement between the ~~benefits to which~~ Company and the Executive ~~is entitled under~~ effective as of February 1, 2004 (the ~~DC Pension Plan~~“Employment Agreement”), the Company shall pay to the Executive a lump sum amount, in cash, equal to the ~~sum~~ aggregate value of (ithe contingent bonus award contemplated by Section 4(b) of the ~~amount~~ Employment Agreement that the Executive would have ~~been contributed thereto by~~ earned as of the ~~Company on~~ last day of the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation Base Period (as defined in the ~~DC Pension Plan) during~~ Employment Agreement), assuming the ~~twelve (12) months immediately preceding~~ achievement, at the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if anyexpected value target level, of ~~(x)~~ the ~~Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of~~ performance goals established with respect to such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Planaward. (D) If The committee (as defined by the ~~Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans~~▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Services, 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 Inc. 1998 Nonstatutory Stock Option Plan) shall deem the Executive’s termination of employment ~~terminated at any time during~~ as a retirement for purposes of the ~~period of twenty-four (24) months after the Date of Termination~~▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Services, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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 terminateInc. 1998 Nonstatutory Stock Option Plan. (E) ~~The~~ If a Change in Control occurs prior to January 4, 2005 the Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay ~~in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid~~ to the Executive ~~within thirty (30) calendar days following~~ a lump sum payment, in cash, equal to the ~~date~~ Black-Scholes value, as reasonably determined by the Company as of March 31, 2004, of an option to purchase 100,000 shares of the Company’s common stock, assuming for this purpose the option was granted on ~~which~~ March 31, 2004, the per share exercise price under the option is $ 14.62, the option has the same terms and conditions as applied to the option granted by the Company to the Executive ~~submits~~ on March 31, 2004 (other than the ~~invoice but no later than December 31~~ number of shares subject to the ~~third~~ option), and the option remains outstanding for the full ten year ~~following~~ term; and utilizing the risk free interest rate, dividend yield, and expected volatility assumptions used by the Company for purposes of valuing stock options for its 2003 fiscal year of as reflected in its fiscal year 2003 Form 10-K filed with the ~~Executive’s Date of Termination~~Securities and Exchange Commission. 5.2 (FA) ~~For the twenty-four (24) month period immediately following the Date of Termination~~ Whether or ~~until~~ not the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior entitled to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this AgreementSeverance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) ~~would~~ will be subject ~~(in whole or part),~~ to the Excise Tax, ~~then~~the Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments provided by reason of section 280G of the Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and ~~after subtracting the net amount of~~ any federal, ~~state, municipal~~ state and local income and employment taxes ~~on such reduced Total Payments~~ and ~~after taking into account~~ Excise Tax upon the ~~phase out~~Gross-Up Payment, ~~if any, of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or~~ shall be equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a~~ “~~payment~~parachute payments” (within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii~~Code) ~~no portion of the Total Payments will be taken into account which~~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, the Company’s independent auditor (the “Auditor”), ~~does~~ such payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all “excess parachute payments” within the meaning of section 280G(b)(1) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ such excess parachute payments (in whole or in part) represent reasonable compensation for services actually ~~rendered,~~ 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~~ section 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 tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made 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 if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of this Section 5.2), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (C) ~~All determinations required by this Section 6.2 (or requested by either~~ In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Executive or shall repay to the ~~Company~~ Company, within five (5) business days following the time that the amount of such reduction in ~~connection with this Section 6.2) will be at~~ the ~~expense~~ Excise Tax is fully determined, the portion of the ~~Company. The fact~~ 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 and employment taxes imposed on the Gross-Up Payment being repaid by the Executive, to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive’s ~~right~~ taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to ~~payments or benefits may be reduced~~ exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the ~~limitations contained in this Section 6.2 will~~ existence or amount of which cannot ~~of itself limit or otherwise affect any other rights~~ 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 additions payable by the Executive ~~under this Agreement~~with respect to such excess) 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. ~~6.3 Subject to Section 6.4, the~~ 5.3 The payments provided in ~~subsections~~ subsection (A) and (C) of Section ~~6.1~~ 5.1 hereof and in Section 5.2 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination; 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 Executive or, in the case of payments under Section 5.2 hereof, in accordance with Section 5.2 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 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)(B) of the Code), but only to the extent such amount has not been paid by the Executive pursuant to Section 5.2(C) above. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following 5.4 If the Executive’s ~~separation from service (~~employment with the ~~“Delayed Payments”)~~ Company is terminated following a Change in Control and ~~benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”)~~ during the ~~six-month period immediately following the Executive’s separation from service (such period~~Term, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall ~~also reimburse~~ pay to the Executive ~~for the after-tax cost~~ all legal fees and expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive’s employment, ~~such reimbursement~~ 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. Such payments shall be made ~~on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount~~ within five (5) business days after delivery of ~~reimbursements or in-kind benefits to be provided in any other taxable year, nor shall~~ the Executive’s ~~right to reimbursement or in-kind benefits be subject to liquidation or exchange~~ written requests for ~~another benefit~~payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Stewart & Stevenson Services Inc)

Severance Payments. ~~6.1 If~~ 6.1. The Company shall pay the Executive ~~incurs a~~ the payments described in this Section 6.1 (the “~~separation from service” (within~~ Severance Payments”) upon the ~~meaning~~ termination of ~~section 409A)~~ the Executive’s employment following a Change in Control and during the ~~Term, other than~~ term of this Agreement (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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits 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, or (iii) by the Executive without Good Reason. For purposes of this Agreement, the ~~Executive~~ Executive’s employment shall be deemed to have ~~incurred a separation from service following a Change in Control~~ been terminated by the Company without Cause or by the Executive with Good ~~Reason,~~ Reason following a Change in Control 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 occurs)~~ 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 ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 or by the Executive for Good Reason prior to a Change in Control and the Executive reasonably demonstrates that such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control occurs). For purposes of Section 5 and 6~~ which actually occurs during the term of this Agreement, ~~no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made~~ or ~~provided unless and until such termination of~~ (iv) the Executive’s employment is ~~also~~ terminated without Cause after a Potential Change in Control of the type described in paragraph (I) of the definition of “~~separation from service,” as determined~~ Potential Change in ~~accordance with section 409A.~~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 ~~two~~ three (3) times the sum of (i) the higher 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 the event or circumstance ~~constituting Good Reason~~upon which the Notice of Termination is based or the Executive’s highest annual base salary in effect during the three (3) completed fiscal years immediately preceding the Change in Control (the “Change in Control Salary”), and (ii) the ~~average~~ 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 (3) completed fiscal years ~~ending~~ immediately preceding the year in which the Date of Termination occurs, the highest annual bonus so earned in respect of the three (3) completed fiscal years immediately preceding the year in which the Change in Control occurs, or the maximum of the bonus opportunity range for the Executive in effect immediately prior to the ~~fiscal year in which occurs the~~ Date of ~~Termination or~~Termination, or if higher, immediately prior to the ~~fiscal year in which occurs~~ first occurrence of the ~~first~~ event or circumstance constituting Good ~~Reason~~Reason (the “Change in Control Bonus”). (B) Notwithstanding any provision of any annual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to a pro rata portion to the Date of Termination of the value of the target incentive award under such plan for the then uncompleted period under such plan, calculated by multiplying the maximum of the bonus opportunity range for the Executive by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (C) For the ~~twenty-four~~ three (243) ~~month~~ year period immediately following the Date of Termination, the Company shall arrange to provide the Executive ~~and his~~ (which includes the Executive’s eligible dependents for purposes of this paragraph (C)) with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ was receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to any amendment to such benefits made subsequent to the earlier of a Potential Change in Control or a Change in Control which amendment adversely affects in any manner the Executive~~, those provided~~ ’s entitlement to or the ~~Executive and his dependents immediately prior to the first occurrence~~ amount of ~~an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to~~ such ~~date or occurrence~~benefits); provided, however, that, unless the Executive consents to a different method, 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~~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 ~~same type~~ 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 ~~twenty-four~~ three (243) ~~month~~ year period following the Executive’s ~~termination~~ Date of ~~employment~~ Termination (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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The ~~payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the~~ applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 benefit continuation period ~~of twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to~~ for the Executive and the Executive’s qualifying dependents ~~commencing on~~ under the ~~later~~ Consolidated Omnibus Budget Reconciliation Act of 1984, as amended (i) “COBRA”), shall commence at the ~~date on which such coverage would have first become available and (ii)~~ expiration of the ~~date on which~~ period of continued benefits ~~described~~ referenced above in ~~subsection (B) of~~ this Section ~~6.1 terminate~~6.1(C). (ED) ~~The~~ Following a Change in Control, the Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s position for a period of one (1) year commencing on the ~~period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by~~ date the Executive ~~of an offer of employment,~~ first uses such outplacement services; provided, however, ~~that in no case shall~~ such first use must occur during the ~~Company be required to pay in excess of $50,000 over such~~ three (3) year period ~~in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days~~ following ~~the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of~~ the Executive’s Date of Termination. 6.2. (FA) ~~For~~ Anything in this Agreement to the ~~twenty-four~~ contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or distribution (24or any acceleration of any payment, award, benefit or distribution) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company ~~immediately prior~~ to or for the ~~Date~~ benefit of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (~~including any payment~~ whether paid or ~~benefits received in connection with a Change in Control~~ payable or ~~the Executive’s termination of employment, whether~~ distributed or distributable pursuant to the terms of this Agreement or ~~any other plan, program, arrangement or agreement~~otherwise) (~~all~~ a “Payment”) would be 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 ~~payments~~ excise tax, together with any such interest and ~~benefits~~penalties, ~~being~~ are hereinafter collectively referred to as the “~~Total Payments~~Excise Tax”~~) 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: (i) no portion of the Total Payments the receipt or enjoyment of which then the Executive shall ~~have waived at such time and in such manner as not~~ be entitled to ~~constitute~~ receive an additional payment (a “payment” within the meaning of section 280G(b) of the Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which, in the opinion of tax counsel (“Tax CounselGross-Up Payment”) ~~reasonably acceptable to~~ in an amount such that after payment by 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 payment” within the meaning of ~~section 280G(b)(2) of the Code~~ all taxes (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; and (iii) the value of any ~~noncash benefits~~ interest 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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 penalties imposed with respect to ~~the Total Payments. 6.3 Subject to Section 6.4~~such taxes), the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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~~ income taxes (and any ~~such opinions or advice which are in writing shall be attached~~ interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the ~~statement)~~Excise Tax imposed upon the Payments. (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Executive Employment Agreement (Inspire Pharmaceuticals Inc)

Severance Payments. ~~6.1 If~~ 6.1. The Company shall pay the Executive ~~incurs a~~ the payments described in this Section 6.1 (the “~~separation from service” (within~~ Severance Payments”) upon the ~~meaning~~ termination of ~~section 409A)~~ the Executive’s employment following a Change in Control and during the ~~Term, other than~~ term of this Agreement (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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits 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, or (iii) by the Executive without Good Reason. For purposes of this Agreement, the ~~Executive~~ Executive’s employment shall be deemed to have ~~incurred a separation from service following a Change in Control~~ been terminated by the Company without Cause or by the Executive with Good ~~Reason,~~ Reason following a Change in Control 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 occurs)~~ 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 ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 or by the Executive for Good Reason prior to a Change in Control and the Executive reasonably demonstrates that such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control occurs). For purposes of Section 5 and 6~~ which actually occurs during the term of this Agreement, ~~no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made~~ or ~~provided unless and until such termination of~~ (iv) the Executive’s employment is ~~also~~ terminated without Cause after a Potential Change in Control of the type described in paragraph (I) of the definition of “~~separation from service,” as determined~~ Potential Change in ~~accordance with section 409A.~~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 ~~two~~ one and one-half (1.5) times the sum of (i) the higher 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 the event or circumstance ~~constituting Good Reason~~upon which the Notice of Termination is based or the Executive’s highest annual base salary in effect during the three (3) completed fiscal years immediately preceding the Change in Control (the “Change in Control Salary”), and (ii) the ~~average~~ 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 (3) completed fiscal years ~~ending~~ immediately ~~prior to~~ preceding the ~~fiscal~~ year in which ~~occurs~~ the Date of Termination ~~or, if higher,~~ occurs or the highest annual bonus so earned in respect of the three (3) completed fiscal years immediately ~~prior to~~ preceding the ~~fiscal~~ year in which the Change in Control occurs (the ~~first event or circumstance constituting Good Reason~~“Change in Control Bonus”). (B) Notwithstanding any provision of any annual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to a pro rata portion to the Date of Termination of the value of the target incentive award under such plan for the 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 any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (C) For the ~~twenty-four~~ eighteen (2418) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive ~~and his~~ (which includes the Executive’s eligible dependents for purposes of this paragraph (C)) with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ was receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to any amendment to such benefits made subsequent to the earlier of a Potential Change in Control or a Change in Control which amendment adversely affects in any manner the Executive~~, those provided~~ ’s entitlement to or the ~~Executive and his dependents immediately prior to the first occurrence~~ amount of ~~an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to~~ such ~~date or occurrence~~benefits); provided, however, that, unless the Executive consents to a different method, 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~~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 ~~same type~~ 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 ~~twenty-four~~ eighteen (2418) month period following the Executive’s ~~termination~~ Date of ~~employment~~ Termination (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 promptly reimburse the Executive for the excess, if any, of the after tax cost of such benefits~~ . 6.2. (A) Anything in this Agreement 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) In addition to the benefits to which the Executive is entitled under the DC Pension Plan, the Company shall pay the Executive a lump sum amountcontrary notwithstanding, in ~~cash~~the event it shall be determined that any payment, ~~equal to the sum~~ award, benefit or distribution (or any acceleration of (iany payment, award, benefit or distribution) ~~the amount that would have been contributed thereto~~ by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the ~~period following the Executive’s Date~~ benefit of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (~~including any payment~~ whether paid or ~~benefits received in connection with a Change in Control~~ payable or ~~the Executive’s termination of employment, whether~~ distributed or distributable pursuant to the terms of this Agreement or ~~any other plan, program, arrangement or agreement~~otherwise) (~~all~~ a “Payment”) would be 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 ~~payments~~ excise tax, together with any such interest and ~~benefits~~penalties, ~~being~~ are hereinafter collectively referred to as the “~~Total Payments~~Excise Tax”~~) 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: (i) no portion of the Total Payments the receipt or enjoyment of which then the Executive shall ~~have waived at such time and in such manner as not~~ be entitled to ~~constitute~~ receive an additional payment (a “payment” within the meaning of section 280G(b) of the Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which, in the opinion of tax counsel (“Tax CounselGross-Up Payment”) ~~reasonably acceptable to~~ in an amount such that after payment by 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 payment” within the meaning of ~~section 280G(b)(2) of the Code~~ all taxes (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; and (iii) the value of any ~~noncash benefits~~ interest 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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 penalties imposed with respect to ~~the Total Payments. 6.3 Subject to Section 6.4~~such taxes), the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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~~ income taxes (and any ~~such opinions or advice which are in writing shall be attached~~ interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the ~~statement)~~Excise Tax imposed upon the Payments. (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Executive Employment Agreement (Inspire Pharmaceuticals Inc)

Severance Payments. ~~6.1 If~~ 10.1 The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 10.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a ~~Change in~~ Change- in-Control and ~~during~~ prior to the ~~Term~~end of the Change-in-Control Protective Period, ~~other than~~ in addition to the payments and benefits described in Sections 6 and 7 hereof, unless such termination is (Ai) by the Company for Cause, (Bii) by reason of ~~death~~ death, Disability or ~~Disability~~Retirement, or (Ciii) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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 shall be deemed to have incurred a separation from service following a Change in Control by the Company without Cause or by the Executive with Good Reason~~immediately preceding sentence, if ~~(i)~~ a termination of the Executive’s 's employment ~~is terminated by the Company without Cause~~ occurs prior to a ~~Change~~ Change-in-Control, but following a Potential Change-in-Control in ~~Control (whether or not a Change in Control occurs) and such termination was at the request or direction of~~ which a Person ~~who~~ has entered into an agreement with the Company the consummation of which ~~would~~ will constitute a ~~Change in~~ Change-in-Control, such termination shall be deemed to have followed a Change-in-Control and to have been (iii) by the ~~Executive terminates his~~ Company without Cause, if the Executive's employment ~~for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) and the circumstance or event which constitutes Good Reason occurs~~ is terminated without Cause at the ~~request or~~ direction of such Person, or (~~iii~~ii) ~~the Executive’s employment is terminated by the Company without Cause or~~ by the Executive ~~for~~ with Good Reason, if the Executive terminates his employment with Good Reason and ~~such termination~~ the act (or ~~the circumstance or event~~ failure to act) which constitutes Good Reason ~~is otherwise in connection with or in anticipation~~ occurs following such Potential Change-in-Control and at the direction of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such ~~termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~Person. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of ~~Termination~~ Termination, in lieu of any lump sum payment with respect to aggregate Base Salary otherwise payable pursuant to Section 8 hereof, 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~~ three (3) times the sum of of: (i) the higher of the Executive~~’s base salary as~~ 's annual Base Salary in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Executive's annual Base Salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change-in-Control, and (ii) the ~~average annual bonus earned by~~ incentive compensation award the Executive ~~pursuant to~~ would have received under the Annual Executive Incentive Plan, or any successor annual ~~bonus or~~ executive incentive ~~plan maintained by~~ compensation plan, for the ~~Company in respect of the three fiscal years ending immediately prior to the fiscal~~ year in which ~~occurs~~ the Date of Termination oroccurs, ~~if higher~~calculated in accordance with Article XI (A) (iii) of the Annual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan, ~~immediately prior~~ without, however, giving effect to ~~the fiscal year~~ any pro-rata adjustments contained in ~~which occurs the first event or circumstance constituting Good Reason~~said provisions. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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 Notwithstanding any provision of the ~~same type are received by~~ Company's Annual Executive Incentive Plan, or ~~made available to the Executive during the twenty-four (24) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plansuccessor annual executive incentive compensation plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any incentive compensation which has been allocated or awarded to the ~~amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Executive for a completed fiscal year preceding the Date of ~~Termination~~Termination under the Annual Executive Incentive Plan, ~~determined~~ or any successor annual executive incentive compensation plan, but has not yet been either (x) ~~as if the Executive made the maximum permissible contributions thereto during such period,~~ paid (pursuant to Section 6.2 hereof or otherwise) or (y) ~~as if~~ 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 any contingent incentive compensation award to the Executive ~~earned~~ for any uncompleted fiscal year under the Annual Executive Incentive Plan or any successor annual executive incentive compensation ~~during~~ plan, calculated as to each such ~~period~~ award in accordance with Article XI (A) (iii) of the Annual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan. (C) 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 (2) years of service credit at ~~a rate equal to~~ the Executive’s 's highest annual rate of compensation ~~(as defined in the DC Pension Plan)~~ during the twelve (12) months immediately preceding the Date of Termination orand shall be deemed to be two (2) years older than he is; provided that if the Executive does not have at least ten (10) years of service credit under the Company's Supplemental Executive Retirement Plan after such additional two (2) years of service credit, ~~if higher, during~~ the ~~twelve months immediately prior~~ Executive shall be deemed to have at least ten (10) years of service credit under the ~~first occurrence of an event or circumstance constituting Good Reason, and (z)~~ Supplemental Executive Retirement Plan; such benefits shall be determined without regard to any amendment to the ~~DC Pension~~ Supplemental Executive Retirement Plan made subsequent to a ~~Change in~~ 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, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) ~~If the Executive would have become entitled to benefits under the Company’s post~~For a thirty-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 six (36) month period ~~of twenty-four (24) months~~ after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue arrange to provide the Executive with ~~all perquisites provided by~~ life, disability, accident and health insurance benefits substantially similar to those which the ~~Company~~ Executive is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or,~~ (without giving effect to any reduction in such benefits subsequent to a Change-in-Control if ~~more favorable~~ the Executive terminated his employment for Good Reason or was terminated without Cause). Benefits otherwise receivable by the Executive pursuant to this Section 10.1(D) shall be reduced to the ~~Executive, immediately prior~~ extent comparable benefits are actually received by or made available to the ~~first occurrence~~ Executive without cost during the thirty-six (36) month period following the Executive's termination of ~~an event or circumstance constituting Good Reason~~ employment (~~including, without limitation, automobile, financial planning, annual physical~~ and ~~executive whole life insurance). 6.2 (1) Notwithstanding~~ any ~~other provisions in this Agreement, if any of the payments or~~ such benefits ~~received or to be~~ actually received by the Executive shall be reported to the Company by the Executive). If the benefits provided to the Executive under this Section 10.1(D) shall result in a Gross-Up Payment pursuant to Section 10.2, and these Section 10.1(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 10.2 hereof. (~~including~~ A) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or ~~benefits received in connection with~~ distribution by the Company to or for the benefit of the Executive on account of a ~~Change in Control or the Executive’s termination of employment~~Change-in-Control, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Code or any ~~other plan~~interest or penalties with respect to such excise tax (such excise tax, ~~program~~together with any such interest and penalties, ~~arrangement or agreement) (all such payments and benefits, being~~ are hereinafter collectively referred to as the ~~“Total Payments”) would be subject (in whole or part~~"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~~Tax imposed upon the Gross-Up Payment, ~~then, after taking into account any reduction in~~ the ~~Total Payments provided by reason of section 280G~~ Executive retains an amount of the ~~Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject~~ Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (B) Subject to the provisions of Section 10.2(C) hereof, all determinations required to be made under this Section 10.2, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determinations, shall be made by the Company's principal outside accounting firm (the "Accounting Firm") which shall provide detailed supporting calculations both to the 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 10.2(B) and Section 10.3 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 10.2(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 no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm under this Section 10.2(B) 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 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 10.2(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. (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 ~~no event~~ 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 ~~less than zero~~be paid. The Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which he gives such notice to the Company (or such 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 to 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 ~~Total Payments will only be reduced if~~ Company shall bear and pay directly all costs and expenses (iincluding additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the ~~net amount~~ 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 ~~Total Payments, as so reduced (~~representation and ~~after subtracting~~ payment of costs and expenses. Without limitation on the ~~net amount~~ foregoing provisions of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total Paymentsthis Section 10.2(C), ~~is greater than~~ the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or ~~equal to (ii)~~ forgo any and all administrative appeals, proceedings, hearings and conferences with the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject taxing authority in respect of such ~~unreduced Total Payments~~ claim and ~~after taking into account~~ may, at its sole option, either direct the ~~phase out~~Executive to pay the tax claimed and sue for a refund or contest the claim in any permissi▇▇▇ 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 ~~any~~the Company directs the Executive to pay such claim and sue for a refund, ~~of itemized deductions~~ the Company shall advance the amoun▇ ▇f such payment to the Executive, on an interest-free basis and ~~personal exemptions attributable~~ 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 ~~unreduced Total Payments)~~advance or 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 contested 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. (AD) In If, after the ~~case~~ receipt by the Executive of ~~a reduction in~~ an amount advanced by the ~~Total Payments~~Company pursuant to Section 10.2(C) hereof, the ~~Total Payments will be reduced in~~ Executive becomes entitled to receive any refund with respect to such claim, the ~~following order:~~ Executive shall (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the ~~Excise Tax and~~ Company's complying with the requirements of Section 10.2(C) hereof) promptly pay to the Company the amount of such ~~Excise Tax:~~ refund (~~i) no portion of the Total Payments~~ together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt ~~or enjoyment~~ by the Executive of ~~which~~ an amount advanced by the Company pursuant to Section 10.2(C) hereof, a determination is made that the Executive shall ~~have waived at~~ not be entitled to any refund with respect to such ~~time~~ claim and ~~in such manner as~~ the Company does not to constitute a “payment” within the meaning of section 280G(b) of the Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to notify the Executive ~~and selected by the accounting firm which was, immediately~~ in writing of its intent to contest such denial of refund prior to the ~~Change in Control~~expiration of thirty (30) days after such determination, the Company’s independent auditor (the “Auditor”), does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of then such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; and (iii) the value of any noncash benefits or any deferred payment or benefit advance shall be ~~determined by the Auditor~~ forgiven and shall not be required to be repaid. 10.3 The payments provided for in ~~accordance with the principles of sections 280G(d)(3~~Section 10.1 hereof (other than Section 10.1(C) and (4D)) of the Code. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth ~~(5th) business~~ day following each Determination Date, provided, however, that if the ~~Date~~ amounts of ~~Termination. At the time that~~ such payments ~~are made under this Agreement~~cannot be finally determined on or before such day, the Company shall ~~provide~~ pay to the Executive ~~with a written statement setting forth~~ on such day an estimate, as determined by the ~~manner in which~~ Executive, of the minimum amount of 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 to which ~~are in writing shall be attached to the statement). (A) Notwithstanding any provisions of this Agreement to the contrary, if~~ the Executive is ~~a “specified employee”~~ clearly entitled and shall pay the remainder of such payments (~~within the meaning of section 409A and determined pursuant to procedures adopted by the Company)~~ together with interest at the ~~time of his separation from service and if any portion~~ rate provided in Section 1274(b)(2)(B) of the ~~payments or benefits to~~ Code) as soon as the amount thereof can be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive determined but in no event later than ~~December 31~~ the thirtieth (30th) day after each Determination Date. In the event that the amount of the ~~year following~~ estimated payments exceeds the ~~year~~ 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 ~~which~~ Section 1274(b)(2)(B) of the Code). 10.4 The Company also shall pay to the Executive ~~incurs~~ all legal fees and expenses incurred by the ~~related expenses; provided, that with respect to reimbursement relating~~ Executive as a result of a termination which entitles the Executive to the ~~Additional Delayed Payments~~Severance Payments (including all such fees and expenses, if any, incurred in disputing any such ~~reimbursement~~ 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). Such payments shall be made on within five (5) business days after delivery of the ~~Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by~~ Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitreasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Employment Agreement (New York State Electric & Gas Corp)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, if the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive’s employment is terminated 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”)) and Section 6.2 hereof, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof, provided that the Executive shall have properly executed and not revoked a customary release of claims in a form reasonably acceptable to the Company. For purposes of this Agreement, the ~~Executive~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ 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 (whether or not a Change in Control ever occurs) 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 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, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the ~~average~~ Executive’s target annual bonus ~~earned by the Executive pursuant to~~ under any 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 or, if higher, ~~immediately prior to~~ the highest target annual bonus in respect of the fiscal year in which occurs the Change in Control or the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) month period immediately following the Date of ~~Termination~~Termination (or such shorter period as may be required to avoid the imposition of a tax under section 409A of the Code), the Company shall arrange to provide the Executive and his dependents 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 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 ~~after~~ after-tax cost to the Executive than the ~~after~~ after-tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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~~ eliminated if benefits of the same type are received by or made available to the Executive during the twenty-four (24) 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~~. If the Severance Payments shall be decreased pursuant to Section 6.2 hereof, ~~however~~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, ~~that~~ 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. (C) Notwithstanding any provision of any annual or long term incentive plan to the contrary, the Company shall ~~promptly reimburse~~ pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the ~~excess~~Date of Termination under any such plan and which, ~~if any~~as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent 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, at the target level, of the ~~after tax cost~~ individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period 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 DB Pension Plan or any successor plan thereto, 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 second anniversary of the Date of Termination) as of which the actuarial equivalent of such ~~benefits~~ annuity is greatest) which the Executive would have accrued under the terms of all DB Pension Plans (without regard to any amendment to any DB 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) twenty-four (24) additional months of age and service credit thereunder and had been credited under each DB Pension Plan during such period with compensation equal to the Executive’s compensation (as defined in such DB Pension Plan) during the twelve (12) months immediately preceding Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, 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 ~~cost~~ annuity is greatest) which the Executive had accrued pursuant to the provisions of the DB 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 B▇▇▇▇▇ International Inc. and Subsidiaries Pension Plan immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason~~. (C)~~ . In addition to the benefits to which the Executive is entitled under ~~the~~ each DC 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 by the Company on the Executive’s behalf during the ~~twenty-four (24) months~~ two years immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (DE) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive 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. (EF) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination~~ two years or, if earlier, until the first acceptance by the Executive of an offer of employment, ~~provided, however, that~~ in ~~no case shall~~ an aggregate amount not exceeding $50,000. The lump-sum cash payments required pursuant to the ~~Company be required to pay in excess~~ preceding provisions of ~~$50,000 over such period in providing outplacement services and that all reimbursements hereunder~~ this Section 6.1 hereof shall be ~~paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no~~ made not later than ~~December 31 of~~ the ~~third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately~~ fifth day following the Date of Termination (or ~~until~~ on the ~~Executive becomes eligible for substantially similar benefits from~~ earliest date that will avoid the imposition of a ~~new employer, whichever occurs earlier,~~ tax under section 409A of the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insuranceCode). 6.2 The following special payment provisions shall apply: (1A) ~~Notwithstanding any other provisions in this Agreement~~Whether or not the Executive becomes entitled to the Severance Payments, if any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter ~~referred to as the~~ called “Total Payments”) ~~would~~ will be subject (in whole or part), ) to the Excise Tax, then, subject to the provisions of subsection (B) of this Section 6.2, the Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments ~~provided by reason~~ and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes of ~~section 280G~~ determining the amount of the ~~Code in such other plan, program, arrangement or agreement~~Gross-Up Payment, the ~~Company will reduce~~ 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 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 if there is no 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 tax which could be obtained from deduction of such state and local taxes. (B) In the event that the amount of the Total Payments to does not exceed 110% of the ~~extent necessary so~~ largest amount that would result in no portion of the Total Payments is being subject to the Excise Tax (~~but in no event to less than zero); provided, however, that~~ the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total Payments“Safe Harbor”), 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). then subsection (A) In of this Section 6.2 shall not apply and the ~~case of a reduction in the Total Payments, the Total~~ noncash Severance Payments ~~will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will~~ shall first be reduced (if necessary, to zero), ~~with amounts~~ and the cash Severance Benefits shall thereafter be reduced (if necessary, to zero) so that ~~are payable last~~ 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 ~~first;~~ (iior eliminated) ~~payments and benefits due in respect of~~ prior to any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensationthe noncash Severance Payments. (BC) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a~~ “~~payment~~parachute payments” within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which~~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, the Company’s independent auditor (the “Auditor”), ~~does~~ such other payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all “excess parachute payments” within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ 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~~. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company~~. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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 Prior to the ~~Total Payments.~~ payment date set forth in Section 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. At the time that payments are made under this Agreementhereof, the Company shall provide the Executive with ~~a written statement setting forth~~ its calculation of the ~~manner~~ amounts referred to in ~~which~~ this Section 6.2(C) and such ~~payments were calculated and~~ supporting materials as are reasonably necessary for the ~~basis for such~~ Executive to evaluate the Company’s calculations. If the Executive disputes the Company’s calculations ~~including, without limitation, any opinions~~ (in whole or ~~other advice the Company has received from Tax Counsel~~in part), the ~~Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached~~ reasonable opinion of Tax Counsel with respect to the ~~statement)~~matter in dispute shall prevail. (AD) ~~Notwithstanding any provisions of this Agreement~~ (I) In the event that (1) amounts are paid to the ~~contrary~~Executive pursuant to Section 6.2(A) hereof, if (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are to be reduced pursuant to Section 6.2(B) hereof, the Executive ~~is a “specified employee” (within the meaning of section 409A and determined pursuant~~ shall repay to ~~procedures adopted by~~ the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, ~~amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service~~ within five (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st5) business ~~day of the seventh month~~ days following the date of the ~~Executive’s separation from service or (ii) Executive’s death (the applicable date~~Final Determination, the ~~“Permissible Payment Date”). The Company shall also reimburse~~ Gross-Up Payment, the ~~Executive for~~ amount of the ~~after-tax cost incurred by~~ reduction in the ~~Executive~~ Severance Payments, plus interest on the amount of such repayments at 120% of the rate provided in ~~independently obtaining any Delayed Benefits (~~section 1274(b)(2)(B) of the ~~“Additional Delayed Payments”)~~Code. (BII) ~~With respect~~ In the event that (1) amounts are paid to ~~any amount of expenses eligible for reimbursement under Sections 6.1 (B)~~the Executive pursuant to Section 6.2(A) hereof, (D2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (F)3) after giving effect to such Final Determination, ~~such expenses~~ the Severance Payments are not to be reduced pursuant to Section 6.2(B) hereof, the Executive shall ~~be reimbursed by~~ repay to the ~~Company~~ Company, within ~~thirty~~ five (305) ~~calendar~~ business days following the date ~~on which the Company receives the applicable invoice from the Executive but in no event later than December 31~~ of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409AFinal Determination, the ~~Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series~~ portion of ~~separate and distinct pay~~the Gross-Up

Appears in 1 contract

Sources: Severance Agreement (Baxter International Inc)

Severance Payments. 6.1 If the ~~Executive incurs~~ Executive’s employment is terminated either during the Initial Term or otherwise following a Change in Control and within two (2) years after a Change in Control (provided that such termination of employment constitutes a “separation from service” (within the meaning of ~~section 409A) following a Change~~ Section 409A of the Code), in ~~Control and during the Term,~~ either event 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ 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 (whether or not a Change in Control ever occurs) 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, 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, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive~~Termination, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to ~~two~~ one (1) times the sum of (i) the Executive’s highest base salary as in effect during the three-year period ending immediately prior to the Date of Termination or(including, if ~~higher~~the Date of Termination occurs within three years after the effective date of the Existing CIC Agreement, salary paid in ~~effect immediately prior to the first occurrence~~ respect of ~~an event~~ employment by Temple-Inland Inc. (“Temple-Inland”) or ~~circumstance constituting Good Reason,~~ its Affiliates during such three-year period) and (ii) the ~~average~~ Executive’s target annual bonus ~~earned by the Executive~~ pursuant to any 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 (or, if higher, ~~immediately prior~~ 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 before the ~~fiscal year in which occurs~~ effective date of the ~~first event or circumstance constituting Good Reason~~Existing CIC Agreement, annual bonuses paid by Temple-Inland)). (B) For ~~the twenty~~an additional one-~~four (24) month~~ year period immediately following the ~~Date~~ end of ~~Termination~~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, ~~disability~~accidental death and dismemberment, ~~accident~~ medical and ~~health insurance~~ 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, ~~that, unless the Executive consents to a different method,~~ that such health ~~insurance~~ and welfare benefits shall be provided through ~~a third-party insurer~~an arrangement that satisfies the requirements of Sections 105 and 106 of the Code. ~~Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to~~ To the extent that health and welfare benefits of the same type are received by or made available to the Executive during the ~~twenty~~three-~~four (24) month~~ year period following the Executive’s ~~termination~~ Date of ~~employment~~ Termination (~~and any~~ which such benefits received by or made available to the Executive shall be reported by the Executive to the ~~Company~~ insurance company or other appropriate party in accordance with any applicable coordination of benefits provisions), the benefits otherwise receivable by the ~~Executive)~~Executive pursuant to this Section 6.1(B) shall be made secondary to such benefits; provided, however, that the Company shall ~~promptly~~ 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 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 equity or equity-based awards in respect of Temple-Inland. (D) In addition to the benefits to which the Executive is entitled under ~~the DC~~ 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 twenty-four~~ an additional one (241) ~~months~~ year period immediately following the ~~Date~~ end of ~~Termination~~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 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 additional one-year period, (y) as if the Executive earned compensation during such additional one-year period at a rate equal to the Executive’s highest rate of compensation (as defined in the DC defined contribution Pension Plan) during the ~~twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months~~ three-year period ending immediately prior to the ~~first occurrence~~ Date of ~~an event or circumstance constituting Good Reason~~Termination, and (z) without regard to any amendment to the DC defined contribution Pension Plan made subsequent to ~~a Change in Control~~ the effective date of the Existing CIC Agreement and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC defined contribution Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (DE) If For an additional one-year period immediately following the end of the two-year period provided for in Section 6.1(H) of the Existing CIC Agreement, the Company shall provide the Executive ~~would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans~~with perquisites, ~~as in effect~~ if any, that were applicable immediately prior to the Date of Termination or, if more ~~favorable to the Executive~~favorable, ~~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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, provided that in no ~~case~~ event shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal and local income taxes on such Total Payments and the amount of ~~Excise Tax~~ perquisites to which the Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value is entitled under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section ~~6.2 (or requested by either the Executive or the Company in connection with this Section 6.2~~6.1(E) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect for any ~~other rights~~ taxable year of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of ~~reimbursements or in-kind benefits~~ perquisites to ~~be provided in~~ which the Executive is entitled under this Section 6.1(E) for any other taxable year~~, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit~~. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control/Severance Agreement (Guaranty Financial Group Inc.)

Severance Payments. ~~6.1 If~~ The Employer shall pay the ~~Executive incurs a~~ Employee the payments described in this Section 10.1 (the “~~separation from service” (within~~ Severance Payments”) upon the ~~meaning~~ termination of ~~section 409A)~~ the Employee’s employment following a Change in Control and ~~during~~ prior to the ~~Term, other than (A) by~~ end of 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”)Change-in-Control Protective Period, in addition to any payments and benefits to which the ~~Executive~~ Employee is entitled under ~~Section 5~~ Sections 5, 6, 7 and 8.1 hereof, unless such termination is (i) by the Employer for Cause, (ii) by reason of death or Disability, or (iii) by the Employee without Good Reason. For purposes of this Agreement, the ~~Executive~~ Employee’s employment shall be deemed to have ~~incurred a separation from service~~ been terminated by the Employer without Cause following a Change in Control ~~by the Company without Cause~~ or by the ~~Executive~~ Employee with Good ~~Reason~~Reason following a Change in Control, as the case may be, if (iI) the ~~Executive~~Employee’s employment is terminated ~~by the Company~~ without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and such termination was at the request or direction of a Person who has entered into an agreement with the ~~Company~~ Employer the consummation of which would constitute a Change in Control, (iiII) the ~~Executive~~ Employee terminates his employment ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (~~iii~~III) the ~~Executive~~Employee’s employment is terminated by the ~~Company~~ Employer without Cause ~~or by the Executive for Good Reason~~ prior to a Change in Control (but following a Potential Change in Control) and such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control~~ which actually occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Employee shall be presumed to be correct unless the Employer establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~not correct. (A) In lieu of any further salary payments to the ~~Executive~~ Employee for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ~~Executive~~Employee, the ~~Company~~ Employer shall pay to the ~~Executive~~ Employee a lump sum severance payment, in cash, equal to ~~two times the sum of~~ (i) the ~~Executive~~Employee’s ~~base salary as~~ Base Salary in effect immediately prior to the ~~Date of Termination or, if higher, in effect immediately prior to the first~~ occurrence of an the event or circumstance ~~constituting Good Reason~~upon which the Notice of Termination is based multiplied by three (3), and (ii) the average annual ~~bonus~~ bonus, including but not limited to the Annual Bonus described in Exhibit A, earned by the ~~Executive pursuant to any~~ Employee under the Employer’s annual ~~bonus or~~ incentive plan ~~maintained by~~ in the ~~Company in respect of the~~ Employer’s three fiscal years ~~ending~~ immediately ~~prior to~~ preceding the fiscal year in which ~~occurs~~ the Date of Termination oroccurs multiplied by three (3). In addition, ~~if higher~~Employee will be entitled to receive any unpaid compensation and/or compensation attributable to LTIP RS Awards (at the target grant value) that have not been issued as provided in, ~~immediately prior~~ and pursuant to the ~~fiscal year~~ terms of, Exhibit A through the remainder of the Term. Of the foregoing payments, an amount equal to one year’s Base Salary plus one year’s Annual Bonus shall be in ~~which occurs the first event or circumstance constituting Good Reason~~consideration of and allocated to Employee’s obligations under Section 13.2. (B) For the ~~twenty-four (24) month~~ a period ~~immediately following~~ beginning on the Date of ~~Termination~~Termination and ending at the end of the Term, as it may be extended, the ~~Company~~ Employer shall arrange to provide the ~~Executive and his dependents~~ Employee with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the ~~Executive and his dependents~~ Employee is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior any amendment to such ~~date~~ benefits made subsequent to a Change in Control, which amendment adversely affects in any manner the Employee’s entitlement to or ~~occurrence~~the amount of such benefits); provided, however, that, unless the ~~Executive~~ Employee consents to a different method, such health insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the ~~Executive~~ Employee pursuant to this Section ~~6.1(B~~10.1(B) shall be reduced to the extent comparable benefits ~~of the same type~~ are actually received by or made available to the ~~Executive~~ Employee without cost during the ~~twenty-four (24) month~~ benefit period following the ~~Executive~~Employee’s termination of employment (and any such benefits actually received by or made available to the ~~Executive~~ Employee shall be reported to the ~~Company~~ Employer by the ~~Executive~~Employee)~~; provided~~. Notwithstanding the foregoing, ~~however, that the Company~~ any benefits or payments provided under this Section 10.1(B) shall ~~promptly reimburse the Executive for the excess, if any, of the after tax cost of such benefits~~ be subject 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) In addition to the benefits to which the Executive is entitled under the DC Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the sum of following: (i) the amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement or benefits provided under ~~Sections 6.1 (B), (D~~this Section 10.1(B) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 during any taxable year of the ~~year following~~ Employee may not affect the ~~year in which~~ expenses eligible for reimbursement or the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by to the ~~Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided~~ Employee in any other taxable year~~, nor shall~~ ; (ii) the ~~Executive~~reimbursement of an eligible expense must be made on or before the last day of the Employee’s taxable year following the taxable year in which the expense was incurred; and (iii ) the right to reimbursement or ~~in-kind~~ such benefits may not be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Employment Agreement (Schulman a Inc)

Severance Payments. ~~6.1~~ If the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive’s employment is terminated following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by reason of ~~death~~ death, Disability or ~~Disability~~Retirement, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the following amounts, and provide the Executive the ~~benefits~~following benefits (collectively, ~~described in this Section 6.1 (~~the “Severance Payments”), together with any Gross-Up Payment payable under Section 6(b) hereof, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive shall be deemed to have incurred a separation from service 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 (whether or not a Change in Control occurs) 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 for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A. (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~~Executive (including pursuant to any employment agreement), the Company shall pay to the Executive a lump sum severance payment, in cash, equal to ~~two~~ 2.0 times the sum of (ix) the Executive’s 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 circumstance constituting Good Reason, and (iiy) the ~~average~~ Executive’s target annual bonus ~~earned by the Executive~~ pursuant to any 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 or, if higher, ~~immediately prior to~~ in respect of the fiscal year in which occurs the ~~first event or circumstance constituting Good Reason~~Change in Control. (Bii) For the ~~twenty-four (24) month~~ two year 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 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~method (after taking into account the effect of such method on the calculation of “parachute payments” pursuant to Section 6(b) hereof), such ~~health~~ insurance benefits shall be provided through a third-party insurer. The Company’s payment of such premiums shall be paid directly to the relevant third party insurers on a monthly basis. Benefits otherwise receivable by the Executive pursuant to this Section ~~6.1(B~~6(a)(ii) shall be reduced to the extent benefits of the same type are received by or made available to the Executive by a subsequent employer of the Executive during the ~~twenty-four (24) month~~ two year 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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (Ciii) ~~In addition~~ Notwithstanding any provision of any stock option plan, stock incentive plan, restricted stock plan or similar plan or agreement to the ~~benefits to which~~ contrary, as of the Date of Termination, (x) the Executive ~~is entitled under~~ shall be fully vested in all outstanding options to acquire stock of the ~~DC Pension Plan~~Company (or the options of any parent, surviving, or acquiring company then held by the Executive) and all then outstanding restricted shares of stock of the Company and other equity-based awards (including restricted stock units) (or such parent, surviving or acquiring company) held by the Executive, and (y) subject to any limitation on exercise in any such plan or agreement that may not be amended without stockholder approval, all options referred to in clause (x) above shall be immediately exercisable and shall remain exercisable until the earlier of (1) the second anniversary of the Date of Termination, or (2) the otherwise applicable expiration date of the term of such option. (iv) To the extent that the full vesting of any stock option, share of restricted stock or other equity-based award, or the full exercisability of any stock option or other equity-based award, provided for in Section 5(c) or Section 6(a)(iii) should violate any law, rule or regulation of any governmental authority or self-regulatory organization applicable to the Company, or to the extent otherwise determined by the Company in its sole discretion, the Company may, in lieu of providing any vesting or exercisability rights pursuant to Section 5(c) or 6(a)(iii), (x) cancel any or all of the Executive’s outstanding options in exchange for a lump sum payment, in cash, equal to the excess of the fair market value of the shares of stock underlying such options (whether or not vested or exercisable) on the Date of Termination (as reasonably determined by the Board in good faith) over the aggregate exercise price provided for in such stock options, and (y) repurchase any shares of restricted stock or other equity-based awards (including restricted stock units) at their fair market value (as determined by the Board without regard to the restrictions on such shares of stock). The lump sum payment provided for in this Section 6(a)(iv) shall be made, if at all, within thirty (30) days of the Date of Termination, with the payment date determined by the Company in its sole discretion. (v) The Company shall pay to the Executive a lump sum amount, in cash, equal to the ~~sum of (i) the amount that would have been contributed thereto~~ Executive’s target annual bonus under any bonus plan maintained by the Company on in respect of the ~~Executive’s behalf during~~ fiscal year in which occurs the ~~twenty-four (24) months immediately following~~ Date of Termination multiplied by a fraction, the numerator of which is the number of days in such fiscal year through and including the Date of Termination, ~~determined (x~~and the denominator of which is 365. The lump sum payment provided for in this Section 6(a)(v) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination orshall be made, if ~~higher~~at all, ~~during the twelve months immediately prior to the first occurrence~~ within thirty (30) days of ~~an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Pension Plan made subsequent to a Change in Control and on or prior to~~ the Date of Termination, ~~which amendment adversely affects~~ with the payment date determined by the Company in any manner the computation of benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Planits sole discretion. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (Evi) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar~~ one year following ~~such~~ his or her Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment. For purposes of this Agreement, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s ~~Date of Termination. (F) For the twenty-four (24) month period immediately~~ employment shall be deemed to have been terminated following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received in connection with a Change in Control by the Company without Cause or by the Executive with Good Reason, if (x) the Executive’s employment is terminated by the Company without Cause (whether or not a Change in Control ever occurs) and, at the time of such termination, the Company is a party to a written agreement the consummation of which would constitute a Change in Control, or (y) the Executive terminates his employment for Good Reason (whether or not a Change in Control ever occurs) within six (6) months of the occurrence of the event which constitutes Good Reason, or if shorter, the end of the term, and, both at the time the event occurs that constitutes Good Reason and at the time of such termination, the Company is a party to such an agreement. Notwithstanding anything herein to the contrary, to the maximum extent permitted by applicable law, the Severance Payments to be made to the Executive pursuant to this Section 6(a) shall be made in reliance upon Treasury Regulations promulgated under Section 409A of the Code, including Section 1.409A-1(b)(9) of the Treasury Regulations (including any exceptions from the application of Section 409A thereunder) or Section 1.409A-1(b)(4) of the Treasury Regulations. For this purpose, each Severance Payment shall be considered a separate and distinct payment for purposes of Section 409A of the Code. However, to the extent any such payments are treated as non-qualified deferred compensation subject to Section 409A of the Code, then (a) no amount shall be payable pursuant to this Section 6(a) unless Executive’s termination of employment, whether pursuant to the terms of this Agreement or any other plan, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 employment constitutes a “~~payment~~separation from service” within the meaning of ~~section 280G(b~~Section 1.409A-1(h) of the ~~Code will~~ Treasury Regulations and (b) if Executive is deemed at the time of his separation from service to be taken into account; (ii) no portion of the Total Payments will 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 payment~~specified employee” ~~within the meaning~~ for purposes of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(BSection 409A(a)(2)(B)(i) of the Code, ~~in excess~~ then to the extent delayed commencement of any portion of the ~~Base Amount allocable~~ Severance Payments to ~~such reasonable compensation; and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor~~ which Executive is entitled under this Agreement is required in ~~accordance with the principles of sections 280G(d)(3) and (4~~order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code. , such portion of Executive’s Severance Payments shall not be provided to Executive prior to the earlier of (Cx) ~~All determinations required by this Section 6.2 (or requested by either~~ the ~~Executive or the Company in connection with this Section 6.2) will be at the expense~~ expiration of the ~~Company. The fact that~~ six-month period measured from the date of the Executive’s ~~right to payments or benefits may be reduced by reason~~ “separation from service” with the Company (as such term is defined in Section 1.409A-1(h) of the ~~limitations contained~~ Treasury Regulations) or (y) the date of Executive’s death. Upon the earlier of such dates, all payments deferred pursuant to this paragraph shall be paid in ~~this Section 6.2 will not of itself limit or~~ a lump sum to the Executive, and any remaining payments due under the Agreement shall be paid as otherwise ~~affect any other rights of the Executive under this Agreement~~provided herein. 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~~ determination of liability for Excise Tax with respect to the Total Payments. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if whether the Executive is a “specified employee” ~~(within~~ for purposes of Section 409A(a)(2)(B)(i) of the ~~meaning~~ Code as of ~~section 409A and determined pursuant to procedures adopted by the Company) at~~ the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made ~~on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided~~ by the Company in ~~one taxable year affect~~ accordance with the ~~amount~~ terms of ~~reimbursements or in-kind benefits to be provided in~~ Section 409A of the Code and applicable guidance thereunder (including without limitation Section 1.409A-1(i) of the Treasury Regulations and any ~~other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit~~successor provision thereto). (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Agreement (Tractor Supply Co /De/)

Severance Payments. ~~6.1 If~~ 6.1. The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a Change in Control and during the ~~Term, other than~~ term of this Agreement (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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits 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, or (iii) by the Executive without Good Reason. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service following a Change in Control~~ been terminated by the Company without Cause or by the Executive with Good ~~Reason,~~ Reason following a Change in Control if (i) the Executive’s 's employment is terminated ~~by the Company~~ without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 '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 ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control occurs). For purposes of Section 5 and 6~~ which actually occurs during the term of this Agreement, ~~no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made~~ or ~~provided unless and until such termination of~~ (iv) the Executive's employment is ~~also~~ terminated without Cause after a ~~“separation from service,” as determined~~ Potential Change in ~~accordance with section 409A.~~Control 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 two (2) times the sum of (i) the higher of the Executive’s '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 the event or circumstance ~~constituting Good Reason~~upon which the Notice of Termination is based or the Executive's highest annual base salary in effect during the three (3) completed fiscal years immediately preceding the Change in Control (the "Change in Control Salary"), and (ii) the ~~average~~ 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 (3) completed fiscal years ~~ending~~ immediately preceding the year in which the Date of Termination occurs, the highest annual bonus so earned in respect of the three (3) completed fiscal years immediately preceding the year in which the Change in Control occurs, or the maximum of the bonus opportunity range for the Executive in effect immediately prior to the ~~fiscal year in which occurs the~~ Date of ~~Termination or~~Termination, or if higher, immediately prior to the ~~fiscal year in which occurs~~ first occurrence of the ~~first~~ event or circumstance constituting Good ~~Reason~~Reason (the "Change in Control Bonus"). (B) Notwithstanding any provision of any annual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to a pro rata portion to the Date of Termination of the value of the target incentive award under such plan for the then uncompleted period under such plan, calculated by multiplying the maximum of the bonus opportunity range for the Executive by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (C) For the ~~twenty-four~~ two (242) ~~month~~ year period immediately following the Date of Termination, the Company shall arrange to provide the Executive ~~and his~~ (which includes the Executive's eligible dependents for purposes of this paragraph (C)) with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ was receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to any amendment to such benefits made subsequent to the earlier of a Potential Change in Control or a Change in Control which amendment adversely affects in any manner the Executive~~, those provided~~ 's entitlement to or the ~~Executive and his dependents immediately prior to the first occurrence~~ amount of ~~an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to~~ such ~~date or occurrence~~benefits); provided, however, that, unless the Executive consents to a different method, 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~~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 ~~same type~~ 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 ~~twenty-four~~ two (242) ~~month~~ year period following the Executive~~’s termination~~ 's Date of ~~employment~~ 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) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a "Payment") would be 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 imposed on the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (B) Subject to the provisions of Section 6.2(C), all determinations required to be made under this Section 6.2, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company 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 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 this Section 6, shall be paid by the 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 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. (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 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 ~~promptly reimburse~~ 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 ~~the excess, if any, of the after~~ any Excise Tax or income tax ~~cost~~ (including interest and penalties with respect thereto) imposed as a result of such ~~benefits to~~ representation and payment of costs and expenses. Without limitation on the ~~Executive over such cost immediately prior to the Date~~ foregoing provisions of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Planthis Section 6.2(C), the Company shall 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 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 ~~lump sum amount~~determination before any administrative tribunal, in ~~cash, equal to the sum~~ a court of (i) the amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined initial jurisdiction and in ~~the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event~~ one or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) If the Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance plansmore appellate courts, 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero)determine; provided, however, that if the ~~Total Payments will only be reduced if (i)~~ Company directs the ~~net~~ Executive to pay such claim and ▇▇▇ for a refund, the Company shall advance the amount of such ~~Total Payments~~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 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 contested 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 ~~so reduced~~ the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (~~and~~ D) If, after ~~subtracting~~ the ~~net~~ receipt by the Executive of an amount ~~of federal~~advanced by the Company pursuant to Section 6.2(C), ~~state, municipal and local income taxes on such reduced Total Payments and after taking into account~~ the ~~phase out, if any, of itemized deductions and personal exemptions attributable~~ Executive becomes entitled to receive any refund with respect to such ~~reduced Total Payments~~claim, the Executive shall (subject to the Company's complying with the requirements of Section 6.2(C)~~, is greater than or equal~~ ) promptly pay to ~~(ii)~~ the ~~net~~ Company the amount of such ~~Total Payments without~~ 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 made that the Executive shall not be entitled to any refund with respect to such ~~reduction (but after subtracting the net amount of federal, state, municipal and local income taxes on such Total Payments~~ claim and the ~~amount of Excise Tax to which~~ Company does not notify the Executive ~~would be subject~~ in ~~respect~~ writing of its intent to contest such ~~unreduced Total Payments and after taking into account the phase out, if any,~~ denial of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject refund prior to the ~~Excise Tax~~ expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such ~~Excise Tax: (i) no portion of the Total Payments the receipt or enjoyment of which the Executive~~ advance 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 will be taken into account; (ii) no portion of the Total Payments will be taken into account whichoffset, ~~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~~extent thereof, the ~~Company’s independent auditor (the “Auditor”), does not constitute a “parachute payment” within the meaning~~ amount of ~~section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will~~ Gross-Up Payment required to be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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 Codepaid. ~~(C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company~~6.3. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided for in subsections (A), (B) and (C) of Section 6.1 hereof shall be made not later than the thirtieth (30th) day following the Date of Termination unless payable at a later date at the election of the Executive in accordance with Section 17 hereof; 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 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 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the sixtieth (60th) 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 ~~following~~ after demand by the Company (together with interest at one hundred twenty percent (120%) of the rate provided in Section 1274(b)(2)(B) of the Code). In the 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 Section 6.3 (without regard to any extension of the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined Termination pursuant to ~~procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits~~ Section 7.3 hereof), to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of payment at a rate equal to one hundred twenty (120%) of the ~~Executive’s separation from service or (ii~~rate provided in Section 1274(b)(2)(B) ~~Executive’s death (~~of the ~~applicable date, the “Permissible Payment Date”)~~Code. 6.4. The Company also shall ~~also reimburse~~ pay to the Executive ~~for the after-tax cost~~ all legal fees and expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive's employment, ~~such reimbursement~~ 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. Such payments shall be made ~~on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount~~ within five (5) business days after delivery of ~~reimbursements or in-kind benefits to be provided in any other taxable year, nor shall~~ the Executive~~’s right to reimbursement or in-kind benefits be subject to liquidation or exchange~~ 's written requests for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct paypayment accom

Appears in 1 contract

Sources: Executive Employment Agreement (Inspire Pharmaceuticals Inc)

Severance Payments. ~~6.1~~ 5.1 If the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive’s employment is terminated 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 amounts, and provide the Executive the benefits, described in this Section ~~6.1~~ 5.1 (“Severance Payments”)) and Section 5.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 4 hereof. For purposes of this Agreement, the ~~Executive~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ 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 (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person (other than the Company) 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 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, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). ~~For purposes of Section 5 and 6 of~~ Notwithstanding anything to the contrary in this Agreement, ~~no payment~~ to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, amounts that would otherwise be ~~made~~ payable and ~~no benefit~~ benefits that would otherwise be provided ~~upon a termination~~ pursuant to this Agreement during the six-month period immediately following the Date of ~~employment will~~ Termination shall instead be ~~made or provided unless and until such termination of employment~~ paid on the first business day after the date that is ~~also a~~ six months following the Executive’s “separation from service,” ~~as determined in accordance with section 409A.~~within the meaning of Section 409A of the Code. (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 times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the ~~average~~ Executive’s target annual bonus ~~earned by the Executive pursuant to~~ under any 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 or, if higher, ~~immediately prior to~~ the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents ~~life~~health, ~~disability~~medical, ~~accident~~ dental, and ~~health~~ similar 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 ~~after~~ after-tax cost to the Executive than the ~~after~~ after-tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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~~5.1(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) 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 ~~promptly~~ reimburse the Executive for the excess, if any, of the ~~after~~ after-tax 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) ~~In addition~~ Notwithstanding any provision of any annual or long term incentive plan to the ~~benefits to which the Executive is entitled under the DC Pension Plan~~contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the ~~amount that would have been contributed thereto by~~ Executive for a completed fiscal year or other measuring period preceding the ~~Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Date of Termination under any such plan and which, as of the Date of Termination, ~~determined (x) as if~~ is contingent only upon the continued employment of the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder~~subsequent date, and (ii) ~~the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the~~ a pro rata portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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~~ of the aggregate value of all contingent cash incentive compensation awards to the ~~Executive~~Executive for all then uncompleted periods under any such plan, calculated as ~~in effect immediately prior~~ to each such award by multiplying the ~~first occurrence~~ award that the Executive would have earned on the last day of ~~an event or circumstance constituting Good Reason~~the performance award period, ~~had~~ assuming the ~~Executive’s employment terminated~~ achievement, at the target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any ~~time~~ fractional portion of a month during ~~the~~ such performance award period ~~of twenty-four (24) months after~~ through the Date of ~~Termination,~~ Termination by the ~~Company shall provide~~ total number of months contained in such post-retirement health care and/or life insurance benefits to the Executive 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 terminateperformance award period. (ED) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination~~ two years or, if earlier, until the first acceptance by the Executive of an offer of employment~~, provided, however, that in no case shall~~ . (E) All restrictions relating to the sale or disposal of restricted shares of Company ~~be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid~~ common stock granted to the Executive ~~within thirty (30) calendar days following~~ on March 14, 2006, as set forth in a letter agreement between the ~~date on which~~ Company and the Executive ~~submits~~ dated May 18, 2006, shall lapse notwithstanding anything to the ~~invoice but no later than December 31 of~~ contrary contained in the ~~third year following the year of the Executive’s Date of Termination~~award agreement, letter agreement, or otherwise. 5.2 (FA) ~~For the twenty-four (24) month period immediately following the Date of Termination~~ Whether or ~~until~~ not the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior entitled to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this AgreementSeverance Payments, if any of the payments or benefits received or to be received by the Executive (including any payment or ~~benefits~~ benefit received or to be received 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, ~~program,~~ arrangement or agreement) (all such payments and benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) ~~would~~ will be subject ~~(in whole or part),~~ to the Excise Tax, ~~then~~the Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments provided by reason of section 280G of the Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and ~~after subtracting the net amount of~~ any federal, ~~state, municipal~~ state and local income and employment taxes ~~on such reduced Total Payments~~ and Excise Tax upon the Gross-Up Payment, and after taking into account the phase ~~out, if any,~~ out of itemized deductions and personal exemptions attributable to ~~such reduced Total Payments)~~the Gross-Up Payment, ~~is greater than or~~ shall be equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a~~ “~~payment~~parachute payments” (within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii~~Code) ~~no portion of the Total Payments will be taken into account which~~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, the Company’s independent auditor (the “Auditor”), ~~does~~ such payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all “excess parachute payments” within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ such excess parachute payments (in whole or in part) represent reasonable compensation for services actually ~~rendered,~~ 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. For purposes of determining the amount of the Gross-Up Payment, (1) the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made 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 if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of this Section 5.2), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes and (2) the Executive shall be deemed to be subject to the loss of itemized deductions and personal exemptions to the maximum extent provided by the Code for each dollar of incremental income. (C) ~~All determinations required by this Section 6.2 (or requested by either~~ In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Executive or shall repay to the ~~Company~~ Company, within five (5) business days following the time that the amount of such reduction in ~~connection with this Section 6.2) will be at~~ the ~~expense~~ Excise Tax is finally determined, the portion of the ~~Company. The fact~~ 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 and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive’s ~~right~~ taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to ~~payments or benefits may be reduced~~ exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the ~~limitations contained in this Section 6.2 will~~ existence or amount of which cannot ~~of itself limit or otherwise affect any other rights~~ 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 additions payable by the Executive ~~under this Agreement~~with respect to such excess) 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. ~~6.3 Subject to Section 6.4, the~~ 5.3 The payments provided in subsections (A) and (C) of Section ~~6.1~~ 5.1 hereof and in Section 5.2 hereof shall be made not later than the fifth day following the Date of Termination (or if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of Section 5.2 hereof); 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 Executive or, in the case of payments under Section 5.2 hereof, in accordance with Section 5.2 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 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 ~~following~~ after demand by the ~~Date~~ Company (together with interest at 120% of ~~Termination~~the rate provided in section 1274(b)(2)(B) of the Code). 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). ~~(A) Notwithstanding any provisions of this Agreement~~ 5.4 The Company also shall pay to the ~~contrary, if the~~ Executive ~~is a “specified employee” (within the meaning of section 409A~~ all legal fees and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive’s employment, ~~such reimbursement~~ 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. Such payments shall be made ~~on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount~~ within five (5) business days after delivery of ~~reimbursements or in-kind benefits to be provided in any other taxable year, nor shall~~ the Executive’s ~~right to reimbursement or in-kind benefits be subject to liquidation or exchange~~ written requests for ~~another benefit~~payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. ~~(C) For purposes of section 409A~~5.5 Notwithstanding the foregoing, the ~~Executive~~Company’s ~~right~~ obligations to ~~receive~~ pay or provide any ~~“installment” payments pursuant to this Agreement~~ benefits, other than as required by Section 4, shall (1) cease as of the date the Executive breaches any of the provisions of Section 14 and (2) be ~~treated~~ conditioned on the Executive signing a release of claims in favor of the Company, substantially in the form attached hereto as ~~a right to receive a series~~ Exhibit A, and the expiration of ~~separate and distinct pay~~any revocation period provided for in such release.

Appears in 1 contract

Sources: Change in Control Severance Agreement (Xm Satellite Radio Holdings Inc)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, if the ~~Executive incurs a “separation from service” (within~~ Executive’s employment is terminated during the ~~meaning of section 409A)~~ two year period immediately 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if within the 90 day period prior to a Change in Control (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 occurs)~~ 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 for Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.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 ~~two~~ three times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the ~~average~~ greater of (1) the target annual bonus of the Executive 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 (2) the annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in with respect of to the ~~three~~ fiscal ~~years~~ year ending immediately prior to the 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 constituting Good Reason~~Termination. (B) For the ~~twenty~~thirty-~~four~~ six (2436) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents ~~life~~health, ~~disability, accident~~ vision care and ~~health~~ dental 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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 by a subsequent employer during the ~~twenty~~thirty-~~four~~ six (2436) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) Notwithstanding any other provisions in of this Agreement, if in the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive (including any payment or ~~benefits~~ benefit received in connection with a Change in Control or the termination of the Executive’s ~~termination of~~ employment, whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or agreement) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as the “Total Payments”) would not be ~~subject~~ deductible (in whole or part), to by the ~~Excise Tax~~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, ~~program,~~ arrangement or agreement), the ~~Company will reduce the Total~~ cash Severance Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will shall first be reduced (if necessary, to zero), ~~with amounts that are payable last reduced first; (ii) payments~~ and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other ~~non-cash benefits not otherwise described in clauses~~ Severance Payments shall thereafter be reduced (iiif necessary, to zero); provided, however, that the Executive may elect to have the noncash Severance Payments reduced (or eliminated) ~~or (iv) will be next reduced pro-rata. Any reductions made pursuant~~ prior to ~~each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata~~ any reduction of the cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensationSeverance Payments. (B) For purposes of ~~determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax:~~ 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 ~~will~~ shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ 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 payment” within the meaning of section 280G(b)(2) of the ~~Code (~~Code, including by reason of section 280G(b)(4)(A) of the Code, (iii) ~~and, in calculating~~ the ~~Excise Tax, no portion of such~~ Severance Payments shall be reduced only to the extent necessary so that the Total Payments ~~will be taken into account which,~~ (other than those referred to in ~~the opinion of Tax Counsel, constitutes~~ clauses (i) or (ii)) in their entirety constitute reasonable compensation for services actually ~~rendered,~~ rendered within the meaning of section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions by reason of section 280G of the Code, in ~~excess~~ the opinion of ~~the Base Amount allocable to such reasonable compensation;~~ Tax Counsel, and (~~iii~~iv) the value of any noncash ~~benefits~~ benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. (C) ~~All determinations required by this Section 6.2 (~~If it is established pursuant to a final determination of a court or ~~requested by either~~ an Internal Revenue Service proceeding that, notwithstanding the ~~Executive or the Company in connection with this Section 6.2) will be at the expense~~ good faith of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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~~ portion of such Total Payments being subject to the ~~existence or amount~~ Excise Tax, then, if such repayment would result in (i) no portion of ~~liability for~~ the remaining Total Payments being subject to the Excise Tax ~~with respect~~ and (ii) 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 sum of (i) the excess of the Total ~~Payments~~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; 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 Subject to Section ~~6.4~~14 hereof, the payments provided in ~~subsections~~ subsection (A~~) and (C~~) of Section 6.1 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination. 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). ~~(A) Notwithstanding any provisions of this Agreement~~ 6.4 The Company also shall pay to the ~~contrary, if the~~ Executive ~~is a “specified employee” (within the meaning of section 409A~~ all legal fees and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive’s employment, ~~such reimbursement~~ 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. Such payments shall be made ~~on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount~~ within five (5) business days after delivery of ~~reimbursements or in-kind benefits to be provided in any other taxable year, nor shall~~ the Executive’s ~~right to reimbursement or in-kind benefits be subject to liquidation or exchange~~ written requests for ~~another benefit~~payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Agreement (US BioEnergy CORP)

Severance Payments. 6.1 ~~If the Executive incurs a “separation from service”~~ Subject to Section 6.2 hereof, if (~~within the meaning of section 409A~~1) ~~following~~ a Change in Control occurs on or prior to December 31, 2004, and ~~during~~ (2) the ~~Term,~~ Executive's employment is terminated (other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, ) and the Date of Termination in connection therewith occurs within three (3) years after such Change in Control then the Company shall pay the Executive the amounts, and provide the Executive the benefits, hereinafter described in this Section 6.1 (“"Severance Payments”"), together with any payments that may be due under Section 6.2 hereof, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ 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 (whether or not a Change in Control occurs) 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 for Good Reason ~~prior to a Change~~ if (a) in ~~Control (whether or not a Change in Control occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction~~ connection with Executive's termination of ~~such Person, or (iii) the Executive’s~~ employment ~~is terminated~~ by the Company without Cause or by the Executive for Good Reason determined by treating the event or transaction hereinafter described as the Change in Control), a Notice of Termination is furnished following an event or transaction described in Section 15(G)(1)(x) or Section 15(G)(3)(x) which occurs on or prior to December 31, 2004, and ~~such termination or the circumstance or event which constitutes Good Reason is otherwise~~ (b) a Management Change occurs in connection with or ~~in anticipation~~ within twelve (12) months following such event or transaction and subsequent to, but not more than six (6) months after, the furnishing of ~~a Change in Control (whether or not a Change in Control occurs). For purposes~~ such Notice of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.Termination. (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 by the Company or any of its subsidiaries to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to ~~two~~ (1) if the Date of Termination occurs on or prior to the second anniversary of the Change in Control, one and three-quarters (1.75) times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason~~Change in Control (the "Base Salary"), ~~and~~ plus (ii) the ~~average~~ target annual bonus ~~earned by~~ established for the Executive ~~pursuant to any annual~~ under the 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 (or, if higher, ~~immediately prior to~~ in respect of the fiscal year in which occurs the ~~first event~~ Change in Control), or ~~circumstance constituting Good Reason~~(2) if the Date of Termination occurs after the second anniversary of the Change in Control, one (1) times the sum of such Base Salary plus such target annual bonus. If, notwithstanding the foregoing provision that the lump sum severance is to be in lieu of any severance benefit otherwise payable, the Company or any of its subsidiaries is required by applicable law to pay such a benefit, the Company's obligation to pay such lump sum severance hereunder shall be offset and reduced by the amount of the benefit required to be paid by applicable law. (B) For the ~~twenty~~21-~~four (24)~~ month period 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 (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~~Change in Control), at no greater ~~after tax~~ cost to the Executive on an after-tax basis than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, ~~that, unless~~ that the ~~Executive consents to a different method, such health insurance~~ foregoing benefits shall be provided ~~through~~ for a ~~third-party insurer~~period of only twelve (12) months if the Date of Termination occurs after the second anniversary of the Change in Control. 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 at no greater cost by a subsequent employer during the ~~twenty-four (24) month~~ applicable period ~~following the Executive’s termination of employment~~ set forth above (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive)~~; provided~~. If the Severance Payments shall be decreased pursuant to Section 6.2(B) hereof, ~~however~~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, ~~that~~ the Company ~~shall promptly reimburse the Executive for the excess~~shall, ~~if any~~no later than five (5) business days following such reduction, ~~of the after tax cost of such benefits~~ pay to the Executive ~~over such cost immediately prior~~ 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 ~~Date~~ Executive without being, or causing any other payment to be, nondeductible by reason of ~~Termination or, if more favorable to~~ section 280G of the ~~Executive, the first occurrence of an event or circumstance constituting Good Reason~~Code. (C) ~~In addition~~ Notwithstanding any provision of any incentive, stock, retirement, savings or other plan to the ~~benefits to which~~ contrary, as of the Date of Termination, (i) the Executive ~~is entitled~~ shall be fully vested in (1) all then outstanding options to acquire stock of the Company (or if such options have been assumed by, or replaced with options for shares of, a parent, surviving or acquiring company, such assumed or replacement options), and all then outstanding restricted shares of stock of the Company (or the stock of any parent, surviving or acquiring company into which such restricted shares have been converted or for which they have been exchanged) held by the Executive, (2) all accrued basic match and incremental match employer contributions under the ~~DC Pension Plan~~Company's Capital Appreciation Plan (but not deemed participation match contributions thereunder), and (3) to the extent permissible under the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all amounts credited to his account under the Company's 401(k) Savings and Investment Plan which are attributable to employer contributions; and (ii) all stock options referred to in clause (i) above shall remain exercisable until the earlier of (x) the third anniversary of the Date of Termination or (y) the otherwise applicable expiration date of such option. To the extent that the full vesting of the Executive under clause (i)(3) of the preceding sentence would violate either ERISA or the Code, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount which cannot become fully vested. (D) The Company shall pay to the Executive a lump sum ~~of (i)~~ amount, in cash, equal to the ~~amount that would have been contributed thereto~~ Executive's target annual bonus under the bonus plan maintained by the Company on in respect of the ~~Executive’s behalf during~~ fiscal year in which occurs the ~~twenty-four~~ Date of Termination (24or, if higher, in respect of the fiscal year in which occurs the Change of Control) ~~months immediately following~~ multiplied by a fraction, the numerator of which is the number of days in such fiscal year through and including the Date of Termination, ~~determined~~ and the denominator of which is 365. For purposes of this clause (~~x) as if the Executive made the maximum permissible contributions thereto during such period~~D), ~~(y) as if the Executive earned compensation during such period at a rate equal to~~ the Executive~~’s compensation~~ 's target annual bonus in respect of 2001 shall be deemed to be 150% of his actual target annual bonus in respect of 2001 (~~as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or~~less, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 previously paid to the Executive, as 60% of his actual target annual bonus in ~~effect immediately prior to the first occurrence~~ respect of an event or circumstance constituting Good Reason, had the Executive’s employment terminated at any time during the period of twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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 terminate2001). (EA) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination orExcept as otherwise provided in Section 6.2(B), if ~~earlier, until~~ the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination Severance Payments together with any payment or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, program, arrangement or agreement~~otherwise) (all such payments and benefits, excluding the Gross- Up Payment, being hereinafter ~~referred to as the “~~called "Total Payments”") ~~would~~ will be subject (in whole or part), ) to the Excise Tax, ~~then~~then the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments ~~provided by reason~~ and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes of ~~section 280G~~ determining the amount of the ~~Code in such other plan, program, arrangement or agreement~~Gross-Up Payment, the ~~Company will reduce~~ 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 and state and local income taxes at the highest marginal rate of taxation in the state and localities of the Executive's residence and employment, as applicable, on the Date of Termination, net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes. (B) If the Total Payments would (but for this Section 6.2(B)) be subject (in whole or part) to the ~~extent necessary so that no~~ Excise Tax, but the aggregate value of the portion of the Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is ~~subject to the Excise Tax (but in no event to~~ less than ~~zero); provided~~330% of the Executive's Base Amount, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). then subsection (A) In of this Section 6.2 shall not apply, and the ~~case of a reduction in the Total Payments, the Total~~ cash Severance Payments ~~will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will~~ shall be reduced (if necessary, to zero), ~~with amounts that are payable last~~ and all other Severance Payments shall thereafter be reduced ~~first;~~ (~~ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1~~if necessary, ~~Q&A 24(a~~to zero), ~~with~~ to the ~~highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next~~ extent necessary to cause the Total Payments not to be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to ~~section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation~~the Excise Tax. (BC) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a “payment”~~ "parachute payments" within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which~~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, the Company’s 's independent auditor (the “"Auditor”"), ~~does~~ such other payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of ~~Tax Counsel~~the Auditor, ~~constitutes~~ 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 the Auditor with respect to the matter in dispute shall prevail. (CI) ~~All determinations required by this Section 6.2~~ In the event that (~~or requested by either~~ 1) amounts are paid to the Executive or pursuant to Section 6.2(A), (2) there is a Final Determination that the ~~Company~~ Excise Tax is less than the amount taken into account hereunder in ~~connection with this~~ calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are to be reduced pursuant to Section ~~6.2~~6.2(B), the Executive shall repay to the Company, within five (5) ~~will be at~~ business days following the ~~expense~~ date of the ~~Company. The fact~~ Final Determination, the Gross-Up Payment and the amount of the reduction in the Severance Payments, plus interest on the amount of such repayments at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (II) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the ~~Executive’s right~~ Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to ~~payments or benefits may~~ such Final Determination, the Severance Payments are not to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, 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 and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (III) Except as otherwise provided in clause (IV) below, in the event there is a Final Determination that the Excise Tax exceeds the amount taken into account hereunder in determining the Gross-Up Payment (including by reason of ~~the limitations contained in this Section 6.2 will not of itself limit or otherwise affect~~ any other rights of the Executive under this Agreement. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning payment the existence or amount of ~~liability for~~ which cannot be determined at the time of the Gross-Up Payment), the Company shall pay to the Executive, within five (5) business days following the date of the Final Determination, the sum of (1) a 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, including a Gross-Up Payment in respect of any Excise Tax attributable to amounts payable under clauses (2) and (3) of this paragraph (III) (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion), (2) if Severance Payments were reduced pursuant to Section 6.2(B) but after giving effect to such Final Determination, the Severance Payments should not have been reduced pursuant to Section 6.2(B), the amount by which the Severance Payments were reduced pursuant to Section 6.2(B), and (3) interest on such amounts at 120% of the rate provided in section 1274(b)(2) of the Code. (IV) In the event that (1) Severance Payments were reduced pursuant to Section 6.2(B) and (2) the aggregate value of Total ~~Payments~~Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is subsequently redetermined in a Final Determination, but such redetermined value still does not exceed 330% of the Executive's Base Amount, then, within five (5) business days following such Final Determination, (x) the Company shall pay to the Executive the amount (if any) by which the reduced Severance Payments (after taking the Final Determination into account) exceeds the amount of the reduced Severance Payments actually paid to the Executive, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code, or (y) the Executive shall pay to the Company the amount (if any) by which the reduced Severance Payments actually paid to the Executive exceeds the amount of the reduced Severance Payments (after taking the Final Determination into account), plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code. 6.3 ~~Subject to Section 6.4, the~~ The payments provided in ~~subsections~~ subsection (A) and (D) (and to the extent applicable, subsection (C)) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the ~~fifth~~ fifteenth (~~5th~~15th) ~~business~~ day following the Date of Termination, provided, however, that if the amounts of such payments, and the potential 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 or, in the case of payments under Section 6.2 hereof, in accordance with said Section 6.2, 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 sixtieth (60th) day after the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay,

Appears in 1 contract

Sources: Severance Agreement (Chiquita Brands International Inc)

Severance Payments. ~~6.1 If~~ 6.1. The Company shall pay the Executive ~~incurs a~~ the payments described in this Section 6.1 (the “~~separation from service” (within~~ Severance Payments”) upon the ~~meaning~~ termination of ~~section 409A)~~ the Executive’s employment following a Change in Control and during the ~~Term, other than~~ term of this Agreement (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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits 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, or (iii) by the Executive without Good Reason. For purposes of this Agreement, the ~~Executive~~ Executive’s employment shall be deemed to have ~~incurred a separation from service following a Change in Control~~ been terminated by the Company without Cause or by the Executive with Good ~~Reason,~~ Reason following a Change in Control 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 occurs)~~ 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 ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 or by the Executive for Good Reason prior to a Change in Control and the Executive reasonably demonstrates that such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control occurs). For purposes of Section 5 and 6~~ which actually occurs during the term of this Agreement, ~~no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made~~ or ~~provided unless and until such termination of~~ (iv) the Executive’s employment is ~~also~~ terminated without Cause after a Potential Change in Control of the type described in paragraph (I) of the definition of “~~separation from service,” as determined~~ Potential Change in ~~accordance with section 409A.~~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 two (2) times the sum of (i) the higher 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 the event or circumstance ~~constituting Good Reason~~upon which the Notice of Termination is based or the Executive’s highest annual base salary in effect during the three (3) completed fiscal years immediately preceding the Change in Control (the “Change in Control Salary”), and (ii) the ~~average~~ 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 (3) completed fiscal years ~~ending~~ immediately ~~prior to~~ preceding the ~~fiscal~~ year in which ~~occurs~~ the Date of Termination ~~or, if higher,~~ occurs or the highest annual bonus so earned in respect of the three (3) completed fiscal years immediately ~~prior to~~ preceding the ~~fiscal~~ year in which the Change in Control occurs (the ~~first event or circumstance constituting Good Reason~~“Change in Control Bonus”). (B) Notwithstanding any provision of any annual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to a pro rata portion to the Date of Termination of the value of the target incentive award under such plan for the 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 any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (C) For the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive ~~and his~~ (which includes the Executive’s eligible dependents for purposes of this paragraph (C)) with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ was receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to any amendment to such benefits made subsequent to the earlier of a Potential Change in Control or a Change in Control which amendment adversely affects in any manner the Executive~~, those provided~~ ’s entitlement to or the ~~Executive and his dependents immediately prior to the first occurrence~~ amount of ~~an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to~~ such ~~date or occurrence~~benefits); provided, however, that, unless the Executive consents to a different method, 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~~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 ~~same type~~ 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 twenty-four (24) month period following the Executive’s ~~termination~~ Date of ~~employment~~ Termination (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 promptly reimburse the Executive for the excess, if any, of the after tax cost of such benefits~~ . 6.2. (A) Anything in this Agreement 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) In addition to the benefits to which the Executive is entitled under the DC Pension Plan, the Company shall pay the Executive a lump sum amountcontrary notwithstanding, in ~~cash~~the event it shall be determined that any payment, ~~equal to the sum~~ award, benefit or distribution (or any acceleration of (iany payment, award, benefit or distribution) ~~the amount that would have been contributed thereto~~ by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the ~~period following the Executive’s Date~~ benefit of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (~~including any payment~~ whether paid or ~~benefits received in connection with a Change in Control~~ payable or ~~the Executive’s termination of employment, whether~~ distributed or distributable pursuant to the terms of this Agreement or ~~any other plan, program, arrangement or agreement~~otherwise) (~~all~~ a “Payment”) would be 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 ~~payments~~ excise tax, together with any such interest and ~~benefits~~penalties, ~~being~~ are hereinafter collectively referred to as the “~~Total Payments~~Excise Tax”~~) 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: (i) no portion of the Total Payments the receipt or enjoyment of which then the Executive shall ~~have waived at such time and in such manner as not~~ be entitled to ~~constitute~~ receive an additional payment (a “payment” within the meaning of section 280G(b) of the Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which, in the opinion of tax counsel (“Tax CounselGross-Up Payment”) ~~reasonably acceptable to~~ in an amount such that after payment by 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 payment” within the meaning of ~~section 280G(b)(2) of the Code~~ all taxes (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; and (iii) the value of any ~~noncash benefits~~ interest 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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 penalties imposed with respect to ~~the Total Payments. 6.3 Subject to Section 6.4~~such taxes), the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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~~ income taxes (and any ~~such opinions or advice which are in writing shall be attached~~ interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the ~~statement)~~Excise Tax imposed upon the Payments. (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Executive Employment Agreement (Inspire Pharmaceuticals Inc)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, the Company shall pay the Executive ~~incurs a~~ the payments described in this Section 6.1 (the “~~separation from service” (within~~ Severance Payments”) upon the ~~meaning~~ termination of ~~section 409A)~~ the Executive’s employment following a Change in Control and during the ~~Term~~term of this Agreement, ~~other than~~ in addition to the payments and benefits described in Section 5 hereof, unless such termination is (Ai) by the Company for Cause, (Bii) by reason of ~~death~~ death, Disability or ~~Disability~~Retirement, or (Ciii) by the Executive without Good Reason~~, then the Company shall pay~~ . To be a valid termination of employment by the Executive under this Agreement for Good Reason, the ~~amounts, and provide~~ date of the ~~Executive~~ actual termination of the ~~benefits, described in this Section 6.1 (“Severance Payments”), in addition~~ Executive’s employment due to any ~~payments and benefits to~~ 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 ~~Executive is entitled under Section 5 hereof~~consent of the Executive. ~~For purposes of this Agreement, the Executive~~ The Executive’s employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good ~~Reason,~~ Reason 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 occurs) and such termination was~~ without Cause at the ~~request or~~ direction of a Person who (i) has entered into an agreement with the Company the consummation of which ~~would~~ will constitute a Change in ~~Control,~~ Control or (ii) has caused a Potential Change in Control to occur, or if the Executive terminates his employment ~~for~~ with Good Reason prior to a Change in Control (~~whether or not~~ determined by treating a Potential Change in Control as a Change in Control ~~occurs~~in applying the definition of Good Reason) ~~and~~ if 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.. (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 ~~two times~~ [200%][250%]of the sum of (i) the higher of the Executive’s annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change in Control, and (ii) the ~~average annual bonus earned by~~ higher of the target amount which the Executive ~~pursuant to any~~ could have earned under the Company’s annual ~~bonus or~~ incentive plan ~~maintained by~~ in the ~~Company in respect of the three fiscal years ending immediately prior to the fiscal~~ year in which ~~occurs~~ the Date of Termination ~~or, if higher, immediately prior to~~ occurs or such target amount in the ~~fiscal~~ year in which ~~occurs~~ the ~~first event or circumstance constituting Good Reason~~Change in Control occurs. (Bb) For ~~the twenty-four~~ an eighteen (2418) month period ~~immediately following~~ after the Date of Termination, 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 ~~and his dependents~~ with life, disability, ~~accident~~ accident, health and ~~health~~ dental insurance benefits substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to ~~the Executive, those provided~~ any reduction in such benefits subsequent to ~~the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting~~ a Change in Control which reduction constitutes Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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~~6.1(b) shall be reduced to the extent comparable benefits ~~of the same type~~ are actually received by or made available to the Executive by a new employer of the Executive without cost during the ~~twenty-four~~ eighteen (2418) 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~~ . If the ~~Company shall promptly reimburse the Executive for the excess, if any, of the after tax cost of such~~ benefits provided to the Executive ~~over such cost immediately prior~~ 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 ~~Date~~ immediately preceding sentence because of ~~Termination or, if more favorable to~~ the ~~Executive, the first occurrence~~ receipt of ~~an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plan~~comparable benefits, the Company ~~shall~~ shall, at the time of such reduction, pay to the Executive ~~a lump sum amount, in cash, equal to~~ the ~~sum~~ lesser of (iA) the amount ~~that would have been contributed thereto by~~ of the ~~Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive~~ decrease made ~~the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined~~ in the ~~DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or~~Severance Payments pursuant to Section 6.2, ~~if higher, during the twelve months immediately prior to the first occurrence of an event~~ or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide~~ the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall maximum amount which can be paid to the Executive ~~within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31~~ without being, or causing any other payment to be, nondeductible by reason of Section 280G of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance)Code. 6.2 ~~(1)~~ Notwithstanding any other provisions of this Agreement (except the provisions of Section 6.5 below), in ~~this Agreement, if~~ the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter ~~referred to as the~~ called “Total Payments”) would not be ~~subject~~ deductible (in whole or part), to by the ~~Excise Tax~~Company, an affiliate or any 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~~ Section 280G of the Code in such other plan, ~~program,~~ arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the ~~case of a reduction in the Total Payments, the Total~~ cash Severance Payments ~~will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will~~ shall first be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (vB) all other non-cash ~~benefits not otherwise described in clauses~~ Severance Payments shall next be reduced (~~ii) or (iv) will be next reduced pro-rata~~if necessary, to zero). Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of ~~determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax:~~ this limitation, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have effectively waived ~~at such time and~~ in ~~such manner as not~~ writing prior to ~~constitute a “payment” within~~ the ~~meaning~~ Date of ~~section 280G(b) of the Code will~~ Termination shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ shall be taken into account ~~which,~~ which in the opinion of tax counsel ~~(“Tax Counsel”)~~ selected by the Company’s independent auditors and 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 payment” within the meaning of ~~section~~ Section 280G(b)(2) of the ~~Code (~~Code, including by reason of ~~section~~ Section 280G(b)(4)(A) of the Code, (iii) ~~and, in calculating~~ the ~~Excise Tax, no portion of such~~ Severance Payments shall be reduced only to the extent necessary so that the Total Payments ~~will be taken into account which~~(other than those referred to in clauses (i) or (ii)) in their entirety constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of ~~Tax Counsel, constitutes reasonable compensation for services actually rendered, within~~ the ~~meaning of section 280G(b)(4)(B) of the Code,~~ tax counsel referred to in ~~excess of the Base Amount allocable to such reasonable compensation~~clause (ii); and (~~iii~~iv) 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 ~~Auditor~~ Company’s independent auditors in accordance with the principles of ~~sections~~ Sections 280G(d)(3) and (4) of the Code~~. (C) All determinations required by this Section 6.2 (~~. If it is established pursuant to a final determination of a court or ~~requested by either~~ an Internal Revenue Service proceeding that, notwithstanding the ~~Executive or the Company in connection with this Section 6.2) will be at the expense~~ good faith of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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~~excess of the aggregate “parachute payments” paid to or for the 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 reason of Section 280G of the Code. 6.3 ~~Subject to Section 6.4, the~~ The payments provided for in ~~subsections (A) and (C) of~~ Section 6.1 (other than Section 6.1(b)) hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination, 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, 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 determined by the Company within six (6) months after payment to have been due, such excess shall be paid by the Executive to the Company, no later than the thirtieth (30th) business day after demand by the Company. At the time that payments are made under this ~~Agreement~~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 ~~Tax Counsel~~outside counsel, ~~the Auditor or other advisors~~ auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). 6.4 Following a Change in Control (~~A) Notwithstanding any provisions~~ or a termination described in the second sentence of ~~this Agreement~~ Section 6.1), the Company also shall pay to the ~~contrary~~Executive all legal fees and related expenses (including costs of experts, ~~if the Executive is a “specified employee” (within the meaning of section 409A~~ evidence and ~~determined pursuant to procedures adopted by the Company~~counsel) ~~at the time of his separation from service and if any portion of the payments or benefits to be received~~ incurred by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier as a result of ~~(i) the first (1st) business day of the seventh month following the date~~ any dispute in connection with a termination of the Executive’s ~~separation from service~~ employment, whether or ~~(ii)~~ not such dispute is resolved in the Executive’s ~~death (~~favor, but only if the ~~applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred~~ dispute is pursued by the Executive in ~~independently obtaining any Delayed Benefits~~ good faith (~~the “Additional Delayed Payments”). (B) With~~ including all such fees and expenses, if any, incurred in respect of a dispute relating to any ~~amount of expenses eligible for reimbursement under Sections 6.1~~ such termination or in the Executive seeking in good faith to obtain or enforce any benefit or right provided by this Agreement (~~B), (D) and (F), such expenses shall be reimbursed~~ or by any other plan or arrangement maintained by the Company ~~within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in~~ under which the Executive ~~incurs the related expenses; provided, that~~ is or may be entitled to receive benefits) or in connection with ~~respect to reimbursement relating~~ any tax audit or proceeding to the ~~Additional Delayed Payments, such reimbursement~~ extent attributable to the application of Section 4999 of the Code to any payment or benefit provided hereunder). Such payments shall be made on to the ~~Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount~~ Executive within five (5) business days after delivery of ~~reimbursements or in-kind benefits to be provided in any other taxable year, nor shall~~ the Executive’s ~~right to reimbursement or in-kind benefits be subject to liquidation or exchange~~ written requests for ~~another benefit~~payment accompanied by evidence of fees and expenses incurred. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Protection Agreement (Vanguard Health Systems Inc)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, the Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termina- tion of ~~section 409A)~~ the Executive's employment following a Change in Control and during the ~~Term, other than (A) by the Company for Cause, (B) by reason~~ term of ~~death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in~~ this ~~Section 6.1 (“Severance Payments”)~~Agreement, in ~~addition~~ addi- tion to any payments and benefits to which the Executive is entitled under Section 5 hereof, unless such termina- tion is (i) by the Company for Cause, (ii) by reason of death or Disability, or (iii) by the Executive without Good Reason. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service following a Change in Control~~ been terminated by the Company without Cause or by the ~~Executive~~ Execu- tive with Good ~~Reason,~~ Reason following a Change in Control if (i) the Executive’s 's employment is terminated ~~by the Company~~ without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and such termination was at the request or direction of a Person who has ~~entered~~ en- tered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s 's employment is terminated ~~by the Company~~ without Cause ~~or by the Executive for Good Reason~~ prior to a Change in Control and such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in ~~connection~~ connec- tion with or in anticipation of a Change in Control ~~(whether or not a Change in Control~~ which actually occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum ~~severance~~ sever- ance payment, in cash, equal to ~~two~~ three times the sum of (i) the higher of the Executive’s 's annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Executive's annual base salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change in Control, and (ii) the ~~average~~ higher of the aver- age of the annual ~~bonus~~ bonuses earned or received by the Executive ~~pursuant to any annual bonus or incentive plan maintained by~~ from the Company or its subsidiaries in respect of the three (3) consecutive fiscal years ~~ending~~ immediately ~~prior to the fiscal year~~ preceding that in which ~~occurs~~ the Date of Termination ~~or, if higher,~~ occurs or the average of the annual bonuses so earned or received in respect of the three (3) consecutive fiscal years immediately ~~prior to the fiscal year~~ pre- ceding that in which ~~occurs~~ the ~~first event or circumstance constituting Good Reason~~Change in Control occurs. (B) Notwithstanding any provision of any annual or long-term incentive plan to the con- trary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any 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 any such plan but which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subse- quent date or otherwise has not been paid, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent incentive compen- sation awards to the Executive for all then uncom- pleted 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, at the target level of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (C) From and after the occur- rence of a Change in Control, notwithstanding any provision of the Officers' Supplemental Retirement Plan of Orange and Rockland Utili- ties, Inc. as Amended and Restated (the "SERP") to the contrary, (i) the Benefit Formula Per- centage applicable to the Executive under the SERP shall be deemed to be 70% and (ii) the Executive shall be treated as having completed 20 years of Service for purposes of Section 2(8) of the SERP. Notwithstanding any provi- sion of the SERP to the contrary, upon the termination of the Executive's employment by the Executive for Good Reason or by the Compa- ny, in either case at any time following the occurrence of a Change in Control and during the term of this Agreement, the Executive shall be deemed to have satisfied all of the require- ments for a Normal Retirement Allowance pursu- ant to Section 6(D) of the SERP and the Execu- tive shall, accordingly, be entitled to com- mence receipt of such Normal Retirement Allow- ance, without reduction on account of his age, immediately following such termination of em- ployment. (D) For the ~~twenty~~thirty-~~four~~ six (2436) month period immediately following the Date of Termination, the Company shall arrange to ~~provide~~ pro- vide the Executive ~~and his dependents~~ with life, disability, ~~accident~~ acci- dent and health insurance benefits ~~substantially~~ substantial- ly similar to those ~~provided to~~ which the Executive ~~and his dependents~~ is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to any amendment to such benefits made subsequent to a Change in Control which amendment adversely affects in any manner the Executive~~, those provided~~ 's entitle- ment to or the ~~Executive and his dependents immediately prior to the first occurrence~~ amount of ~~an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to~~ such ~~date or occurrence~~benefits); ~~provided~~pro- vided, however, that, unless the Executive ~~consents~~ con- sents to a different ~~method~~method (after taking into account the effect of such method on the calcu- lation of "parachute payments" pursuant to Section 6.2 hereof), such health insurance benefits shall be provided through a ~~third-~~third- party insurer. Benefits otherwise receivable by the Executive pursuant to this Section ~~6.1(B~~6.1(D) shall be reduced to the extent compa- rable benefits ~~of the same type~~ are actually received by or made available to the Executive without cost during the ~~twenty~~thirty-~~four~~ six (2436) month period following the Executive’s '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~~ . If the ~~Company shall promptly reimburse the Executive for the excess, if any, of the after tax cost of such~~ benefits provided to the Executive ~~over such cost immediately prior~~ under this Section 6.1(D) shall result in a decrease, pursuant to Section 6.2 hereof, in the Severance Payments and these Section 6.1(D) benefits are thereaf- ter reduced pursuant to the ~~Date~~ immediately preced- ing sentence because of ~~Termination or~~the receipt or avail- ability of comparable benefits, ~~if more favorable~~ the Company shall, at the time of such reduction, pay to the ~~Executive~~Executive the lesser of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, or (b) the ~~first occurrence~~ maximum amount which can be paid to the Execu- tive without being, or causing any other pay- ment to be, nondeductible by reason of ~~an event or circumstance constituting Good Reason~~section 280G of the Code. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (DE) If the Executive would have become entitled to benefits under the Company’s 's post-~~retirement~~ re- tirement 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, plans had the Executive’s 's employment terminated at any time during the period of ~~twenty~~thirty-~~four~~ six (2436) months after the Date of Termination, the Company shall provide such ~~post-~~post- retirement health care ~~and/or~~ or life insurance benefits to the Executive ~~and the Executive’s dependents~~ commencing on the later of (i) the date ~~on which~~ that such coverage would have first become available and (ii) the date ~~on which~~ that benefits described in subsection (BD) of this Section ~~6.1~~ 6.2 terminate. (EA) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination Whether or ~~until~~ not the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior entitled to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this AgreementSeverance Payments, if any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being ~~hereinafter referred to as the “~~herein- after called "Total Payments”") ~~would~~ will be subject (in whole or part), ) to the Excise Tax, then, subject to the provi- sions of subsection (B) of this Section 6.2, 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 and employment tax and Excise Tax upon the Gross-Up Pay- ment, shall be equal to the Total Payments. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income and employment taxes at the highest marginal rate of federal income and employment taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxa- tion in the state and locality of the Executive's resi- dence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. (B) In the event that, after giving effect to any redeterminations described in subsection (D) of this Section 6.2, a reduction in the Severance Payments to the largest amount that would result in no portion of the Total Payments being 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, ~~program,~~ arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) ~~the~~ would produce a net amount (after deduction of ~~such Total Payments, as so reduced (and after subtracting~~ the net amount of federal, ~~state, municipal~~ state and local income ~~taxes~~ tax on such reduced Total ~~Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total Payments), is~~ Pay- ments) that would be greater than ~~or equal to (ii)~~ the net amount of ~~such~~ unreduced Total Payments ~~without such reduction~~ (~~but~~ after ~~subtracting~~ deduction of the net amount of federal, ~~state, municipal~~ state and local income ~~taxes on such Total Payments~~ tax 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total~~ Payments). , then subsection (A) In of this Section 6.2 shall not apply and the ~~case of a reduction in the Total Payments, the Total~~ cash Severance Payments ~~will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will~~ shall first be reduced (if necessary, to zero), ~~with amounts that are payable last reduced first; (ii) payments~~ and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other ~~non-cash benefits not otherwise described in clauses~~ noncash Severance Benefits shall thereafter be reduced (iiif necessary, to zero); provided, however, that the Executive may elect to have the noncash Severance Payments reduced (or elimi- nated) ~~or (iv) will be next reduced pro-rata. Any reductions made pursuant~~ prior to ~~each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata~~ any reduction of the cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensationSeverance Payments. (BC) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total ~~Payments the receipt or enjoyment of which the Executive~~ Pay- ments shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a “payment”~~ "parachute payments" within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which~~Code, unless in the opinion of tax counsel (“the "Tax Counsel”") reasonably ~~acceptable~~ ac- ceptable to the Executive and selected by the accounting firm (the "Auditor") which was, immediately prior to the Change in Control, the Company’s 's independent ~~auditor~~ auditor, such other payments or benefits (~~the “Auditor”), does~~ in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ 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. (CD) ~~All determinations required by this Section 6.2~~ In the event that (~~or requested by either~~ i) amounts are paid to the Executive ~~or the Company in connection with~~ pursuant to subsection (A) of this Section 6.2, (ii) ~~will~~ the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the ~~expense~~ time of termination of the Executive's employment, and (iii) after giving effect to such redetermination, the Severance Payments are to be reduced pursuant to subsec- tion (B) of this Section 6.2, the Executive shall repay to the Company~~. The fact~~ , at the time that the amount of such reduction in Excise Tax is finally determined, the por- tion of the Gross-Up Payment attributable to such reduc- tion (plus that portion of the Gross-Up Payment attribut- able 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 re- sults in a reduction in the Excise Tax and/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)(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 right to payments or benefits may be reduced~~ 's employment (including by reason of ~~the limitations contained in this Section 6.2 will not of itself limit or otherwise affect~~ any other rights of the Executive under this Agreement. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning pay- ment the existence or amount of ~~liability for~~ which cannot be deter- mined at the time of the Gross-Up Payment) and (y) after giving effect to such redetermination, the Severance Pay- ments should not have been reduced pursuant to subsection (B) of this Section 6.2, the Company shall make an addi- tional Gross-Up Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to which the ~~Total Payments~~Company had not previously made a Gross-Up Pay- ment (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion) at the time that the amount of such excess is finally determined. (E) Exhibit A hereto is intended to illustrate the operation of this Section 6.2. 6.3 ~~Subject to Section 6.4, the~~ The payments provided for in subsections (A) and (CB) of Section 6.1 hereof and Section 6.2 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination; 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 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 pay- ments 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)(B) of the Code). At the time that payments are made under this ~~Agreement~~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~~limita- tion, any opinions or other advice the Company has ~~received~~ re- ceived from ~~Tax Counsel~~outside counsel, ~~the Auditor or other advisors~~ auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). . In the event the Company should fail to pay when due the amounts described in subsections (A) ~~Notwithstanding any provisions~~ or (B) of ~~this Agreement to the contrary~~Section 6.1 hereof or Section 6.2 hereof, if the Executive ~~is a “specified employee”~~ 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 Section 6.3 (~~within~~ without regard to any extension of the ~~meaning~~ Date of ~~section 409A and determined~~ Termination pursuant to ~~procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits~~ Section 7.3 hereof), to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of payment at a rate equal to the ~~Executive’s separation~~ prime rate of Citibank as in effect from ~~service or (ii) Executive’s death (the applicable~~ time to time after such due date~~, the “Permissible Payment Date”).~~ . 6.4 The Company also shall ~~also reimburse~~ pay to the ~~Executive for the after-tax cost~~ Execu- tive all legal fees and expenses incurred by the ~~Executive~~ Execu- tive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but disputing in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct paygood faith

Appears in 1 contract

Sources: Executive Employment Agreement (Orange & Rockland Utilities Inc)

Severance Payments. ~~6.1 If~~ 6.1. The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a Change in Control and during the ~~Term~~term of this Agreement, ~~other than~~ in addition to the payments and benefits described in Section 5 hereof, unless such termination is (Ai) by the Company for Cause, (Bii) by reason of death or Disability, or (Ciii) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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~~ The Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated, following a Change in Control by the Company without Cause or by the Executive with Good ~~Reason,~~ Reason if ~~(i)~~ the Executive’s 's employment is terminated ~~by the Company without Cause~~ prior to a Change in Control ~~(whether or not a Change in Control occurs) and such termination was at the request or direction of~~ without Cause after consultation with a Person who has entered into an agreement with the Company the consummation of which ~~would~~ will constitute a Change in ~~Control, (ii)~~ Control or if the Executive terminates his employment ~~for~~ with Good Reason prior to a Change in Control (~~whether or not~~ determined by treating a Potential Change in Control as a Change in Control ~~occurs~~in applying the definition of Good Reason under Section 15(M)(i) ~~and~~ through (vii) hereof) if the circumstance or event ~~which~~ that 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.. (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~~ the Applicable Multiplier times the sum of (i) the higher of the Executive’s 's annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or such salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change in Control, and (ii) the ~~average annual~~ higher of (x) the target bonus ~~earned by~~ for the year in which the Notice of Termination is provided or (y) the highest actual bonus paid or payable to the Executive pursuant to the Company's Bonus Plan or any ~~annual bonus or incentive plan maintained by~~ successor thereto (the ~~Company in respect~~ "Bonus Plan") for any of the ~~three fiscal~~ five years ~~ending~~ completed immediately prior to the ~~fiscal year in which occurs~~ occurrence of the ~~Date of Termination or, if higher, immediately prior to the fiscal year in which occurs the first~~ event or circumstance ~~constituting Good Reason~~upon which the Notice of Termination is based. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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 Notwithstanding any provision of the same type are received by or made available to the Executive during the twenty-four (24) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Bonus Plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) ~~the~~ any bonus amount ~~that would have~~ which has been ~~contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if~~ allocated or awarded to the Executive ~~made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such~~ for a completed fiscal year or other measuring period ~~at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately~~ preceding the Date of Termination ~~or, if higher, during~~ under the ~~twelve months immediately prior~~ Bonus Plan but has not yet been paid (pursuant to ~~the first occurrence of an event~~ Section 5.2 hereof or ~~circumstance constituting Good Reason,~~ otherwise) and (zii) ~~without regard to any amendment to the DC Pension Plan made subsequent to~~ a ~~Change in Control and on or prior~~ pro rata portion to the Date of ~~Termination, which amendment adversely affects in any manner~~ Termination of the ~~computation~~ aggregate value of ~~benefits thereunder, and (ii)~~ all contingent bonus awards to the ~~excess, if any, of (x) the Executive’s account balance~~ Executive for all uncompleted periods under the ~~DC Pension~~ 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 over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan.Termination; (DC) 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 For a ____________ month period ~~of twenty-four (24) months~~ after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue arrange to provide the Executive with ~~all perquisites provided by~~ life, disability, accident and health insurance benefits substantially similar to those which the ~~Company~~ Executive is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or,~~ (without giving effect to any reduction in such benefits subsequent to a Change in Control if ~~more favorable~~ such reduction constitutes Good Reason). Benefits otherwise receivable by the Executive pursuant to this Section 6.1(C) shall be reduced to the ~~Executive, immediately prior~~ extent comparable benefits are actually received by or made available to the ~~first occurrence of an event or circumstance constituting Good Reason (including~~Executive without cost during the above-referenced period. In addition, ~~without limitation, automobile, financial planning, annual physical and executive whole life insurance)~~any such benefits actually received by the Executive shall be reported to the Company by the Executive. ~~6.2~~ (1A) ~~Notwithstanding any other provisions in this Agreement~~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 ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of employment, whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement)~~ agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (~~all such payments and benefits, being hereinafter referred to as~~ the “"Total Payments”") ~~would~~ shall be ~~subject~~ treated as "parachute payments" (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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the ~~Code~~ 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) ~~and, in calculating~~ of the Code) shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of ~~Tax Counsel~~such tax counsel, ~~constitutes~~ such excess parachute payments (in whole or in part) represent reasonable compensation for services actually ~~rendered,~~ rendered (within the meaning of section 280G(b)(4)(B) of the Code), ~~in excess of~~ or are otherwise not subject to the ~~Base Amount allocable to such reasonable compensation;~~ Excise Tax, and (~~iii~~ii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the ~~Auditor~~ Company's independent auditors in accordance with the principles of 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) ~~All determinations required by this Section 6.2~~ 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 ~~requested by either~~ such other time as is hereinafter described), the Executive or shall repay to the ~~Company in connection with this Section 6.2) will be~~ Company, at the ~~expense~~ time that the amount of such reduction in Excise Tax is finally determined, the portion of the ~~Company~~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)(B) of the Code. ~~The fact~~ 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 right to payments~~ 's employment (or ~~benefits may be reduced~~ such other time as is hereinafter described) (including by reason of any payment the ~~limitations contained in this Section 6.2 will~~ existence or amount of which cannot ~~of itself limit or otherwise affect any other rights~~ 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 ~~under this Agreement~~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 Subject to Section 6.4, the~~ 6.3. The payments provided for in ~~subsections~~ section 6.1 hereof (Aother than Section 6.1(C)) and ~~(C) of~~ in Section ~~6.1~~ 6.2 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination; 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)(B) of the Code). At the time that payments are made under this ~~Agreement~~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 ~~Tax Counsel~~outside counsel, ~~the Auditor or other advisors~~ auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). ~~(A) Notwithstanding any provisions~~ 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 ~~contrary, if~~ extent attributable to the ~~Executive is a “specified employee” (within the meaning~~ application of section ~~409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion~~ 4999 of the ~~payments~~ Code to any payment or ~~benefits~~ benefit provided hereunder). For purposes of this Section 6.4, an Executive shall be deemed to ~~be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts~~ have acted in good faith unless an arbitrator finds that ~~would otherwise be payable pursuant to this Agreement during the six-month period immediately following~~ the Executive~~’s separation from service~~ 's action resulting in such legal fees and expenses was frivolous. Such payments shall be made within five (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st5) business ~~day of the seventh month following the date~~ days after delivery of the Executive~~’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive~~ 's written request for ~~the after-tax cost~~ payment accompanied with such evidence of fees and expenses incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by as the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitreasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Systems & Computer Technology Corp)

Severance Payments. 6.1 If The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a Change in Control and during the ~~Term~~term of this Agreement, ~~other than~~ in addition to the payments and benefits described in Section 5 hereof, unless such termination is (Ai) by the Company for Cause, (Bii) by reason of ~~death~~ death, Disability or ~~Disability~~Retirement, or (Ciii) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of ~~this Agreement~~the immediately preceding sentence, if a termination of the ~~Executive~~ Executive's employment occurs prior to a Change in Control, but following a Potential Change in Control 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 ~~incurred a separation from service following~~ followed a Change in Control and to have been (i) 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 (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 occurs) 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 ~~for~~ with Good Reason ~~prior to a Change in Control (whether or not a Change in Control occurs)~~ and the ~~circumstance~~ act (or ~~event~~ failure to act) which constitutes Good Reason occurs following such Potential Change in Control and 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.. (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) times the sum of (i) the higher of the Executive’s 's annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Executive's annual base salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change in Control, and (ii) the ~~average annual bonus earned by~~ higher of (x) (the amount paid to the Executive pursuant to the Company's Annual Executive Incentive Plan, or any successor annual ~~bonus~~ executive incentive compensation plan, as the case may be, in the fiscal year preceding that in which the Date of Termination occurs, or ~~incentive plan maintained by~~ (y) the ~~Company~~ average amount so paid in ~~respect of~~ the three fiscal years ~~ending immediately prior to the fiscal year~~ preceding that in which ~~occurs~~ the ~~Date of Termination or, if higher, immediately prior to the fiscal year~~ Change in ~~which occurs the first event or circumstance constituting Good Reason~~Control occurs. (B) ~~For~~ Notwithstanding any provision of the ~~twenty-four~~ Company's Annual Executive Incentive Plan or successor annual executive incentive compensation plan (24) 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 but 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, such health insurance benefits that there 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~~ no duplication of the ~~same type are received by or made available to the Executive during the twenty-four (24) month period following the Executive’s termination of employment (and any~~ benefits under such ~~benefits received by or made available to the Executive shall be reported to the Company by the Executive~~plans); provided, however, that the Company shall promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any incentive compensation which has been allocated or awarded to the ~~amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Executive for a completed fiscal year preceding the Date of ~~Termination~~Termination under the Annual Executive Incentive Plan, ~~determined~~ or any successor annual executive incentive compensation plan, as the case may be, but has not yet been either (x) ~~as if the Executive made the maximum permissible contributions thereto during such period,~~ paid (pursuant to Section 5.2 hereof or otherwise) or (y) ~~as if~~ 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 any contingent incentive compensation award to the Executive ~~earned~~ for any uncompleted fiscal year under the Annual Executive Incentive Plan, or any successor annual executive incentive compensation ~~during~~ plan, calculated as to each such ~~period~~ award in accordance with Article XI (A) (iii) of the Annual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan. (C) In determining the 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 ~~a rate equal to~~ the Executive’s 's highest annual rate of compensation ~~(as defined in the DC Pension Plan)~~ during the twelve (12) months immediately preceding the Date of Termination ~~or, if higher, during the twelve months immediately prior~~ and shall be deemed to ~~the first occurrence of an event or circumstance constituting Good Reason, and~~ be two (z2) years older than he is; such benefits shall be determined without regard to any amendment to the ~~DC Pension~~ Supplemental Executive Retirement Plan (or any successor 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, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 For a twenty-four (24) ~~months~~ month period after the Date of Termination, the Company shall arrange to provide ~~such post-retirement~~ the Executive with life, disability, accident and health ~~care and/or life~~ insurance benefits 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). Benefits otherwise receivable by the Executive pursuant to this Section 6.1(D) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without cost during the twenty-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’s dependents commencing on~~ Executive shall refund to the ~~later~~ 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. (E) For a period equal to the lesser of (i) the ~~date on which such coverage would have first become available and (ii)~~ period from the date on which benefits described in subsection (B) of this Section 6.1 terminate. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to ~~pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following~~ the date on which the Executive ~~submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination.~~ commences employment with another employer or (Fii) ~~For~~ the twenty-four (24) month period immediately following the Date of ~~Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier~~Termination, the Company shall ~~continue~~ arrange to provide the Executive with ~~all perquisites provided by~~ outplacement counseling; provided, however, that the ~~Company~~ aggregate cost of such counseling shall not exceed five percent (5%) of the Executive's annual base salary in effect immediately prior to the ~~Date of Termination or, if more favorable to the Executive, immediately prior to the first~~ occurrence of an the event or circumstance ~~constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance)~~upon which the Notice of Termination is based. 6.2 (1A) ~~Notwithstanding any other provisions~~ Anything in this ~~Agreement~~Agreement to the contrary notwithstanding, ~~if any of~~ in the ~~payments or benefits received or to~~ event it shall be ~~received by the Executive (including~~ determined that any payment or ~~benefits received in connection with~~ distribution by the Company to or for the benefit of the Executive on account of a Change in ~~Control or the Executive’s termination of employment~~Control, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Code or any ~~other plan~~interest or penalties with respect to such excise tax (such excise tax, ~~program~~together with any such interest and penalties, ~~arrangement or agreement) (all such payments and benefits, being~~ are hereinafter collectively referred to as the ~~“Total Payments”) would be subject (in whole or part~~"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~~Tax imposed upon the Gross-Up Payment, ~~then, after taking into account any reduction in~~ the ~~Total Payments provided by reason of section 280G~~ Executive retains an amount of the ~~Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject~~ Gross-Up Payment equal to the Excise Tax ~~(but in no event to less than zero); provided, however, that~~ imposed upon the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments)Payment. (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Energy East Corp)

Severance Payments. ~~6.1 If~~ The Employer shall pay the ~~Executive incurs a~~ Employee the payments described in this Section 10.1 (the “~~separation from service” (within~~ Severance Payments”) upon the ~~meaning~~ termination of ~~section 409A)~~ the Employee’s employment following a Change in Control and ~~during~~ prior to the ~~Term, other than (A) by~~ end of 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”)Change-in-Control Protective Period, in addition to any payments and benefits to which the ~~Executive~~ Employee is entitled under ~~Section 5~~ Sections 5, 6, 7 and 8.1 hereof, unless such termination is (i) by the Employer for Cause, (ii) by reason of death or Disability, or (iii) by the Employee without Good Reason. For purposes of this Agreement, the ~~Executive~~ Employee’s employment shall be deemed to have ~~incurred a separation from service~~ been terminated by the Employer without Cause following a Change in Control ~~by the Company without Cause~~ or by the ~~Executive~~ Employee with Good ~~Reason~~Reason following a Change in Control, as the case may be, if (iI) the ~~Executive~~Employee’s employment is terminated ~~by the Company~~ without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and such termination was at the request or direction of a Person who has entered into an agreement with the ~~Company~~ Employer the consummation of which would constitute a Change in Control, (iiII) the ~~Executive~~ Employee terminates his employment ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (~~iii~~III) the ~~Executive~~Employee’s employment is terminated by the ~~Company~~ Employer without Cause ~~or by the Executive for Good Reason~~ prior to a Change in Control (but following a Potential Change in Control) and such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control~~ which actually occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Employee shall be presumed to be correct unless the Employer establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~not correct. (A) In lieu of any further salary payments to the ~~Executive~~ Employee for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ~~Executive~~Employee, the ~~Company~~ Employer shall pay to the ~~Executive~~ Employee a lump sum severance payment, in cash, equal to ~~two times the sum of~~ (i) the ~~Executive~~Employee’s ~~base salary as~~ Base Salary in effect immediately prior to the ~~Date of Termination or, if higher, in effect immediately prior to the first~~ occurrence of an the event or circumstance ~~constituting Good Reason~~upon which the Notice of Termination is based divided by twelve (12) and multiplied by the number of full months remaining in the Term, and (ii) the average annual ~~bonus~~ bonus, including but not limited to the Annual Bonus described in Exhibit A, earned by the ~~Executive pursuant to any~~ Employee under the Employers’ annual ~~bonus or~~ incentive plan ~~maintained by~~ in the ~~Company in respect of the three~~ Employer’s fiscal years ~~ending~~ immediately ~~prior to~~ preceding the fiscal year in which ~~occurs~~ the Date of Termination oroccurs multiplied by the number of fiscal years that a bonus, ~~if higher~~including but not limited to the Annual Bonus described in Exhibit A, ~~immediately~~ has not been paid to the Employee provided, however, that in the event that the Date of Termination occurs prior to the ~~fiscal year~~ date on which Employee is first entitled to receive a bonus under the Employers’ annual incentive plan, the average annual bonus shall be deemed to be $490,000. In addition, Employee will be entitled to receive any unpaid Cash Bonus described in ~~which occurs the first event~~ Section 5 and any unpaid compensation and/or compensation attributable to RSU Award(s) that has not been issued and or/or ~~circumstance constituting Good Reason.~~LTIP RS Awards as provided in Exhibit A. (B) For the ~~twenty-four (24) month~~ a period ~~immediately following~~ beginning on the Date of ~~Termination~~Termination and ending on December 31, 2010, the ~~Company~~ Employer shall arrange to provide the ~~Executive and his dependents~~ Employee with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the ~~Executive and his dependents~~ Employee is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior any amendment to such ~~date~~ benefits made subsequent to a Change in Control, which amendment adversely affects in any manner the Employee’s entitlement to or ~~occurrence~~the amount of such benefits); ~~provided~~PROVIDED, ~~however~~HOWEVER, that, unless the ~~Executive~~ Employee consents to a different method, such health insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the ~~Executive~~ Employee pursuant to this Section ~~6.1(B~~10.1(B) shall be reduced to the extent comparable benefits ~~of the same type~~ are actually received by or made available to the ~~Executive~~ Employee without cost during the ~~twenty-four (24) month~~ benefit period following the ~~Executive~~Employee’s termination of employment (and any such benefits actually received by or made available to the ~~Executive~~ Employee shall be reported to the ~~Company~~ Employer by the ~~Executive~~Employee)~~; provided~~. Notwithstanding the foregoing, ~~however, that the Company~~ any benefits or payments provided under this Section 10.1(B) shall ~~promptly reimburse the Executive for the excess, if any, of the after tax cost of such benefits~~ be subject 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) In addition to the benefits to which the Executive is entitled under the DC Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the sum of following: (i) the amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement or benefits provided under ~~Sections 6.1 (B), (D~~this Section 10.1(B) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 during any taxable year of the ~~year following~~ Employee may not affect the ~~year in which~~ expenses eligible for reimbursement or the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by to the ~~Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided~~ Employee in any other taxable year~~, nor shall~~ ; (ii) the ~~Executive~~reimbursement of an eligible expense must be made on or before the last day of the Employee’s taxable year following the taxable year in which the expense was incurred; and (iii ) the right to reimbursement or ~~in-kind~~ such benefits may not be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Employment Agreement (Schulman a Inc)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, if (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive’s employment is terminated 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ 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 (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs no later than six (6) months following the Executive’s termination of employment) 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 for Good Reason prior to a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs no later than six (6) months following the Executive’s termination 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs). For purposes of Section 5 and 6 of this Agreement,~~ occurs no ~~payment that would otherwise be made and no benefit that would otherwise be provided upon a~~ later than six (6) months following the Executive’s termination of ~~employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~employment). (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~~ one times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the ~~average~~ Executive’s target annual bonus ~~earned by the Executive pursuant to~~ under any 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 or, if higher, ~~immediately prior to~~ the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the ~~twenty-four (24)~~ 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 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 ~~after~~ after-tax cost to the Executive than the ~~after~~ after-tax cost to the Executive immediately prior to such date or occurrence~~; provided, however, that, unless the Executive consents to a different method, 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)~~ 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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) ~~In addition~~ Notwithstanding any provision of any annual incentive plan to the ~~benefits to which the Executive is entitled under the DC Pension Plan~~contrary, the Company shall pay to the Executive ~~a lump sum~~ an amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the ~~amount that would have been contributed thereto by~~ Executive for a completed fiscal year preceding the ~~Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Date of Termination under any such plan and which, as of the Date of Termination, ~~determined (x) as if~~ is contingent only upon the continued employment of the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder~~subsequent date, and (ii) ~~the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the~~ a pro rata portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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~~ of the Amount the Executive would have earned with respect to the ~~Executive, as~~ year 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination ~~or until~~ occurs, calculated by multiplying the award that the Executive ~~becomes eligible~~ would have earned for ~~substantially similar benefits from a new employer~~such year, ~~whichever occurs earlier~~based upon the actual level of achievement of the performance goals established with respect to such award, ~~the Company shall continue to provide the Executive with all perquisites provided~~ by the ~~Company immediately prior to~~ fraction obtained by dividing the number of full months and any fractional portion of a month during such year through the Date of Termination ~~or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason~~ by twelve (~~including, without limitation, automobile, financial planning, annual physical and executive whole life insurance~~12). ~~6.2~~ (1A) Notwithstanding any other provisions in of this Agreement, if in the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive (including any payment or ~~benefits~~ benefit received in connection with a Change in Control or the termination of the Executive’s ~~termination of~~ employment, whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or agreement) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as 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, ~~program,~~ arrangement or agreement, the ~~Company will reduce~~ 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 ~~in no event to less than zero); provided, however, that the Total Payments will~~ only ~~be reduced~~ if (iA) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, ~~state, municipal~~ state and local income taxes on such reduced Total Payments and after taking into account the phase ~~out, if any,~~ out of itemized deductions and personal exemptions attributable to such reduced Total Payments), ) is greater than or equal to (iiB) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, ~~state, municipal~~ 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, if any,~~ out of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise ~~Tax and the amount of such 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 ~~will~~ shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ 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”)~~Executive, does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments ~~will~~ shall be taken into account which, in the opinion of Tax Counsel, constitutes 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; , and (iii) 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 Auditor~~ in accordance with the principles of sections 280G(d)(3) and (4) of the Code. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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~~ 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. 6.3 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 ~~any provisions of this Agreement~~ the above, to the ~~contrary, if~~ extent the Executive is terminated (i) following a ~~“specified employee”~~ 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 ~~and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion~~ of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”Code) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) ~~Executive’s death (~~prior to a Change in Control in a manner described in Section 6.1, to the ~~applicable date~~extent required to avoid accelerated or additional tax under section 409A of the Code, amounts payable to the ~~“Permissible Payment Date”).~~ 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 ~~also reimburse~~ pay to the Executive ~~for the after-tax cost~~ all legal fees and expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any ~~Delayed Benefits (~~issue hereunder relating to the ~~“Additional Delayed Payments”). (B) With respect~~ termination 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 ~~amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses~~ payment or benefit provided hereunder. Such payments shall be ~~reimbursed by~~ made within five (5) business days after delivery of the Executive’s written requests for payment accompanied with such evidence of fees and expenses incurred as the Company ~~within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but~~ reasonably may require; provided that in no event will payment be made for requests that are submitted later than December 31 15th of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitexpense is incurred. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Covisint Corp)

Severance Payments. 6.1 If (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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~~ or (ii) the Executive voluntarily terminates his employment for any reason during the one-month period commencing on the first anniversary of the Change in Control, then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“"Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s '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 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 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~~Person described in clause (i), or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to ~~two~~ three times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason; provided, that if the Executive has not participated in an annual bonus or incentive plan maintained by the Company for the entirety of such three-year period, the amount referred to in this clause (ii) shall be calculated using such lesser number of bonuses as have been actually earned by the Executive in respect of such lesser period. (B) For the ~~twenty~~thirty-~~four~~ six (2436) 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 and perquisites (including, but not limited to, executive life insurance, club memberships, financial planning and tax preparation, annual physical examination and charitable contributions), in each case, 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~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~~thirty-~~four~~ six (2436) month period following the Executive’s '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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) Notwithstanding any provision of the Baker Hughes Incorporated 1995 Employee Annual Incentive Com▇▇▇▇▇t▇▇▇ ▇▇an (the "Annual Incentive Plan"), the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any 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 under the Annual Incentive Plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent incentive compensation awards to the Executive for all then uncompleted periods under the Annual Incentive 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 he achievement, at the expected value target level, of the individual and corporate performance goals established with respect to such award, y the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period; provided, however, that if such termination of employment occurs during the same year in which the Change in Control occurs, the pro-rata bonus payment referred to in clause (ii) above shall be offset by any payments received under the Annual Incentive Plan in connection with such Change in Control. (D) In addition to the retirement benefits to which the Executive is entitled under the ~~DC Pension~~ Company's Thrift Plan (the "Thrift Plan") and the Company's Supplemental Retirement Plan ( the "SRP"), the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ present value of ~~(i)~~ the ~~amount that~~ employer-provided contributions, deferrals and allocations the Executive would have ~~been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ received had he continued to participate, after the Date of Termination, ~~determined~~ in the Thrift Plan and the SRP for three (x3) ~~as if the Executive made the maximum permissible contributions thereto during such period~~additional years, assuming for this purpose that (yi) ~~as if~~ the Executive earned compensation for purposes of the Thrift Plan and SRP during such three-year period ~~at a rate equal~~ the amount used to calculate the Executive~~’s compensation~~ 's severance payment under subparagraph (~~as defined in the DC Pension Plan~~A) ~~during the twelve (12) months immediately preceding the Date~~ of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunderthis Section 6.1, and (ii) the ~~excess~~percentages of contributions, ~~if any, of (x) the Executive’s account balance~~ deferrals and allocations made under the ~~DC Pension~~ Thrift Plan as and the SRP by or on behalf of the Executive during such three-year period are the same percentages of contributions, deferrals and allocations in effect on the date of the Change in Control or the Date of ~~Termination over (y)~~ Termination, whichever is more favorable to the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan.Executive, (DE) If the Executive would have become entitled to benefits under the Company’s '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 's employment terminated at any time during the period of ~~twenty~~thirty-~~four~~ six (2436) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive and the Executive’s '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. (EF) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s 's position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination~~ three years or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) ~~Notwithstanding any other provisions in this Agreement~~Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “"Total Payments”") ~~would~~ will be subject ~~(in whole or part),~~ to the Excise Tax, ~~then~~the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments provided by reason of section 280G of the Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and ~~after subtracting the net amount of~~ any federal, ~~state, municipal~~ state and local income and employment taxes ~~on such reduced Total Payments~~ and ~~after taking into account~~ Excise Tax upon the ~~phase out~~Gross-Up Payment, ~~if any, of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or~~ shall be equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a “payment”~~ "parachute payments" (within the meaning of section ~~280G(b~~28OG(b)(2) of the ~~Code will be taken into account; (ii~~Code) ~~no portion of the Total Payments will be taken into account which~~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, the Company’s 's independent auditor (the “"Auditor”"), ~~does~~ such payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment”~~ payments, including by reason of section 28OG(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the meaning of section ~~280G(b)(2~~28OG(b)(1) of the Code ~~(including by reason of section 280G(b)(4)(A) of the Code) and, in calculating~~ shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ such excess parachute payments (in whole or in part) represent reasonable compensation for services actually ~~rendered,~~ 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~~28OG(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 tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made 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 if there is no 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 which could be obtained from deduction of such state and local taxes. (C) ~~All determinations required by this Section 6.2 (or requested by either~~ In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Executive or shall repay to the ~~Company~~ Company, within five (5) business days following the time that the amount of such reduction in ~~connection with this Section 6.2) will be at~~ the ~~expense~~ Excise Tax is finally determined, the portion of the ~~Company~~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 and employment taxes imposed on the Gross-Up Payment being repaid by the Executive, to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. ~~The fact~~ In the event that the ~~Executive’s right~~ Excise Tax is determined to ~~payments or benefits may be reduced~~ exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the ~~limitations contained in this Section 6.2 will~~ existence or amount of which cannot ~~of itself limit or otherwise affect any other rights~~ 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 additions payable by the Executive ~~under this Agreement~~with respect to such excess) 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. 6.3 ~~Subject to Section 6.4, the~~ The payments provided in subsections (A), (C) and (CD) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination; 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 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 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)(B) of the Code), but only to the extent such amount has not been paid by the Executive pursuant to Section 6.2(C) above. 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). ~~(A) Notwithstanding any provisions of this Agreement~~ 6.4 The Company also shall pay to the ~~contrary, if the~~ Executive ~~is a “specified employee” (within the meaning of section 409A~~ all legal fees and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive's employment, ~~such reimbursement~~ 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. Such payments shall be made on within five (5) business days after delivery of the ~~Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by~~ Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payreasonably may require,

Appears in 1 contract

Sources: Severance Agreement (Baker Hughes Inc)

Severance Payments. ~~6.1~~ 4.1 If ~~the Executive incurs~~ a “separation from service” (within the meaning of section 409A) 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 Qualifying Termination shall ~~pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”)~~occur, in addition to any payments and benefits to which the Executive is entitled under Section 5 3 hereof~~. For purposes~~ , the Company shall pay the Executive the payments described in this Section 4.1 (the “Severance Payments”); provided, however, that, in the case of ~~this Agreement~~clauses (A), (B), (C), (D) and (F) below, the Executive shall have executed and not revoked a release of claims in the form set forth in Exhibit A hereto. The Executive shall also be ~~deemed~~ entitled to ~~have incurred a separation from service following a Change in Control by~~ the ~~Company without Cause or by the Executive with Good Reason,~~ Severance Payments (and any payments and benefits under Section 3) if ~~(i)~~ the Executive’s employment is terminated by the Company ~~without~~ other than (x) for Cause ~~prior to~~ or (y) by reason of death or Disability within the six (6) month period immediately preceding a Change in Control ~~(whether or not a Change in Control occurs)~~ and the Executive reasonably demonstrates that 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 for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control that actually occurs during the term of the Agreement (~~whether or not~~ a “Pre-Change in Control ~~occurs~~Termination”)~~. For purposes~~ ; provided, however, that, in the case of clauses (A), (B), (C), (D) and (F) below, Executive shall have executed and not revoked a release of claims in the form set forth in Exhibit A hereto; and provided further, however, that any such payments shall be offset by the amount of severance previously paid to the Executive under any employment agreement between the Executive and the Company and, to the extent permitted by Section ~~5 and 6~~ 409A of ~~this Agreement~~the Code, ~~no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination~~ any other severance policy, plan or program of ~~employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~the Company. (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 times~~ one hundred (100%) of the Executive’s annual base salary then in effect (or immediately prior to any reduction resulting in a termination for Good Reason, if applicable) (the “Change in Control Salary”). (B) Notwithstanding any provision of any annual incentive plan to the contrary, the Company shall pay to the Executive an amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the ~~Executive’s base salary~~ Executive for a completed fiscal year preceding the Date of Termination under any such plan and which, as ~~in effect immediately prior~~ of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination ~~or, if higher,~~ of Executive’s target bonus for the year in which the Date of Termination occurs (or the target in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason), ~~and (ii) the average annual~~ calculated by multiplying such target bonus ~~earned~~ by the ~~Executive pursuant to~~ fraction obtained by dividing the number of full months and any ~~annual bonus or incentive plan maintained by the Company in respect~~ fractional portion of ~~the three fiscal years ending immediately prior to the fiscal~~ a month during such year ~~in which occurs~~ through the Date of Termination ~~or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason~~by twelve (12). (BC) For the ~~twenty-four (24)~~ twelve month period immediately following the Date of Termination, the Company shall arrange to provide the Executive ~~and his~~ (which includes the Executive’s eligible dependents for purposes of this subsection (C)) with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ was receiving immediately prior to the Date of Termination ~~or, if more favorable to the Executive, those provided to the Executive and his dependents~~ (or immediately prior to ~~the first occurrence of an event or circumstance constituting~~ any reduction resulting in a termination for Good Reason, ~~at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence~~if applicable); provided, however, ~~that,~~ that (i) the Executive’s and her qualified dependents’ COBRA eligibility period shall include the period during which the Company is providing benefits under this subsection (C); (ii) unless the Executive consents to a different ~~method~~method (or elects COBRA coverage at applicable COBRA rates), such health insurance benefits shall be provided through a third-party insurer; and (iii) the Executive shall be responsible for the payment of premiums for such benefits in the same amount as active employees of the Company. Benefits otherwise receivable by the Executive pursuant to this ~~Section 6.1(B~~subsection (C) shall be reduced to the extent comparable benefits (including continued coverage for any preexisting medical condition of any person covered by the ~~same type~~ benefits provided to the Executive and her eligible dependents immediately prior to the Date of Termination) are actually received by or made available to the Executive by a subsequent employer during the twenty-four ~~(24)~~ month period following the Executive’s ~~termination~~ Date of ~~employment~~ Termination (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive)~~; provided~~. Notwithstanding the foregoing, ~~however~~in the event of a Pre-Change in Control Termination, ~~that~~ on the sixtieth (60th) day following the Change in Control the Company shall ~~promptly~~ pay or reimburse the Executive for ~~the excess, if any, of the after tax cost of such~~ any amounts or benefits it would have been responsible to pay or provide to the Executive ~~over such cost immediately~~ under this Section 4.1(C) during the period prior to the ~~Date of Termination or~~Change in Control, ~~if more favorable to~~ had the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plan, the Company shall pay the Executive a lump sum amount, Change in ~~cash, equal to the sum of (i) the amount that would have been contributed thereto by the Company~~ Control occurred on ~~the Executive’s behalf during the twenty-four (24) months immediately following~~ the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) If the Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance ~~plans,~~ plans (as in effect immediately prior to the Date of Termination ~~or, if more favorable to the Executive, as in effect~~ (or immediately prior to ~~the first occurrence of an event or circumstance constituting~~ any reduction resulting in a termination for Good Reason, if applicable)) had the Executive’s employment terminated at any time during the period of ~~twenty-~~twenty four ~~(24)~~ months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive ~~and~~ (subject to any employee contributions required under the ~~Executive’s dependents~~ terms of such plans in the same amounts as active employees of the Company) commencing on the later of (i) the date ~~on which~~ that such coverage would have first become available ~~and~~ or (ii) the date ~~on which~~ that benefits described in subsection (BC) of this Section ~~6.1~~ 4.1 terminate. (E) The Company shall ~~provide~~ pay the ~~Executive with third-party outplacement services suitable to~~ Executive, at a daily salary rate calculated from the Executive’s ~~position for~~ annual base salary in effect immediately prior to the ~~period following the Executive’s~~ Date of Termination ~~and ending on December 31 of the second calendar year following such Date of Termination or~~(or immediately prior to any reduction resulting in a termination for Good Reason, if ~~earlier~~applicable), ~~until~~ a lump sum amount equal to all earned but unused paid time off days through the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) ~~For~~ The Company shall pay, no later than the last day of the calendar year in which they are incurred, the reasonable fees and expenses of a full service nationally recognized executive outplacement firm until the earlier of the date the Executive secures new employment or the date which is twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately months following the Executive’s ~~separation from service (the “Delayed Payments”) and benefits~~ Date of Termination; provided that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the ~~reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the~~ aggregate amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitsuch payments exceed $5,000. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Agreement (Insignia Systems Inc/Mn)

Severance Payments. 6.1 If (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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~~ or (ii) the Executive voluntarily terminates his employment for any reason during the one-month period commencing on the first anniversary of the Change in Control, then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“" Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s '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 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 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~~Person described in clause (i), or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to ~~two~~ three times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason.in (B) For the ~~twenty~~thirty-~~four~~ six (2436) 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 and perquisites (including, but not limited to, executive life insurance, club memberships, financial planning and tax preparation, annual physical examination and charitable contributions), in each case, 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~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~~thirty-~~four~~ six (2436) month period following the Executive’s '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 ~~promptly~~ reimburse the (C) Notwithstanding any provision of the Bake▇ ▇▇▇h▇▇ Incorporated 1995 Employee Annual Incentive Compensation Plan (the "Annual Incentive Plan"), the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the ~~excess~~Date of Termination under the Annual Incentive Plan and which, ~~if any,~~ as of the ~~after tax cost~~ Date of ~~such benefits to~~ Termination, is contingent only upon the continued employment of the Executive ~~over such cost immediately prior~~ to a subsequent date, and (ii) a pro rata portion to the Date of Termination ~~or, if more favorable~~ of the aggregate value of all contingent incentive compensation awards to the ~~Executive~~Executive for all then uncompleted periods under the Annual Incentive 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, at the expected value target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period; provided, however, that if such termination of employment occurs during the some year in which the Change in Control occurs, the ~~first occurrence of an event or circumstance constituting Good Reason~~pro-rata bonus payment referred to in clause (ii) above shall be offset by any payments received under the Annual Incentive Plan in connection with such Change in Control. (CD) In addition to the retirement benefits to which the Executive is entitled under the ~~DC Pension~~ Company's Thrift Plan (the "Thrift Plan") and the Company's Supplemental Retirement Plan ( the "SRP"), the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ present value of ~~(i)~~ the ~~amount that~~ employer-provided contributions, deferrals and allocations the Executive would have ~~been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ received had he continued to participate, after the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Pension Thrift 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan.and (DE) If the Executive would have become entitled to benefits under the Company’s '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 's employment terminated at any time during the period of ~~twenty~~thirty-~~four~~ six (2436) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive and the Executive’s '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. (EF) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s 's position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination~~ three years or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) ~~Notwithstanding any other provisions in this Agreement~~Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up 8 Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax ~~and the amount of such Excise Tax: (i) no portion of~~ on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon 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 will be taken into account; (ii) no portion of the Total Payments will be taken into account whichGross-Up Payment, 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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 equal to the Total Payments. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Baker Hughes Inc)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, if the ~~Executive incurs a “separation from service” (within~~ Executive’s employment is terminated during the ~~meaning of section 409A)~~ two year period immediately 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if within the 90 day period prior to a Change in Control (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 occurs)~~ 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 for Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.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 two times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the ~~average~~ greater of (1) the target annual bonus of the Executive 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 (2) the annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in with respect of to the ~~three~~ fiscal ~~years~~ year ending immediately prior to the 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 constituting Good Reason~~Termination. (B) For the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents ~~life~~health, ~~disability, accident~~ vision care and ~~health~~ dental 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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 by a subsequent employer during the twenty-four (24) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) Notwithstanding any other provisions in of this Agreement, if in the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive (including any payment or ~~benefits~~ benefit received in connection with a Change in Control or the termination of the Executive’s ~~termination of~~ employment, whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or agreement) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as the “Total Payments”) would not be ~~subject~~ deductible (in whole or part), to by the ~~Excise Tax~~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, ~~program,~~ arrangement or agreement), the ~~Company will reduce the Total~~ cash Severance Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will shall first be reduced (if necessary, to zero), ~~with amounts that are payable last reduced first; (ii) payments~~ and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other ~~non-cash benefits not otherwise described in clauses~~ Severance Payments shall thereafter be reduced (iiif necessary, to zero); provided, however, that the Executive may elect to have the noncash Severance Payments reduced (or eliminated) ~~or (iv) will be next reduced pro-rata. Any reductions made pursuant~~ prior to ~~each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata~~ any reduction of the cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensationSeverance Payments. (B) For purposes of ~~determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax:~~ 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 ~~will~~ shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ 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 payment” within the meaning of section 280G(b)(2) of the ~~Code (~~Code, including by reason of section 280G(b)(4)(A) of the Code, (iii) ~~and, in calculating~~ the ~~Excise Tax, no portion of such~~ Severance Payments shall be reduced only to the extent necessary so that the Total Payments ~~will be taken into account which,~~ (other than those referred to in ~~the opinion of Tax Counsel, constitutes~~ clauses (i) or (ii)) in their entirety constitute reasonable compensation for services actually ~~rendered,~~ rendered within the meaning of section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions by reason of section 280G of the Code, in ~~excess~~ the opinion of ~~the Base Amount allocable to such reasonable compensation;~~ Tax Counsel, and (~~iii~~iv) the value of any noncash ~~benefits~~ benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. (C) ~~All determinations required by this Section 6.2 (~~If it is established pursuant to a final determination of a court or ~~requested by either~~ an Internal Revenue Service proceeding that, notwithstanding the ~~Executive or the Company in connection with this Section 6.2) will be at the expense~~ good faith of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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~~ portion of such Total Payments being subject to the ~~existence or amount~~ Excise Tax, then, if such repayment would result in (i) no portion of ~~liability for~~ the remaining Total Payments being subject to the Excise Tax ~~with respect~~ and (ii) 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 sum of (i) the excess of the Total ~~Payments~~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; 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 Subject to Section ~~6.4~~14 hereof, the payments provided in ~~subsections~~ subsection (A~~) and (C~~) of Section 6.1 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination. 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). ~~(A) Notwithstanding any provisions of this Agreement~~ 6.4 The Company also shall pay to the ~~contrary, if the~~ Executive ~~is a “specified employee” (within the meaning of section 409A~~ all legal fees and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive’s employment, ~~such reimbursement~~ 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. Such payments shall be made ~~on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount~~ within five (5) business days after delivery of ~~reimbursements or in-kind benefits to be provided in any other taxable year, nor shall~~ the Executive’s ~~right to reimbursement or in-kind benefits be subject to liquidation or exchange~~ written requests for ~~another benefit~~payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Agreement (US BioEnergy CORP)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, if (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“"Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s 's employment is terminated by the Company without Cause after the occurrence of a Potential Change in Control and prior to a Change in Control (whether or not a Change in Control ever occurs) 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 for Good Reason after the occurrence of a Potential Change in Control and 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, or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason after the occurrence of a Potential Change in Control and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to ~~two~~ three times the sum of (i) the Executive’s 's 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 circumstance constituting Good ~~Reason,~~ Reason and (ii) the ~~average~~ target annual ~~bonus earned by~~ incentive compensation for the Executive ~~pursuant to any 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~~ Change in Control occurred, or, if higher, ~~immediately prior to~~ the actual incentive compensation the Executive earned for the fiscal year preceding the year in which ~~occurs~~ the ~~first event or circumstance constituting Good Reason~~Executive's employment is terminated. (B) ~~For the twenty-four (24) month period immediately following the Date~~ Notwithstanding any provision 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~~ any annual or long–term incentive plan 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plancontrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) ~~the amount that would have~~ any unpaid incentive compensation which has been ~~contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if~~ allocated or awarded to the Executive ~~made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such~~ for a completed fiscal year or other measuring period ~~at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately~~ preceding the Date of Termination under any such plan and which has not yet been paid or deferred pursuant to a deferral plan maintained by the Company, and (ii) and, notwithstanding any provision of the Company's annual incentive plan to the contrary, a cash lump sum amount equal to a pro rata portion to the Date of Termination of the aggregate value of the annual incentive compensation award to the Executive for the then uncompleted fiscal year under such plan, assuming achievement of performance goals at the target level, or, if higher, ~~during~~ assuming continued achievement of such performance goals at the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Pension Plan made subsequent to a Change in Control and on or prior to level achieved through the Date of Termination, which amendment adversely affects in any manner the computation of benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (EC) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s 's position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar~~ one year ~~following such Date of Termination~~ or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) ~~Notwithstanding any other provisions in this Agreement~~Whether or not the Executive becomes entitled to the Severance Payments, if any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, excluding the Gross–Up Payment, being hereinafter ~~referred to as the “~~called "Total Payments”") ~~would~~ will be subject (in whole or part), ) to the Excise Tax, then, subject to the provisions of subsection (B) of this Section 6.2, the Company shall pay to the Executive an additional amount (the "Gross–Up Payment") such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments ~~provided by reason~~ and any federal, state and local income and employment taxes and Excise Tax upon the Gross–Up Payment, shall be equal to the Total Payments. For purposes of ~~section 280G~~ determining the amount of the ~~Code in such other plan, program, arrangement or agreement~~Gross–Up Payment, the ~~Company will reduce~~ 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 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 if there is no 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 tax which could be obtained from deduction of such state and local taxes. (B) In the event that, after giving effect to any redeterminations described in subsection (D) of this Section 6.2, the Total Payments do not exceed by more than ten percent (10%) the largest amount that would result in no portion of the Total Payments being subject to the Excise Tax, then subsection (A) of this Section 6.2 shall not apply and Severance Payments shall first be reduced (if necessary, to zero) in the manner elected by the Executive to the extent necessary so that no portion of the Total Payments is will be subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments)Tax. (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (BC) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a “payment”~~ "parachute payments" within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which~~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, the Company’s 's independent auditor (the “"Auditor”"), ~~does~~ such other payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ 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. (CD) ~~All determinations required by this Section 6.2~~ In the event that (~~or requested by either~~ i) amounts are paid to the Executive ~~or the Company in connection with~~ pursuant to subsection (A) of this Section 6.2, (ii) ~~will~~ the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (iii) after giving effect to such redetermination, the Total Payments are to be reduced pursuant to subsection (B) of this Section 6.2, the Executive shall repay to the Company, within ten (10) 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 and employment taxes imposed on the Gross-Up Payment being repaid by the 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 the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes) plus interest on the amount of such repayment at 120% of the rate provided in section 1274(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 ~~expense~~ time of the ~~Company. The fact that~~ termination of the Executive~~’s right to payments or benefits may be reduced~~ 's employment (including by reason of ~~the limitations contained in this Section 6.2 will not of itself limit or otherwise affect~~ any other rights of the Executive under this Agreement. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning payment the existence or amount of ~~liability for~~ which cannot be determined at the time of the Gross–Up Payment) and (y) after giving effect to such redetermination, the Total 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 ~~Total Payments~~Company had not previously made a Gross–Up Payment (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion) within ten (10) business days following the time that the amount of such excess is finally determined. 6.3 ~~Subject to Section 6.4, the~~ The payments provided in subsections (A), (C) and (CD) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the ~~fifth (5th) business~~ tenth day following the Date of Termination; 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 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 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 tenth (10th) business day after demand by the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(B) of the Code). 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall bear the entire cost of any opinions, advice or similar expenses associated with Sections 6.2 or 6.3 hereof. 6.4 The Company also ~~reimburse~~ shall pay to the Executive ~~for the after-tax cost~~ all legal fees and expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive's employment, ~~such reimbursement~~ 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. Such payments shall be made on within ten (10) business days after delivery of the ~~Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by~~ Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitreasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Yum Brands Inc)

Severance Payments. ~~6.1 If~~ 10.1 The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 10.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a ~~Change in~~ Change- in-Control and ~~during~~ prior to the ~~Term~~end of the Change-in-Control Protective Period, ~~other than~~ in addition to the payments and benefits described in Sections 6 and 7 hereof, unless such termination is (Ai) by ~~the Company~~ Energy East for Cause, (Bii) by reason of ~~death~~ death, Disability or ~~Disability~~Retirement, or (Ciii) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of ~~this Agreement~~the immediately preceding sentence, if a termination of the ~~Executive~~ Executive's employment occurs prior to a Change-in-Control, but following a Potential Change-in-Control in which a Person has entered into an agreement with Energy East the consummation of which will constitute a Change-in-Control, such termination shall be deemed to have ~~incurred~~ followed a ~~separation from service following a Change in~~ Change-in-Control and to have been (i) by Energy East without Cause, if the ~~Company~~ Executive's employment is terminated without Cause at the direction of such Person, or (ii) 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 (whether or not a Change in Control occurs) 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 ~~for~~ with Good Reason ~~prior to a Change in Control (whether or not a Change in Control occurs)~~ and the ~~circumstance~~ act (or ~~event~~ failure to act) which constitutes Good Reason occurs following such Potential Change-in-Control and 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of ~~Termination~~ Termination, in lieu of any lump sum payment with respect to aggregate Base Salary otherwise payable pursuant to Section 8 hereof, 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~~ three (3) times the sum of of: (i) the higher of the Executive~~’s base salary as~~ 's annual Base Salary in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Executive's annual Base Salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change-in-Control, ~~and~~ and (ii) the ~~average annual bonus earned by~~ incentive compensation award the Executive ~~pursuant to~~ would have received under the Annual Executive Incentive Plan, or any successor annual ~~bonus or~~ executive incentive ~~plan maintained by~~ compensation plan, for the ~~Company in respect of the three fiscal years ending immediately prior to the fiscal~~ year in which ~~occurs~~ the Date of Termination oroccurs, ~~if higher~~calculated in accordance with Article XI (A) (iii) of the Annual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan, ~~immediately prior~~ without, however, giving effect to ~~the fiscal year~~ any pro-rata adjustments contained in ~~which occurs the first event or circumstance constituting Good Reason~~said provisions. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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 Notwithstanding any provision of the ~~same type are received by~~ Company's Annual Executive Incentive Plan, or ~~made available to the Executive during the twenty-four (24) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plansuccessor annual executive incentive compensation plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any incentive compensation which has been allocated or awarded to the ~~amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Executive for a completed fiscal year preceding the Date of ~~Termination~~Termination under the Annual Executive Incentive Plan, ~~determined~~ or any successor annual executive incentive compensation plan, but has not yet been either (x) ~~as if the Executive made the maximum permissible contributions thereto during such period,~~ paid (pursuant to Section 6.2 hereof or otherwise) or (y) ~~as if~~ 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 any contingent incentive compensation award to the Executive ~~earned~~ for any uncompleted fiscal year under the Annual Executive Incentive Plan or any successor annual executive incentive compensation ~~during~~ plan, calculated as to each such ~~period at a rate equal~~ award in accordance with Article XI (A) (iii) of the Annual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan. (C) The Company shall pay to the Executive the retirement benefits to which the Executive is entitled under the Company's Supplemental Executive Retirement Plan (or any successor plan), and in determining such benefits, the Executive shall be given an additional two (2) years of service credit at the Executive’s 's highest annual rate of compensation ~~(as defined in the DC Pension Plan)~~ during the twelve (12) months immediately preceding the Date of Termination ~~or, if higher, during the twelve months immediately prior~~ and shall be deemed to ~~the first occurrence of an event or circumstance constituting Good Reason~~be five (5) years older than he is and a "Key Person" as defined in, and for all purposes under, the Company's Supplemental Executive Retirement Plan (zor any successor plan); provided that if the Executive does not have at least ten (10) years of service credit and age eligibility under the Company's Supplemental Executive Retirement Plan (or any successor plan) after such additional service and age credit, the Executive shall be deemed to have at least ten (10) years of service credit and age eligibility under the Company's Supplemental Executive Retirement Plan (or any successor plan); such benefits shall be determined without regard to any amendment to the ~~DC Pension~~ Company's Supplemental Executive Retirement Plan (or any successor plan) made subsequent to a ~~Change in~~ 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. Notwithstanding any provision in the Company's Supplemental Executive Retirement Plan (or any successor plan) that may be to the contrary, the benefits otherwise payable to the Executive pursuant to this Section 10.1(C) shall be paid to the Executive in a lump sum payment that is equal in amount to the present value (calculated under generally accepted actuarial methods that are consistent with the actuarial methods used in producing the tables of Appendix A of the Company's Retirement Benefit Plan (or any successor plan)) of such benefits and such payment shall be in lieu of any payments to which the Executive otherwise would have been entitled under the Company's Supplemental Executive Retirement Plan (or any successor plan) and shall satisfy any obligations that the Company would otherwise have to the Executive under the Company's Supplemental Executive Retirement Plan (or any successor plan). Such lump sum payment shall be paid to the Executive no later than the due date of the first payment otherwise due to the Executive under the Company's Supplemental Executive Retirement Plan (or any successor plan). Notwithstanding the immediately preceding paragraph of this Section 10.1(C), the Executive may elect to have the benefits otherwise payable to the Executive pursuant to this Section 10.1(C) be paid to the Executive in the manner provided for under the Company's Supplemental Executive Retirement Plan (or any successor plan) and such method of payment shall be in lieu of a lump sum payment. The Executive shall make such election by sending a letter to the Company in which he states that he has decided to make such election. The election shall not be effective unless the letter is received by the Company (i) at least 60 days prior to the day (the "Change-in-Control Day") that the Change-in-Control, or Potential Change-in-Control, that gives rise to the applicability of Section 10.1(C) occurs and (ii) prior to the ~~excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as~~ first day of the ~~Date of Termination over (y)~~ calendar year in which the ~~portion~~ Change-in-Control Day occurs. The Executive shall have the right to revoke any such election by sending a letter to the Company in which he states that he has decided to revoke such election. The revocation of such ~~account balance that~~ election shall not be effective unless the letter is ~~nonforfeitable under~~ received by the ~~terms~~ Company (i) at least 60 days prior to the Change-in-Control Day and (ii) prior to the first day of the ~~DC Pension Plan~~calendar year in which the Change-in-Control Day occurs. ~~The payments provided~~ If the Executive revokes an election, he can make a new election (in the manner, and subject to the timing requirements, set forth in this ~~Section 6.1(C) are~~ paragraph), and he can revoke any such new election (in ~~addition~~ the manner, and subject to ~~any payment~~ the ~~Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan~~timing requirements, set forth in this paragraph). (D) ~~If the Executive would have become entitled to benefits under the Company’s post~~For a thirty-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 six (36) month period ~~of twenty-four (24) months~~ after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue arrange to provide the Executive with ~~all perquisites provided by~~ life, disability, accident and health insurance benefits substantially similar to those which the ~~Company~~ Executive is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or,~~ (without giving effect to any reduction in such benefits subsequent to a Change-in-Control if ~~more favorable~~ the Executive terminated his employment for Good Reason or was terminated without Cause). Benefits otherwise receivable by the Executive pursuant to this Section 10.1(D) shall be reduced to the ~~Executive, immediately prior~~ extent comparable benefits are actually received by or made available to the ~~first occurrence~~ Executive without cost during the thirty-six (36) month period following the Executive's termination of ~~an event or circumstance constituting Good Reason~~ employment (~~including, without limitation, automobile, financial planning, annual physical~~ and ~~executive whole life insurance). 6.2 (1) Notwithstanding~~ any ~~other provisions in this Agreement, if any of the payments or~~ such benefits ~~received or to be~~ actually received by the Executive shall be reported to Energy East by the Executive). If the benefits provided to the Executive under this Section 10.1(D) shall result in a Gross-Up Payment pursuant to Section 10.2, and these Section 10.1(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 10.2 hereof. (~~including~~ A) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or ~~benefits received in connection with a Change in Control~~ distribution by Energy East or the ~~Executive’s termination~~ Company to or for the benefit of ~~employment~~the Executive on account of a Change-in-Control, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Code or any ~~other plan~~interest or penalties with respect to such excise tax (such excise tax, ~~program~~together with any such interest and penalties, ~~arrangement or agreement) (all such payments and benefits, being~~ are hereinafter collectively referred to as the ~~“Total Payments”) would be subject (in whole or part~~"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~~Tax imposed upon the Gross-Up Payment, ~~then, after taking into account any reduction in~~ the ~~Total Payments provided by reason of section 280G~~ Executive retains an amount of the ~~Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject~~ Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (B) Subject to the provisions of Section 10.2(C) hereof, all determinations required to be made under this Section 10.2, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determinations, shall be made by Energy East's principal outside accounting firm (the "Accounting Firm") which shall provide detailed supporting calculations both to the 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 Energy East or the Executive (each such date and the Date of Termination shall be referred to as a "Determination Date", for purposes of this Section 10.2(B) and Section 10.3 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 10.2(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 no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm under this Section 10.2(B) shall be binding upon Energy East, 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 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 Energy East exhausts its remedies pursuant to Section 10.2(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. (C) The Executive shall notify Energy East 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 ~~no event~~ writing of such claim and shall apprise Energy East of the nature of such claim and the date on which such claim is requested to ~~less than zero~~be paid. The Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which he gives such notice to Energy East (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If Energy East notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give Energy East any information reasonably requested by Energy East relating to such claim, (ii) take such action in connection with contesting such claim as Energy East 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 Energy East, (iii) cooperate with Energy East in good faith in order effectively to contest such claim, and (iv) permit Energy East to participate in any proceeding relating to such claim; provided, however, that the ~~Total Payments will only be reduced if~~ Company shall bear and pay directly all costs and expenses (iincluding additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the ~~net amount~~ 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 ~~Total Payments, as so reduced (~~representation and ~~after subtracting~~ payment of costs and expenses. Without limitation on the ~~net amount~~ foregoing provisions of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total Paymentsthis Section 10.2(C), ~~is greater than~~ Energy East shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or ~~equal to (ii)~~ forgo any and all administrative appeals, proceedings, hearings and conferences with the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject taxing authority in respect of such ~~unreduced Total Payments~~ claim and ~~after taking into account~~ may, at its sole option, either direct the ~~phase out~~Executive to pay the tax claimed and sue for a refund or contest the claim in any permissi▇▇▇ 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 Energy East shall determine; provided, however, that if ~~any~~Energy East directs the Executive to pay such claim and sue for a refund, ~~of itemized deductions~~ the Company shall advance the amoun▇ ▇f such payment to the Executive, on an interest-free basis and ~~personal exemptions attributable~~ 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 ~~unreduced Total Payments)~~advance or 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 contested amount is claimed to be due is limited solely to such contested amount. Furthermore, Energy East'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. (AD) In If, after the ~~case~~ receipt by the Executive of ~~a reduction in~~ an amount advanced by the ~~Total Payments~~Company pursuant to Section 10.2(C) hereof, the ~~Total Payments will be reduced in~~ Executive becomes entitled to receive any refund with respect to such claim, the ~~following order:~~ Executive shall (~~i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary,~~ subject to ~~zero), with amounts that are payable last reduced first; (ii) payments~~ Energy East's and ~~benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a),~~ the Company's complying with the ~~highest values reduced first (as such values are determined under Treasury Regulation~~ requirements of Section ~~1.280G-1, Q&A 24~~10.2(C) ~~will next be reduced; (iii~~hereof) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject promptly pay to the ~~Excise Tax and~~ Company the amount of such ~~Excise Tax:~~ refund (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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. The Executive and the Company shall each reasonably cooperate with the other in connection together with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be interest paid or ~~made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the~~ credited thereon after taxes applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payther

Appears in 1 contract

Sources: Employment Agreement (New York State Electric & Gas Corp)

Severance Payments. 6.1 ~~If the Executive incurs a “separation from service” (within the meaning of section 409A) following a Change in Control and during the Term~~Subject to Section 6.2 hereof, ~~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 ~~amounts, and provide the Executive the benefits,~~ payments described in this Section 6.1 (the “Severance Payments”)) upon the termination of the Executive’s employment following a Change of Control and during the term of this Agreement, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of the Executive’s death or Disability, or (iii) by the Executive without Good Reason. For purposes of this Agreement, the ~~Executive~~ Executive’s employment shall be deemed to have ~~incurred a separation from service following a Change in Control~~ been terminated by the Company without Cause or by the Executive with Good ~~Reason~~Reason following a Change of Control if, if following a Potential Change of Control, (i) the Executive’s employment is terminated ~~by the Company~~ without Cause prior to a Change in of Control ~~(whether or not a Change in Control occurs)~~ 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 of Control, (ii) the Executive terminates his employment ~~for~~ with Good Reason prior to a Change in of Control ~~(whether or not a Change in Control occurs)~~ 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~~ prior to a Change of Control and such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in of Control ~~(whether or not a Change in Control~~ which actually occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and 6 convincing evidence that such position is not correct. Notwithstanding the foregoing, if the Executive terminates employment with the Company by means of ~~this Agreement~~a Discretionary Termination, ~~no payment that would otherwise~~ he shall be ~~made and no benefit that would otherwise be provided upon a termination~~ entitled to 50% of ~~employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined~~ the Severance Benefits set forth in ~~accordance with section 409A.~~(A) - (F) below. (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) times the sum of (i) the greater of the Executive’s annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Executive’s annual base salary in effect immediately prior to the ~~first occurrence~~ Change of ~~an event or circumstance constituting Good Reason~~Control, and (ii) the ~~average~~ greatest of the Executive’s target annual bonus ~~earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three fiscal years ending immediately prior to~~ for the fiscal year in which ~~occurs~~ the Date of Termination oroccurs, ~~if higher,~~ the average of the annual bonuses earned or received by the Executive from the Company or its subsidiaries in respect of the two (2) consecutive fiscal years immediately ~~prior to the fiscal year~~ preceding that in which the Date of Termination occurs or the ~~first event~~ average of the annual bonuses so earned or ~~circumstance constituting Good Reason~~received in respect of the two (2) consecutive fiscal years immediately preceding that in which the Change of Control occurs. (B) Notwithstanding any provision of any annual 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 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 any such plan but 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 been paid, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent 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, at the target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (C) Notwithstanding any provision of the Company's supplemental pension and thrift plans (the “Supplemental Plans”) to the contrary, upon the termination of the Executive’s employment by the Executive for Good Reason or by the Company, in either case at any time following the occurrence of a Change of Control and during the term of this Agreement, the Executive shall be deemed to have an additional twenty-four (24) months of benefit credit under each of the Supplemental Plans and shall be entitled to receive such additional credit either (1) as part of the benefit otherwise payable under the Supplemental Plan or (2) as a lump sum. (D) For the twenty-four (24) month period 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~~ which the Executive ~~and his dependents~~ is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to any amendment to such benefits made subsequent to a Change of Control which amendment adversely affects in any manner the Executive~~, those provided~~ ’s entitlement to or the ~~Executive and his dependents immediately prior to the first occurrence~~ amount of ~~an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to~~ such ~~date or occurrence~~benefits); provided, however, that, unless the Executive consents to a different ~~method~~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~~ though a third-party insurer. Benefits otherwise receivable by the Executive pursuant to this Section ~~6.1(B~~6.1(D) 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 twenty-four (24) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (DE) If the Executive would have become entitled to benefits under the Company’s '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, plans had the Executive’s employment terminated at any time during the period of twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive ~~and the Executive’s dependents~~ commencing on the later of (i) the date ~~on which~~ that such coverage would have first become available and (ii) the date ~~on which~~ that like benefits described in subsection (BD) of this Section 6.1 terminate. (EF) ~~The Company shall provide~~ Immediately prior to a Change of Control and notwithstanding any provision in the ~~Executive with third~~Company’s 2002 Long-~~party outplacement services suitable~~ Term Incentive Plan (or any agreement entered into thereunder or any successor stock compensation plan or agreement thereunder) to the ~~Executive’s position for~~ contrary, all conditions and/or restrictions relating to the ~~period following~~ continued performance of services and/or the ~~Executive’s Date~~ achievement of ~~Termination and ending on December 31 of~~ performance objectives with respect to the ~~second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive~~ exercisability or full enjoyment of an ~~offer of employment, provided, however, that in no case~~ award under the 2002 Long-Term Incentive Plan shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Terminationlapse. (FA) ~~For the twenty-four (24) month period immediately following the Date of Termination~~ Whether or ~~until~~ not the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior entitled to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this AgreementSeverance Payments, if any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in of Control or the termination of the Executive’s ~~termination of employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change of Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance payments, being hereinafter ~~referred to as the~~ called “Total Payments”) ~~would~~ will be subject (in whole or part), ) to the Excise Tax, ~~then~~then the Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments ~~provided by reason~~ and any federal, state and local income and employment tax and Excise Tax upon the Gross-Up-Payment, shall be equal to the Total Payments. For purposes of ~~section 280G~~ determining the amount of the ~~Code in such other plan, program, arrangement or agreement~~Gross-Up Payment, the ~~Company will reduce~~ Executive shall be deemed to pay federal income and employment taxes at the ~~Total Payments~~ highest marginal rate of federal income and employment taxation in the calendar year in which the Gross-Up Payment is to ~~the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only~~ be ~~reduced if (i) the net amount of such Total Payments, as so reduced (~~made and ~~after subtracting the net amount of federal, state, municipal~~ state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on ~~such reduced Total Payments and after taking into account~~ the ~~phase out~~Date of Termination, ~~if any,~~ net of ~~itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii)~~ the ~~net amount~~ maximum reduction in federal income taxes which could be obtained from deduction of such ~~Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal~~ 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensationtaxes. (B) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a~~ “~~payment~~parachute payments” within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which~~Code, unless in the opinion of tax counsel (the “Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm (the “Auditor”) which was, immediately prior to the Change in of Control, the Company’s independent ~~auditor~~ auditor, such other payments or benefits (~~the “Auditor”), does~~ in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all “excess parachute payments” within the meaning of section 280G(b)(1) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ such excess parachute payments (in whole or 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~~ section 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(B) 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. (C) ~~All determinations required by this Section 6.2~~ In the event that (~~or requested by either~~ i) amounts are paid to the Executive ~~or the Company in connection with~~ pursuant to subsection (A) of this Section 6.2, and (ii) ~~will~~ the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the ~~expense~~ time of termination of the Executive’ s employment, 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 interest on the amount of such repayment at the rate provided in section 1274(b)(2)(B) of the Code. ~~The fact~~ 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 ~~right to payments or benefits may be reduced~~ employment (including by reason of ~~the limitations contained in this Section 6.2 will not of itself limit or otherwise affect~~ any other rights of the Executive under this Agreement. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning payment the existence or amount of ~~liability for Excise Tax~~ which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment to the Executive in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion) at the ~~Total Payments~~time that the amount of such excess is finally determined. 6.3 ~~Subject to Section 6.4, the~~ The payments provided for in subsections (A), (B) ~~and~~ and, if applicable, (C) of Section 6.1 hereof and Section 6.2 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination; provided, however, that if the amounts of such payments, or, if applicable, the Excise Tax, 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 Executive or, in the case of Gross-Up 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 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) (B) of the Code). At the time that payments are made under this ~~Agreement~~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 ~~Tax Counsel~~outside counsel, ~~the Auditor or other advisors~~ auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). . In the event the Company should fail to pay when due the amounts described in subsections (A), (B) ~~Notwithstanding any provisions of this Agreement to the contrary~~and, if applicable, (C) of Section 6.1 hereof or Section 6.2 hereof, the Executive ~~is a “specified employee”~~ 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 Section 6.3 (~~within~~ without regard to any extension of the ~~meaning~~ Date of ~~section 409A and determined~~ Termination pursuant to ~~procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits~~ Section 7.3 hereof), to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of payment at a rate equal to the ~~Executive’s separation~~ prime rate published in The Wall Street Journal as in effect from ~~service or (ii) Executive’s death (the applicable~~ time to time after such due date~~, the “Permissible Payment Date”).~~ . 6.4 The Company also shall ~~also reimburse~~ pay to the Executive ~~for the after-tax cost~~ all legal fees and expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any ~~Delayed Benefits~~ issue relating to the termination of the Executive’ s employment following a Change of Control (including a termination of employment following a Potential Change of Control if the ~~“Additional Delayed Payments”). (B~~Executive alleges in good faith that such termination will be deemed to have occurred following a Change of Control pursuant to the second sentence of Section 6.1 hereof) ~~With respect~~ 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 ~~amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses~~ payment or benefit provided hereunder. Such payments shall be ~~reimbursed~~ made as such fees and expenses are incurred by the ~~Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive~~ Executive, but in no event later than ~~December 31~~ five (5) business days after delivery of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s ~~right to reimbursement or in-kind benefits be subject to liquidation or exchange~~ written requests for ~~another benefit~~payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change of Control and Retention Agreement (Riggs National Corp)

Severance Payments. ~~6.1~~ 4.1 If ~~the Executive incurs~~ a “separation from service” (within the meaning of section 409A) 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 Qualifying Termination shall ~~pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”)~~occur, in addition to any payments and benefits to which the Executive is entitled under Section 5 3 hereof~~. For purposes~~ , the Company shall pay the Executive the payments described in this Section 4.1 (the “Severance Payments”); provided, however, that, in the case of ~~this Agreement~~clauses (A), (B), (C), (D) and (F) below, the Executive shall have executed and not revoked a release of claims in the form set forth in Exhibit A hereto. The Executive shall also be ~~deemed~~ entitled to ~~have incurred a separation from service following a Change in Control by~~ the ~~Company without Cause or by the Executive with Good Reason,~~ Severance Payments (and any payments and benefits under Section 3) if ~~(i)~~ the Executive’s employment is terminated by the Company ~~without~~ other than (x) for Cause ~~prior to~~ or (y) by reason of death or Disability within the six (6) month period immediately preceding a Change in Control ~~(whether or not a Change in Control occurs)~~ and the Executive reasonably demonstrates that 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 for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control that actually occurs during the term of the Agreement (~~whether or not~~ a “Pre-Change in Control ~~occurs~~Termination”)~~. For purposes~~ ; provided, however, that, in the case of clauses (A), (B), (C), (D) and (F) below, Executive shall have executed and not revoked a release of claims in the form set forth in Exhibit A hereto; and provided further, however, that any such payments shall be offset by the amount of severance previously paid to the Executive under any employment agreement between the Executive and the Company and, to the extent permitted by Section ~~5 and 6~~ 409A of ~~this Agreement~~the Code, ~~no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination~~ any other severance policy, plan or program of ~~employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~the Company. (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 times~~ seventy five percent (75%) of the Executive’s annual base salary then in effect (or immediately prior to any reduction resulting in a termination for Good Reason, if applicable) (the “Change in Control Salary”). (B) Notwithstanding any provision of any annual incentive plan to the contrary, the Company shall pay to the Executive an amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the ~~Executive’s base salary~~ Executive for a completed fiscal year preceding the Date of Termination under any such plan and which, as ~~in effect immediately prior~~ of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination ~~or, if higher,~~ of Executive’s target bonus for the year in which the Date of Termination occurs (or the target in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason), ~~and (ii) the average annual~~ calculated by multiplying such target bonus ~~earned~~ by the ~~Executive pursuant to~~ fraction obtained by dividing the number of full months and any ~~annual bonus or incentive plan maintained by the Company in respect~~ fractional portion of ~~the three fiscal years ending immediately prior to the fiscal~~ a month during such year ~~in which occurs~~ through the Date of Termination ~~or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason~~by twelve (12). (BC) For the ~~twenty-four (24)~~ six month period immediately following the Date of Termination, the Company shall arrange to provide the Executive ~~and his~~ (which includes the Executive’s eligible dependents for purposes of this subsection (C)) with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ was receiving immediately prior to the Date of Termination ~~or, if more favorable to the Executive, those provided to the Executive and his dependents~~ (or immediately prior to ~~the first occurrence of an event or circumstance constituting~~ any reduction resulting in a termination for Good Reason, ~~at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence~~if applicable); provided, however, ~~that,~~ that (i) the Executive’s and his qualified dependents’ COBRA eligibility period shall include the period during which the Company is providing benefits under this subsection (C); (ii) unless the Executive consents to a different ~~method~~method (or elects COBRA coverage at applicable COBRA rates), such health insurance benefits shall be provided through a third-party insurer; and (iii) the Executive shall be responsible for the payment of premiums for such benefits in the same amount as active employees of the Company. Benefits otherwise receivable by the Executive pursuant to this ~~Section 6.1(B~~subsection (C) shall be reduced to the extent comparable benefits (including continued coverage for any preexisting medical condition of any person covered by the ~~same type~~ benefits provided to the Executive and his eligible dependents immediately prior to the Date of Termination) are actually received by or made available to the Executive by a subsequent employer during the twenty-four ~~(24)~~ month period following the Executive’s ~~termination~~ Date of ~~employment~~ Termination (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive)~~; provided~~. Notwithstanding the foregoing, ~~however~~in the event of a Pre-Change in Control Termination, ~~that~~ on the sixtieth (60th) day following the Change in Control the Company shall ~~promptly~~ pay or reimburse the Executive for ~~the excess, if any, of the after tax cost of such~~ any amounts or benefits it would have been responsible to pay or provide to the Executive ~~over such cost immediately~~ under this Section 4.1(C) during the period prior to the ~~Date of Termination or~~Change in Control, ~~if more favorable to~~ had the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plan, the Company shall pay the Executive a lump sum amount, Change in ~~cash, equal to the sum of (i) the amount that would have been contributed thereto by the Company~~ Control occurred on ~~the Executive’s behalf during the twenty-four (24) months immediately following~~ the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) If the Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance ~~plans,~~ plans (as in effect immediately prior to the Date of Termination ~~or, if more favorable to the Executive, as in effect~~ (or immediately prior to ~~the first occurrence of an event or circumstance constituting~~ any reduction resulting in a termination for Good Reason, if applicable)) had the Executive’s employment terminated at any time during the period of ~~twenty-~~twenty four ~~(24)~~ months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive ~~and~~ (subject to any employee contributions required under the ~~Executive’s dependents~~ terms of such plans in the same amounts as active employees of the Company) commencing on the later of (i) the date ~~on which~~ that such coverage would have first become available ~~and~~ or (ii) the date ~~on which~~ that benefits described in subsection (BC) of this Section ~~6.1~~ 4.1 terminate. (E) The Company shall ~~provide~~ pay the ~~Executive with third-party outplacement services suitable to~~ Executive, at a daily salary rate calculated from the Executive’s ~~position for~~ annual base salary in effect immediately prior to the ~~period following the Executive’s~~ Date of Termination ~~and ending on December 31 of the second calendar year following such Date of Termination or~~(or immediately prior to any reduction resulting in a termination for Good Reason, if ~~earlier~~applicable), ~~until~~ a lump sum amount equal to all earned but unused paid time off days through the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) ~~For~~ The Company shall pay, no later than the last day of the calendar year in which they are incurred, the reasonable fees and expenses of a full service nationally recognized executive outplacement firm until the earlier of the date the Executive secures new employment or the date which is twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately months following the Executive’s ~~separation from service (the “Delayed Payments”) and benefits~~ Date of Termination; provided that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the ~~reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the~~ aggregate amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitsuch payments exceed $5,000. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Agreement (Insignia Systems Inc/Mn)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, if (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“"Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s 's employment is terminated by the Company without Cause prior to a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs no later than six (6) months following the Executive’s termination of employment) 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 for Good Reason prior to a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs no later than six (6) months following the Executive’s termination 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 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs). For purposes of Section 5 and 6 of this Agreement,~~ occurs no ~~payment that would otherwise be made and no benefit that would otherwise be provided upon a~~ later than six (6) months following the Executive’s termination of ~~employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~employment). (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~~ «multiple» times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) the ~~average~~ Executive’s target annual bonus ~~earned by the Executive pursuant to~~ under any 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 or, if higher, ~~immediately prior to~~ the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the ~~twenty-four (24)~~ «benefits» 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 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 ~~after~~ after-tax cost to the Executive than the ~~after~~ after-tax cost to the Executive immediately prior to such date or occurrence~~; provided, however, that, unless the Executive consents to a different method, 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)~~ «benefits» month period following the Executive’s '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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or ~~circumstance~~ circumstance constituting Good Reason. (C) ~~In addition~~ Notwithstanding any provision of any annual incentive plan to the ~~benefits to which the Executive is entitled under the DC Pension Plan~~contrary, the Company shall pay to the Executive ~~a lump sum~~ an amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the ~~amount that would have been contributed thereto by~~ Executive for a completed fiscal year preceding the ~~Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Date of Termination under any such plan and which, as of the Date of Termination, ~~determined (x) as if~~ is contingent only upon the continued employment of the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder~~subsequent date, and (ii) ~~the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the~~ a pro rata portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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~~ of the Amount the Executive would have earned with respect to the ~~Executive, as~~ year 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination ~~or until~~ occurs, calculated by multiplying the award that the Executive ~~becomes eligible~~ would have earned for ~~substantially similar benefits from a new employer~~such year, ~~whichever occurs earlier~~based upon the actual level of achievement of the performance goals established with respect to such award, ~~the Company shall continue to provide the Executive with all perquisites provided~~ by the ~~Company immediately prior to~~ fraction obtained by dividing the number of full months and any fractional portion of a month during such year through the Date of Termination ~~or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason~~ by twelve (~~including, without limitation, automobile, financial planning, annual physical and executive whole life insurance~~12). 6.2 (1A) Notwithstanding any other provisions of this Agreement, in ~~this Agreement, if~~ the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive (including any payment or ~~benefits~~ 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, ~~program,~~ arrangement or agreement) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as 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, ~~program,~~ arrangement or agreement, the ~~Company will reduce~~ 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 ~~in no event to less than zero); provided, however, that the Total Payments will~~ only ~~be reduced~~ if (iA) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, ~~state, municipal~~ state and local income taxes on such reduced Total Payments and after taking into account the phase ~~out, if any,~~ out of itemized deductions and personal exemptions attributable to such reduced Total Payments), ) is greater than or equal to (iiB) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, ~~state, municipal~~ 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, if any,~~ out of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise ~~Tax and the amount of such 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 ~~will~~ shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ 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”)~~Executive, does not constitute a “"parachute payment” " within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments ~~will~~ shall be taken into account which, in the opinion of Tax Counsel, constitutes 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; , and (iii) 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 Auditor~~ in accordance with the principles of sections 280G(d)(3) and (4) of the Code. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. At the time that payments are made under this ~~Agreement~~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~~ calculations including, without limitation, any opinions or other advice the Company has received from Tax ~~Counsel, the Auditor~~ 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. 6.3 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 ~~any provisions of this Agreement~~ the above, to the ~~contrary, if~~ extent the Executive is terminated (i) following a ~~“specified employee”~~ 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 ~~and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion~~ of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”Code) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) ~~Executive’s death (~~prior to a Change in Control in a manner described in Section 6.1, to the ~~applicable date~~extent required to avoid accelerated or additional tax under section 409A of the Code, amounts payable to the ~~“Permissible Payment Date”).~~ 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 ~~also reimburse~~ pay to the Executive ~~for the after-tax cost~~ all legal fees and expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any ~~Delayed Benefits (~~issue hereunder relating to the ~~“Additional Delayed Payments”). (B) With respect~~ termination 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 ~~amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses~~ payment or benefit provided hereunder. Such payments shall be ~~reimbursed by~~ made within five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company ~~within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but~~ reasonably may require; provided that in no event will payment be made for requests that are submitted later than December 31 15th of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitexpense is incurred. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Compuware Corp)

Severance Payments. ~~6.1~~ 5.1 If the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated following a Change in ~~Control and during the Term~~Control, 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 amounts, and provide the Executive the ~~benefits,~~ benefits described in this Section ~~6.1~~ 5 (“"Severance Payments~~”),~~ ") in addition to any payments and benefits to which the Executive is entitled under Section ~~5 hereof~~4 of this Agreement. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated by the Company following a Change in ~~Control by the Company~~ Control, without Cause or by the Executive with Good Reason, if (i) the Executive’s '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 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 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, or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~not correct. (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 ~~two times~~ the sum of (i) three (3) times the Executive’s 's 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 circumstance constituting Good Reason, and (ii) one (1) times the ~~average~~ "target bonus" applicable to the Executive at the Date of Termination or, if higher, the annual bonus ~~earned by~~ actually paid for the ~~Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three~~ fiscal ~~years~~ year ending immediately prior to the fiscal year in which occurs the Date of ~~Termination or~~Termination, ~~if higher~~in either case pursuant to any annual bonus or incentive plan maintained by the Company. For purposes of this Agreement, ~~immediately prior~~ the "target bonus" is an amount equal to the ~~fiscal year in which occurs~~ Executive's annual base salary rate at the ~~first event or circumstance constituting Good Reason~~Date of Termination times the target bonus opportunity percentage applicable to the Executive's salary grade at the Date of Termination. (Bb) For the ~~twenty~~thirty-~~four~~ six (2436) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents ~~life~~medical, ~~disability~~dental, ~~accident~~ accidental death and ~~health insurance~~ disability 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence~~; provided, however, that, unless the Executive consents to a different method, 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~~5.1(b) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the ~~twenty~~thirty-~~four~~ six (2436) month period following the Executive’s '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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (Cc) Notwithstanding any provision to the contrary in any plan or agreement maintained by the Company pursuant to which the Executive has been granted restricted stock, stock options or stock appreciation rights, (i) all restrictions with respect to any such restricted stock held by the Executive shall lapse, (ii) all stock appreciation rights held by the Executive shall become fully vested and exercisable, and (iii) all stock options held by the Executive shall be canceled in exchange for a cash payment equal to the excess of the fair market value of the shares of Company stock subject to the option on the date of the Change in Control over the aggregate exercise price of such stock option. (d) In addition to the retirement benefits to which the Executive is entitled under any tax-qualified, supplemental or excess benefit pension plan maintained by the DC Company and any other plan or agreement entered into between the Executive and the Company which is designed to provide the Executive supplemental retirement benefits (the "Pension ~~Plan~~Plans") or any successor plan thereto, the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ excess of (i) the ~~amount that would have been contributed thereto by~~ actuarial equivalent of the ~~Company on~~ aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity (or such other annuity form for which the ~~Executive’s behalf during~~ Executive is eligible under the ~~twenty-four~~ Kaman Corporation Employees' Pension Plan (24the "Plan"), the actuarial equivalent of which is greatest) ~~months immediately following~~ commencing at the date (but in no event earlier than the fifth anniversary of the Date of Termination~~, determined (x~~) as if of which the actuarial equivalent of such annuity is greatest) which the Executive ~~made~~ would have accrued under the ~~maximum permissible contributions thereto during such period,~~ terms of all Pension Plans (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to ~~the DC~~ 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) sixty (60) additional months of service credit thereunder and had been credited under each Pension Plan during such period with compensation equal to the Executive's compensation (as defined in each such Pension Plan) during the twelve (12) months immediately preceding Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, over (ii) the ~~excess, if any,~~ actuarial equivalent of the aggregate retirement pension (xtaking 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 ~~Executive’s account balance under~~ actuarial equivalent of such annuity is greatest) which the DC Executive had accrued pursuant to the provisions of the Pension ~~Plan~~ Plans as of the Date of ~~Termination over (y)~~ Termination. For purposes of this Section 5.1(d), "actuarial equivalent" shall be determined using the ~~portion~~ same assumptions utilized for purposes of ~~such account balance that is nonforfeitable~~ determining optional forms of benefit under the ~~terms~~ Plan immediately prior to the Date of Termination or, if more favorable to the ~~DC Pension Plan. The payments provided in this Section 6.1(C) are in addition~~ Executive, immediately prior to ~~any payment~~ the ~~Executive would otherwise receive under the applicable DC Plan and are not intended to offset~~ first occurrence of an event or ~~reduce any payment under such DC Plan~~circumstance constituting Good Reason. (De) If the Executive would have become entitled to benefits under the Company’s '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 's employment terminated at any time during the period of ~~twenty~~thirty-~~four~~ six (2436) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or life insurance~~ benefits to the Executive and the Executive’s '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~~ 5.1(e) terminate. (Ef) 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 life of the Executive in effect between the Executive and the Company, and (ii) shall transfer to the Executive any and all rights and incidents of ownership in such arrangements at no cost to the Executive. (g) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s 's position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination~~ two years or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. 5.2 (FA) ~~For the twenty-four (24) month period immediately following the Date of Termination~~ Whether or ~~until~~ not the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior entitled to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this AgreementSeverance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which 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 ~~and the amount of such Excise Tax: (i) no portion of~~ on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon 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 will be taken into account; (ii) no portion of the Total Payments will be taken into account whichGross-Up Payment, 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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 equal to the Total Payments. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Employment Agreement (Kaman Corp)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, the Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a Change in Control and during the ~~Term, other than (A) by the Company for Cause, (B) by reason~~ term of ~~death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in~~ this ~~Section 6.1 (“Severance Payments”)~~Agreement, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of the Executive's death or Disability, or (iii) by the Executive without Good Reason. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service following a Change in Control~~ been terminated by the Company without Cause or by the Executive with Good ~~Reason~~Reason following a Change in Control if, if following a Potential Change in Control, (i) the Executive’s 's employment is terminated ~~by the Company~~ without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s 's employment is terminated ~~by the Company~~ without Cause ~~or by the Executive for Good Reason~~ prior to a Change in Control and such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control~~ which actually occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and 6 convincing evidence that such position is not correct. Notwithstanding the foregoing, if the Executive terminates employment with the Company by means of ~~this Agreement~~a Discretionary Termination, ~~no payment that would otherwise~~ he shall be ~~made and no benefit that would otherwise be provided upon a termination~~ entitled to 50% of ~~employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined~~ the Severance Benefits set forth in ~~accordance with section 409A.~~(A) - (F) below. (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) times the sum of (i) the greater of the Executive’s 's annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Executive's annual base salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change in Control, and (ii) the greater of the average of the annual ~~bonus~~ bonuses earned or received by the Executive ~~pursuant to any annual bonus or incentive plan maintained by~~ from the Company or its subsidiaries in respect of the ~~three~~ two (2) consecutive fiscal years ~~ending~~ immediately ~~prior to the fiscal year~~ preceding that in which ~~occurs~~ the Date of Termination ~~or, if higher,~~ occurs or the average of the annual bonuses so earned or received in respect of the two (2) consecutive fiscal years immediately ~~prior to the fiscal year~~ preceding that in which ~~occurs~~ the ~~first event or circumstance constituting Good Reason~~Change in Control occurs. (B) Notwithstanding any provision of any annual 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 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 any such plan but 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 been paid, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent 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, at the target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (C) Notwithstanding any provision of the Company's supplemental pension and thrift plans (the "Supplemental Plans") to the contrary, upon the termination of the Executive's employment by the Executive for Good Reason or by the Company, in either case at any time following the occurrence of a Change in Control and during the term of this Agreement, the Executive shall be deemed to have an additional twenty-four (24) months of benefit credit under each of the Supplemental Plans and shall be entitled to receive such additional credit either (1) as part of the benefit otherwise payable under the Supplemental Plan or (2) as a lump sum. (D) For the twenty-four (24) month period 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~~ which the Executive ~~and his dependents~~ is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to any amendment to such benefits made subsequent to a Change in Control which amendment adversely affects in any manner the Executive~~, those provided~~ 's entitlement to or the ~~Executive and his dependents immediately prior to the first occurrence~~ amount of ~~an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to~~ such ~~date or occurrence~~benefits); provided, however, that, unless the Executive consents to a different ~~method~~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~~ though a third-party insurer. Benefits otherwise receivable by the Executive pursuant to this Section ~~6.1(B~~6.1(D) 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 twenty-four (24) month period following the Executive’s '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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (DE) If the Executive would have become entitled to benefits under the Company’s '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, plans had the Executive’s 's employment terminated at any time during the period of twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive ~~and the Executive’s dependents~~ commencing on the later of (i) the date ~~on which~~ that such coverage would have first become available and (ii) the date ~~on which~~ that like benefits described in subsection (BD) of this Section 6.1 terminate. (EF) ~~The Company shall provide~~ From and after the ~~Executive with third-party outplacement services suitable~~ occurrence of Change in Control and notwithstanding any provision in the Company's 1995 Stock Option and Retention Stock Plan (or any agreement entered into thereunder or any successor stock compensation plan or agreement thereunder) to the ~~Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or~~contrary, ~~if earlier, until the first acceptance~~ any Option held by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be ~~paid to~~ fully exercisable and any restriction on any Retention Share held by the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Terminationshall lapse or be deemed fully satisfied, as applicable. (FA) ~~For the twenty-four (24) month period immediately following the Date of Termination~~ Whether or ~~until~~ not the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior entitled to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this AgreementSeverance Payments, if any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance payments, being hereinafter ~~referred to as the “~~called "Total Payments”") ~~would~~ will be subject (in whole or part), ) to the Excise Tax, ~~then~~then the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments ~~provided by reason~~ and any federal, state and local income and employment tax and Excise Tax upon the Gross-Up- Payment, shall be equal to the Total Payments. For purposes of ~~section 280G~~ determining the amount of the ~~Code in such other plan, program, arrangement or agreement~~Gross-Up Payment, the ~~Company will reduce~~ Executive shall be deemed to pay federal income and employment taxes at the ~~Total Payments~~ highest marginal rate of federal income and employment taxation in the calendar year in which the Gross-Up Payment is to ~~the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only~~ be ~~reduced if (i) the net amount of such Total Payments, as so reduced (~~made and ~~after subtracting the net amount of federal, state, municipal~~ state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on ~~such reduced Total Payments and after taking into account~~ the ~~phase out~~Date of Termination, ~~if any,~~ net of ~~itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii)~~ the ~~net amount~~ maximum reduction in federal income taxes which could be obtained from deduction of such ~~Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal~~ 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensationtaxes. (B) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a “payment”~~ "parachute payments" within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which~~Code, unless in the opinion of tax counsel (“the "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 's independent ~~auditor~~ auditor, such other payments or benefits (~~the “Auditor”), does~~ in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all "excess parachute payments" within the meaning of section 280G(b)(1) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ such excess parachute payments (in whole or 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~~ section 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(B) 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. (C) ~~All determinations required by this Section 6.2~~ In the event that (~~or requested by either~~ i) amounts are paid to the Executive ~~or the Company in connection with~~ pursuant to subsection (A) of this Section 6.2, and (ii) ~~will~~ the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the ~~expense~~ time of termination of the Executive's employment, the Executive shall repay to the Company~~. The fact~~ , 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 interest on the amount of such repayment at the rate provided in section 1274(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 right to payments or benefits may be reduced~~ 's employment (including by reason of ~~the limitations contained in this Section 6.2 will not of itself limit or otherwise affect~~ any other rights of the Executive under this Agreement. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning payment the existence or amount of ~~liability for Excise Tax~~ which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment to the Executive in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion) at the ~~Total Payments~~time that the amount of such excess is finally determined. 6.3 ~~Subject to Section 6.4, the~~ The payments provided for in subsections (A), (B) ~~and~~ and, if applicable, (C) of Section 6.1 hereof and Section 6.2 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination~~. At~~ ; provided, however, that if the ~~time that payments are made under this Agreement~~amounts of such payments, or, if applicable, the Excise Tax, cannot be finally determined on or before such day, the Company shall ~~provide~~ pay to the Executive on such day an estimate, as determined in good faith by the Executive or, in the case of Gross-Up Payments under Section 6.2 hereof, in accordance with ~~a written statement setting forth~~ Section 6.2 hereof, of the ~~manner in which~~ minimum amount of 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 to which ~~are in writing shall be attached to the statement). (A) Notwithstanding any provisions of this Agreement to the contrary, if~~ the Executive is ~~a “specified employee”~~ clearly entitled and shall pay the remainder of such payments (~~within the meaning of section 409A and determined pursuant to procedures adopted by the Company)~~ together with interest at the ~~time of his separation from service and if any portion~~ rate provided in section 1274(b)(2)(B) of the ~~payments or benefits to~~ Code) as soon as the amount thereof can be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive determined but in no event later than ~~December 31 of~~ the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct paythirtieth

Appears in 1 contract

Sources: Executive Employment Agreement (Union Pacific Resources Group Inc)

Severance Payments. ~~6.1 If~~ In the Executive incurs a “separation from service” (within the meaning of section 409A) 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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 shall be deemed to have incurred a separation from service following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) event the Executive’s employment is terminated ~~by the Company without Cause~~ prior to ~~a Change in Control (whether or not a Change in Control occurs) and such termination was at~~ the ~~request or direction~~ expiration 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 for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) 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 Term by the Company without Cause or by the Executive for Good ~~Reason and such~~ Reason, which shall not include any termination or by the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A. (A) In lieu of any further salary payments Company due to the Executive’s death or incapacity that prevents the Executive ~~for periods subsequent~~ from performing the essential functions of his position, the Executive shall be entitled to the ~~Date of~~ Termination Payments and the following “Severance Package”, in lieu of any ~~severance benefit otherwise payable~~ other compensation and benefits whatsoever: (i) continued payment of the Executive’s Salary for the remainder of the Term; (ii) continued participation in the Company’s group medical plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”) or if the Executive’s COBRA rights have expired, ~~the Company shall pay~~ pursuant to an individual policy at no cost to the Executive ~~a lump sum severance payment, in cash, equal to two times~~ until the ~~sum~~ earlier of (iA) the ~~Executive’s base salary as~~ last day of the month in ~~effect immediately prior~~ which the last payment is made to ~~the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (ii) the average annual bonus earned by~~ the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. Section 4(a)(i) above and (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive ~~submits the invoice but no later than December 31~~ first becomes eligible for coverage provided by any other entity following termination; (iii) payment of the ~~third year following~~ guaranteed bonus of fifteen percent (15%) of the Executive’s Salary payable pursuant to Section 3(b) of the Letter Agreement, but only for the year of the ~~Executive’s Date~~ Term in which the termination of ~~Termination.~~employment occurs, payable at the same time as such bonuses are paid to other executives of the Company; and (Fiv) ~~For~~ (A) in the ~~twenty-four (24) month period immediately following~~ event the ~~Date~~ termination of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided employment is by the Company ~~immediately~~ without Cause or by the Executive for Good Reason, acceleration of vesting of that unvested portion of any awards provided to the Executive pursuant to the ▇▇▇▇▇▇ Gaming, LLC 2011 Long Term Incentive Plan (the “Plan”) that is next scheduled to vest, provided such vesting would have otherwise occurred prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any expiration of the ~~payments~~ Term, with the result that such portions of such awards are immediately and fully exercisable, or ~~benefits received or to be received~~ (B) in the event the termination of employment is by the Executive for Good Reason within six (~~including~~ 6) months after a “change of control,” as that term is defined in the Plan, acceleration of vesting of all unvested portions of any ~~payment or benefits received in connection with a Change in Control or~~ awards provided to the ~~Executive’s termination of employment, whether~~ Executive pursuant to the terms of this Agreement or any other plan, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a)Plan, with the ~~highest values reduced first (as such values~~ result that all the awards provided are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments immediately and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensationfully exercisable. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Executive Severance Agreement (Herbst Gaming, LLC)

Severance Payments. 6.1 If the Executive incurs a “separation from service” (within the meaning of section 409A) 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 amounts, and provide the Executive the ~~benefits,~~ benefits described in this Section 6.1 (“Severance 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 shall be deemed to have incurred a separation from service 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 (whether or not a Change in Control occurs) 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 for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of ~~Section~~ Sections 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A. (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 and one-half times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the ~~twenty-four~~ thirty (2430) month period immediately following the Date of Termination, the Company provide, or shall arrange to ~~provide~~ provide, to the Executive and his dependents 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 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence~~; provided, however, that, unless the Executive consents to a different method, 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~~ thirty (2430) month period following the Executive’s termination of ~~employment~~ employment, such as pursuant to the benefit plans of a subsequent employer (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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the ~~twenty-four~~ thirty (2430) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 ~~twenty-four~~ thirty (2430) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second ~~calendar~~ year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third calendar year following the year of the Executive’s Date of Termination. (F) For the ~~twenty-four~~ thirty (2430) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). ~~6.2~~ (1A) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (AB) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (BC) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (CD) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination; 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 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 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) calendar 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 be payable by the Executive to the Company 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)(B) of the Code). 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the ~~after-tax~~ cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct paycalen

Appears in 1 contract

Sources: Change in Control Severance Agreement (Stanley Black & Decker, Inc.)

Severance Payments. 6.1 If The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a Change in Control and during the ~~Term~~term of this Agreement, ~~other than~~ in addition to the payments and benefits described in Section 5 hereof, unless such termination is (Ai) by the Company for Cause, (Bii) by reason of ~~death~~ death, Disability or ~~Disability~~Retirement, or (Ciii) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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 shall be deemed to have incurred a separation from service following a Change in Control by the Company without Cause or by the Executive with Good Reason~~immediately preceding sentence, if ~~(i)~~ a termination of the Executive’s 's employment ~~is terminated by the Company without Cause~~ occurs prior to a Change in ~~Control (whether or not~~ Control, but following a Potential Change in Control ~~occurs) and such termination was at the request or direction of~~ in which a Person ~~who~~ has entered into an agreement with the Company the consummation of which ~~would~~ will constitute a Change in Control, ~~(ii) the Executive terminates his employment for Good Reason prior~~ such termination shall be deemed to have followed a Change in Control and to have been (~~whether or not a Change in Control occurs~~i) ~~and~~ by the ~~circumstance or event which constitutes Good Reason occurs~~ Company without Cause, if the Executive's employment is terminated without Cause at the ~~request or~~ direction of such Person, or (~~iii~~ii) ~~the Executive’s employment is terminated by the Company without Cause or~~ by the Executive ~~for~~ with Good Reason, if the Executive terminates his employment with Good Reason and ~~such termination~~ the act (or ~~the circumstance or event~~ failure to act) which constitutes Good Reason ~~is otherwise in connection with or in anticipation of a~~ occurs following such Potential Change in Control ~~(whether or not a Change in Control occurs). For purposes~~ and at the direction of ~~Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~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) times the sum of (i) the higher of the Executive’s '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 the event or circumstance ~~constituting Good Reason, and (ii)~~ upon which the average annual bonus earned by the Executive pursuant to any 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 Notice of Termination or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received in connection with a Change in Control based or the Executive’s termination of employment, whether pursuant to the terms of this Agreement or any other plan, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as the “Total Payments”) would be subject ('s annual base salary 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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, effect immediately prior to the Change in Control, and (ii) the higher of (x) the amount paid to the Executive pursuant to the Company~~’s independent auditor (~~'s Annual Executive Incentive Plan, or any successor annual executive incentive compensation plan, as the “Auditor”), does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account whichcase may be, in the ~~opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code,~~ fiscal year preceding that in excess of the Base Amount allocable to such reasonable compensation; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following which the Date of ~~Termination. At the time that payments are made under this Agreement~~Termination occurs, 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (iy) the ~~first (1st) business day of~~ average amount so paid in the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year three fiscal years preceding that in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company Change in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitControl occurs. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Energy East Corp)

Severance Payments. ~~6.1 If~~ The Employer shall pay the ~~Executive incurs a~~ Employee the payments described in this Section 10.1 (the “~~separation from service” (within~~ Severance Payments”) upon the ~~meaning~~ termination of ~~section 409A)~~ the Employee’s employment following a Change in Control and ~~during~~ prior to the ~~Term, other than (A) by~~ end of 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”)Change-in-Control Protective Period, in addition to any payments and benefits to which the ~~Executive~~ Employee is entitled under ~~Section 5~~ Sections 5, 6, 7 and 8.1 hereof, unless such termination is (i) by the Employer for Cause, (ii) by reason of death or Disability, or (iii) by the Employee without Good Reason. For purposes of this Agreement, the ~~Executive~~ Employee’s employment shall be deemed to have ~~incurred a separation from service~~ been terminated by the Employer without Cause following a Change in Control ~~by the Company without Cause~~ or by the ~~Executive~~ Employee with Good ~~Reason~~Reason following a Change in Control, as the case may be, if (i) the ~~Executive~~Employee’s employment is terminated ~~by the Company~~ without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and such termination was at the request or direction of a Person who has entered into an agreement with the ~~Company~~ Employer the consummation of which would constitute a Change in Control, (ii) the ~~Executive~~ Employee terminates his employment ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the ~~Executive~~Employee’s employment is terminated by the ~~Company~~ Employer without Cause ~~or by the Executive for Good Reason~~ prior to a Change in Control (but following a Potential Change in Control) and such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control~~ which actually occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Employee shall be presumed to be correct unless the Employer establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~not correct. (A) In lieu of any further salary payments to the ~~Executive~~ Employee for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ~~Executive~~Employee, the ~~Company~~ Employer shall pay to the ~~Executive~~ Employee a lump sum severance payment, in cash, equal to ~~two~~ three (3) times the sum of (i) the ~~Executive~~higher of the Employee’s ~~base salary as~~ Base Salary in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Employee’s Base Salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change in Control, and (ii) the ~~average~~ higher of the annual ~~bonus~~ Bonus earned by the ~~Executive pursuant to any~~ Employee in respect of the Employer’s fiscal year immediately preceding that in which the Date of Termination occurs, or the average annual ~~bonus or incentive plan maintained by the Company~~ Bonus so earned in respect of the three fiscal years ~~ending~~ immediately ~~prior to the fiscal year~~ preceding that in which ~~occurs~~ the ~~Date~~ Change in Control occurs. One-third of ~~Termination or, if higher, immediately prior to the fiscal year~~ this lump sum severance payment shall be in ~~which occurs the first event or circumstance constituting Good Reason~~consideration of Employee’s obligations under Section 13.2. (B) Notwithstanding any provision of any annual incentive plan to the contrary, the Employer shall pay to the Employee a lump sum amount, in cash, equal to the sum of (i) any annual incentive compensation which has been allocated or awarded to the Employee for a completed fiscal year preceding the Date of Termination and which, as of the Date of Termination, is contingent only upon the continued employment of the Employee to a subsequent date, and (ii) a pro rata portion to the Date of Termination of a deemed annual bonus for the Employer’s fiscal year in which the Date of Termination occurs, calculated by multiplying (i) the higher of the annual Bonus earned by the Employee with respect to the immediately preceding fiscal year or the average annual Bonus earned by the Employee with respect to the immediately preceding three fiscal years of the Employer by (ii) the fraction obtained by dividing the number of days in the fiscal year of the Employer in which termination occurs up to and including the Date of Termination by 365. (C) For the ~~twenty~~thirty-~~four~~ six (2436) month period immediately following the Date of Termination, the ~~Company~~ Employer shall arrange to provide the ~~Executive and his dependents~~ Employee with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the ~~Executive and his dependents~~ Employee is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior any amendment to such ~~date~~ benefits made subsequent to a Change in Control, which amendment adversely affects in any manner the Employee’s entitlement to or ~~occurrence~~the amount of such benefits); ~~provided~~PROVIDED, ~~however~~HOWEVER, that, unless the ~~Executive~~ Employee consents to a different method, such health insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the ~~Executive~~ Employee pursuant to this Section ~~6.1(B~~10.1(C) shall be reduced to the extent comparable benefits ~~of the same type~~ are actually received by or made available to the ~~Executive~~ Employee without cost during the ~~twenty~~thirty-~~four~~ six (2436) month period following the ~~Executive~~Employee’s termination of employment (and any such benefits actually received by or made available to the ~~Executive~~ Employee shall be reported to the ~~Company~~ Employer by the ~~Executive~~Employee)~~; provided~~. Notwithstanding the foregoing, ~~however, that the Company~~ any benefits or payments provided under this Section 10.1(C) shall ~~promptly reimburse the Executive for the excess, if any, of the after tax cost of such benefits~~ be subject 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) In addition to the benefits to which the Executive is entitled under the DC Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the sum of following: (i) the amount ~~that would have been contributed thereto by~~ of expenses eligible for reimbursement or benefits provided under this Section 10.1(C) during any taxable year of the ~~Company on~~ Employee may not affect the ~~Executive’s behalf during~~ expenses eligible for reimbursement or the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal benefits to be provided to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Pension Plan made subsequent to a Change in Control and on or prior to the Date of Termination, which amendment adversely affects Employee in any ~~manner the computation of benefits thereunder, and~~ other taxable year; (ii) the ~~excess, if any,~~ reimbursement of ~~(x)~~ an eligible expense must be made on or before the ~~Executive’s account balance under the DC Pension Plan as~~ last day of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) If the Executive would have become entitled to benefits under the CompanyEmployee’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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third taxable year following the taxable year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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 compensationexpense was incurred; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or ~~in-kind~~ such benefits may not be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Employment Agreement (Schulman a Inc)

Severance Payments. ~~6.1 If~~ 10.1 The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 10.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a ~~Change in~~ Change- in-Control and ~~during~~ prior to the ~~Term~~end of the Change-in-Control Protective Period, ~~other than~~ in addition to the payments and benefits described in Sections 6 and 7 hereof, unless such termination is (Ai) by ~~the Company~~ Energy East for Cause, (Bii) by reason of ~~death~~ death, Disability or ~~Disability~~Retirement, or (Ciii) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of ~~this Agreement~~the immediately preceding sentence, if a termination of the ~~Executive~~ Executive's employment occurs prior to a Change-in-Control, but following a Potential Change-in-Control in which a Person has entered into an agreement with Energy East the consummation of which will constitute a Change-in-Control, such termination shall be deemed to have ~~incurred~~ followed a ~~separation from service following a Change in~~ Change-in-Control and to have been (i) by Energy East without Cause, if the ~~Company~~ Executive's employment is terminated without Cause at the direction of such Person, or (ii) 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 (whether or not a Change in Control occurs) 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 ~~for~~ with Good Reason ~~prior to a Change in Control (whether or not a Change in Control occurs)~~ and the ~~circumstance~~ act (or ~~event~~ failure to act) which constitutes Good Reason occurs following such Potential Change-in-Control and 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of ~~Termination~~ Termination, in lieu of any lump sum payment with respect to aggregate Base Salary otherwise payable pursuant to Section 8 hereof, 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~~ three (3) times the sum of of: (i) the higher of the Executive~~’s base salary as~~ 's annual Base Salary in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Executive's annual Base Salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change-in-Control, ~~and~~ and (ii) the ~~average annual bonus earned by~~ incentive compensation award the Executive ~~pursuant to~~ would have received under the Annual Executive Incentive Plan, or any successor annual ~~bonus or~~ executive incentive ~~plan maintained by~~ compensation plan, for the ~~Company in respect of the three fiscal years ending immediately prior to the fiscal~~ year in which ~~occurs~~ the Date of Termination oroccurs, ~~if higher~~calculated in accordance with Article XI (A) (iii) of the Annual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan, ~~immediately prior~~ without, however, giving effect to any pro-rata adjustments contained in said provisions, and (iii) the ~~fiscal year~~ amount the Company agreed to pay in ~~which occurs~~ connection with the ~~first event or circumstance constituting Good Reason~~Life Insurance Policy referred to in the third paragraph of Section 5.2 hereof. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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 Notwithstanding any provision of the ~~same type are received by~~ Company's Annual Executive Incentive Plan, or ~~made available to the Executive during the twenty-four (24) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plansuccessor annual executive incentive compensation plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any incentive compensation which has been allocated or awarded to the ~~amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Executive for a completed fiscal year preceding the Date of ~~Termination~~Termination under the Annual Executive Incentive Plan, ~~determined~~ or any successor annual executive incentive compensation plan, but has not yet been either (x) ~~as if the Executive made the maximum permissible contributions thereto during such period,~~ paid (pursuant to Section 6.2 hereof or otherwise) or (y) ~~as if~~ 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 any contingent incentive compensation award to the Executive ~~earned~~ for any uncompleted fiscal year under the Annual Executive Incentive Plan or any successor annual executive incentive compensation ~~during~~ plan, calculated as to each such ~~period at a rate equal~~ award in accordance with Article XI (A) (iii) of the Annual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan. (C) The Company shall pay to the Executive the retirement benefits to which the Executive is entitled under the Company's Supplemental Executive Retirement Plan (or any successor plan), and in determining such benefits, the Executive shall be given an additional two (2) years of service credit at the Executive’s 's highest annual rate of compensation ~~(as defined in the DC Pension Plan)~~ during the twelve (12) months immediately preceding the Date of Termination ~~or, if higher, during the twelve months immediately prior~~ and shall be deemed to ~~the first occurrence of an event or circumstance constituting Good Reason~~be five (5) years older than he is and a "Key Person" as defined in, and for all purposes under, the Company's Supplemental Executive Retirement Plan (zor any successor plan); provided that if the Executive does not have at least ten (10) years of service credit and age eligibility under the Company's Supplemental Executive Retirement Plan (or any successor plan) after such additional service and age credit, the Executive shall be deemed to have at least ten (10) years of service credit and age eligibility under the Company's Supplemental Executive Retirement Plan (or any successor plan); such benefits shall be determined without regard to any amendment to the ~~DC Pension~~ Company's Supplemental Executive Retirement Plan (or any successor plan) made subsequent to a ~~Change in~~ 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. Notwithstanding any provision in the Company's Supplemental Executive Retirement Plan (or any successor plan) that may be to the contrary, the benefits otherwise payable to the Executive pursuant to this Section 10.1(C) shall be paid to the Executive in a lump sum payment that is equal in amount to the present value (calculated under generally accepted actuarial methods that are consistent with the actuarial methods used in producing the tables of Appendix A of the Company's Retirement Benefit Plan (or any successor plan)) of such benefits and such payment shall be in lieu of any payments to which the Executive otherwise would have been entitled under the Company's Supplemental Executive Retirement Plan (or any successor plan) and shall satisfy any obligations that the Company would otherwise have to the Executive under the Company's Supplemental Executive Retirement Plan (or any successor plan). Such lump sum payment shall be paid to the Executive no later than the due date of the first payment otherwise due to the Executive under the Company's Supplemental Executive Retirement Plan (or any successor plan). Notwithstanding the immediately preceding paragraph of this Section 10.1(C), the Executive may elect to have the benefits otherwise payable to the Executive pursuant to this Section 10.1(C) be paid to the Executive in the manner provided for under the Company's Supplemental Executive Retirement Plan (or any successor plan) and such method of payment shall be in lieu of a lump sum payment. The Executive shall make such election by sending a letter to the Company in which he states that he has decided to make such election. The election shall not be effective unless the letter is received by the Company (i) at least 60 days prior to the day (the "Change-in-Control Day") that the Change-in-Control, or Potential Change-in-Control, that gives rise to the applicability of Section 10.1(C) occurs and (ii) prior to the ~~excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as~~ first day of the ~~Date of Termination over (y)~~ calendar year in which the ~~portion~~ Change-in-Control Day occurs. The Executive shall have the right to revoke any such election by sending a letter to the Company in which he states that he has decided to revoke such election. The revocation of such ~~account balance that~~ election shall not be effective unless the letter is ~~nonforfeitable under~~ received by the ~~terms~~ Company (i) at least 60 days prior to the Change-in-Control Day and (ii) prior to the first day of the ~~DC Pension Plan~~calendar year in which the Change-in-Control Day occurs. ~~The payments provided~~ If the Executive revokes an election, he can make a new election (in the manner, and subject to the timing requirements, set forth in this ~~Section 6.1(C) are~~ paragraph), and he can revoke any such new election (in ~~addition~~ the manner, and subject to ~~any payment~~ the ~~Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan~~timing requirements, set forth in this paragraph). (D) ~~If the Executive would have become entitled to benefits under the Company’s post~~For a thirty-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 six (36) month period ~~of twenty-four (24) months~~ after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue arrange to provide the Executive with ~~all perquisites provided by~~ life (other than the ~~Company~~ Life Insurance Policy), disability, accident and health insurance benefits substantially similar to those which the Executive is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or,~~ (without giving effect to any reduction in such benefits subsequent to a Change-in-Control if ~~more favorable~~ the Executive terminated his employment for Good Reason or was terminated without Cause). Benefits otherwise receivable by the Executive pursuant to this Section 10.1(D) shall be reduced to the ~~Executive, immediately prior~~ extent comparable benefits are actually received by or made available to the ~~first occurrence~~ Executive without cost during the thirty-six (36) month period following the Executive's termination of ~~an event or circumstance constituting Good Reason~~ employment (~~including, without limitation, automobile, financial planning, annual physical~~ and ~~executive whole life insurance). 6.2 (1) Notwithstanding~~ any ~~other provisions in this Agreement, if any of the payments or~~ such benefits ~~received or to be~~ actually received by the Executive shall be reported to Energy East by the Executive). If the benefits provided to the Executive under this Section 10.1(D) shall result in a Gross-Up Payment pursuant to Section 10.2, and these Section 10.1(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 10.2 hereof. (~~including~~ A) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or ~~benefits received in connection with a Change in Control~~ distribution by Energy East or the ~~Executive’s termination~~ Company to or for the benefit of ~~employment~~the Executive on account of a Change-in-Control, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Code or any ~~other plan~~interest or penalties with respect to such excise tax (such excise tax, ~~program~~together with any such interest and penalties, ~~arrangement or agreement) (all such payments and benefits, being~~ are hereinafter collectively referred to as the ~~“Total Payments”) would be subject (in whole or part~~"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~~Tax imposed upon the Gross-Up Payment, ~~then, after taking into account any reduction in~~ the ~~Total Payments provided by reason of section 280G~~ Executive retains an amount of the ~~Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject~~ Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (B) Subject to the provisions of Section 10.2(C) hereof, all determinations required to be made under this Section 10.2, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determinations, shall be made by Energy East's principal outside accounting firm (the "Accounting Firm") which shall provide detailed supporting calculations both to the 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 Energy East or the Executive (each such date and the Date of Termination shall be referred to as a "Determination Date", for purposes of this Section 10.2(B) and Section 10.3 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 10.2(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 no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm under this Section 10.2(B) shall be binding upon Energy East, 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 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 Energy East exhausts its remedies pursuant to Section 10.2(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. (C) The Executive shall notify Energy East 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 ~~no event~~ writing of such claim and shall apprise Energy East of the nature of such claim and the date on which such claim is requested to ~~less than zero~~be paid. The Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which he gives such notice to Energy East (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If Energy East notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give Energy East any information reasonably requested by Energy East relating to such claim, (ii) take such action in connection with contesting such claim as Energy East 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 Energy East, (iii) cooperate with Energy East in good faith in order effectively to contest such claim, and (iv) permit Energy East to participate in any proceeding relating to such claim; provided, however, that the ~~Total Payments will only be reduced if~~ Company shall bear and pay directly all costs and expenses (iincluding additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the ~~net amount~~ 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 ~~Total Payments, as so reduced (~~representation and ~~after subtracting~~ payment of costs and expenses. Without limitation on the ~~net amount~~ foregoing provisions of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total Paymentsthis Section 10.2(C), ~~is greater than~~ Energy East shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or ~~equal to (ii)~~ forgo any and all administrative appeals, proceedings, hearings and conferences with the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject taxing authority in respect of such ~~unreduced Total Payments~~ claim and ~~after taking into account~~ may, at its sole option, either direct the ~~phase out, if any, of itemized deductions~~ Executive to pay the tax claimed and ~~personal exemptions attributable to such unreduced Total Payments). (A) In~~ sue for a refund or contest the ~~case of a reduction~~ claim in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following permissi▇▇▇ manner~~: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A~~, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: (i) no portion of the Total Payments the receipt or enjoyment of which the Executive ~~shall have waived at~~ agrees to prosecute such ~~time~~ contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in ~~such manner~~ one or more appellate courts, as ~~not to constitute a “payment” within the meaning of section 280G(b) of the Code will be taken into account~~Energy East shall determine; ~~(ii) no portion of the Total Payments will be taken into account which~~provided, ~~in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to~~ however, that if Energy East directs the Executive to pay such claim 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~~ sue for a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. At the time that payments are made under this Agreementrefund, the Company shall ~~provide~~ advance the amoun▇ ▇f 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 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 ~~a written statement setting forth the manner in~~ respect to which such ~~payments were calculated~~ contested amount is claimed to be due is limited solely to such contested amount. Furthermore, Energy East's control of the contest shall be limited to issues with respect to which a Gross- Up Payment would be payable hereunder and the ~~basis for such calculations including~~Executive shall be entitled to settle or contest, ~~without limitation~~as the case may be, any ~~opinions~~ other issue raised by the Internal Revenue Service or any 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)~~taxing authority. (AD) ~~Notwithstanding any provisions of this Agreement to~~ If, after the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received receipt by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any an amount ~~of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed~~ advanced by the Company ~~within thirty (30~~pursuant to Section 10.2(C) ~~calendar days following the date on which the Company receives the applicable invoice from~~ hereof, the Executive ~~but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that~~ becomes entitled to receive any refund with respect to ~~reimbursement relating to~~ such claim, the ~~Additional Delayed Payments, such reimbursement~~ Executive shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be (subject to ~~liquidation or exchange for another benefit. (C) For purposes of section 409A,~~ Energy East's and the ~~Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay~~Company's comp

Appears in 1 contract

Sources: Employment Agreement (New York State Electric & Gas Corp)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, if the ~~Executive incurs a “separation from service” (within~~ Executive’s employment is terminated during the ~~meaning of section 409A)~~ two year period immediately 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if within the 90 day period prior to a Change in Control (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 occurs)~~ 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 for Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.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 ~~two~~ [three] [two] times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the ~~average~~ greater of (1) the target annual bonus of the Executive 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 (2) the annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in with respect of to the ~~three~~ fiscal ~~years~~ year ending immediately prior to the 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 constituting Good Reason~~Termination. (B) For the [thirty-six (36)] [twenty-four (24) )] month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents ~~life~~health, ~~disability, accident~~ vision care and ~~health~~ dental 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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 by a subsequent employer during the [thirty-six (36)] [twenty-four (24) )] 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) Notwithstanding any other provisions in of this Agreement, if in the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive (including any payment or ~~benefits~~ benefit received in connection with a Change in Control or the termination of the Executive’s ~~termination of~~ employment, whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or agreement) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as the “Total Payments”) would not be ~~subject~~ deductible (in whole or part), to by the ~~Excise Tax~~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, ~~program,~~ arrangement or agreement), the ~~Company will reduce the Total~~ cash Severance Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will shall first be reduced (if necessary, to zero), ~~with amounts that are payable last reduced first; (ii) payments~~ and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other ~~non-cash benefits not otherwise described in clauses~~ Severance Payments shall thereafter be reduced (iiif necessary, to zero); provided, however, that the Executive may elect to have the noncash Severance Payments reduced (or eliminated) ~~or (iv) will be next reduced pro-rata. Any reductions made pursuant~~ prior to ~~each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata~~ any reduction of the cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensationSeverance Payments. (B) For purposes of ~~determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax:~~ 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 ~~will~~ shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ 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 payment” within the meaning of section 280G(b)(2) of the ~~Code (~~Code, including by reason of section 280G(b)(4)(A) of the Code, (iii) ~~and, in calculating~~ the ~~Excise Tax, no portion of such~~ Severance Payments shall be reduced only to the extent necessary so that the Total Payments ~~will be taken into account which,~~ (other than those referred to in ~~the opinion of Tax Counsel, constitutes~~ clauses (i) or (ii)) in their entirety constitute reasonable compensation for services actually ~~rendered,~~ rendered within the meaning of section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions by reason of section 280G of the Code, in ~~excess~~ the opinion of ~~the Base Amount allocable to such reasonable compensation;~~ Tax Counsel, and (~~iii~~iv) the value of any noncash ~~benefits~~ benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. (C) ~~All determinations required by this Section 6.2 (~~If it is established pursuant to a final determination of a court or ~~requested by either~~ an Internal Revenue Service proceeding that, notwithstanding the ~~Executive or the Company in connection with this Section 6.2) will be at the expense~~ good faith of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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~~ portion of such Total Payments being subject to the ~~existence or amount~~ Excise Tax, then, if such repayment would result in (i) no portion of ~~liability for~~ the remaining Total Payments being subject to the Excise Tax ~~with respect~~ and (ii) 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 sum of (i) the excess of the Total ~~Payments~~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; 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 Subject to Section ~~6.4~~14 hereof, the payments provided in ~~subsections~~ subsection (A~~) and (C~~) of Section 6.1 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination. 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). ~~(A) Notwithstanding any provisions of this Agreement~~ 6.4 The Company also shall pay to the ~~contrary, if the~~ Executive ~~is a “specified employee” (within the meaning of section 409A~~ all legal fees and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive’s employment, ~~such reimbursement~~ 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. Such payments shall be made ~~on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount~~ within five (5) business days after delivery of ~~reimbursements or in-kind benefits to be provided in any other taxable year, nor shall~~ the Executive’s ~~right to reimbursement or in-kind benefits be subject to liquidation or exchange~~ written requests for ~~another benefit~~payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Agreement (US BioEnergy CORP)

Severance Payments. 6.1 If The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a Change in Control and during the ~~Term~~term of this Agreement, ~~other than~~ in addition to the payments and benefits described in Section 5 hereof, unless such termination is (Ai) by the Company for Cause, (Bii) by reason of ~~death~~ death, Disability or ~~Disability~~Retirement, or (Ciii) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of ~~this Agreement~~the immediately preceding sentence, if a termination of the ~~Executive~~ Executive's employment occurs prior to a Change in Control, but following a Potential Change in Control 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 ~~incurred a separation from service following~~ followed a Change in Control and to have been (i) 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 (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 occurs) 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 ~~for~~ with Good Reason ~~prior to a Change in Control (whether or not a Change in Control occurs)~~ and the ~~circumstance~~ act (or ~~event~~ failure to act) which constitutes Good Reason occurs following such Potential Change in Control and 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.. (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~~ ___ (_) times the sum of (i) the higher of the Executive’s '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 the event or circumstance ~~constituting Good Reason, and (ii)~~ upon which the average annual bonus earned by the Executive pursuant to any 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 Notice of Termination or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received in connection with a Change in Control based or the Executive’s termination of employment, whether pursuant to the terms of this Agreement or any other plan, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as the “Total Payments”) would be subject ('s annual base salary 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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, effect immediately prior to the Change in Control, and (ii) the higher of (x) the amount paid to the Executive pursuant to the Company~~’s independent auditor (~~'s Annual Executive Incentive Plan, or any successor annual executive incentive compensation plan, as the “Auditor”), does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account whichcase may be, in the ~~opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code,~~ fiscal year preceding that in excess of the Base Amount allocable to such reasonable compensation; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following which the Date of ~~Termination. At the time that payments are made under this Agreement~~Termination occurs, 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (iy) the ~~first (1st) business day of~~ average amount so paid in the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year three fiscal years preceding that in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company Change in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitControl occurs. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Agreement (New York State Electric & Gas Corp)

Severance Payments. 6.1 If (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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~~ or (ii) the Executive voluntarily terminates his employment for any reason during the one-month period commencing on the first anniversary of the Change in Control, then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“"Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s '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 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 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~~Person described in clause (i), or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to ~~two~~ three times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason; provided, that if the Executive has not participated in an annual bonus or incentive plan maintained by the Company for the entirety of such three-year period, the amount referred to in this clause (ii) shall be calculated using such lesser number of bonuses as have been actually earned by the Executive in respect of such lesser period. (B) For the ~~twenty~~thirty-~~four~~ six (2436) 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 and perquisites (including, but not limited to, executive life insurance, club memberships, financial planning and tax preparation, annual physical examination and charitable contributions), in each case, substantially similar to those EXHIBIT 10.4 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~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~~thirty-~~four~~ six (2436) month period following the Executive’s '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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) Notwithstanding any provision of the ▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated 1995 Employee Annual Incentive Compensation Plan (the "Annual Incentive Plan"), the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any 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 under the Annual Incentive Plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent incentive compensation awards to the Executive for all then uncompleted periods under the Annual Incentive 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 he achievement, at the expected value target level, of the individual and corporate performance goals established with respect to such award, y the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period; provided, however, that if such termination of employment occurs during the same year in which the Change in Control occurs, the pro-rata bonus payment referred to in clause (ii) above shall be offset by any payments received under the Annual Incentive Plan in connection with such Change in Control. (D) In addition to the retirement benefits to which the Executive is entitled under the ~~DC Pension~~ Company's Thrift Plan (the "Thrift Plan") and the Company's Supplemental Retirement Plan ( the "SRP"), the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ present value of ~~(i)~~ the ~~amount that~~ employer-provided contributions, deferrals and allocations the Executive would have ~~been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ received had he continued to participate, after the Date of Termination, ~~determined~~ in the Thrift Plan and the SRP for three (x3) ~~as if the Executive made the maximum permissible contributions thereto during such period~~additional years, assuming for this purpose that (yi) ~~as if~~ the Executive earned compensation for purposes of the Thrift Plan and SRP during such three-year period ~~at a rate equal~~ the amount used to calculate the Executive~~’s compensation~~ 's severance payment under subparagraph (~~as defined in the DC Pension Plan~~A) ~~during the twelve (12) months immediately preceding the Date~~ of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunderthis Section 6.1, and (ii) the ~~excess~~percentages of contributions, ~~if any, of (x) the Executive’s account balance~~ deferrals and allocations made under the ~~DC Pension~~ Thrift Plan as and the SRP by or on behalf of the Executive during such three-year period are the same percentages of contributions, deferrals and allocations in effect on the date of the Change in Control or the Date of ~~Termination over (y)~~ Termination, whichever is more favorable to the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan.Executive, (DE) If the Executive would have become entitled to benefits under the Company’s '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 's employment terminated at any time during the period of ~~twenty~~thirty-~~four~~ six (2436) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive and the Executive’s '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. (EF) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s 's position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination~~ three years or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) ~~Notwithstanding any other provisions in this Agreement~~Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~EXHIBIT 10.4 agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “"Total Payments”") ~~would~~ will be subject ~~(in whole or part),~~ to the Excise Tax, ~~then~~the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments provided by reason of section 280G of the Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and ~~after subtracting the net amount of~~ any federal, ~~state, municipal~~ state and local income and employment taxes ~~on such reduced Total Payments~~ and ~~after taking into account~~ Excise Tax upon the ~~phase out~~Gross-Up Payment, ~~if any, of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or~~ shall be equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a “payment”~~ "parachute payments" (within the meaning of section ~~280G(b~~28OG(b)(2) of the ~~Code will be taken into account; (ii~~Code) ~~no portion of the Total Payments will be taken into account which~~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, the Company’s 's independent auditor (the “"Auditor”"), ~~does~~ such payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment”~~ payments, including by reason of section 28OG(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the meaning of section ~~280G(b)(2~~28OG(b)(1) of the Code ~~(including by reason of section 280G(b)(4)(A) of the Code) and, in calculating~~ shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ such excess parachute payments (in whole or in part) represent reasonable compensation for services actually ~~rendered,~~ 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~~28OG(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 tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made 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 if there is no 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 which could be obtained from deduction of such state and local taxes. (C) ~~All determinations required by this Section 6.2 (or requested by either~~ In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Executive or shall repay to the ~~Company~~ Company, within five (5) business days following the time that the amount of such reduction in ~~connection with this Section 6.2) will be at~~ the ~~expense~~ Excise Tax is finally determined, the portion of the ~~Company~~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 and employment taxes imposed on the Gross-Up Payment being repaid by the Executive, to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. ~~The fact~~ In the event that the ~~Executive’s right~~ Excise Tax is determined to ~~payments or benefits may be reduced~~ exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the ~~limitations contained in this Section 6.2 will~~ existence or amount of which cannot ~~of itself limit or otherwise affect any other rights~~ 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 additions payable by the Executive ~~under this Agreement~~with respect to such excess) 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. 6.3 ~~Subject to Section 6.4, the~~ The payments provided in subsections (A), (C) and (CD) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination; 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 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 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)(B) of the Code), but only to the extent such amount has not been paid by the Executive pursuant to Section 6.2(C) above. 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 EXHIBIT 10.4 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). ~~(A) Notwithstanding any provisions of this Agreement~~ 6.4 The Company also shall pay to the ~~contrary, if the~~ Executive ~~is a “specified employee” (within the meaning of section 409A~~ all legal fees and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive's employment, ~~such reimbursement~~ 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. Such payments shall be made on within five (5) business days after delivery of the ~~Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by~~ Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payreasonably may require,

Appears in 1 contract

Sources: Severance Agreement (Baker Hughes Inc)

Severance Payments. ~~6.1~~ 4.1 If ~~the Executive incurs~~ a “separation from service” (within the meaning of section 409A) 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 Qualifying Termination shall ~~pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”)~~occur, in addition to any payments and benefits to which the Executive is entitled under Section 5 3 hereof~~. For purposes~~ , the Company shall pay the Executive the payments described in this Section 4.1 (the “Severance Payments”); provided, however, that, in the case of ~~this Agreement~~clauses (A), (B), (C), (D) and (F) below, the Executive shall have executed and not revoked a release of claims in the form set forth in Exhibit A hereto. The Executive shall also be ~~deemed~~ entitled to ~~have incurred a separation from service following a Change in Control by~~ the ~~Company without Cause or by the Executive with Good Reason,~~ Severance Payments (and any payments and benefits under Section 3) if ~~(i)~~ the Executive’s employment is terminated by the Company ~~without~~ other than (x) for Cause ~~prior to~~ or (y) by reason of death or Disability within the six (6) month period immediately preceding a Change in Control ~~(whether or not a Change in Control occurs)~~ and the Executive reasonably demonstrates that 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 for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control that actually occurs during the term of the Agreement (~~whether or not~~ a “Pre-Change in Control ~~occurs~~Termination”)~~. For purposes~~ ; provided, however, that, in the case of clauses (A), (B), (C), (D) and (F) below, Executive shall have executed and not revoked a release of claims in the form set forth in Exhibit A hereto; and provided further, however, that any such payments shall be offset by the amount of severance previously paid to the Executive under any employment agreement between the Executive and the Company and, to the extent permitted by Section ~~5 and 6~~ 409A of ~~this Agreement~~the Code, ~~no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination~~ any other severance policy, plan or program of ~~employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~the Company. (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 times~~ seventy-five (75%) of the Executive’s annual base salary then in effect (or immediately prior to any reduction resulting in a termination for Good Reason, if applicable) (the “Change in Control Salary”). (B) Notwithstanding any provision of any annual incentive plan to the contrary, the Company shall pay to the Executive an amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the ~~Executive’s base salary~~ Executive for a completed fiscal year preceding the Date of Termination under any such plan and which, as ~~in effect immediately prior~~ of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination ~~or, if higher,~~ of Executive’s target bonus for the year in which the Date of Termination occurs (or the target in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason), ~~and (ii) the average annual~~ calculated by multiplying such target bonus ~~earned~~ by the ~~Executive pursuant to~~ fraction obtained by dividing the number of full months and any ~~annual bonus or incentive plan maintained by the Company in respect~~ fractional portion of ~~the three fiscal years ending immediately prior to the fiscal~~ a month during such year ~~in which occurs~~ through the Date of Termination ~~or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason~~by twelve (12). (BC) For the ~~twenty-four (24)~~ six month period immediately following the Date of Termination, the Company shall arrange to provide the Executive ~~and his~~ (which includes the Executive’s eligible dependents for purposes of this subsection (C)) with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ was receiving immediately prior to the Date of Termination ~~or, if more favorable to the Executive, those provided to the Executive and his dependents~~ (or immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or resulting in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Agreement (Insignia Systems Inc/Mn)

Severance Payments. ~~6.1 If~~ 6.1. The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's ------------------ employment following a Change in Control and during the ~~Term, other than (A) by the Company for Cause, (B) by reason~~ term of ~~death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in~~ this ~~Section 6.1 (“Severance Payments”)~~Agreement, in addition to any payments and benefits 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, or (iii) by the Executive without Good Reason. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service following a Change in Control~~ been terminated by the Company without Cause or by the Executive with Good ~~Reason,~~ Reason following a Change in Control if (i) the Executive’s 's employment is terminated ~~by the Company~~ without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 's employment is terminated ~~by the Company~~ without Cause ~~or by~~ prior to a Change in Control and the Executive ~~for Good Reason and~~ reasonably demonstrates that such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control occurs). For purposes of Section 5 and 6~~ which actually occurs during the term of this Agreement, ~~no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made~~ or ~~provided unless and until such termination of~~ (iv) the Executive's employment is ~~also~~ terminated without Cause after a ~~“separation from service,” as determined~~ Potential Change in ~~accordance with section 409A.~~Control of the type described in paragraphs (I) or (IV) 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 ~~two~~ three (3) times the sum of (i) the higher of the Executive’s 's annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Executive's annual base salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change in Control (the "Change in Control ----------------- Salary"), and (ii) the ~~average~~ higher of (x) 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 ~~fiscal~~ (3) years ~~ending~~ immediately preceding that year in which the Date of Termination occurs or (y) the annual target bonus in respect of the year in which the Change in Control occurs (the "Change in --------- Control Bonus"). ------------- (B) Notwithstanding any provision of any annual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to a pro rata portion to the Date of Termination of the value of the target incentive award under such plan for the 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 any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (C) Notwithstanding any provision to the contrary within paragraphs (A) and (B) of this Section 6.1, the Company shall honor any election that the Executive makes with respect to the timing of any benefit payments due under this section (provided the Executive makes the election more than 90 days before a Change in Control and the period over which payments are elected to be made ends not more than 15 years after the Change in Control). In any event, not later than ten business days after a Change in Control, the Company shall (i) establish an irrevocable grantor trust (the "Trust") designed in accordance with Revenue Procedure 92-64 and having a trustee independent of the Company, (ii) assign to the Trust the Company's interest in any policy or policies insuring the Executive under any insurance policy insuring the life of the Executive under any "split-dollar" or corporate-owned insurance arrangement in effect between the Executive and the Company, (iii) deposit in said Trust an amount sufficient to pay all remaining premiums owed by the Company on such insurance policies (with the Trust being required to pay such premiums), and all amounts that could become payable after the Change in Control pursuant to either paragraphs (A) or (B) of this Section 6.1 or pursuant to any other plan or program under which the Executive may be entitled to collect deferred compensation, supplemental retirement benefits, or welfare benefits after the date of the Change in Control, and (iv) provide the trustee of the Trust with a written direction to hold said amount and any investment return thereon in a segregated account for the benefit of the Executive, and to follow the procedures set forth herein as to the payment of such amounts from the Trust. During the 39-consecutive month period after a Change in Control, the Employee may provide the trustee of the Trust with a written notice directing that the trustee pay to the Executive an amount designated in the notice as being payable pursuant to this Agreement. Within three business days after receiving said notice, the trustee of the Trust shall pay such amount to the Executive, and coincidentally shall provide the Company or its successor with notice of such payment. Upon the earlier of the Trust's final payment of all amounts due under paragraphs (A) and (B) of this Section 6.1 or the date 36 months after the Change in Control, the trustee of the Trust shall pay to the Company the entire balance remaining in the segregated account maintained for the benefit of the Employee. The Employee shall thereafter have no further interest in the Trust. (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 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 the earlier of a Potential Change in Control or 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 (1) the Executive's compensation (as defined in such Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or (2) 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 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; provided that the actuarial equivalent of such payment shall reduce the amount of the benefit enhancement to which the Executive may be entitled under the Company's Retirement Benefit Equity Plan due to enhance change in Control benefits under Article I, Section(35) Article VI, Section (2), Article VI Section (7), and Article VII, Section (6) of the Company's Retirement Income Plan. For purposes of this Section 6.1(D), "actuarial equivalent" shall be determined using the same assumptions utilized under the Company's Retirement Income Plan immediately prior to the ~~fiscal year~~ Change in ~~which occurs~~ Control, to determine lump sum present values under Article VII, Section (7) of the ~~Date of Termination or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason~~Company's Retirement Income Plan. (BE) For the ~~twenty~~thirty-~~four~~ six (2436) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive ~~and his~~ (which includes the Executive's eligible dependents for purposes of this paragraph (E)) with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ was receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to any amendment to such benefits made subsequent to the earlier of a Potential Change in Control or a Change in Control which amendment adversely affects in any manner the Executive~~, those provided~~ 's entitlement to or the ~~Executive and his dependents immediately prior to the first occurrence~~ amount of ~~an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to~~ such ~~date or occurrence~~benefits); provided, however, that, unless the Executive -------- ------- consents to a different method, 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~~6.1(E) shall be reduced to the extent comparable benefits ~~of the same type~~ are actually received by or made available to the Executive by a subsequent employer without cost during the ~~twenty~~thirty-~~four~~ six (2436) month period following the Executive’s '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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (DF) If the Executive would have become entitled to benefits under the Company’s 's post-retirement health care or life insurance ~~plans,~~ plans (as in effect immediately prior to a Potential Change in Control, the Change in Control or the Date of ~~Termination or~~Termination, ~~if more~~ whichever is most 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 's employment terminated at any time during the period of ~~twenty~~thirty-~~four~~ six (2436) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive ~~and~~ (subject to any employee contributions required under the terms of such plans at the level in effect immediately prior to the Change in Control or the Date of Termination, whichever is more favorable to the Executive~~’s dependents~~ ) commencing on the later of (i) the date ~~on which~~ that such coverage would have first become available ~~and~~ or (ii) the date ~~on which~~ that benefits described in subsection (BE) of this Section 6.1 terminate. From the end of the period described in the preceding sentence until the Executive and his spouse (if any, as of the Change in Control) become entitled to Medicare coverage, the Company will permit them to purchase, at COBRA rates or less, any health care coverage that they were receiving on the date of the Change in Control; provided that the Company may instead hold them harmless from any cost and associated income taxes that they incur in order to purchase substitute health insurance at premiums above the COBRA premiums that they would have paid to the Company. (EG) The Company will pay the Executive, at a daily salary rate calculated from the 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 the Executive's annual base salary in effect immediately prior to the Change in Control, an amount equal to all unused vacation days which would have been earned had the Executive continued employment through December 31 of the year in which the Date of Termination occurs. (H) The Company shall ~~provide~~ pay the reasonable fees and expenses of a full service nationally recognized executive outplacement firm until the earlier of the date the Executive ~~with third~~secures new employment or the date which is thirty-~~party outplacement services suitable to the Executive’s position for the period~~ six (36) months following the Executive’s 's Date of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment,~~ Termination; provided~~, however~~, that in no ~~case~~ event shall the ~~Company~~ aggregate amount of such payment be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later greater than ~~December 31 of the third year following the year~~ 20% of the Executive~~’s Date of Termination~~'s Change in Control Salary. (FA) ~~For~~ Anything in this Agreement to the ~~twenty-four (24) month period immediately following~~ contrary notwithstanding, in the ~~Date of Termination~~ event it shall be determined that any payment or ~~until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided~~ distribution by the Company ~~immediately prior~~ to or for the ~~Date~~ benefit of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (~~including any payment~~ whether paid or ~~benefits received in connection with a Change in Control~~ payable or ~~the Executive’s termination of employment, whether~~ distributed or distributable pursuant to the terms of this Agreement or ~~any other plan, program, arrangement or agreement~~otherwise) (~~all~~ a "Payment") would be 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 ~~payments~~ excise tax, together with any such interest and ~~benefits~~penalties, ~~being~~ are hereinafter collectively referred to as the ~~“Total Payments”) would be subject (in whole or part~~"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~~Tax imposed on the Gross-Up Payment, ~~then, after taking into account any reduction in~~ the ~~Total Payments provided by reason of section 280G~~ Executive retains an amount of the ~~Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject~~ Gross-Up Payment equal to the Excise Tax ~~(but in no event to less than zero); provided, however, that~~ imposed upon the ~~Total Payments will only be reduced if (i) the net amount of such Total~~ Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) ~~For purposes~~ Subject to the provisions of ~~determining~~ Section 6.2(C), all determinations required to be made under this Section 6.2, including whether and ~~the extent to which the Total Payments will be subject to the Excise Tax~~ when a Gross-Up Payment is required and the amount of such ~~Excise Tax:~~ Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (ithe "Accounting Firm") ~~no portion of~~ which shall provide detailed supporting --------------- calculations both to the ~~Total Payments the receipt or enjoyment of which~~ Company and the Executive ~~shall have waived at~~ within fifteen (15) business days after there has been a Payment, or such earlier time ~~and in such manner~~ as not to constitute a “payment” within the meaning of section 280G(b) of the Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected requested by the ~~accounting firm which was~~Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, ~~immediately prior to~~ 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~~’s independent auditor (~~. Any Gross-Up Payment, as determined pursuant to this Section 6, shall be paid by the ~~“Auditor”), does not constitute~~ Company to the Executive within five 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 ~~“parachute payment” within~~ result of the ~~meaning~~ uncertainty in the application of section ~~280G(b)(2)~~ 4999 of the Code ~~(including by reason of section 280G(b)(4)(A)~~ at the time of the ~~Code~~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, in calculating~~ and the Executive thereafter is required to make a payment of any Excise Tax, ~~no portion of such Total Payments will be taken into account which, in~~ the ~~opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within~~ Accounting Firm shall determine the ~~meaning of section 280G(b)(4)(B)~~ amount of the ~~Code, in excess~~ Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Base Amount allocable to such reasonable compensation; 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 CodeExecutive. (C) ~~All determinations required by this Section 6.2 (or requested by either the~~ The Executive or shall notify the Company in ~~connection with this Section 6.2) will be at~~ writing of any claim by the ~~expense~~ Internal Revenue Service that, if successful, would require the payment by the Company of the ~~Company~~Gross-Up Payment. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof Such notification shall be ~~made not~~ given as soon as practicable but no later than ~~the fifth~~ ten (~~5th~~10) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if days after the Executive is ~~a “specified employee” (within~~ informed in writing of such claim and shall apprise the ~~meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion~~ Company of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (nature of such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payclaim an

Appears in 1 contract

Sources: Executive Employment Agreement (Armstrong World Industries Inc)

Severance Payments. 6.1 If the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive’s employment is terminated following a Change in Control and during the ~~Term~~term of this Agreement, ~~other than~~ unless such termination is (Ai) by the Company for Cause, (Bii) by reason of death or ~~Disability,~~ Disability or (Ciii) by the Executive without Good Reason, ~~then~~ and provided that the seven-day revocation period described in Section 6.6 has expired without revocation of the Release and Waiver by the Executive, the Company shall pay the Executive the ~~amounts, and provide the Executive the benefits,~~ payments described in this Section 6.1 (the “Severance Payments”), ) in addition to ~~any~~ the payments and benefits ~~to which the Executive is entitled under~~ described in Sections 5.1 and 5.2 hereof (but not Section 5 5.3 hereof). ~~For purposes of this Agreement, the Executive~~ The Executive’s employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good ~~Reason,~~ Reason 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 occurs) and such termination was~~ without Cause at the ~~request or~~ direction of a Person who has entered into an agreement with the Company the consummation of which ~~would~~ will constitute a Change in ~~Control, (ii)~~ Control or if the Executive terminates his employment ~~for~~ with Good Reason prior to a Change in Control (~~whether or not~~ determined by treating a Potential Change in Control as a Change in Control ~~occurs~~in applying the definition of Good Reason) ~~and~~ if 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.. (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 (i) two times the Executive’s annual base salary as approved by the Compensation Committee of the Board to be paid to the Executive (or, if the Executive’s annual base salary is not presented for approval at the Compensation Committee level, then as otherwise established by J. ▇▇▇▇ or one of its Subsidiaries) with respect to the year in which the Date of Termination occurs, plus (ii) the sum of the amounts paid or payable to the Executive under all Bonus Plans with respect to the two fiscal years (or any portion thereof) immediately prior to the year in which the Date of Termination 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 incentive compensation which has been allocated or awarded to the ~~Executive’s base salary as in effect immediately prior~~ Executive for a completed year or other measuring period preceding the Date of Termination under any such Bonus Plan but has not yet been paid (pursuant to Section 5.2 hereof or otherwise), (ii) a pro rata portion to the Date of Termination ~~or, if higher, in effect immediately prior~~ of the maximum bonus amount payable to the ~~first occurrence of an event or circumstance constituting Good Reason, and (ii) the average annual bonus earned by the~~ Executive ~~pursuant to any annual bonus or incentive plan maintained by the Company in~~ under all Bonus Plans with respect ~~of the three fiscal years ending immediately prior~~ to the ~~fiscal~~ year (or any portion thereof) in which ~~occurs~~ the Date of Termination oroccurs, ~~if higher~~treating any and all performance goals under such Bonus Plans as having been met and calculated by multiplying such maximum bonus amount by a fraction, ~~immediately prior~~ the numerator of which is the number of days in such year (or portion thereof) which elapsed to the ~~fiscal~~ Date of Termination and the denominator of which is the number of days in such year (or portion thereof), and (iii) if any portion of the guaranteed bonus payments for the Spring 2006 and Fall 2006 seasons described in ~~which occurs~~ the ~~first event or circumstance constituting Good Reason~~fourth bullet paragraph of the letter agreement between the Executive and the Company dated October 17, 2005 remains unpaid at the Date of Termination and such unpaid portion exceeds the amount described in clause (ii) of this Section 6.1(B), an additional amount equal to the difference between such unpaid portion and the amount described in such clause (ii). (BC) For ~~the~~ a twenty-four (24) month period ~~immediately following~~ after 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 life, disability, accident and health insurance benefits which the Executive ~~and his dependents~~ is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to ~~the Executive, those provided~~ any reduction in such benefits subsequent to ~~the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting~~ a Change in Control which reduction constitutes Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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~~6.1(C) 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 twenty-four (24) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. 6.2 The payments provided for in ~~this~~ Section 6.1 (other than Section 6.1(C)) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) ~~business~~ day following the ~~Date~~ expiration of ~~Termination. At~~ the ~~time~~ seven-day revocation period described in Section 6.6 without revocation of the Release and Waiver by the Executive, unless the Company determines in good faith that such payments are ~~made under this Agreement~~required to be delayed for a period of six (6) months in order to satisfy the requirements of Internal Revenue Code §409A(a)(2)(B)(i), in which case the Company shall ~~provide~~ so advise the ~~Executive with a written statement setting forth the manner in which~~ Executive, and 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made ~~available~~ on the earlier of (i) six (6) months after the ~~first~~ Date of Termination or (~~1st~~ii) ~~business day~~ the death of the ~~seventh month~~ Executive. 6.3 If the Executive’s employment is terminated following a Change in Control and during the ~~date~~ term of this Agreement, unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability or (iii) by the Executive without Good Reason, all outstanding stock options held by the Executive for the purchase of shares of Common Stock of J. ▇▇▇▇ shall immediately become vested in full. The Executive agrees not to exercise the portion of such stock options for which vesting has been accelerated until the seven-day revocation period described in Section 6.6 has expired without revocation of the Release and Waiver by the Executive, and any such exercise before the seven-day revocation period has expired without revocation of the Release and Waiver by the Executive shall be null and void. 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 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 as a Change in Control in applying the definition of Good Reason) if the circumstance or event which constitutes Good Reason occurs at the direction of such Person. (i) If any payment or benefit made available to the Executive in connection with a Change in Control (including, without limitation, any payment made pursuant to any long-term incentive plans, stock option or equity participation right plans) or termination of the Executive’s ~~separation from service or~~ employment following a Change in Control (iiin either category, a “Change in Control Payment”) ~~Executive’s death~~ is subject to the Excise Tax (~~the applicable date~~as hereinafter defined), the ~~“Permissible Payment Date”). The~~ Company shall ~~also reimburse~~ pay to the Executive ~~for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits~~ additional amounts (the “~~Additional Delayed Payments~~Gross Up Amounts”~~). (B~~) ~~With respect to any~~ such that the total amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but all Change in ~~no event later than December 31~~ Control Payments net of the ~~year following~~ Excise Tax shall equal the ~~year~~ total amount of all Change in Control Payments to which the Executive ~~incurs~~ would have been entitled if the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payExcise Tax had not

Appears in 1 contract

Sources: Change in Control Severance Agreement (J Jill Group Inc)

Severance Payments. ~~6.1 If~~ The Employer shall pay the ~~Executive incurs a “separation from service”~~ Employee the payments described in this Section 10.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Employee's employment following a Change in Control and ~~during~~ prior to the ~~Term, other than (A) by~~ end of 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”)Change-in-Control Protective Period, in addition to any payments and benefits to which the ~~Executive~~ Employee is entitled under ~~Section 5~~ Sections 5, 6, 7 and 8.1 hereof, unless such termination is (i) by the Employer for Cause, (ii) by reason of death or Disability, or (iii) by the Employee without Good Reason. For purposes of this Agreement, the ~~Executive~~ Employee's employment shall be deemed to have ~~incurred a separation from service~~ been terminated by the Employer without Cause following a Change in Control ~~by the Company without Cause~~ or by the ~~Executive~~ Employee with Good ~~Reason~~Reason following a Change in Control, as the case may be, if (iI) the ~~Executive’s~~ Employee's employment is terminated ~~by the Company~~ without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and such termination was at the request or direction of a Person who has entered into an agreement with the ~~Company~~ Employer the consummation of which would constitute a Change in Control, (iiII) the ~~Executive~~ Employee terminates his employment ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (~~iii~~III) the ~~Executive’s~~ Employee's employment is terminated by the ~~Company~~ Employer without Cause ~~or by the Executive for Good Reason~~ prior to a Change in Control (but following a Potential Change in Control) and such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control~~ which actually occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Employee shall be presumed to be correct unless the Employer establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~not correct. Exhibit 10.2 (A) In lieu of any further salary payments to the ~~Executive~~ Employee for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ~~Executive~~Employee, the ~~Company~~ Employer shall pay to the ~~Executive~~ Employee a lump sum severance payment, in cash, equal to ~~two~~ three (3) times ~~the sum of~~ (i) the ~~Executive’s base salary as~~ greater of the Employee's Base Salary in effect immediately prior to the ~~Date of Termination or, if higher, in effect immediately prior to the first~~ occurrence of an the event or circumstance ~~constituting Good Reason, and (ii)~~ upon which the average annual bonus earned by the Executive pursuant to any 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 Notice of Termination ~~or, if higher, immediately prior to~~ is based or the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) If the Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans, as Employee's Base Salary 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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, and (ii) the ~~Company’s independent auditor~~ greater of (x) the ~~“Auditor”), does not constitute a “parachute payment” within~~ Annual Bonus earned by the ~~meaning of section 280G(b)(2)~~ Employee in respect of the ~~Code (including by reason of section 280G(b)(4)(A) of the Code) and,~~ Employer's fiscal year immediately preceding that in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following which the Date of ~~Termination. At~~ Termination occurs, (y) the ~~time~~ average Annual Bonus so earned in respect of the three fiscal years immediately preceding 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~~Change in Control occurs, ~~without limitation~~or (z) $736,000. Of the foregoing payments, ~~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~~ an amount equal to one year's Base Salary plus one year's Annual Bonus shall be ~~attached~~ in consideration of and allocated to the statement). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation Employee's obligations under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”)Section 13.2. (B) For 18 months after the Employee's Date of Termination, the Company will maintain in full force and effect, for the Employee's continued benefit (and that of all family members and other dependents who were enrolled in the programs on the Employee's Date of Termination) all life, medical and dental insurance programs in which the Employee (and members of the Employee's family or other dependents) were participating or by which such individuals were covered immediately before the Employee's Date of Termination. If the terms of any of such programs do not allow the continued participation described in the preceding sentence, the Company will: (i) provide benefits that are substantially similar (including eligibility conditions, conditions on benefits, the value of benefits and the scope of coverage) to those provided by the life, medical and dental insurance programs in which the Employee, members of the Employee's family and dependents were participating immediately before the Employee's Date of Termination; and (ii) ensure that any eligibility or other conditions on benefits under these programs, including deductibles and co-payments, will be administered by applying the Employee's experience under any predecessor program in which the Employee (and members of the Employee's family and dependents) were participating before Termination. With respect to this Section 10.1(B), any benefits or payments relating to medical and dental insurance that are provided after completion of the applicable continuation period permitted under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, and any benefits or payments relating to life insurance shall be subject to the following: (A) the amount of expenses eligible for reimbursement or the benefits or payments provided under ~~Sections 6.1 (B), (D~~this Section 10.1(B) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 during any taxable year of the ~~year following~~ Employee may not affect the ~~year in which~~ expenses eligible for reimbursement or the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements benefits or ~~in-kind benefits~~ payments to be provided by to the ~~Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided~~ Employee in any other taxable year~~, nor shall~~ ; (B) the ~~Executive’s~~ reimbursement of an eligible expense must be made on or before the last day of the Employee's taxable year following the taxable year in which the expense was incurred; and (C) the right to reimbursement or ~~in-kind~~ to such benefits be or payments is not subject to liquidation or exchange for another benefit~~. (C~~. To the extent that any benefit extended under this Section 10.1(B) ~~For purposes of section 409A~~would result in taxable compensation for the Employee, the ~~Executive’s right to receive any “installment” payments pursuant to this Agreement~~ Employee shall be ~~treated as a right to receive a series of separate and distinct pay~~solely responsible for any such taxes.

Appears in 1 contract

Sources: Employment Agreement (Schulman a Inc)

Severance Payments. ~~6.1 If~~ The Employer shall pay the ~~Executive incurs a~~ Employee the payments described in this Section 10.1 (the “~~separation from service” (within~~ Severance Payments”) upon the ~~meaning~~ termination of ~~section 409A)~~ the Employee’s employment following a Change in Control and ~~during~~ prior to the ~~Term, other than (A) by~~ end of 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”)Change-in-Control Protective Period, in addition to any payments and benefits to which the ~~Executive~~ Employee is entitled under ~~Section 5~~ Sections 5, 6, 7 and 8.1 hereof, unless such termination is (i) by the Employer for Cause, (ii) by reason of death or Disability, or (iii) by the Employee without Good Reason. For purposes of this Agreement, the ~~Executive~~ Employee’s employment shall be deemed to have ~~incurred a separation from service~~ been terminated by the Employer without Cause following a Change in Control ~~by the Company without Cause~~ or by the ~~Executive~~ Employee with Good ~~Reason~~Reason following a Change in Control, as the case may be, if (iI) the ~~Executive~~Employee’s employment is terminated ~~by the Company~~ without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and such termination was at the request or direction of a Person who has entered into an agreement with the ~~Company~~ Employer the consummation of which would constitute a Change in Control, (iiII) the ~~Executive~~ Employee terminates his employment ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (~~iii~~III) the ~~Executive~~Employee’s employment is terminated by the ~~Company~~ Employer without Cause ~~or by the Executive for Good Reason~~ prior to a Change in Control (but following a Potential Change in Control) and such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control~~ which actually occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Employee shall be presumed to be correct unless the Employer establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~not correct. (A) In lieu of any further salary payments to the ~~Executive~~ Employee for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ~~Executive~~Employee, the ~~Company~~ Employer shall pay to the ~~Executive~~ Employee a lump sum severance payment, in cash, equal to two (2) times the sum of (i) the ~~Executive~~greater of the Employee’s ~~base salary as~~ Base Salary in effect immediately prior to the ~~Date of Termination or, if higher, in effect immediately prior to the first~~ occurrence of an the event or circumstance ~~constituting Good Reason, and (ii)~~ upon which the average annual bonus earned by the Executive pursuant to any 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 Notice of Termination ~~or, if higher, immediately prior to~~ is based or the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) month period following the ExecutiveEmployee’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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) If the Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans, as Base Salary 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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, and (ii) the ~~Company’s independent auditor~~ greater of (x) the ~~“Auditor”), does not constitute a “parachute payment” within~~ annual Bonus earned by the ~~meaning of section 280G(b)(2)~~ Employee in respect of the ~~Code (including by reason of section 280G(b)(4)(A) of the Code) and,~~ Employer’s fiscal year immediately preceding that in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following which the Date of ~~Termination. At~~ Termination occurs, (y) the ~~time~~ average annual Bonus so earned in respect of the two fiscal years immediately preceding that ~~payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner~~ in which the Change in Control occurs, or (z) $350,000. Of the foregoing payments, one-half of all 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~~ in consideration of and allocated to the statement). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation Employee’s obligations under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”)Section 13.2. (B) For 18 months after the Employee’s Date of Termination, the Company will maintain in full force and effect, for the Employee’s continued benefit (and that of all family members and other dependents who were enrolled in the programs on the Employee’s Date of Termination) all life, medical and dental insurance programs in which the Employee (and members of the Employee’s family or other dependents) were participating or by which such individuals were covered immediately before the Employee’s Date of Termination. If the terms of any of such programs do not allow the continued participation described in the preceding sentence, the Company will: (i) provide benefits that are substantially similar (including eligibility conditions, conditions on benefits, the value of benefits and the scope of coverage) to those provided by the life, medical and dental insurance programs in which the Employee, members of the Employee’s family and dependents were participating immediately before the Employee’s Date of Termination; and (ii) ensure that any eligibility or other conditions on benefits under these programs, including deductibles and co-payments, will be administered by applying the Employee’s experience under any predecessor program in which the Employee (and members of the Employee’s family and dependents) were participating before Termination. With respect to this Section 10.1(B), any benefits or payments relating to medical and dental insurance that are provided after completion of the applicable continuation period permitted under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, and any benefits or payments relating to life insurance shall be subject to the following: (A) the amount of expenses eligible for reimbursement or the benefits or payments provided under ~~Sections 6.1 (B), (D~~this Section 10.1(B) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 during any taxable year of the ~~year following~~ Employee may not affect the ~~year in which~~ expenses eligible for reimbursement or the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements benefits or ~~in-kind benefits~~ payments to be provided by to the ~~Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided~~ Employee in any other taxable year~~, nor shall~~ ; (B) the ~~Executive~~reimbursement of an eligible expense must be made on or before the last day of the Employee’s taxable year following the taxable year in which the expense was incurred; and (C) the right to reimbursement or ~~in-kind~~ to such benefits be or payments is not subject to liquidation or exchange for another benefit~~. (C~~. To the extent that any benefit extended under this Section 10.1(B) ~~For purposes of section 409A~~would result in taxable compensation for the Employee, the ~~Executive’s right to receive any “installment” payments pursuant to this Agreement~~ Employee shall be ~~treated as a right to receive a series of separate and distinct pay~~solely responsible for any such taxes.

Appears in 1 contract

Sources: Employment Agreement (Schulman a Inc)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, the Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a Change in Control and during the ~~Term~~term of this Agreement, ~~other than~~ in addition to the payments and benefits described in Section 5 hereof, unless such termination is (Ai) by the Company or the Bank for Cause, (Bii) by reason of death or ~~Disability~~Retirement, or (Ciii) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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~~ The Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good ~~Reason,~~ Reason if ~~(i)~~ the Executive’s 's employment is terminated ~~by the Company without Cause~~ prior to a Change in Control ~~(whether or not a Change in Control occurs) and such termination was~~ without Cause at the ~~request or~~ direction of a Person who has entered into an agreement with the Company the consummation of which ~~would~~ will constitute a Change in ~~Control, (ii)~~ Control or if the Executive terminates his employment ~~for~~ with Good Reason prior to a Change in Control (~~whether or not~~ determined by treating a Potential Change in Control as a Change in Control ~~occurs~~in applying the definition of Good Reason) ~~and~~ if the ~~circumstance~~ circum- stance 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.. (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 ~~Executive~~Executive 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 two (2) times the sum of (i) the higher of the Executive’s 's annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason,~~ Change in Control and (ii) the higher of the average of the annual ~~bonus earned by~~ amounts paid to, or approved for, the Executive pursuant to the Performance Recognition Opportunity Plan, or any ~~annual bonus~~ successor plan, with respect to the three (3) years (or ~~incentive plan maintained by~~ the ~~Company in respect~~ number of years employed, if less) immediately preceding (a) the occur rence of the ~~three fiscal years ending immediately prior to the 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 ~~constituting Good Reason~~upon which the Notice of Termination is based or (b) the Change in Control. (B) ~~For the twenty-four (24) month period immediately following the Date~~ In lieu of ~~Termination, the Company shall arrange to provide the Executive and his dependents~~ any further 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable due to the Executive, the ~~first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plan, the~~ Company shall pay to the Executive a lump sum amount, in cash, equal to the ~~sum of~~ cost to the Company (~~i) the amount that would have been contributed thereto~~ as determined by the Company on in good faith with reference to its most recent actual experience) of providing such benefits, to the ~~Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if~~ extent that the Executive ~~made the maximum permissible contributions thereto during~~ is eligible to receive such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months benefits immediately prior to the ~~first occurrence~~ Notice of ~~an event or circumstance constituting Good Reason, and~~ Termination (z) without ~~regard~~ giving effect to any ~~amendment to the DC Pension Plan made~~ reduction in such benefits 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 reduction constitutes Good Reason), ~~had the Executive’s employment terminated at any time during the~~ for a period of ~~twenty-four~~ two (242) ~~months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive and the Executive’s dependents~~ years 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (FC) ~~For the twenty-four (24) month period immediately following the Date of Termination or until the~~ The Executive ~~becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company~~ shall continue to ~~provide~~ accrue service credit (for all purposes, including without limitation benefit accrual) under the ~~Executive with all perquisites provided by~~ Pension Plan, Thrift Plan, the ~~Company immediately prior~~ Bonus SERP, the Excess SERP or any successor plans thereto, at the compensation level equal to the ~~Date~~ amount determined in accordance with Section 6.1(A) hereof for a period of ~~Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason~~ two (~~including, without limitation, automobile, financial planning, annual physical and executive whole life insurance)~~2) years. 6.2 ~~(1)~~ Notwithstanding any other provisions in of this Agreement, if in the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter ~~referred to as the “~~called "Total Payments”") would be subject (in whole or part), ) to the Excise Tax, ~~then,~~ 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, ~~program,~~ arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced ) if (iA) the net amount of such Total Payments, as so reduced (and after ~~subtracting~~ deduction of the net amount of federal, ~~state, municipal~~ state and local income ~~taxes~~ tax on ~~such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to~~ such reduced Total Payments), is greater than ~~or equal to~~ (iiB) the excess of (i) the net amount of such Total ~~Payments~~ Payments, without ~~such~~ reduction (but after ~~subtracting~~ deduction of the net amount of federal, ~~state, municipal~~ state and local income ~~taxes~~ tax on such Total ~~Payments and~~ Payments) over (ii) 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, if any, of itemized deductions and personal exemptions attributable to such unreduced~~ Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise ~~Tax and the amount of such 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~~ in ~~such manner as not~~ writing prior to ~~constitute a “payment” within~~ the ~~meaning~~ Date of ~~section 280G(b) of the Code will~~ Termination shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ shall be taken into account which, in the opinion of tax counsel ~~(“Tax Counsel”)~~ selected by the Company's independent auditors and 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”)~~Executive, does not constitute a “"parachute payment” " within the meaning of section 280G(b)(2) of the ~~Code~~ Code, (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments ~~will~~ shall be taken into account ~~which, in the opinion of Tax Counsel,~~ which constitutes 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; , and (iii) 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 ~~Auditor~~ Company in accordance with the principles of sections 280G(d)(3) and (4) of the Code~~. (C) All determinations required by this~~ . Prior to the payment date set forth in Section ~~6.2 (or requested by either~~ 6.3 hereof, the Company shall provide the Executive ~~or the Company in connection~~ with ~~this Section 6.2) will be at the expense~~ its calculation of the ~~Company. The fact that the Executive’s right~~ amounts referred to ~~payments or benefits may be reduced by reason of the limitations contained~~ in this Section ~~6.2 will not of itself limit or otherwise affect any other rights of~~ and such supporting materials as are reasonably necessary for the Executive ~~under this Agreement~~to evaluate the Company'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. 6.3 Subject~~ Executive such portion of the Severance Payments (up to ~~Section 6.4,~~ 100% thereof) as the ~~payments provided~~ Executive determines is necessary to result in ~~subsections~~ the Executive receiving the greater of clauses (A) and (CB) of this Section. 6.3 The payments provided for in Section 6.1 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination~~. At~~ ; however, if the ~~time that~~ amounts of such payments, and the limitation on such payments ~~are made under this Agreement~~set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall ~~provide~~ pay to the Executive ~~with a written statement setting forth~~ on such day an estimate, as determined by the ~~manner in which~~ Executive, of the minimum amount of 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 to which ~~are in writing shall be attached to the statement). (A) Notwithstanding any provisions of this Agreement to the contrary, if~~ the Executive is ~~a “specified employee”~~ clearly entitled and shall pay the remainder of such payments (~~within the meaning of section 409A and determined pursuant to procedures adopted by the Company)~~ together with interest at the ~~time of his separation from service and if any portion~~ rate provided in section 1274(b)(2)(B) of the ~~payments or benefits to~~ Code) as soon as the amount thereof can be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive determined but in no event later than ~~December 31~~ the thirtieth (30th) day after the Date of Termination. In the event that the amount of the ~~year following~~ estimated payments exceeds the ~~year~~ 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 ~~which~~ section 1274(b)(2)(B) of the Code). 6.4 The Company also shall pay to the Executive ~~incurs~~ all legal fees and expenses incurred by the ~~related expenses; provided~~Executive in seeking to obtain or enforce any benefit or right provided by this Agreement, ~~that~~ in accordance with ~~respect~~ Section 14 hereof (including without limitation fees and expenses incurred in seeking to ~~reimbursement relating to~~ secure the ~~Additional Delayed Payments, such reimbursement~~ Executive's rights provided by Section 14 hereof). Such payments shall be made on within five (5) business days after delivery of the ~~Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by~~ Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitreasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Executive Employment Agreement (Bank of Boston Corp)

Severance Payments. 6.1 If Subject to Sections 6.2 and 16(A) hereof, if (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s 's employment is terminated by the Company without Cause after the occurrence of a Potential Change in Control and prior to a Change in Control (whether or not a Change in Control ever occurs) 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 for Good Reason after the occurrence of a Potential Change in Control and 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, or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason after the occurrence of a Potential Change in Control and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) the ~~average~~ target annual ~~bonus earned by~~ incentive compensation for the Executive ~~pursuant to any 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~~ Change in Control occurred, or, if higher, ~~immediately prior to~~ the actual incentive compensation the Executive earned for the fiscal year preceding the year in which ~~occurs~~ the ~~first event or circumstance constituting Good Reason~~Executive's employment is terminated. (B) ~~For the twenty~~Notwithstanding any provision of any annual or long-four (24) 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 term incentive plan 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plancontrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) ~~the amount that would have~~ any unpaid incentive compensation which has been ~~contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if~~ allocated or awarded to the Executive ~~made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such~~ for a completed fiscal year or other measuring period ~~at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately~~ preceding the Date of Termination under any such plan and which has not yet been paid or deferred pursuant to a deferral plan maintained by the Company, and (ii) and, notwithstanding any provision of the Company's annual incentive plan to the contrary, a cash lump sum amount equal to a pro rata portion to the Date of Termination of the aggregate value of the annual incentive compensation award to the Executive for the then uncompleted fiscal year under such plan, assuming achievement of performance goals at the target level, or, if higher, ~~during~~ assuming continued achievement of such performance goals at the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Pension Plan made subsequent to a Change in Control and on or prior to level achieved through the Date of Termination, which amendment adversely affects in any manner the computation of benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (EC) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s 's position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar~~ one year ~~following such Date of Termination~~ or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (FA) ~~For~~ Notwithstanding any contrary provision in this Agreement or any other plan or agreement to the ~~twenty-four (24) month period immediately following the Date~~ contrary and regardless of ~~Termination~~ whether or ~~until~~ not the Executive becomes ~~eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue~~ entitled to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this AgreementSeverance Payments, if any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, ~~program,~~ arrangement or ~~agreement)~~ agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (all such payments and ~~benefits,~~ benefits being hereinafter ~~referred to as~~ called the “Total Payments”) would constitute a “parachute payment” (as defined in Section 280G of the Code), then if any of 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~~ shall be either (a) reduced (but not below zero) so that the aggregate present value of such Total Payments and benefits received by ~~reason of section 280G of~~ the ~~Code in such other plan, program, arrangement or agreement,~~ Executive from the Company ~~will reduce~~ and its affiliated entities shall be $1.00 less than three times the ~~Total Payments to~~ Executive's Base Amount (the ~~extent necessary~~ “Safe Harbor Amount”) and so that no portion of ~~the~~ such Total Payments is received by the Executive shall be subject to the Excise Tax, or (b) paid in full, whichever produces the better net after-tax result for the Executive (taking into account any applicable Excise Tax ~~(but in no event to less than zero~~and any applicable income tax); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such . If reduced Total Payments are made to the Executive and ~~after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than~~ through error or ~~equal to (ii) the net amount of such~~ otherwise those Total Payments ~~without~~ exceed the Safe Harbor Amount, the Executive shall immediately repay such excess to the Company or its applicable affiliated entity upon notification that an overpayment has been made. If a reduction is made in accordance with the foregoing, such reduction (but after subtracting the net amount of federal, state, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will shall be made in the following ~~manner: first~~order: (i) First, ~~a pro~~by reducing the amounts of parachute payments that would not constitute deferred compensation subject to Section 409A of the Code, to the extent necessary to decrease the Total Payments that would otherwise constitute parachute payments in excess of the Safe Harbor Amount, as agreed by the Company and the Executive; (ii) Next, if after the reduction to zero of the amounts described in subparagraph (i), the remaining scheduled parachute payments are greater than the Safe Harbor Amount, then by reducing the cash amounts of Total Payments that constitute deferred compensation (within the meaning of Section 409A) subject to Section 409A, with the reductions to be applied first to the Total Payments scheduled for the latest distribution date, and then applied to distributions scheduled for progressively earlier distribution dates, to the extent necessary to decrease the Total Payments that would otherwise constitute parachute payments in excess of the Safe Harbor Amount; and (iii) Next, if after the reduction to zero of the amounts described in subparagraphs (i) and (ii), the remaining scheduled parachute payments are greater than the Safe Harbor Amount, then, by reducing the non-~~rata reduction of~~ cash ~~payment and payments and benefits due in respect~~ amounts of any ~~equity not~~ of the remaining scheduled Total Payments that constitute deferred compensation (within the meaning of subject to ~~section~~ 409A), with the reductions to be applied first to the Total Payments scheduled for the latest distribution date, and ~~second~~then applied to distributions scheduled for progressively earlier distribution dates, ~~a pro-rata reduction~~ to the extent necessary to decrease the Total Payments that would otherwise constitute parachute payments in excess of ~~cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation~~the Safe Harbor Amount. (B) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a “payment” within the meaning of section 280G(b) of the Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which~~parachute payments, 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, the Company’s 's independent auditor (~~the~~ “Auditor”), ~~does~~ such other payments or benefits (in whole or in part) do not constitute a parachute payments, (ii) all “excess parachute ~~payment~~payments” within the meaning of section ~~280G(b)(2~~280G(b)(l) of the Code ~~(including by reason of section 280G(b)(4)(A) of the Code) and, in calculating~~ shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which,~~ Tax unless otherwise determined in the opinion of Tax Counsel, ~~constitutes 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;~~ 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)~~ section 280G of the ~~Code. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company~~Code and applicable regulations. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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 Prior to the ~~Total Payments.~~ payment date set forth in Section 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. At the time that payments are made under this Agreementhereof, the Company shall provide the Executive with ~~a written statement setting forth~~ its calculation of the ~~manner~~ amounts referred to in ~~which~~ this Section 6.2(B) and such ~~payments were calculated and~~ supporting materials as are reasonably necessary for the ~~basis for such~~ Executive to evaluate the Company's calculations. If the Executive disputes the Company's calculations ~~including, without limitation, any opinions~~ (in whole or ~~other advice the Company has received from Tax Counsel~~in part), the ~~Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). (A) Notwithstanding any provisions~~ reasonable opinion of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that Tax Counsel with respect to ~~reimbursement relating to~~ the ~~Additional Delayed Payments, such reimbursement~~ matter in dispute shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitprevail. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Severance Agreement (Yum Brands Inc)

Severance Payments. ~~6.1 If~~ 6.01 Subject to Section 6.02, Section 6.05 and Section 9 hereof, the Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.01 (~~within~~ collectively, the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a Change in Control and during the ~~Term~~term of this Agreement, ~~other than~~ unless such termination is (Ai) by the Company for Cause, (Bii) by reason of death or Disability, or (Ciii) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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 shall be deemed to have incurred a separation from service following a Change in Control by the Company without Cause or by the Executive with Good Reason~~immediately preceding sentence, if ~~(i)~~ a termination of the Executive’s 's employment ~~is terminated by the Company without Cause~~ occurs prior to a Change in ~~Control (whether or not~~ Control, but following a Potential Change in Control ~~occurs) and such termination was at the request or direction of~~ in which a Person ~~who~~ has entered into an agreement with the Company the consummation of which ~~would~~ will constitute a Change in Control, ~~(ii) the Executive terminates his employment for Good Reason prior~~ such termination shall be deemed to have followed a Change in Control and to have been (~~whether or not a Change in Control occurs~~i) ~~and~~ by the ~~circumstance or event which constitutes Good Reason occurs~~ Company without Cause, if the Executive's employment is terminated without Cause at the ~~request or~~ direction of such Person, or (~~iii~~ii) ~~the Executive’s employment is terminated by the Company without Cause or~~ by the Executive ~~for~~ with Good Reason, if the Executive terminates his or her employment with Good Reason and ~~such termination~~ the act (or ~~the circumstance or event~~ failure to act) which constitutes Good Reason ~~is otherwise in connection with or in anticipation of a~~ occurs following such Potential Change in Control ~~(whether or not a Change in Control occurs). For purposes~~ and at the direction of ~~Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~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 cash severance ~~payment, in cash,~~ payment within sixty (60) days following the Date of Termination equal to two (2) times the sum of (i) the higher of (x) the Executive’s 's annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher, in effect~~ is based or (y) the average of Executive's annual base salary for the three (3) years immediately prior to the ~~first~~ occurrence of an the event or circumstance ~~constituting Good Reason~~upon which the Notice of Termination is based, ~~and~~ plus (ii) the ~~average annual bonus earned by~~ higher of (x) the amount paid to the Executive ~~pursuant to any~~ as annual ~~bonus or~~ non-equity incentive plan ~~maintained by~~ compensation in the ~~Company in respect of~~ year preceding the ~~three fiscal years ending immediately prior to the fiscal~~ year in which ~~occurs~~ the Date of Termination occurs or (y) the average amount so paid in the three (3) years preceding that in which the Date of Termination occurs (or, if ~~higher~~the Executive is not eligible for annual non-equity incentive plan compensation and, ~~immediately prior~~ instead, is eligible for an annual discretionary bonus, the higher of (x) the amount paid to the ~~fiscal~~ Executive as an annual discretionary bonus in the year preceding the year in which the Date of Termination occurs or (y) the ~~first event or circumstance constituting Good Reason~~average amount so paid in the three (3) years preceding that in which the Date of Termination occurs). (B) ~~For the twenty-four (24) month period immediately following the Date of Termination, the~~ The Company shall ~~arrange to provide the Executive and his dependents life, disability, accident and health insurance benefits substantially similar to those provided~~ pay to the Executive ~~and his dependents immediately prior to~~ a pro-rata bonus for the annual incentive plan performance period ("Plan Year") in which the Date of Termination oroccurs (the "Final Year Bonus"), ~~if more favorable to~~ the ~~Executive, those provided to the Executive~~ calculation and ~~his dependents immediately prior to the first occurrence~~ payment of an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, such health insurance benefits which 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) 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 promptly 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 depend upon when the Date of Termination oroccurs, ~~if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason.~~as follows: (C1) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination ~~or, if higher,~~ occurs during the ~~twelve months immediately prior to~~ same Plan Year in which the ~~first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Pension Plan made subsequent to a~~ Change in Control ~~and on or prior to~~ occurs, the ~~Date of Termination, which amendment adversely affects in any manner the computation of benefits thereunder, and (ii) the excess, if any,~~ Final Year Bonus shall equal product of (x) the Executive~~’s account balance~~ 's target annual bonus for such year, and (y) a fraction, the numerator of which is the number of days in the Plan Year through the Date of Termination, and the denominator of which is 365; and such Final Year Bonus shall be paid a single lump sum cash payment within sixty (60) days after the Date of Termination (or any later date that may be required pursuant to Section 13 hereof); (2) if the Date of Termination occurs after the end of the Plan Year in which the Change in Control occurs, the Final Year Bonus shall equal product of (x) the amount the Executive would have earned, if any, under the ~~DC Pension~~ annual incentive plan for such year based on actual financial performance for such Plan Year, and (y) a fraction, the numerator of which is the number of days in the Plan Year through the Date of Termination, and the denominator of which is 365; and such Final Year Bonus shall be paid in a single lump sum cash payment at the time such bonus awards are normally paid for such Plan Year (or any later date that may be required pursuant to Section 13 hereof); (C) All of the Executive's equity awards outstanding on the Date of Termination shall be treated as follows: (1) all time-based restrictions on awards of restricted stock or unit awards shall lapse as of the Date of ~~Termination over~~ Termination; (y2) all stock options shall be fully vested and exercisable as of the ~~portion~~ Date of ~~such account balance that is nonforfeitable under~~ Termination; and (3) any performance shares or units shall be governed by the terms and conditions of the ~~DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive~~ Company's long-term incentive plan under ~~the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan~~which they were awarded. (D) If the Executive ~~would have become entitled~~ elects to continue participation in any group medical, dental, vision and/or prescription drug plan benefits ~~under~~ to which 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~~ Executive and/or the Executive's eligible dependents would be entitled under Section 4980B of the Code (COBRA), ~~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~~ then for twenty-four (24) months ~~after~~ following the Date of ~~Termination~~Termination (the "COBRA Reimbursement Period"), the Company shall ~~provide such post-retirement health care and/or life insurance benefits~~ pay to the Executive ~~and~~ monthly payments of an amount equal to the ~~Executive’s dependents commencing on the later~~ excess of (i) the ~~date on which~~ COBRA cost of such coverage ~~would have first become available and~~ over (ii) the ~~date on~~ amount that the Executive would have had to pay for such coverage if he or she had remained employed during the COBRA Reimbursement Period and paid the active employee rate for such coverage, less withholding for taxes and other similar items; provided, however, that (1) if the Executive becomes eligible to receive group health benefits under a program of a subsequent employer or otherwise (including coverage available to the Executive's spouse), the Company's obligation to pay any portion of the cost of health coverage as described herein shall cease, except as otherwise provided by law; (2) the COBRA Reimbursement Period shall only run for the period during which ~~benefits described in subsection~~ the Executive is eligible to elect health coverage under COBRA and timely elects such coverage; and (B3) ~~of this Section 6.1 terminate~~nothing herein shall prevent the Company from amending, changing, or canceling any group medical, dental, vision and/or prescription drug plans during the COBRA Reimbursement Period. (E) ~~The Company shall provide~~ If Executive timely elects to convert his or her life insurance coverage provided under the ~~Executive with third-party outplacement services suitable~~ Company's group life insurance plan to ~~the Executive’s position~~ an individual policy, then for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) ~~month period immediately~~ months following the Date of Termination ~~or until~~ (the "Life Insurance Premium Period"), the Company shall pay to the Executive monthly payments of an amount equal to the premiums for the Executive's individual basic life insurance policy provided by the Company's group life insurance carrier (with the dollar value of the premium payment paid by the Company being equal to one and one-half (1.5) times the amount that the Company would have had to pay if the Executive had remained employed during the Life Insurance Premium Period (notwithstanding the fact that such amount may increase during the Life Insurance Premium Period), less withholding for taxes and other similar items; provided, however, that if the Executive becomes eligible ~~for substantially similar benefits from~~ to receive life insurance under a ~~new~~ program of a subsequent employer, ~~whichever occurs earlier~~the Company's obligation to pay the premium as described herein shall cease, ~~the Company shall continue to provide the Executive with all perquisites~~ except as otherwise provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance)law. ~~6.2 (1)~~ 6.02 Notwithstanding any other provisions in of this Agreement, if in the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with and contingent on a Change in Control ~~or the Executive’s termination of employment,~~ (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter ~~referred to as the “~~called "Total Payments”") would not be ~~subject~~ deductible (in whole or part), to by the ~~Excise Tax~~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 the remaining portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments provided by reason of ~~section~~ Section 280G of the Code in such other plan, ~~program,~~ arrangement or agreement), (A) the ~~Company will reduce the Total~~ cash Severance Payments and/or other cash payments provided for hereunder, in each case, to the extent ~~necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided~~still unpaid, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will shall first be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (vB) all other noncash Severance Payments and/or other non-cash benefits ~~not otherwise described~~ provided for hereunder, in ~~clauses~~ each case, to the extent still unfurnished, shall next be reduced (iiif necessary, to zero), and (C) the Executive shall have no right to receive hereunder, and neither the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person shall be obligated to make, pay or furnish to the Executive hereunder any payment or benefit in excess of those payments or benefits provided hereunder as reduced, if applicable, pursuant to clause (A) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. clause (B) above. For purposes of ~~determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax:~~ this limitation (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have effectively waived ~~at such time and~~ in ~~such manner as not~~ writing prior to ~~constitute a “payment” within~~ the ~~meaning~~ Date of ~~section 280G(b) of the Code will~~ Termination shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ shall be taken into account ~~which,~~ which in the opinion of tax counsel ~~(“Tax Counsel”)~~ selected by the Company's independent auditors and 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 payment” " within the meaning of ~~section~~ Section 280G(b)(2) of the ~~Code (~~Code, including by reason of ~~section~~ Section 280G(b)(4)(A) of the Code, (iii) ~~and, in calculating~~ the ~~Excise Tax, no portion of such~~ Severance Payments shall be reduced only to the extent necessary so that the Total Payments ~~will be taken into account which~~(other than those referred to in clauses (i) or (ii)) in their entirety constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of ~~Tax Counsel, constitutes reasonable compensation for services actually rendered, within~~ the ~~meaning of section 280G(b)(4)(B) of the Code,~~ tax counsel referred to in ~~excess of the Base Amount allocable to such reasonable compensation~~clause (ii); and (~~iii~~iv) 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 ~~Auditor~~ Company's independent auditors in accordance with the principles of ~~sections~~ Sections 280G(d)(3) and (4) of the Code~~. (C) All determinations required by this Section 6.2 (~~. If it is established pursuant to a final determination of a court or ~~requested by either~~ an Internal Revenue Service proceeding that, notwithstanding the ~~Executive or the Company in connection with this Section 6.2) will be at the expense~~ good faith of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. The Executive and the Company ~~shall each~~ in applying the terms of this Section 6.02, (1) 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 (an "Overpayment"), then the Executive shall, at the direction of the Company, take such steps as are reasonably necessary (including the filing of returns and claims for refund), follow reasonable instructions from, and procedures established by the Company, and otherwise reasonably cooperate with the ~~other~~ Company to correct such Overpayment, and shall pay promptly (and in ~~connection with~~ no event later than sixty (60) days following the date on which such Overpayment is determined) any ~~administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect~~ such Overpayment to the ~~Total Payments~~Company together with interest at the rate provided in Section 7872(f)(2) of the Code from the date of the Executive's receipt of such Overpayment until the date of his or her correction of such Overpayment, provided, however, that no amount shall be payable by the Executive to the Company if and to the extent such payment would not either reduce the amount on which the Executive is subject to tax under Section 4999 of the Code or generate a refund of such taxes; or (2) the aggregate "parachute payments" paid to or for the Executive's benefit have been unnecessarily limited by this Section 6.02 ("Underpayment"), then any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code, but no later than March 15 of the year after the year in which the Underpayment is determined to exist. ~~6.3 Subject~~ 6.03 Executive shall be provided with reasonable outplacement services for up to ~~Section 6.4~~one year following the Executive's Date of Termination by a service provider of the Company's choice. 6.04 In the event of litigation relating to this Agreement, the ~~payments provided~~ prevailing party shall be entitled to recover its or his or her reasonable attorneys' fees and costs of litigation, in ~~subsections (A)~~ addition to all other remedies available at law or in equity. If the Executive is awarded the right to recover his or her reasonable attorneys' fees and ~~(C)~~ costs of litigation under this Section ~~6.1 hereof~~ 6.04, the reimbursement of attorneys' fees and costs of litigation shall be made ~~not later than the fifth~~ within ten (~~5th~~10) business ~~day~~ days following the ~~Date of Termination. At~~ date on which such rights are established. 6.05 Notwithstanding anything to the ~~time that payments are made under~~ contrary in this Agreement, the Company shall be obligated to 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). (A) Notwithstanding any provisions of this Agreement to the contrary, Severance Payments only if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) within forty-five (45) days after the ~~first (1st) business day~~ Date of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse Termination the Executive ~~for~~ shall have executed a full general release of claims and covenant not to ▇▇▇ in the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be form provided by the Company ~~in one taxable year affect~~ (the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C"Release Agreement") ~~For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this~~ and such Release Agreement shall ~~be treated as a right to receive a series of separate~~ not have been revoked within any revocation period specified in the Release Agreement; and ~~distinct pay~~(ii) the Executive complies with his or her obligations set forth in Section 9 hereof.

Appears in 1 contract

Sources: Severance Agreement (Haverty Furniture Companies Inc)

Severance Payments. 6.1 If the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive’s employment is terminated following a Change in Control and during the ~~Term~~term of this Agreement, ~~other than~~ unless such termination is (Ai) by the Company for Cause, (Bii) by reason of death or ~~Disability,~~ Disability or (Ciii) by the Executive without Good Reason, ~~then~~ and provided that the seven-day revocation period described in Section 6.6 has expired without revocation of the Release and Waiver by the Executive, the Company shall pay the Executive the ~~amounts, and provide the Executive the benefits,~~ payments described in this Section 6.1 (the “Severance Payments”), ) in addition to ~~any~~ the payments and benefits ~~to which the Executive is entitled under~~ described in Sections 5.1 and 5.2 hereof (but not Section 5 5.3 hereof). ~~For purposes of this Agreement, the Executive~~ The Executive’s employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good ~~Reason,~~ Reason 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 occurs) and such termination was~~ without Cause at the ~~request or~~ direction of a Person who has entered into an agreement with the Company the consummation of which ~~would~~ will constitute a Change in ~~Control, (ii)~~ Control or if the Executive terminates his employment ~~for~~ with Good Reason prior to a Change in Control (~~whether or not~~ determined by treating a Potential Change in Control as a Change in Control ~~occurs~~in applying the definition of Good Reason) ~~and~~ if 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.. (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 (i) two times the Executive’s annual base salary as approved by the Compensation Committee of the Board to be paid to the Executive (or, if the Executive’s annual base salary is not presented for approval at the Compensation Committee level, then as otherwise established by J. ▇▇▇▇ or one of its Subsidiaries) with respect to the year in which the Date of Termination occurs, plus (ii) the sum of the amounts paid or payable to the Executive under all Bonus Plans with respect to the two fiscal years (or any portion thereof) immediately prior to the year in which the Date of Termination 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 incentive compensation which has been allocated or awarded to the ~~Executive’s base salary as in effect immediately prior~~ Executive for a completed year or other measuring period preceding the Date of Termination under any such 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 ~~or, if higher, in effect immediately prior~~ of the maximum bonus amount payable to the ~~first occurrence of an event or circumstance constituting Good Reason, and (ii) the average annual bonus earned by the~~ Executive ~~pursuant to any annual bonus or incentive plan maintained by the Company in~~ under all Bonus Plans with respect ~~of the three fiscal years ending immediately prior~~ to the ~~fiscal~~ year (or any portion thereof) in which ~~occurs~~ the Date of Termination oroccurs, ~~if higher~~treating any and all performance goals under such Bonus Plans as having been met and calculated by multiplying such maximum bonus amount by a fraction, ~~immediately prior~~ the numerator of which is the number of days in such year (or portion thereof) which elapsed to the ~~fiscal~~ Date of Termination and the denominator of which is the number of days in such year ~~in which occurs the first event~~ (or ~~circumstance constituting Good Reason~~portion thereof). (BC) For ~~the~~ a twenty-four (24) month period ~~immediately following~~ after 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 life, disability, accident and health insurance benefits which the Executive ~~and his dependents~~ is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to ~~the Executive, those provided~~ any reduction in such benefits subsequent to ~~the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting~~ a Change in Control which reduction constitutes Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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~~6.1(C) 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 twenty-four (24) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. 6.2 The payments provided for in ~~this~~ Section 6.1 (other than Section 6.1(C)) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) ~~business~~ day following the ~~Date~~ expiration of ~~Termination. At~~ the ~~time~~ seven-day revocation period described in Section 6.6 without revocation of the Release and Waiver by the Executive, unless the Company determines in good faith that such payments are ~~made under this Agreement~~required to be delayed for a period of six (6) months in order to satisfy the requirements of Internal Revenue Code §409A(a)(2)(B)(i), in which case the Company shall ~~provide~~ so advise the ~~Executive with a written statement setting forth the manner in which~~ Executive, and 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made ~~available~~ on the earlier of (i) six (6) months after the ~~first~~ Date of Termination or (~~1st~~ii) ~~business day~~ the death of the ~~seventh month~~ Executive. 6.3 If the Executive’s employment is terminated following a Change in Control and during the ~~date~~ term of this Agreement, unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability or (iii) by the Executive without Good Reason, all outstanding stock options held by the Executive for the purchase of shares of Common Stock of J. ▇▇▇▇ shall immediately become vested in full. The Executive agrees not to exercise the portion of such stock options for which vesting has been accelerated until the seven-day revocation period described in Section 6.6 has expired without revocation of the Release and Waiver by the Executive, and any such exercise before the seven-day revocation period has expired without revocation of the Release and Waiver by the Executive shall be null and void. 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 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 as a Change in Control in applying the definition of Good Reason) if the circumstance or event which constitutes Good Reason occurs at the direction of such Person. (i) If any payment or benefit made available to the Executive in connection with a Change in Control (including, without limitation, any payment made pursuant to any long-term incentive plans, stock option or equity participation right plans) or termination of the Executive’s ~~separation from service or~~ employment following a Change in Control (iiin either category, a “Change in Control Payment”) ~~Executive’s death~~ is subject to the Excise Tax (~~the applicable date~~as hereinafter defined), the ~~“Permissible Payment Date”). The~~ Company shall ~~also reimburse~~ pay to the Executive ~~for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits~~ additional amounts (the “~~Additional Delayed Payments~~Gross Up Amounts”~~). (B~~) ~~With respect to any~~ such that the total amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but all Change in ~~no event later than December 31~~ Control Payments net of the ~~year following~~ Excise Tax shall equal the ~~year~~ total amount of all Change in Control Payments to which the Executive ~~incurs~~ would have been entitled if the ~~related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date~~Excise Tax had not been imposed. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of ~~section 409A~~this Section 6.4, the ~~Executive’s right to receive~~ term “Excise Tax” shall mean the tax imposed by Section 4999 of the Code and any ~~“installment” payments pursuant to this Agreement shall~~ similar tax that may hereafter be ~~treated as a right to receive a series of separate and distinct pay~~imposed.

Appears in 1 contract

Sources: Change in Control Severance Agreement (J Jill Group Inc)

Severance Payments. ~~6.1 If~~ 10.1 The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 10.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a ~~Change in~~ Change- in-Control and ~~during~~ prior to the ~~Term~~end of the Change-in-Control Protective Period, ~~other than~~ in addition to the payments and benefits described in Sections 6 and 7 hereof, unless such termination is (Ai) by ~~the Company~~ Energy East for Cause, (Bii) by reason of ~~death~~ death, Disability or ~~Disability~~Retirement, or (Ciii) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of ~~this Agreement~~the immediately preceding sentence, if a termination of the ~~Executive~~ Executive's employment occurs prior to a Change-in-Control, but following a Potential Change-in-Control in which a Person has entered into an agreement with Energy East the consummation of which will constitute a Change-in-Control, such termination shall be deemed to have ~~incurred~~ followed a ~~separation from service following a Change in~~ Change-in-Control and to have been (i) by Energy East without Cause, if the ~~Company~~ Executive's employment is terminated without Cause at the direction of such Person, or (ii) 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 (whether or not a Change in Control occurs) 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 ~~for~~ with Good Reason ~~prior to a Change in Control (whether or not a Change in Control occurs)~~ and the ~~circumstance~~ act (or ~~event~~ failure to act) which constitutes Good Reason occurs following such Potential Change-in-Control and 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of ~~Termination~~ Termination, in lieu of any lump sum payment with respect to aggregate Base Salary otherwise payable pursuant to Section 8 hereof, 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~~ three (3) times the sum of of: (i) the higher of the Executive~~’s base salary as~~ 's annual Base Salary in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Executive's annual Base Salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change-in-Control, ~~and~~ and (ii) the ~~average annual bonus earned by~~ incentive compensation award the Executive ~~pursuant to~~ would have received under the Annual Executive Incentive Plan, or any successor annual ~~bonus or~~ executive incentive ~~plan maintained by~~ compensation plan, for the ~~Company in respect of the three fiscal years ending immediately prior to the fiscal~~ year in which ~~occurs~~ the Date of Termination oroccurs, ~~if higher~~calculated in accordance with Article XI (A) (iii) of the Annual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan, ~~immediately prior~~ without, however, giving effect to ~~the fiscal year~~ any pro-rata adjustments contained in ~~which occurs the first event or circumstance constituting Good Reason~~said provisions. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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 Notwithstanding any provision of the ~~same type are received by~~ Company's Annual Executive Incentive Plan, or ~~made available to the Executive during the twenty-four (24) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plansuccessor annual executive incentive compensation plan, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any incentive compensation which has been allocated or awarded to the ~~amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Executive for a completed fiscal year preceding the Date of ~~Termination~~Termination under the Annual Executive Incentive Plan, ~~determined~~ or any successor annual executive incentive compensation plan, but has not yet been either (x) ~~as if the Executive made the maximum permissible contributions thereto during such period,~~ paid (pursuant to Section 6.2 hereof or otherwise) or (y) ~~as if~~ 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 any contingent incentive compensation award to the Executive ~~earned~~ for any uncompleted fiscal year under the Annual Executive Incentive Plan or any successor annual executive incentive compensation ~~during~~ plan, calculated as to each such ~~period at a rate equal~~ award in accordance with Article XI (A) (iii) of the Annual Executive Incentive Plan or any comparable provision in any successor annual executive incentive compensation plan. (C) The Company shall pay to the Executive the retirement benefits to which the Executive is entitled under the Company's Supplemental Executive Retirement Plan (or any successor plan), and in determining such benefits, the Executive shall be given an additional two (2) years of service credit at the Executive’s 's highest annual rate of compensation ~~(as defined in the DC Pension Plan)~~ during the twelve (12) months immediately preceding the Date of Termination ~~or, if higher, during the twelve months immediately prior~~ and shall be deemed to ~~the first occurrence of an event or circumstance constituting Good Reason~~be five (5) years older than he is and a "Key Person" as defined in, and for all purposes under, the Company's Supplemental Executive Retirement Plan (zor any successor plan); provided that if the Executive does not have at least ten (10) years of service credit and age eligibility under the Company's Supplemental Executive Retirement Plan (or any successor plan) after such additional service and age credit, the Executive shall be deemed to have at least ten (10) years of service credit and age eligibility under the Company's Supplemental Executive Retirement Plan (or any successor plan) ; such benefits shall be determined without regard to any amendment to the ~~DC Pension~~ Company's Supplemental Executive Retirement Plan (or any successor plan) made subsequent to a ~~Change in~~ 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. Notwithstanding any provision in the Company's Supplemental Executive Retirement Plan (or any successor plan) that may be to the contrary, the benefits otherwise payable to the Executive pursuant to this Section 10.1(C) shall be paid to the Executive in a lump sum payment that is equal in amount to the present value (calculated under generally accepted actuarial methods that are consistent with the actuarial methods used in producing the tables of Appendix A of the Company's Retirement Benefit Plan (or any successor plan)) of such benefits and such payment shall be in lieu of any payments to which the Executive otherwise would have been entitled under the Company's Supplemental Executive Retirement Plan (or any successor plan) and shall satisfy any obligations that the Company would otherwise have to the Executive under the Company's Supplemental Executive Retirement Plan (or any successor plan). Such lump sum payment shall be paid to the Executive no later than the due date of the first payment otherwise due to the Executive under the Company's Supplemental Executive Retirement Plan (or any successor plan). Notwithstanding the immediately preceding paragraph of this Section 10.1(C), the Executive may elect to have the benefits otherwise payable to the Executive pursuant to this Section 10.1(C) be paid to the Executive in the manner provided for under the Company's Supplemental Executive Retirement Plan (or any successor plan) and such method of payment shall be in lieu of a lump sum payment. The Executive shall make such election by sending a letter to the Company in which he states that he has decided to make such election. The election shall not be effective unless the letter is received by the Company (i) at least 60 days prior to the day (the "Change-in-Control Day") that the Change-in-Control, or Potential Change-in-Control, that gives rise to the applicability of Section 10.1(C) occurs and (ii) prior to the ~~excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as~~ first day of the ~~Date of Termination over (y)~~ calendar year in which the ~~portion~~ Change-in-Control Day occurs. The Executive shall have the right to revoke any such election by sending a letter to the Company in which he states that he has decided to revoke such election. The revocation of such ~~account balance that~~ election shall not be effective unless the letter is ~~nonforfeitable under~~ received by the ~~terms~~ Company (i) at least 60 days prior to the Change-in-Control Day and (ii) prior to the first day of the ~~DC Pension Plan~~calendar year in which the Change-in-Control Day occurs. ~~The payments provided~~ If the Executive revokes an election, he can make a new election (in the manner, and subject to the timing requirements, set forth in this ~~Section 6.1(C) are~~ paragraph), and he can revoke any such new election (in ~~addition~~ the manner, and subject to ~~any payment~~ the ~~Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan~~timing requirements, set forth in this paragraph). (D) ~~If the Executive would have become entitled to benefits under the Company’s post~~For a thirty-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 six (36) month period ~~of twenty-four (24) months~~ after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue arrange to provide the Executive with ~~all perquisites provided by~~ life, disability, accident and health insurance benefits substantially similar to those which the ~~Company~~ Executive is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or,~~ (without giving effect to any reduction in such benefits subsequent to a Change-in-Control if ~~more favorable~~ the Executive terminated his employment for Good Reason or was terminated without Cause). Benefits otherwise receivable by the Executive pursuant to this Section 10.1(D) shall be reduced to the ~~Executive, immediately prior~~ extent comparable benefits are actually received by or made available to the ~~first occurrence~~ Executive without cost during the thirty-six (36) month period following the Executive's termination of ~~an event or circumstance constituting Good Reason~~ employment (~~including, without limitation, automobile, financial planning, annual physical~~ and ~~executive whole life insurance). 6.2 (1) Notwithstanding~~ any ~~other provisions in this Agreement, if any of the payments or~~ such benefits ~~received or to be~~ actually received by the Executive shall be reported to Energy East by the Executive). If the benefits provided to the Executive under this Section 10.1(D) shall result in a Gross-Up Payment pursuant to Section 10.2, and these Section 10.1(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 10.2 hereof. (~~including~~ A) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or ~~benefits received in connection with a Change in Control~~ distribution by Energy East or the ~~Executive’s termination~~ Company to or for the benefit of ~~employment~~the Executive on account of a Change-in-Control, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Code or any ~~other plan~~interest or penalties with respect to such excise tax (such excise tax, ~~program~~together with any such interest and penalties, ~~arrangement or agreement) (all such payments and benefits, being~~ are hereinafter collectively referred to as the ~~“Total Payments”) would be subject (in whole or part~~"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~~Tax imposed upon the Gross-Up Payment, ~~then, after taking into account any reduction in~~ the ~~Total Payments provided by reason of section 280G~~ Executive retains an amount of the ~~Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject~~ Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (B) Subject to the provisions of Section 10.2(C) hereof, all determinations required to be made under this Section 10.2, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determinations, shall be made by Energy East's principal outside accounting firm (the "Accounting Firm") which shall provide detailed supporting calculations both to the 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 Energy East or the Executive (each such date and the Date of Termination shall be referred to as a "Determination Date", for purposes of this Section 10.2(B) and Section 10.3 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 10.2(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 no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm under this Section 10.2(B) shall be binding upon Energy East, 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 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 Energy East exhausts its remedies pursuant to Section 10.2(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. (C) The Executive shall notify Energy East 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 ~~no event~~ writing of such claim and shall apprise Energy East of the nature of such claim and the date on which such claim is requested to ~~less than zero~~be paid. The Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which he gives such notice to Energy East (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If Energy East notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give Energy East any information reasonably requested by Energy East relating to such claim, (ii) take such action in connection with contesting such claim as Energy East 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 Energy East, (iii) cooperate with Energy East in good faith in order effectively to contest such claim, and (iv) permit Energy East to participate in any proceeding relating to such claim; provided, however, that the ~~Total Payments will only be reduced if~~ Company shall bear and pay directly all costs and expenses (iincluding additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the ~~net amount~~ 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 ~~Total Payments, as so reduced (~~representation and ~~after subtracting~~ payment of costs and expenses. Without limitation on the ~~net amount~~ foregoing provisions of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total Paymentsthis Section 10.2(C), ~~is greater than~~ Energy East shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or ~~equal to (ii)~~ forgo any and all administrative appeals, proceedings, hearings and conferences with the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject taxing authority in respect of such ~~unreduced Total Payments~~ claim and ~~after taking into account~~ may, at its sole option, either direct the ~~phase out~~Executive to pay the tax claimed and sue for a refund or contest the claim in any permissi▇▇▇ 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 Energy East shall determine; provided, however, that if ~~any~~Energy East directs the Executive to pay such claim and sue for a refund, ~~of itemized deductions~~ the Company shall advance the amoun▇ ▇f such payment to the Executive, on an interest-free basis and ~~personal exemptions attributable~~ 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 ~~unreduced Total Payments)~~advance or 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 contested amount is claimed to be due is limited solely to such contested amount. Furthermore, Energy East'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. (AD) In If, after the ~~case~~ receipt by the Executive of ~~a reduction in~~ an amount advanced by the ~~Total Payments~~Company pursuant to Section 10.2(C) hereof, the ~~Total Payments will be reduced in~~ Executive becomes entitled to receive any refund with respect to such claim, the ~~following order:~~ Executive shall (~~i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary,~~ subject to ~~zero), with amounts that are payable last reduced first; (ii) payments~~ Energy East's and ~~benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a),~~ the Company's complying with the ~~highest values reduced first (as such values are determined under Treasury Regulation~~ requirements of Section ~~1.280G-1, Q&A 24~~10.2(C) ~~will next be reduced; (iii~~hereof) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject promptly pay to the ~~Excise Tax and~~ Company the amount of such ~~Excise Tax:~~ refund (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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. The Executive and the Company shall each reasonably cooperate with the other in connection together with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be interest paid or ~~made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the~~ credited thereon after taxes applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct paythe

Appears in 1 contract

Sources: Employment Agreement (New York State Electric & Gas Corp)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, if the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ 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 ~~amounts, and provide the Executive the benefits,~~ payments described in this Section 6.1 (“the "Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s 's employment is terminated by the Company without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 's employment is terminated by the Company without Cause ~~or by~~ prior to a Change in Control and the Executive ~~for Good Reason and~~ reasonably demonstrates that such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control occurs)~~which actually occurs during the term of this Agreement. For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to ~~two~~ three times the sum of (i) the higher of the Executive’s 's annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based and the Executive's annual base salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change in Control, and (ii) the product of (a) the amount determined under clause (i) above and (b) the higher of the average ~~annual bonus~~ percentage of base salary paid to or earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three ~~fiscal~~ years ~~ending~~ immediately ~~prior to the fiscal year~~ preceding that in which ~~occurs~~ the Date of Termination ~~or, if higher,~~ occurs or the average percentage of base salary paid to or earned by the Executive in respect of the three years immediately ~~prior to the fiscal year~~ preceding that in which ~~occurs~~ the ~~first event or circumstance constituting Good Reason~~Change in Control occurs. (B) For the ~~twenty~~thirty-~~four~~ six (2436) month period 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 and Company-provided perquisites (including, but not limited to a Company car and club membership dues), in each case substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ is receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (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, 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, howeverHOWEVER, that~~, unless the Executive consents to a different method~~, 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 ~~of the same type~~ or perquisites are actually received by or made available to the Executive without cost during the ~~twenty~~thirty-~~four~~ six (2436) month period following the Executive’s '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)~~; provided~~. If the Severance Payments shall be decreased pursuant to Section 6.2 hereof, ~~however~~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 receipt or availability of comparable benefits or perquisites, ~~that~~ the Company shall, at the time of 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 perquisites, 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. (C) Notwithstanding any provision of any annual or long-term incentive plan to the contrary, the Company shall ~~promptly reimburse~~ pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the ~~excess~~Date of Termination under any such plan and which, ~~if any,~~ as of the ~~after tax cost~~ Date of ~~such benefits to~~ Termination, is contingent only upon the continued employment of the Executive ~~over such cost immediately prior~~ to a subsequent date or otherwise has not been paid, and (ii) a pro rata portion to the Date of Termination ~~or, if more favorable~~ of the aggregate value of all contingent incentive compensation awards to the ~~Executive~~Executive for all then uncompleted periods under any such plan, calculated as to each such award by multiplying the ~~first occurrence~~ award that the Executive would have earned on the last day of ~~an event or circumstance constituting Good Reason~~the performance award period, assuming the achievement, at the target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (CD) In addition to the retirement benefits to which the Executive is entitled under ~~the DC~~ each Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ excess of (i) the ~~amount that would have been contributed thereto by~~ actuarial equivalent of the ~~Company on~~ aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the ~~Executive’s behalf during~~ date (but in no event earlier than the ~~twenty-four (24) months immediately following~~ third anniversary of the Date of Termination~~, determined (x~~) as if of which the actuarial equivalent of such annuity is greatest) which the Executive ~~made~~ would have accrued under the ~~maximum permissible contributions thereto during such period,~~ terms of all Pension Plans (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to ~~the DC~~ 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 ~~excess~~Executive's compensation (as defined in such Pension Plan) during the twelve (12) months immediately preceding the Change in Control, ~~if any, of~~ over (xii) the ~~Executive’s~~ actuarial equivalent of the aggregate retirement pension (taking into account ~~balance under~~ any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the DC 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 ~~Plan~~ Plans as of the Date of ~~Termination over (y)~~ Termination. For purposes of this Section 6.1(D), "actuarial equivalent" shall be determined using the ~~portion of such account balance that is nonforfeitable~~ same assumptions utilized under the ~~terms~~ Stone Container Corporation Salaried Employees Retirement Plan immediately prior to the Date of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC PlanTermination. (DE) If the Executive would have become entitled to benefits under the Company’s 's post-retirement health care or life insurance plans, as in effect immediately prior to the Change in Control or the Date of Termination ~~or, if~~ (whichever is 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 's employment terminated at any time during the period of ~~twenty~~thirty-~~four~~ six (2436) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive and the Executive’s '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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) Notwithstanding any other provisions in of this Agreement, if in the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter ~~referred to as the “~~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, ~~program,~~ arrangement or agreement, the ~~Company will reduce~~ cash Severance Payments shall first be reduced, and the ~~Total~~ 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 ~~in no event to less than zero); provided, however, that the Total Payments will~~ only ~~be reduced~~ if (iA) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, ~~state, municipal~~ state and local income taxes on such reduced Total ~~Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total~~ Payments), ) is greater than ~~or equal to~~ (iiB) the excess of (i) the net amount of such Total ~~Payments~~ Payments, without ~~such~~ reduction (but after subtracting the net amount of federal, ~~state, municipal~~ state and local income taxes on such Total ~~Payments and~~ Payments), over (ii) the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total ~~Payments and after taking into account~~ Payments; PROVIDED, HOWEVER, that the ~~phase out, if any, of itemized deductions and personal exemptions attributable~~ Executive may elect (at any time prior to ~~such unreduced Total Payments). (A) In~~ the ~~case~~ delivery of a ~~reduction in~~ Notice of Termination hereunder) to have the ~~Total Payments, the Total~~ noncash Severance Payments ~~will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be~~ reduced (~~if necessary,~~ or eliminated) prior to ~~zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of~~ any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of the cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensationSeverance Payments. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise ~~Tax and the amount of such 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 in manner so that such ~~manner as~~ portion does not to constitute a “"payment” " within the meaning of section 280G(b) of the Code ~~will~~ shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ 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 "Auditor") which was, immediately prior to the Change in Control, the Company’s 's independent ~~auditor (the “Auditor”)~~auditor, does not constitute a “"parachute payment” " within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments ~~will~~ shall be taken into account ~~which, in the opinion of Tax Counsel,~~ which constitutes 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; , and (iii) 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 Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. ~~(C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company.~~ 6.3 The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A), (C) and (CD) of Section 6.1 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination; 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 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)(B) of the Code). At the time that payments are made under this ~~Agreement~~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 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). ~~(A) Notwithstanding any provisions of this Agreement~~ 6.4 The Company also shall pay to the ~~contrary, if the~~ Executive ~~is a “specified employee” (within the meaning of section 409A~~ all legal fees and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive's employment, ~~such reimbursement~~ 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. Such payments shall be made on within five (5) business days after delivery of the ~~Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by~~ Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitreasonably may require. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Stone Container Corp)

Severance Payments. 6.1 If (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive’s employment is terminated following a Change in Control and ~~during the Term~~within two (2) years after a Change in Control, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, ~~then~~ 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”), 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~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ 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 (whether or not a Change in Control ever occurs) 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, 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, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive~~Termination, 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 ~~two~~ one and one half (11/2) times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the ~~average~~ Executive’s target annual bonus ~~earned by the Executive~~ pursuant to any 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 or, if higher, ~~immediately prior to~~ the fiscal year in which occurs the first event or circumstance constituting Good Reason. The amount payable pursuant to this Section 6.1(A) shall be reduced by the amount of any cash severance or salary continuation benefit paid or payable to the Executive under any other plan, policy or program of the Company or any of its Affiliates or any written employment agreement between the Executive and the Company or any of its Affiliates. (B) For the ~~twenty-four (24)~~ 18 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 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~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 ~~twenty-four (24)~~ 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 ~~promptly~~ 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 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) ~~In addition~~ 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 ~~benefits to which the~~ Executive ~~is entitled~~ under the ~~DC Pension Plan~~terms of any 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 unpaid incentive compensation (including performance share awards) which has been allocated or awarded to the ~~amount that would have been contributed thereto by~~ Executive for a completed fiscal year or other measuring period preceding the ~~Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Date of Termination under any such plan and which, as of the Date of Termination, ~~determined (x) as if~~ is contingent only upon the continued employment of the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder~~subsequent date, and (ii) a pro rata portion to the ~~excess~~Date of Termination of the aggregate value of all contingent 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, at the target level (or if higher, at the then projected actual final level), of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. Notwithstanding the forgoing, if ~~any~~and to the extent the Executive had elected to defer receipt of any such award, ~~of (x)~~ and if the Executive’s ~~account balance under the DC Pension Plan~~ deferral election is irrevocable as of the Date of Termination ~~over (y)~~ for purposes of Code Section 409A, the ~~portion of such~~ amount calculated above shall be credited to the Executive’s account ~~balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive~~ under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) If the Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans, as deferred compensation plan in ~~effect immediately prior to the Date~~ lieu of ~~Termination or, if more favorable~~ being distributed directly 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The benefits then accrued by or payable to the Executive 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 Executive 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, as so vested, will be paid in accordance with the terms of the 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 paid upon the Executive’s attainment of age fifty-five (55). With respect to the Supplemental 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 ~~provide~~ 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 irrevocable grantor trust (a so-called “Rabbi Trust”) whose trustee shall be an entity unaffiliated with ~~third-party~~ and independent of the 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 transfer to the Rabbi Trust would be treated, under Code Sections 83 and 409A(b), as a taxable transfer to the Executive, 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 such plan on or after the Change in Control date the effect of which would be to reduce or eliminate the benefit payable to the Executive shall be disregarded. (F) The Company shall reimburse the Executive for expenses incurred for outplacement services suitable to the Executive’s position for ~~the~~ a period of two (2) years following the Executive’s ~~Date of Termination and ending on December 31 of the second calendar year following such Date of Termination~~ Separation from Service, (or, if earlier, until the first acceptance by the Executive of an offer of employment~~, provided, however, that~~ ) in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 an amount not exceeding 25% of the ~~third year following the year~~ sum of the Executive’s annual base salary as in effect immediately prior to the Date of ~~Termination~~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. (FG) For the ~~twenty-four~~ six (246) month period immediately following the Date of ~~Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier~~Termination, the Company shall ~~continue to~~ provide the Executive with ~~all perquisites~~ the use of any Company provided by automobile on the ~~Company~~ same terms and conditions that were applicable immediately prior to the Date of Termination or, if more ~~favorable to the Executive~~favorable, immediately prior to the first occurrence of an event or circumstance constituting Good ~~Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance)~~Reason. The Executive’s right to use a Company provided automobile cannot be exchanged for cash or another benefit. ~~6.2~~ (1A) Notwithstanding any other provisions in of this Agreement, if in the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter ~~referred to as the~~ 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, ~~program,~~ arrangement or agreement, the ~~Company will reduce~~ cash Severance Payments shall first be reduced, and the ~~Total~~ 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 ~~in no event to less than zero); provided, however, that the Total Payments will~~ only ~~be reduced~~ if (iA) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, ~~state, municipal~~ state and local income taxes on such reduced Total ~~Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total~~ Payments), ) is greater than or equal to (iiB) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, ~~state, municipal~~ 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total~~ Payments)~~. (A) In~~ ; provided, however, that the ~~case of a reduction in~~ Executive may elect to have the ~~Total Payments, the Total~~ noncash Severance Payments ~~will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be~~ reduced (~~if necessary,~~ or eliminated) prior to ~~zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of~~ any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of the cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensationSeverance Payments. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise ~~Tax and the amount of such 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 ~~will~~ shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ 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 “Auditor”) which was, immediately prior to the Change in Control, the Company’s independent ~~auditor (the “Auditor”)~~auditor, does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments ~~will~~ shall be taken into account which, in the opinion of Tax Counsel, constitutes 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; , and (iii) 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 Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. (C) ~~All determinations required by~~ At the time that payments are made under this ~~Section 6.2 (or requested by either~~ 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 ~~connection with~~ 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) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 ~~Subject to Section 6.4, the~~ The payments provided in subsections (A) and (CD) of Section 6.1 hereof shall be made ~~not later than~~ on the ~~fifth~~ first day of the seventh (~~5th~~7th) ~~business day~~ month following the ~~Date of Termination~~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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). 6.4 The Company also shall ~~also~~ reimburse the Executive for ~~the after-tax cost~~ all legal fees and expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount termination of ~~reimbursements or in-kind benefits to be provided in any other taxable year, nor shall~~ the Executive’s employment, in seeking in good faith to obtain or enforce any benefit or right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct paypr

Appears in 1 contract

Sources: Change in Control Agreement (Visteon Corp)

Severance Payments. ~~6.1 If~~ 6.1. The Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.1 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a Change in Control and during the ~~Term, other than (A) by the Company for Cause, (B) by reason~~ term of ~~death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in~~ this ~~Section 6.1 (“Severance Payments”)~~Agreement, in addition to any payments and benefits 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, or (iii) by the Executive without Good Reason. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service following a Change in Control~~ been terminated by the Company without Cause or by the Executive with Good ~~Reason,~~ Reason following a Change in Control if (i) the Executive’s 's employment is terminated ~~by the Company~~ without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 's employment is terminated ~~by the Company~~ without Cause ~~or by~~ prior to a Change in Control and the Executive ~~for Good Reason and~~ reasonably demonstrates that such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control occurs). For purposes of Section 5 and 6~~ which actually occurs during the term of this Agreement, ~~no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made~~ or ~~provided unless and until such termination of~~ (iv) the Executive's employment is ~~also~~ terminated without Cause after a ~~“separation from service,” as determined~~ Potential Change in ~~accordance with section 409A.~~Control of the type described in paragraphs (I) or (IV) 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 ~~two~~ three (3) times the sum of (i) the higher of the Executive’s 's annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination ~~or, if higher,~~ is based or the Executive's annual base salary in effect immediately prior to the ~~first occurrence of an event or circumstance constituting Good Reason~~Change in Control (the "Change in Control Salary"), and (ii) the ~~average~~ higher of the annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three ~~fiscal~~ (3) years ~~ending~~ immediately ~~prior to the fiscal~~ preceding that year in which ~~occurs~~ the Date of Termination ~~or, if higher,~~ occurs or the annual bonus so earned in respect of the three (3) years immediately ~~prior to the fiscal~~ preceding that year in which the Change in Control occurs (the ~~first event or circumstance constituting Good Reason~~"Change in Control Bonus"). (B) Notwithstanding any provision of any annual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to a pro rata portion to the Date of Termination of the value of the target incentive award under such plan for the 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 any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (C) The Company shall (i) establish an irrevocable grantor trust holding an amount of assets sufficient to pay all such remaining premiums owed by the Company (which trust shall be required to pay such premiums), under any insurance policy insuring the life of the Executive under any "split dollar" insurance arrangement in effect between the Executive and the Company, and (ii) assign its interest in such policy or policies to the grantor trust. (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 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 the earlier of a Potential Change in Control or 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 (1) the Executive's compensation (as defined in such Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or (2) 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; provided, that the actuarial equivalent of such payment shall reduce the amount of the benefit enhancement to which the executive may be entitled under the Company's Retirement Benefit Equity Plan due to enhanced Change in Control benefits under Article I, Section (35), Article VI, Section (2), Article VI, Section (7), and Article VII, Section (6) of the Company's Retirement Income Plan. For purposes of this Section 6.1(D), "actuarial equivalent" shall be determined using the same assumptions utilized under the Company's Retirement Income Plan immediately prior to the Change in Control, to determine lump sum present values under Article VII, Section (7) of the Company's Retirement Income Plan. (E) For the ~~twenty~~thirty-~~four~~ six (2436) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive ~~and his~~ (which includes the Executive's eligible dependents for purposes of this paragraph (E)) with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ was receiving immediately prior to the ~~Date~~ Notice of Termination ~~or, if more favorable~~ (without giving effect to any amendment to such benefits made subsequent to the earlier of a Potential Change in Control or a Change in Control which amendment adversely affects in any manner the Executive~~, those provided~~ 's entitlement to or the ~~Executive and his dependents immediately prior to the first occurrence~~ amount of ~~an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to~~ such ~~date or occurrence~~benefits); provided, however, that, unless the Executive -------- ------- consents to a different method, 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~~6.1(E) shall be reduced to the extent comparable benefits ~~of the same type~~ are actually received by or made available to the Executive by a subsequent employer without cost during the ~~twenty~~thirty-~~four~~ six (2436) month period following the Executive’s '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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (DF) If the Executive would have become entitled to benefits under the Company’s 's post-retirement health care or life insurance ~~plans,~~ plans (as in effect immediately prior to a Potential Change in Control, the Change in Control or the Date of ~~Termination or~~Termination, ~~if more~~ whichever is most 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 's employment terminated at any time during the period of ~~twenty~~thirty-~~four~~ six (2436) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive ~~and~~ (subject to any employee contributions required under the terms of such plans at the level in effect immediately prior to the Change in Control or the Date of Termination, whichever is more favorable to the Executive~~’s dependents~~ ) commencing on the later of (i) the date ~~on which~~ that such coverage would have first become available ~~and~~ or (ii) the date ~~on which~~ that benefits described in subsection (BE) of this Section 6.1 terminate. (EG) The Company will pay the Executive, at a daily salary rate calculated from the 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 the Executive's annual base salary in effect immediately prior to the Change in Control, an amount equal to all unused vacation days which would have been earned had the Executive continued employment through December 31 of the year in which the Date of Termination occurs. (H) The Company shall ~~provide~~ pay the reasonable fees and expenses of a full service nationally recognized executive outplacement firm until the earlier of the date the Executive ~~with third~~secures new employment or the date which is thirty-~~party outplacement services suitable to the Executive’s position for the period~~ six (36) months following the Executive’s 's Date of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment,~~ Termination; provided~~, however~~, that in no ~~case~~ event shall the ~~Company~~ aggregate amount of such payment be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later greater than ~~December 31 of the third year following the year~~ 20% of the Executive~~’s Date of Termination~~'s Change in Control Salary. (FA) ~~For~~ Anything in this Agreement to the ~~twenty-four (24) month period immediately following~~ contrary notwithstanding, in the ~~Date of Termination~~ event it shall be determined that any payment or ~~until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided~~ distribution by the Company ~~immediately prior~~ to or for the ~~Date~~ benefit of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (~~including any payment~~ whether paid or ~~benefits received in connection with a Change in Control~~ payable or ~~the Executive’s termination of employment, whether~~ distributed or distributable pursuant to the terms of this Agreement or ~~any other plan, program, arrangement or agreement~~otherwise) (~~all~~ a "Payment") would be 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 ~~payments~~ excise tax, together with any such interest and ~~benefits~~penalties, ~~being~~ are hereinafter collectively referred to as the ~~“Total Payments”) would be subject (in whole or part~~"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~~Tax imposed on the Gross-Up Payment, ~~then, after taking into account any reduction in~~ the ~~Total Payments provided by reason of section 280G~~ Executive retains an amount of the ~~Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject~~ Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (B) Subject to the provisions of Section 6.2(C), all determinations required to be made under this Section 6.2, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized accounting firm designated by the Company (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company 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 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 this Section 6, shall be paid by the Company to the Executive within five 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 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. (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 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 ~~no event~~ 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 ~~less than zero~~be paid. The Executive shall not pay such claim prior to the expiration of the 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: (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 to 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 proceedings relating to such claim; provided, however, that the ~~Total Payments will only be reduced if~~ Company shall bear and pay directly all costs and expenses (iincluding additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the ~~net amount~~ 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 ~~Total Payments, as so reduced (~~representation and ~~after subtracting~~ payment of costs and expenses. Without limitation on the ~~net amount~~ foregoing provisions of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total Paymentsthis Section 6.2(C), ~~is greater than~~ the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or ~~equal to (ii)~~ forego any and all administrative appeals, proceedings, hearings and conferences with the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject taxing authority in respect of such ~~unreduced Total Payments~~ claim and ~~after taking into account~~ may, at its sole option, either direct the ~~phase out~~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 ~~any, of itemized deductions~~ the Company directs the Executive to -------- ------- pay such claim and ~~personal exemptions attributable to such unreduced Total Payments). (A) In the case of~~ ▇▇▇ for a ~~reduction in the Total Payments~~refund, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and 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:~~ Tax or income tax (iincluding interest or penalties with respect thereto) ~~no portion~~ imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the ~~Total Payments~~ statute of limitations relating to payment of taxes for the ~~receipt or enjoyment~~ taxable year of the Executive with respect to which such contested 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 ~~have waived at such time and in such manner~~ be entitled to settle or contest, as ~~not to constitute a “payment” within~~ the ~~meaning of section 280G(b) of the Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which~~case may be, ~~in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected~~ any other issue raised 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; and (iii) the value of any noncash benefits Internal Revenue Service 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~~other taxing authority. (CD) ~~All determinations required~~ If, after the receipt by ~~this Section 6.2 (or requested by either~~ the Executive or of an amount advanced by the Company ~~in connection with this~~ pursuant to Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of 6.2(C), the Executive ~~under this Agreement. The Executive and the Company shall each reasonably cooperate with the other in connection with~~ becomes entitled to receive any ~~administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax~~ refund with respect to ~~the Total Payments. 6.3 Subject to Section 6.4~~such claim, the ~~payments provided in subsections~~ Executive shall (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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 subject to the statement). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Executive Employment Agreement (Armstrong World Industries Inc)

Severance Payments. ~~6.1~~ 4.1 If ~~the Executive incurs~~ a “separation from service” (within the meaning of section 409A) 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 Qualifying Termination shall ~~pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”)~~occur, in addition to any payments and benefits to which the Executive is entitled under Section 5 3 hereof~~. For purposes~~ , the Company shall pay the Executive the payments described in this Section 4.1 (the “Severance Payments”); provided, however, that, in the case of ~~this Agreement~~clauses (A), (B), (C), (D) and (F) below, the Executive shall have executed and not revoked a release of claims in the form set forth in Exhibit A hereto. The Executive shall also be ~~deemed~~ entitled to ~~have incurred a separation from service following a Change in Control by~~ the ~~Company without Cause or by the Executive with Good Reason,~~ Severance Payments (and any payments and benefits under Section 3) if ~~(i)~~ the Executive’s employment is terminated by the Company ~~without~~ other than (x) for Cause ~~prior to~~ or (y) by reason of death or Disability within the six (6) month period immediately preceding a Change in Control ~~(whether or not a Change in Control occurs)~~ and the Executive reasonably demonstrates that 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 for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control that actually occurs during the term of the Agreement (~~whether or not~~ a “Pre-Change in Control ~~occurs~~Termination”) ; provided, however, that, in the case of clauses (A)~~. For purposes~~ , (B), (C), (D) and (F) below, Executive shall have executed and not revoked a release of claims in the form set forth in Exhibit A hereto; and provided further, however, that any such payments shall be offset by the amount of severance previously paid to the Executive under any employment agreement between the Executive and the Company and, to the extent permitted by Section ~~5 and 6~~ 409A of ~~this Agreement~~the Code, ~~no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination~~ any other severance policy, plan or program of ~~employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.~~the Company. (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 ~~times~~ hundred and fifty percent (250%) of the sum of (i) the Executive’s annual base 129267/v2 2 salary as then in effect (or immediately prior to any reduction resulting in a termination for Good Reason, if applicable) (the “Change in Control Salary”), plus (ii) the Executive’s target annual incentive compensation for the year of termination , or if no target has been set as of the Date of Termination, the target incentive compensation for the year immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 ~~or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason~~occurs. (B) For the ~~twenty-four (24)~~ thirty month period immediately following the Date of Termination, the Company shall arrange to provide the Executive ~~and his~~ (which includes the Executive’s eligible dependents for purposes of this subsection (C)) with life, disability, accident and health insurance benefits substantially similar to those ~~provided to~~ which the Executive ~~and his dependents~~ was receiving immediately prior to the Date of Termination ~~or, if more favorable to the Executive, those provided to the Executive and his dependents~~ (or immediately prior to ~~the first occurrence of an event or circumstance constituting~~ any reduction resulting in a termination for Good Reason, ~~at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence~~if applicable); provided, however, ~~that,~~ that (i) the Executive’s and his qualified dependents’ COBRA eligibility period shall include the period during which the Company is providing benefits under this subsection (C); (ii) unless the Executive consents to a different ~~method~~method (or elects COBRA coverage at applicable COBRA rates), such health insurance benefits shall be provided through a third-party insurer; and (iii) the Executive shall be responsible for the payment of premiums for such benefits in the same amount as active employees of the Company. Benefits otherwise receivable by the Executive pursuant to this ~~Section 6.1(B~~subsection (C) shall be reduced to the extent comparable benefits (including continued coverage for any preexisting medical condition of any person covered by the ~~same type~~ benefits provided to the Executive and his eligible dependents immediately prior to the Date of Termination) are actually received by or made available to the Executive by a subsequent employer during the twenty-four ~~(24)~~ month period following the Executive’s ~~termination~~ Date of ~~employment~~ Termination (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive)~~; provided~~. Notwithstanding the foregoing, ~~however~~in the event of a Pre-Change in Control Termination, ~~that~~ on the sixtieth (60th) day following the Change in Control the Company shall ~~promptly~~ pay or reimburse the Executive for ~~the excess, if any, of the after tax cost of such~~ any amounts or benefits it would have been responsible to pay or provide to the Executive ~~over such cost immediately~~ under this Section 4.1(C) during the period prior to the Change in Control, had the Change in Control occurred on the Date of ~~Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason~~Termination. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) If the Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance ~~plans,~~ plans (as in effect immediately prior to the Date of Termination ~~or, if more favorable to the Executive, as in effect~~ (or immediately prior to ~~the first occurrence of an event or circumstance constituting~~ any reduction resulting in a termination for Good Reason, if applicable)) had the Executive’s employment terminated at any time during the period of ~~twenty-four (24)~~ thirty months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive ~~and~~ (subject to any employee contributions required under the ~~Executive’s dependents~~ terms of such plans in the same amounts as active employees of the Company) commencing on the later of (i) the date ~~on which~~ that such coverage would have first become available ~~and~~ or (ii) the date ~~on which~~ that benefits described in subsection (BC) of this Section ~~6.1~~ 4.1 terminate. (D) The Company shall pay the Executive, at a daily salary rate calculated from the Executive’s annual base salary in effect immediately prior to the Date of Termination (or immediately prior to any reduction resulting in a termination for Good Reason, 129267/v2 3 if applicable), a lump sum amount equal to all earned but unused paid time off days through the Date of Termination. (E) The Company shall ~~provide~~ pay, no later than the last day of the calendar year in which they are incurred, the reasonable fees and expenses of a full service nationally recognized executive outplacement firm until the earlier of the date the Executive ~~with third~~secures new employment or the date which is twenty-~~party outplacement services suitable to the Executive’s position for the period~~ four months following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, Termination; provided that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the ~~reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the~~ aggregate amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefitsuch payments exceed $30,000. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Agreement (CHS Inc)

Severance Payments. 6.1 If the ~~Executive incurs~~ Executive’s employment is terminated either during the Initial Term or otherwise following a Change in Control and within two (2) years after a Change in Control (provided that such termination of employment constitutes a “separation from service” (within the meaning of ~~section 409A) following a Change~~ Section 409A of the Code), in ~~Control and during the Term,~~ either event 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance 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~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ 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 (whether or not a Change in Control ever occurs) 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, 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, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive~~Termination, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two (2) times the sum of (i) the Executive’s highest base salary as in effect during the three-year period ending immediately prior to the Date of Termination or(including, if ~~higher~~the Date of Termination occurs within three years after the Effective Date, salary paid in ~~effect immediately prior to the first occurrence~~ respect of ~~an event~~ employment by Temple-Inland or ~~circumstance constituting Good Reason,~~ its Affiliates during such three-year period) and (ii) the ~~average~~ Executive’s target annual bonus ~~earned by the Executive~~ pursuant to any 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 (or, if higher, ~~immediately prior~~ 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 before the ~~fiscal year in which occurs the first event or circumstance constituting Good Reason~~Effective Date, annual bonuses paid by Temple-Inland)). (B) For the ~~twenty~~two-~~four (24) month~~ year period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, ~~disability~~accidental death and dismemberment, ~~accident~~ medical and ~~health insurance~~ 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, ~~that, unless the Executive consents to a different method,~~ that such health ~~insurance~~ and welfare benefits shall be provided through ~~a third-party insurer~~an arrangement that satisfies the requirements of Sections 105 and 106 of the Code. ~~Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to~~ To the extent that health and welfare benefits of the same type are received by or made available to the Executive during the ~~twenty~~two-~~four (24) month~~ year period following the Executive’s ~~termination~~ Date of ~~employment~~ Termination (~~and any~~ which such benefits received by or made available to the Executive shall be reported by the Executive to the ~~Company~~ insurance company or other appropriate party in accordance with any applicable coordination of benefits provisions), the benefits otherwise receivable by the ~~Executive)~~Executive pursuant to this Section 6.1(B) shall be made secondary to such benefits; provided, however, that the Company shall ~~promptly~~ 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 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 Pension Plan, and except to the extent it would result in a 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 ~~the DC~~ 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 ~~twenty-four~~ two (242) ~~months~~ years immediately following the Date of ~~Termination~~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 DC Pension Plan) during the ~~twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months~~ three-year period ending immediately prior to the ~~first occurrence~~ Date of ~~an event or circumstance constituting Good Reason~~Termination, and (z) without regard to any amendment to the DC Pension Plan made subsequent to ~~a Change in Control~~ 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 excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (DF) If Notwithstanding any provision of any annual or long-term incentive plan (exclusive of equity-based plans) to the contrary, the Company shall pay to the Executive ~~would have become entitled~~ a lump sum amount, in cash, equal to ~~benefits under~~ the ~~Company’s post-retirement health care~~ sum of (i) any unpaid incentive compensation which has been allocated or ~~life insurance plans, as in effect immediately prior~~ awarded to the Executive for a completed bonus cycle preceding the Date of Termination ~~or, if more favorable to the Executive~~under any such plan and which, 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 twenty-four (24) months after~~ the Date of Termination, is contingent only upon the ~~Company shall provide such post-retirement health care and/or life insurance benefits to~~ continued employment of the Executive ~~and the Executive’s dependents commencing on the later of (i) the date on which such coverage would have first become available~~ to a subsequent date, and (ii) the ~~date~~ aggregate value of all contingent incentive compensation awards to the Executive for the uncompleted period under any such plan, calculated as to each such award by multiplying the award that the Executive would have earned on ~~which benefits described~~ the last day of the performance award period, assuming the achievement, at the target level, of any individual and corporate performance goals established with respect to such award, multiplied by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in ~~subsection~~ such performance award period (~~B) of this Section 6.1 terminate~~or if such fraction is greater than 1/2, multiplied by one (1)). (EG) The Company shall ~~provide~~ reimburse the Executive ~~with third-party~~ for expenses incurred for outplacement services suitable to the Executive’s position for ~~the~~ a period of one (1) year following the ~~Executive’s~~ Date of Termination ~~and ending on December 31 of the second calendar year following such Date of Termination~~ (or, if earlier, until the first acceptance by the Executive of an offer of employment) in an amount not exceeding 15% of the sum of the Executive’s highest annual base rate of salary as in effect during the three-year period ending immediately prior to the Date of Termination (including, ~~provided~~if the Date of Termination occurs within three years after the Effective Date, ~~however~~salary paid in respect of employment by Temple-Inland or its Affiliates during such three-year period), ~~that in no case shall~~ and the greatest target annual bonus pursuant to any annual bonus or incentive plan maintained by the Company ~~be required~~ in respect of the fiscal year in which occurs the Date of Termination (or, if higher, the highest actual annual bonus in respect of any of the three preceding fiscal years (including as applicable, with respect to ~~pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder~~ years ending at or before the Effective Date, annual bonuses paid by Temple-Inland)), which payment shall be ~~paid to the Executive~~ made as soon as practicable but in any event within thirty (30) ~~calendar~~ business days following the date ~~on which~~ of request for reimbursement. Subject to the ~~Executive submits~~ foregoing, in no event shall any payment described in this Section 6.1(G) be made after the ~~invoice but no later than December 31~~ end of the ~~third~~ calendar year following the calendar year of in which the ~~Executive’s Date of Termination~~expenses were incurred. (FH) For the ~~twenty~~two-~~four (24) month~~ year period immediately following the Date of ~~Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier~~Termination, the Company shall ~~continue to~~ provide the Executive with ~~all~~ perquisites (such as any use of a Company provided ~~by the Company~~ automobile, club membership fee reimbursements, income tax preparation and financial advisory services) that were applicable immediately prior to the Date of Termination or, if more ~~favorable to the Executive~~favorable, immediately prior to the first occurrence of an event or circumstance constituting Good ~~Reason (including~~Reason, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so~~ that ~~no portion of the Total Payments is subject to the Excise Tax (but~~ in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal and local income taxes on such Total Payments and shall the amount of ~~Excise Tax~~ perquisites to which the Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value is entitled under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section ~~6.2 (or requested by either the Executive or the Company in connection with this Section 6.2~~6.1(H) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect for any ~~other rights~~ taxable year of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of ~~reimbursements or in-kind benefits~~ perquisites to ~~be provided in~~ which the Executive is entitled under this Section 6.1(H) for any other taxable year~~, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit~~. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control/Severance Agreement (Forestar Real Estate Group LLC)

Severance Payments. 6.1 If (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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~~ or (ii) the Executive voluntarily terminates his employment for any reason during the one-month period commencing on the first anniversary of the Change in Control, then, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“"Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s '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 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 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~~Person described in clause (i), or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to ~~two~~ three times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any 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 or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason.constituting (B) For the ~~twenty~~thirty-~~four~~ six (2436) 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 and perquisites (including, but not limited to, executive life insurance, club memberships, financial planning and tax preparation, annual physical examination and charitable contributions), in each case, 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~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~~thirty-~~four~~ six (2436) month period following the Executive’s '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 ~~promptly~~ 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 or, if more favorable to the Executive, (C) Notwithstanding any provision of the Bake▇ ▇▇▇h▇▇ ▇▇▇orporated 1995 Employee Annual Incentive Compensation Plan (the "Annual Incentive Plan"), the ~~first occurrence~~ Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of ~~an event~~ (i) any unpaid incentive compensation which has been allocated or ~~circumstance constituting Good Reason~~awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under the Annual Incentive Plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent incentive compensation awards to the Executive for all then uncompleted periods under the Annual Incentive 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, at the expected value target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period; provided, however, that if such termination of employment occurs during the same year in which the Change in Control occurs, the pro-rata bonus payment referred to in clause (ii) above shall be offset by any payments received under the Annual Incentive Plan in connection with such Change in Control. (CD) In addition to the retirement benefits to which the Executive is entitled under the ~~DC Pension~~ Company's Thrift Plan (the "Thrift Plan") and the Company's Supplemental Retirement Plan (the "SRP"), the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ present value of ~~(i)~~ the ~~amount that~~ employer-provided contributions, deferrals and allocations the Executive would have ~~been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ received had he continued to participate, after the Date of Termination, ~~determined~~ in the Thrift Plan and the SRP for three (x3) ~~as if the Executive made the maximum permissible contributions thereto during such period~~additional years, assuming for this purpose that (yi) ~~as if~~ the Executive earned compensation for purposes of the Thrift Plan and SRP during such three- year period ~~at a rate equal~~ the amount used to calculate the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any 's severance payment under ~~such DC Plan.~~subparagraph (DE) If the Executive would have become entitled to benefits under the Company~~’s post-~~'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 's employment terminated at any time during the period of ~~twenty~~thirty-~~four~~ six (2436) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive and the Executive’s '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. (EF) The Company shall provide the Executive with ~~third-party~~ outplacement services suitable to the Executive’s 's position for ~~the~~ a period ~~following the Executive’s Date~~ of ~~Termination and ending on December 31 of the second calendar year following such Date of Termination~~ three years or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1A) ~~Notwithstanding any other provisions in this Agreement~~Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which 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 ~~and the amount of such Excise Tax: (i) no portion of~~ on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon 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 will be taken into account; (ii) no portion of the Total Payments will be taken into account whichGross-Up Payment, 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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 equal to the Total Payments. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (Baker Hughes Inc)

Appears in 1 contract

Sources: Severance Agreement (Systems & Computer Technology Corp)

Severance Payments. ~~6.1 If~~ 6.01 Subject to Section 6.02 hereof, the Company shall pay the Executive ~~incurs a “separation from service”~~ the payments described in this Section 6.01 (~~within~~ the ~~meaning~~ "Severance Payments") upon the termination of ~~section 409A)~~ the Executive's employment following a Change in Control and during the ~~Term~~term of this Agreement, ~~other than~~ in addition to the payments and benefits described in Section 5 hereof, unless such termination is (Ai) by the Company for Cause, (Bii) by reason of ~~death~~ death, Disability or ~~Disability~~Retirement, or (Ciii) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of ~~this Agreement~~the immediately preceding sentence, if a termination of the ~~Executive~~ Executive's employment occurs prior to a Change in Control, but following a Potential Change in Control in contemplation of and relating to said Change in Control, such termination shall be deemed to have ~~incurred a separation from service following~~ followed a Change in Control and to have been (i) 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 (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 occurs) 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 ~~for~~ with Good Reason ~~prior to a Change in Control (whether or not a Change in Control occurs)~~ and the ~~circumstance~~ act (or ~~event~~ failure to act) which constitutes Good Reason occurs following such Potential Change in Control and 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.. (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 times~~ the sum of (i) the higher of (x) [TWO AND ONE-HALF (2.5), WITH RESPECT TO ALL OF THE COMPANY'S EXECUTIVE OFFICERS OTHER THAN THE COMPANY'S CONTROLLER] [ONE-HALF (1/2), WITH RESPECT TO THE COMPANY'S CONTROLLER] times the Executive’s 's annual base salary as in effect immediately prior to the ~~Date~~ occurrence of the event or circumstance upon which the Notice of Termination oris based or (y) [TWO AND ONE-HALF (2.5), ~~if higher~~WITH RESPECT TO ALL OF THE COMPANY'S EXECUTIVE OFFICERS OTHER THAN THE COMPANY'S CONTROLLER] [ONE-HALF (1/2), ~~in effect~~ WITH RESPECT TO THE COMPANY'S CONTROLLER] times the average of Executive's annual base salary for the three (3) years immediately prior to the ~~first~~ occurrence of an the event or circumstance ~~constituting Good Reason~~upon which the Notice of Termination is based, and (ii) the ~~average annual bonus earned by~~ higher of (x) [TWO AND ONE-HALF (2.5), WITH RESPECT TO ALL OF THE COMPANY'S EXECUTIVE OFFICERS OTHER THAN THE COMPANY'S CONTROLLER] [ONE-HALF (1/2), WITH RESPECT TO THE COMPANY'S CONTROLLER] times the amount paid to the Executive ~~pursuant to any~~ as an annual discretionary bonus ~~or incentive plan maintained by~~ in the ~~Company in respect of~~ year preceding the ~~three fiscal years ending immediately prior to the fiscal~~ year in which ~~occurs~~ the Date of Termination oroccurs or (y) [TWO AND ONE-HALF (2.5), ~~if higher~~WITH RESPECT TO ALL OF THE COMPANY'S EXECUTIVE OFFICERS OTHER THAN THE COMPANY'S CONTROLLER] [ONE-HALF (1/2), ~~immediately prior~~ WITH RESPECT TO THE COMPANY'S CONTROLLER] times the average annual discretionary bonus paid to the ~~fiscal year~~ Executive in the three (3) years preceding that in which ~~occurs~~ the ~~first event or circumstance constituting Good Reason~~Date of Termination occurs. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) 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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC Pension Plan, the The Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) ~~the amount that would have~~ any annual discretionary bonus which has been ~~contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if~~ allocated or awarded to the Executive ~~made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at~~ for a ~~rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately~~ completed fiscal year preceding the Date of Termination ~~or, if higher, during the twelve months immediately prior~~ but has not yet been paid (pursuant to ~~the first occurrence of an event~~ Section 5.02 hereof or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunderotherwise), and (ii) a pro rata portion of an annual discretionary bonus for the ~~excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of~~ fiscal year in which the Date of Termination ~~over (y)~~ occurs, determined by multiplying the ~~portion~~ Executive's annual discretionary bonus awarded or paid for the most recently completed fiscal year by a fraction, the numerator of ~~such account balance that is nonforfeitable under~~ which shall be the ~~terms~~ number of ~~the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment~~ full days the Executive ~~would otherwise receive under~~ was employed by the ~~applicable DC Plan~~ Company during the fiscal year in which the Executive's Date of Termination occurred and ~~are not intended to offset or reduce any payment under such DC Plan~~the denominator of which shall be three hundred and sixty-five (365). (DC) If At the option of Executive ~~would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans, as in effect immediately prior~~ exercised by written notice to the ~~Date~~ Board 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 twenty-four Directors within thirty (2430) ~~months~~ days after and/or before the Date of Termination, the Company shall ~~provide such post-retirement health care and/or life insurance benefits~~ repurchase all Options held by Executive that the Executive elects to sell to the ~~Executive and~~ Company (which Options shall be cancelled upon the ~~Executive’s dependents commencing on~~ making of the ~~later~~ payment referred to below) by the payment of a lump sum amount, in cash, equal to the product of (i) the ~~date on which~~ excess of the higher of (x) the Current Market Value of the Parent Shares (as hereinafter defined) or (y) the highest per share price for Parent Shares actually paid within six (6) months preceding or after any Change in Control, over the per share exercise price of each such ~~coverage would have first become available and~~ Option held by the Executive, times (ii) the ~~date on which benefits described in subsection (B)~~ number of ~~this Section 6.1 terminate~~Parent Shares covered by each such Option. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Executive Employment Agreement (Wegener Corp)

Severance Payments. 6.1 If Subject to Section 6.2 hereof, if the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive's employment is terminated 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“"Severance 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~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s 's employment is terminated by the Company without Cause prior to a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs within 1 year of the Date of Termination) 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 for Good Reason prior to a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs within 1 year of the Date of Termination) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (~~whether or not~~ but only if a Change in Control ~~occurs~~occurs within 1 year of the Date of Termination). For purposes of Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A.. (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~~ three times the sum of (i) the Executive’s 's 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 circumstance constituting Good Reason, and (ii) 100% of the ~~average annual bonus earned by~~ Annual EV Amount determined for the Executive ~~pursuant to any annual bonus or incentive plan maintained by~~ under the ~~Company in respect of the three fiscal years ending immediately prior to~~ Company's 1996 Incentive Compensation Plan for the fiscal year of the Company in which occurs the Date of Termination or, if higher, ~~immediately prior to~~ the fiscal year in which the Change in Control occurs (or, if no such Annual EV Amount has been determined prior to the ~~first event or circumstance constituting Good Reason~~Change in Control for either such fiscal year, 100% of the Annual EV Amount for the fiscal year of the Company preceding the fiscal year in which the Change in Control occurs). (B) For the ~~twenty~~thirty-~~four~~ six (2436) 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 from time to ~~the Executive and his dependents immediately prior to~~ time following the Date of Termination ~~or, if more favorable~~ to employees of the Company serving in positions of similar grade level to the ~~Executive, those provided to~~ position in which the Executive ~~and his dependents~~ served immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to ~~the Executive immediately prior~~ such employees as in effect from time to ~~such date or occurrence~~time; provided, however, that, unless the Executive consents to a different ~~method~~-------- ------- 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 Company's obligation to provide benefits to the Executive pursuant to this Section 6.1(B) shall ~~be reduced to~~ terminate from and after the ~~extent~~ time that benefits of the same type are received by or made available to the Executive during the ~~twenty~~thirty-~~four~~ six (2436) month period following the ~~Executive’s termination~~ Date of ~~employment~~ Termination (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive)~~; provided~~. If the Severance Payments shall be de creased pursuant to Section 6.2 hereof, ~~however~~and the Company's obligation to provide the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof is thereafter terminated pursuant to the immediately preceding sentence, ~~that~~ the Company ~~shall promptly reimburse the Executive for the excess~~shall, ~~if any~~no later than five (5) business days following such reduction, ~~of the after tax cost of such benefits~~ pay to the Executive ~~over such cost immediately prior~~ 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 ~~Date~~ Executive without being, or causing any other payment to be, nondeductible by reason of ~~Termination or, if more favorable to~~ section 280G of the ~~Executive, the first occurrence of an event or circumstance constituting Good Reason~~Code. (C) In addition to the retirement benefits to which the Executive is entitled under ~~the DC~~ each Pension ~~Plan~~Plan or any successor plan thereto, the Company shall pay the Executive a lump sum amount, in cash, equal to the ~~sum~~ excess of (i) the ~~amount that~~ 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 ~~been contributed thereto by~~ accrued under the ~~Company~~ terms of all Pension Plans (without regard to (x) any amendment to any Pension Plan made subsequent to a Change in Control and on ~~the Executive’s behalf during the twenty-four (24) months immediately following~~ or prior to the Date of Termination, which amendment adversely affects in any manner the computation of retirement benefits thereunder, (y) Sections 3.02 and 4.05 of the SERP and (z) whether any of the conditions set forth in Section 4.01(b) of the SERP have been satisfied), determined ~~(x)~~ as if the Executive ~~made~~ were fully vested thereunder and had accumulated (after the ~~maximum permissible contributions thereto during such period,~~ Date of Termination) thirty-six (y36) ~~as if the Executive earned compensation~~ additional months of service credit thereunder and had been credited under each Pension Plan during such period ~~at a rate~~ with compensation equal to the Executive’s 's compensation (as defined in ~~the DC~~ such Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and over (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan.) (D) If the Executive would have become entitled to benefits under the Company’s '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 's employment terminated at any time during the period of ~~twenty-four~~ thirty- six (2436) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or~~ or life insurance benefits to the Executive and the Executive’s '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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Severance Agreement (York International Corp /De/)

Severance Payments. ~~6.1 If~~ 7.01 The Company, its successors or assigns, will pay Executive as severance pay a lump sum (the ~~Executive incurs a~~ “~~separation from service”~~ Severance Payment”) amount equal to twelve (~~within~~ 12) months of the ~~meaning~~ Executive’s monthly Base Salary for full-time employment at the time of ~~section 409A~~Executive’s termination: (a) ~~following~~ if (i) there has been a Change of Control of the Company (as defined in ~~Control~~ Section 7.02), and ~~during~~ (ii) Executive is an active and full-time employee at the ~~Term~~time of the Change of Control, and (iii) within twelve (12) months following the date of the Change of Control, Executive’s employment is involuntarily terminated for any reason (including Good Reason (as definition Section 6.04)), other than for Cause or death or disability. If prior to a Change of Control (Aa) Executive’s employment is involuntarily terminated by the Company ~~for Cause, (B) by reason of death or Disability,~~ without cause or (Cb) ~~by the~~ Executive ~~without~~ terminates his employment for Good Reason, and such termination for Good Reason (x) occurred at the request of a person who indicated an intention, or taken steps reasonably calculated, to effect a Change of Control or (y) otherwise occurred in connection with, or in anticipation of, a Change of Control which actually occurs, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes termination of ~~this Agreement, the Executive~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ occurred immediately following a Change ~~in Control by the Company without Cause or by the Executive with Good Reason, if~~ of Control; or (ib) the ~~Executive’s~~ employment of Executive is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control occurs) 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 ControlCause, (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control occurs) 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 the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of~~ Reason; or (c) if (i) a Change in Control (~~whether or not a Change~~ as defined in ~~Control occurs). For purposes of~~ Section 5 and 6 of this Agreement, no payment that would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until such termination of employment is also a “separation from service,” as determined in accordance with section 409A. (A7.02) 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 times the sum of (i) the Executive’s base salary as in effect immediately occurred prior to Executive commencing his employment with the ~~Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason~~Company, and (ii) at the ~~average annual bonus earned~~ time of the Change in Control Executive had accepted employment with the Company as indicated by his execution of this Agreement and as a result he was no longer employed by his previous employer, and (iii) the ~~Executive~~ Company decided to not commence Executive’s employment as a result of the Change in Control. Nothing in this Subsection 7.01 shall limit the authority of the Committee or Board to terminate Executive’s employment in accordance with Section 6.03. Payment of the Severance Payment pursuant to ~~any 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 or~~Section 7.01, ~~if higher~~less customary withholdings, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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~~made in one lump sum within thirty (30) ~~shall be reduced to the extent benefits~~ days of ~~the same type are received by or made available to the Executive during the twenty-four (24) month period following~~ the Executive’s termination ~~of employment (and any such benefits received by~~ or ~~made available to~~ resignation. In addition, the ~~Executive~~ Severance Payment shall be ~~reported to the Company~~ reduced by the ~~Executive); provided, however, that the Company shall promptly reimburse the Executive for the excess, if any,~~ amount of the after tax 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) In addition to the cash severance-type benefits to which ~~the~~ Executive is may be entitled ~~under the DC Pension Plan~~pursuant to any other cash severance plan, agreement, policy or program of the Company ~~shall pay the Executive a lump sum amount, in cash, equal to the sum~~ or any of (i) the amount that would have been contributed thereto by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to its subsidiaries; including any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) If the Executive would have become entitled to benefits under the Company’s for 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employmentrestrictions, provided, however, that ~~in no case shall~~ if the ~~Company be required~~ amount of cash severance benefits payable under such other severance plan, agreement, policy or program is greater than the Severance Payment payable pursuant to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, ~~if any of~~ Executive will be entitled to receive the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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 amounts payable under such other plan, ~~program, arrangement or~~ agreement, policy or program which exceeds the ~~Company will reduce the Total Payments to the extent necessary so that no portion~~ Severance Payment. Without limiting other payments which would not constitute “cash severance-type benefits” hereunder, any cash settlement of ~~the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided~~stock options, ~~however~~accelerated vesting of stock options and retirement, ~~that the Total Payments will only be reduced if (i) the net amount~~ pension and other similar benefits shall not constitute “cash severance-type benefits” for purposes of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments)this Section 7.01. ~~(A) In~~ 7.02 For the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. At the time that payments are made under this Agreement, ~~the Company~~ “Change of Control” 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,~~ mean 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion one of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payfollowing:

Appears in 1 contract

Sources: Executive Employment Agreement (Granite City Food & Brewery LTD)

Severance Payments. 6.1 If (i) the ~~Executive incurs a “separation from service” (within the meaning of section 409A)~~ Executive’s employment is terminated following a Change in Control and ~~during the Term~~within three (3) years after a Change in Control, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, ~~then~~ 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”)) 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~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ 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 (whether or not a Change in Control ever occurs) 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, 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, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive~~Termination, the Company shall pay to the Executive within five (5) business days after the Date of Termination, a lump sum severance payment, in cash, equal to ~~two~~ three (3) times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the ~~average~~ Executive’s target annual bonus ~~earned by the Executive~~ pursuant to any 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 or, if higher, ~~immediately prior to~~ the fiscal year in which occurs the first event or circumstance constituting Good Reason. The amount payable pursuant to this Section 6.1(A) shall be reduced by the amount of any cash severance or salary continuation benefit paid or payable to the Executive under any other plan, policy or program of the Company or any of its Affiliates or any written employment agreement between the Executive and the Company or any of its Affiliates. (B) For the ~~twenty-four (24)~~ 36 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 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~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 ~~twenty-four (24)~~ 36 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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) ~~In addition~~ 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 remaining term of such option (such remaining term to be determined as if the Executive were still actively employed), 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 ~~benefits to which the~~ Executive ~~is entitled~~ under the ~~DC Pension Plan~~terms of any annual or long-term incentive plan, the Company shall pay to the Executive within five (5) business days after the Date of Termination, a lump sum amount, in cash, equal to the sum of (i) any unpaid incentive compensation (including performance share awards) which has been allocated or awarded to the ~~amount that would have been contributed thereto by~~ Executive for a completed fiscal year or other measuring period preceding the ~~Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Date of Termination under any such plan and which, as of the Date of Termination, ~~determined (x) as if~~ is contingent only upon the continued employment of the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder~~subsequent date, and (ii) ~~the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the~~ a pro rata portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) 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 orof the aggregate value of all contingent 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, at the target level (or if ~~more favorable~~ higher, at the then projected actual final level), of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. (E) The benefits then accrued by or payable to the Executive under the Company’s Supplemental Executive Retirement Plan, Executive Separation Allowance Plan, Deferred Compensation Plan, Savings Parity Plan, or any successor to any such plan, and the benefits then accrued by or payable to the Executive under any other nonqualified plan providing supplemental retirement or deferred compensation benefits (other than the Select Retirement Plan), shall become fully vested and payable notwithstanding any eligibility conditions that would otherwise apply with respect to such benefits; 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 paid upon the Executive’s attainment of age fifty-five (55). With respect to the Supplemental 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 (other than the Select Retirement Plan), 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 irrevocable grantor trust (a so-called “Rabbi Trust”) whose trustee shall be an entity unaffiliated with and independent of the 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 any amendment or termination of any such plan on or after the Change in Control date the effect of which would be to reduce or eliminate the benefit payable to the Executive shall be disregarded. With respect to the Deferred Compensation Plan, Savings Parity Plan, and any other nonqualified account balance plan or portion of a plan providing supplemental retirement or deferred compensation benefits, the Company shall pay 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 twenty-four~~ within five (245) ~~months~~ business days after the Date of Termination, ~~the Company shall provide such post-retirement health care and/or life insurance benefits~~ a lump sum amount, in cash, equal to the sum of the aggregate account balances of the Executive ~~and the Executive’s dependents commencing on the later~~ under such plans or portions of ~~(i)~~ plans as of the date ~~on which~~ of such ~~coverage would have first become available and (ii) the date on which benefits described in subsection (B) of this Section 6.1 terminate~~payment. (EF) The Company shall ~~provide~~ reimburse the Executive ~~with third-party~~ for expenses incurred for outplacement services suitable to the Executive’s position for ~~the~~ a period of three (3) years following the ~~Executive’s~~ Date of Termination ~~and ending on December 31 of the second calendar year following such Date of Termination~~ (or, if earlier, until the first acceptance by the Executive of an offer of employment~~, provided, however, that~~ ) in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 an amount not exceeding 25% of the ~~third year following the year~~ sum of the Executive’s annual base salary as in effect immediately prior to the Date of ~~Termination~~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. (FG) For the ~~twenty-four~~ six (246) month period immediately following the Date of ~~Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier~~Termination, the Company shall ~~continue to~~ provide the Executive with ~~all perquisites~~ the use of any Company provided by automobile on the ~~Company~~ same terms and conditions that were applicable immediately prior to the Date of Termination or, if more ~~favorable to the Executive~~favorable, immediately prior to the first occurrence of an event or circumstance constituting Good ~~Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance)~~Reason. ~~6.2~~ (1A) ~~Notwithstanding any other provisions in this Agreement~~Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) ~~would~~ will be subject ~~(in whole or part),~~ to the Excise Tax, ~~then~~the Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after ~~taking into account~~ deduction of any ~~reduction in~~ Excise Tax on the Total Payments provided by reason of section 280G of the Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and ~~after subtracting the net amount of~~ any federal, ~~state, municipal~~ state and local income and employment taxes ~~on such reduced Total Payments~~ and ~~after taking into account~~ Excise Tax upon the ~~phase out~~Gross-Up Payment, ~~if any, of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or~~ shall be equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether ~~and the extent to which~~ any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax: , (i) ~~no portion~~ all of the Total Payments ~~the receipt or enjoyment of which the Executive~~ shall ~~have waived at such time and in such manner~~ be treated as ~~not to constitute a~~ “~~payment~~parachute payments” (within the meaning of section ~~280G(b~~280G(b)(2) of the ~~Code will be taken into account; (ii~~Code) ~~no portion of the Total Payments will be taken into account which~~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, the Company’s independent auditor (the “Auditor”), ~~does~~ such payments or benefits (in whole or in part) do not constitute ~~a “~~parachute ~~payment” within the meaning of section 280G(b)(2) of the Code (~~payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) ~~and, in calculating~~ all “excess parachute payments” within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise ~~Tax, no portion of such Total Payments will be taken into account which~~Tax unless, in the opinion of Tax Counsel, ~~constitutes~~ such excess parachute payments (in whole or in part) represent reasonable compensation for services actually ~~rendered,~~ 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. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made 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 if there is no 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 which could be obtained from deduction of such state and local taxes. (C) ~~All determinations required by this Section 6.2 (or requested by either~~ In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Executive or shall repay to the ~~Company~~ Company, within five business days following the time that the amount of such reduction in ~~connection with this Section 6.2) will be at~~ the ~~expense~~ Excise Tax is finally determined, the portion of the ~~Company. The fact~~ 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 and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive’s ~~right~~ taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to ~~payments or benefits may be reduced~~ exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the ~~limitations contained in this Section 6.2 will~~ existence or amount of which cannot ~~of itself limit or otherwise affect any other rights~~ 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 additions payable by the Executive ~~under this Agreement~~with respect to such excess) within five 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. 6.3 ~~Subject to Section 6.4, the~~ The payments provided in subsections (A), (D) and (CE) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifth ~~(5th) business~~ day following the Date of Termination; 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 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 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 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 business day after demand by the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(B) of the Code). 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). ~~(A) Notwithstanding any provisions of this Agreement~~ 6.4 The Company also shall pay to the ~~contrary, if the~~ Executive ~~is a “specified employee” (within the meaning of section 409A~~ all legal fees and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost expenses incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or disputing in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Agreement (Visteon Corp)

Severance Payments. ~~6.1~~ 5.1 If the ~~Executive incurs a “separation from service”~~ Executive's employment is terminated during the thirty-six (~~within the meaning of section 409A~~36) month period following a Change in ~~Control and during the Term~~Control, 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 amounts, and provide the Executive the ~~benefits,~~ benefits described in this Section ~~6.1~~ 5 (“"Severance Payments~~”),~~ ") in addition to any payments and benefits to which the Executive is entitled under Section ~~5 hereof~~4 of this Agreement. For purposes of this Agreement, the ~~Executive~~ Executive's employment shall be deemed to have ~~incurred a separation from service~~ been terminated by the Company following a Change in ~~Control by the Company~~ Control, without Cause or by the Executive with Good Reason, if (i) the Executive’s 's employment is terminated by the Company without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ 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 for Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s 's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in ~~Control (whether or not a Change in Control occurs)~~Control. For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~not correct. (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 ~~two times~~ the sum of (i) two (2) times the Executive’s 's base salary as in effect immediately prior to the Date of Termination or, if ~~higher, in effect immediately prior to the first occurrence of~~ Section 15 (o)(II) is applicable as an event or circumstance constituting Good Reason, the rate in effect immediately prior to such event or circumstance, and (ii) two (2) times the ~~average~~ annual bonus ~~earned by~~ actually paid for the ~~Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the three~~ fiscal ~~years~~ year ending immediately prior to the fiscal year in which occurs the Date of ~~Termination or~~Termination, ~~if higher, immediately prior~~ pursuant to any annual bonus or incentive plan maintained by or through the ~~fiscal year in which occurs the first event or circumstance constituting Good Reason~~Company. (Bb) For the twenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents ~~life~~medical, ~~disability~~dental, ~~accident~~ and ~~health insurance~~ accidental death and disability 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence~~; provided, however, that, unless the Executive consents to a different method, 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~~5.1(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) month period following the ~~Executive’s termination~~ Date of ~~employment~~ Termination (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 ~~promptly~~ 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (Cc) ~~In addition~~ Notwithstanding any provision to the ~~benefits~~ contrary in any plan or agreement maintained by or through the Company pursuant to which the Executive ~~is entitled under the DC Pension Plan~~has been granted restricted stock, ~~the Company shall pay the Executive a lump sum amount~~stock options or stock appreciation rights, ~~in cash, equal to the sum of (i) the amount that would have been contributed thereto by the Company~~ effective on ~~the Executive’s behalf during the twenty-four (24) months immediately following~~ the Date of Termination, ~~determined~~ (xi) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard all restrictions with respect to any amendment to the DC 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 benefits thereunderrestricted stock shall lapse, and (ii) all stock appreciation rights and stock options shall become fully vested and then canceled in exchange for a cash payment equal to the ~~excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as~~ excess of the ~~Date~~ fair market value of ~~Termination~~ the shares of Parent Company stock subject to the stock appreciation right or stock option on the date of the Change in Control, over (ythe exercise price(s) ~~the portion~~ of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset stock appreciation rights or ~~reduce any payment under such DC Plan~~stock options. (De) If the Executive would have become entitled to benefits under the Company’s '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 's employment terminated at any time during the period of twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care ~~and/or life insurance~~ benefits to the Executive and the Executive’s '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~~ Section 5.1 (Bb) ~~of this Section 6.1~~ terminate. (Ef) 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 maintained by or through the Company insuring the life of the Executive, that is in effect, and (ii) shall transfer to the Executive any and all rights and incidents of ownership in such arrangements at no cost to the Executive. (g) The Company shall provide the Executive with ~~third-party~~ reimbursement for outplacement services ~~suitable~~ received by the Executive for up to ~~the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or~~Thirty Thousand Dollars ($30,000), ~~if earlier,~~ but only until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (Fh) ~~For~~ The Company shall provide the ~~twenty-four (24) month period immediately following~~ Executive with his Company automobile. The book value then attributed to it by the leasing company will be considered "fringe benefit" income and that amount will be subject to tax during the calendar year in which the Date of Termination occurs. 5.2 (A) Whether or ~~until~~ not the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior entitled to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this AgreementSeverance Payments, if any of the payments or benefits received or to be received by the Executive ~~(including any payment or benefits received~~ in connection with a Change in Control or the Executive’s 's termination of ~~employment,~~ employment (whether pursuant to the terms of this Agreement or any other plan, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (~~all~~ such payments ~~and~~ or benefits, excluding the Gross-Up Payment, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which 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 ~~and the amount of such Excise Tax: (i) no portion of~~ on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon 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 will be taken into account; (ii) no portion of the Total Payments will be taken into account whichGross-Up Payment, 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 payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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 equal to the Total Payments. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following the Date of Termination. 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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct pay

Appears in 1 contract

Sources: Change in Control Agreement (Kaman Corp)

Severance Payments. ~~6.1 If~~ The Employer shall pay the ~~Executive incurs a~~ Employee the payments described in this Section 10.1 (the “~~separation from service” (within~~ Severance Payments”) upon the ~~meaning~~ termination of ~~section 409A)~~ the Employee’s employment following a Change in Control and ~~during~~ prior to the ~~Term, other than (A) by~~ end of 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 amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”)Change-in-Control Protective Period, in addition to any payments and benefits to which the ~~Executive~~ Employee is entitled under ~~Section 5~~ Sections 5, 6, 7 and 8.1 hereof, unless such termination is (i) by the Employer for Cause, (ii) by reason of death or Disability, or (iii) by the Employee without Good Reason. For purposes of this Agreement, the ~~Executive~~ Employee’s employment shall be deemed to have ~~incurred a separation from service~~ been terminated by the Employer without Cause following a Change in Control ~~by the Company without Cause~~ or by the ~~Executive~~ Employee with Good ~~Reason~~Reason following a Change in Control, as the case may be, if (i) the ~~Executive~~Employee’s employment is terminated ~~by the Company~~ without Cause prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and such termination was at the request or direction of a Person who has entered into an agreement with the ~~Company~~ Employer the consummation of which would constitute a Change in Control, (ii) the ~~Executive~~ Employee terminates his employment ~~for~~ with Good Reason prior to a Change in Control ~~(whether or not a Change in Control occurs)~~ and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the ~~Executive~~Employee’s employment is terminated by the ~~Company~~ Employer without Cause ~~or by the Executive for Good Reason~~ prior to a Change in Control (but following a Potential Change in Control) and such termination ~~or the circumstance or event which constitutes Good Reason~~ is otherwise in connection with or in anticipation of a Change in Control ~~(whether or not a Change in Control~~ which actually occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Employee shall be presumed to be correct unless the Employer establishes to the Committee by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~not correct. (A) In lieu of any further salary payments to the ~~Executive~~ Employee for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the ~~Executive~~Employee, the ~~Company~~ Employer shall pay to the ~~Executive~~ Employee a lump sum severance payment, in cash, equal to two (2) times the sum of (i) the ~~Executive~~higher of the Employee’s ~~base salary as~~ Base Salary in effect immediately prior to the ~~Date of Termination or, if higher, in effect immediately prior to the first~~ occurrence of an the event or circumstance ~~constituting Good Reason, and (ii)~~ upon which the average annual bonus earned by the Executive pursuant to any 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 Notice of Termination ~~or, if higher, immediately prior to~~ is based or the fiscal year in which occurs the first event or circumstance constituting Good Reason. (B) For the twenty-four (24) 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 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 after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, 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) month period following the ExecutiveEmployee’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 promptly 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 or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. (C) In addition to the benefits to which the Executive is entitled under the DC 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 by the Company on the Executive’s behalf during the twenty-four (24) months immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) If the Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans, as Base Salary 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The Company shall provide the Executive with third-party outplacement services suitable to the Executive’s position for the period following the Executive’s Date of Termination and ending on December 31 of the second calendar year following such Date of Termination or, if earlier, until the first acceptance by the Executive of an offer of employment, provided, however, that in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 of the third year following the year of the Executive’s Date of Termination. (F) For the twenty-four (24) month period immediately following the Date of Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier, the Company shall continue to provide the Executive with all perquisites provided by the Company immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance). 6.2 (1) Notwithstanding any other provisions in this Agreement, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received 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, program, arrangement or agreement) (all such payments and benefits, being hereinafter referred to as 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, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to 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, municipal 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, if any, of itemized deductions and personal exemptions attributable to such unreduced Total Payments). (A) In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensation. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such 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 will be taken into account; (ii) no portion of the Total Payments will 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, and (ii) the ~~Company’s independent auditor~~ higher of (x) the ~~“Auditor”), does not constitute a “parachute payment” within~~ annual Bonus earned by the ~~meaning of section 280G(b)(2)~~ Employee in respect of the ~~Code (including by reason of section 280G(b)(4)(A) of the Code) and,~~ Employer’s fiscal year immediately preceding that in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes 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; 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. (C) All determinations required by this Section 6.2 (or requested by either the Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement. 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. 6.3 Subject to Section 6.4, the payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth (5th) business day following which the Date of ~~Termination. At~~ Termination occurs, (y) the ~~time~~ average annual Bonus so earned in respect of the three fiscal years immediately preceding that ~~payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner~~ in which the Change in Control occurs, or (z) $185,750. Of the foregoing payments, one-half of 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~~ in consideration of and allocated to the statement). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation Employee’s obligations under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”)Section 13.2. (B) For 18 months after the Employee’s Date of Termination, the Company will maintain in full force and effect, for the Employee’s continued benefit (and that of all family members and other dependents who were enrolled in the programs on the Employee’s Date of Termination) all life, medical and dental insurance programs in which the Employee (and members of the Employee’s family or other dependents) were participating or by which such individuals were covered immediately before the Employee’s Date of Termination. If the terms of any of such programs do not allow the continued participation described in the preceding sentence, the Company will: (i) provide benefits that are substantially similar (including eligibility conditions, conditions on benefits, the value of benefits and the scope of coverage) to those provided by the life, medical and dental insurance programs in which the Employee, members of the Employee’s family and dependents were participating immediately before the Employee’s Date of Termination; and (ii) ensure that any eligibility or other conditions on benefits under these programs, including deductibles and co-payments, will be administered by applying the Employee’s experience under any predecessor program in which the Employee (and members of the Employee’s family and dependents) were participating before Termination. With respect to this Section 10.1(B), any benefits or payments relating to medical and dental insurance that are provided after completion of the applicable continuation period permitted under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, and any benefits or payments relating to life insurance shall be subject to the following: (A) the amount of expenses eligible for reimbursement ~~under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by~~ or the ~~Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31~~ benefits or payments provided during any taxable year of the ~~year following~~ Employee may not affect the ~~year in which~~ expenses eligible for reimbursement or the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date. In no event shall the reimbursements benefits or ~~in-kind benefits~~ payments to be provided by to the ~~Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided~~ Employee in any other taxable year~~, nor shall~~ ; (B) reimbursement of any eligible expense must be made on or before the ~~Executive~~last day of the Employee’s taxable year following the taxable year in which the expense was incurred; and (C) the right to reimbursement or ~~in-kind~~ to such benefits be or payments is not subject to liquidation or exchange for another benefit~~. (C~~. To the extent that any benefit extended under this Section 10.1(B) ~~For purposes of section 409A~~would result in taxable compensation for the Employee, the ~~Executive’s right to receive any “installment” payments pursuant to this Agreement~~ Employee shall be ~~treated as a right to receive a series of separate and distinct pay~~solely responsible for any such taxes.

Appears in 1 contract

Sources: Employment Agreement (Schulman a Inc)

Severance Payments. 6.1 If (i) the ~~Executive incurs a “separation from service”~~ Executive’s employment is terminated on or within two (~~within the meaning of section 409A~~2) years following a Change in ~~Control and during the Term~~Control, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, ~~then~~ 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”), 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~~ Executive’s employment shall be deemed to have ~~incurred a separation from service~~ 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 (whether or not a Change in Control ever occurs) 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, 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, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control occurs). For purposes of ~~Section 5~~ any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and ~~6 of this Agreement, no payment~~ convincing evidence that ~~would otherwise be made and no benefit that would otherwise be provided upon a termination of employment will be made or provided unless and until~~ such ~~termination of employment~~ position is ~~also a “separation from service,” as determined in accordance with section 409A.~~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 Executive~~Termination, 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 ~~two~~ one and one half (11/2) times the sum of (i) the Executive’s 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 circumstance constituting Good Reason, and (ii) the ~~average~~ Executive’s target annual bonus ~~earned by the Executive~~ pursuant to any 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 or, if higher, ~~immediately prior to~~ the fiscal year in which occurs the first event or circumstance constituting Good Reason. The amount payable pursuant to this Section 6.1(A) shall be in lieu of any cash severance or salary continuation benefit payable to the Executive under any other plan, policy or program of the Company or any of its Affiliates (for which the Executive shall be deemed ineligible if amounts are payable hereunder) or any written employment agreement between the Executive and the Company or any of its Affiliates. (B) For the ~~twenty-four (24)~~ 18 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 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 ~~after tax~~ cost to the Executive than the ~~after tax~~ cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different ~~method~~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 by another employer during the ~~twenty-four (24)~~ 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 ~~promptly~~ 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 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) ~~In addition~~ 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 ~~benefits to which the~~ Executive ~~is entitled~~ under the ~~DC Pension Plan~~terms of any 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 unpaid incentive compensation (including performance share awards) which has been allocated or awarded to the ~~amount that would have been contributed thereto by~~ Executive for a completed fiscal year or other measuring period preceding the ~~Company on the Executive’s behalf during the twenty-four (24) months immediately following~~ Date of Termination under any such plan and which, as of the Date of Termination, ~~determined (x) as if~~ is contingent only upon the continued employment of the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC 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 benefits thereunder~~subsequent date, and (ii) a pro rata portion to the ~~excess~~Date of Termination of the aggregate value of all contingent 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, at the target level (or if higher, at the then projected actual final level), of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. Notwithstanding the forgoing, if ~~any~~and to the extent the Executive had elected to defer receipt of any such award, ~~of (x)~~ and if the Executive’s ~~account balance under the DC Pension Plan~~ deferral election is irrevocable as of the Date of Termination ~~over (y)~~ for purposes of Code Section 409A, the ~~portion of such~~ amount calculated above shall be credited to the Executive’s account ~~balance that is nonforfeitable under the terms of the DC Pension Plan. The payments provided in this Section 6.1(C) are in addition to any payment the Executive would otherwise receive~~ under the applicable DC Plan and are not intended to offset or reduce any payment under such DC Plan. (D) If the Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans, as deferred compensation plan in ~~effect immediately prior to the Date~~ lieu of ~~Termination or, if more favorable~~ being distributed directly 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 twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care and/or life insurance benefits to the Executive 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. (E) The benefits then accrued by or payable to the Executive under the Company’s Supplemental Executive Retirement Plan and Pension Parity Plan, or any successor to any such plan, and the benefits then accrued by or payable to the Executive 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, as so vested, will be paid in accordance with the terms of the applicable plan or program. With respect to the Supplemental Executive Retirement Plan and any other nonqualified nonaccount balance plan or portion of a plan providing supplemental retirement or deferred compensation benefits, the Company shall ~~provide~~ 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 irrevocable grantor trust (a so-called “Rabbi Trust”) whose trustee shall be an entity unaffiliated with ~~third-party~~ and independent of the 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 transfer to the Rabbi Trust would be treated, under Code Sections 83 and 409A(b), as a taxable transfer to the Executive, 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 such plan on or after the Change in Control date the effect of which would be to reduce or eliminate the benefit payable to the Executive shall be disregarded. (F) The Company shall reimburse the Executive for expenses incurred for outplacement services suitable to the Executive’s position for ~~the~~ a period of two (2) years following the Executive’s ~~Date of Termination and ending on December 31 of the second calendar year following such Date of Termination~~ Separation from Service, (or, if earlier, until the first acceptance by the Executive of an offer of employment~~, provided, however, that~~ ) in no case shall the Company be required to pay in excess of $50,000 over such period in providing outplacement services and that all reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days following the date on which the Executive submits the invoice but no later than December 31 an amount not exceeding 25% of the ~~third year following the year~~ sum of the Executive’s annual base salary as in effect immediately prior to the Date of ~~Termination~~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. (FG) For the ~~twenty-four~~ six (246) month period immediately following the Date of ~~Termination or until the Executive becomes eligible for substantially similar benefits from a new employer, whichever occurs earlier~~Termination, the Company shall ~~continue to~~ provide the Executive with ~~all perquisites~~ the use of any Company provided by automobile on the ~~Company~~ same terms and conditions that were applicable immediately prior to the Date of Termination or, if more ~~favorable to the Executive~~favorable, immediately prior to the first occurrence of an event or circumstance constituting Good ~~Reason (including, without limitation, automobile, financial planning, annual physical and executive whole life insurance)~~Reason. The Executive’s right to use a Company provided automobile cannot be exchanged for cash or another benefit. ~~6.2~~ (1A) Notwithstanding any other provisions in of this Agreement, if in the event that any ~~of the payments~~ payment or ~~benefits~~ benefit received or to be received by the Executive ~~(including any payment or benefits received~~ 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, ~~program,~~ arrangement or ~~agreement~~agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter ~~referred to as the~~ 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, ~~program,~~ arrangement or agreement, the ~~Company will reduce~~ cash Severance Payments shall first be reduced, and the ~~Total~~ 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 (~~but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i~~A) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, ~~state, municipal~~ state and local income taxes on such reduced Total ~~Payments and after taking into account the phase out, if any, of itemized deductions and personal exemptions attributable to such reduced Total~~ Payments), ) is greater than or equal to (iiB) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, ~~state, municipal~~ 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~~ Payments); provided, however, that the Executive may elect to the extent that such election (and ~~after taking into account~~ the ~~phase out, if any, of itemized deductions and personal exemptions attributable~~ right to such ~~unreduced Total Payments). (A~~election) In does not result in adverse tax consequences to the ~~case of a reduction in~~ Executive under Code Section 409A, to have the ~~Total Payments, the Total~~ noncash Severance Payments ~~will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be~~ reduced (~~if necessary,~~ or eliminated) prior to ~~zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of~~ any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of the cash payment and payments and benefits due in respect of any equity not subject to section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to section 409A as deferred compensationSeverance Payments. (B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise ~~Tax and the amount of such 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 ~~will~~ shall be taken into account; , (ii) no portion of the Total Payments ~~will~~ 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 “Auditor”) which was, immediately prior to the Change in Control, the Company’s independent auditor (~~the “Auditor”),~~ A) does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) ~~and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel,~~ or (B) constitutes 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; , and (iii) 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 Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. (C) ~~All determinations required by this Section 6.2 (or requested by either~~ At the ~~Executive or the Company in connection with this Section 6.2) will be at the expense of the Company. The fact~~ time that ~~the Executive’s right to~~ payments ~~or benefits may be reduced by reason of the limitations contained in this Section 6.2 will not of itself limit or otherwise affect any other rights of the Executive~~ are made under this Agreement~~. The Executive and~~ , the Company shall ~~each reasonably cooperate~~ 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 ~~connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect~~ writing shall be attached to the ~~Total Payments~~statement). 6.3 ~~Subject to Section 6.4, the~~ The payments provided in subsections (A) and (CD) of Section 6.1 hereof shall be made ~~not later than~~ on the ~~fifth~~ first day of the seventh (~~5th~~7th) ~~business day~~ month following the ~~Date of Termination~~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). (A) Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of section 409A and determined pursuant to procedures adopted by the Company) at the time of his separation from service and if any portion of the payments or benefits to be received by the Executive upon separation from service would be considered deferred compensation under section 409A, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s separation from service (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s separation from service (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first (1st) business day of the seventh month following the date of the Executive’s separation from service or (ii) Executive’s death (the applicable date, the “Permissible Payment Date”). 6.4 The Company also shall ~~also~~ reimburse the Executive for ~~the after-tax cost~~ all legal fees and expenses incurred by the Executive in ~~independently obtaining~~ disputing in good faith any Delayed Benefits (the “Additional Delayed Payments”). (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B), (D) and (F), such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement issue hereunder relating to the ~~Additional Delayed Payments~~termination of the Executive’s employment, ~~such reimbursement~~ 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. Such payments shall be made ~~on the Permissible Payment Date. In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount~~ within five business days after delivery of ~~reimbursements or in-kind benefits to be provided in any other taxable year, nor shall~~ the Executive’s ~~right to~~ written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require; provided that no reimbursement ~~or in-kind benefits be subject to liquidation or exchange for another benefit. (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments~~ pursuant to this ~~Agreement~~ Section 6.4 shall be ~~treated as a right to receive a series~~ made later than the end of ~~separate and distinct pay~~the ca

Appears in 1 contract

Sources: Change in Control Agreement (Visteon Corp)

Common use of Severance Payments Clause in Contracts