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CALUMET SPECIALTY PRODUCTS PARTNERS, L.P. | Calumet GP, LLC | Calumet Specialty Products Partners, LP

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Title: EMPLOYMENT, CONFIDENTIALITY, AND NON-COMPETE AGREEMENT
Governing Law: Indiana     Date: 9/16/2015
Industry: Oil and Gas Operations     Sector: Energy

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EXHIBIT 10.1

 

EMPLOYMENT, CONFIDENTIALITY, AND NON-COMPETE AGREEMENT

 

 

THIS EMPLOYMENT, CONFIDENTIALITY, AND NON-COMPETE AGREEMENT (the “Agreement”) is entered into between Timothy Go (“Executive”) and Calumet GP, LLC (“Company”), collectively referred to as the “Parties,” with an “Effective Date of September 14, 2015.

 

WHEREAS, the Company serves as the general partner of Calumet Specialty Products Partners, L.P., a Delaware limited partnership (the “MLP”);

 

WHEREAS, the Company and Executive wish to enter into an employment relationship; and

 

WHEREAS, the Company wishes to protect its confidential and proprietary information, customer base, and goodwill.

 

NOW, THEREFORE, in consideration of the mutual promises and conditions herein set forth, the Parties agree as follows:

 

1.     Employment and Term .

 

(a)     Employment and Acceptance . The Company agrees to employ the Executive, and the Executive agrees to be employed by the Company, in accordance with the terms and provisions of this Agreement during the Employment Period (as defined below).    

 

(b)     Term .    The initial term of this Agreement shall be for the period beginning on the Effective Date and ending on the third anniversary of the Effective Date (the “Initial Term”). On the third anniversary of the Effective Date and on each subsequent anniversary thereafter, this Agreement shall automatically renew and extend for a period of 12 months (each such 12-month period being a “Renewal Term”) unless written notice of non-renewal is delivered by either party to the other not less than 180 days prior to such applicable anniversary. Notwithstanding any other provision of this Agreement, Executive’s employment pursuant to this Agreement may be terminated at any time in accordance with Section 8. The period from the Effective Date through the expiration of this Agreement or, if sooner, the termination of Executive’s employment pursuant to this Agreement, regardless of the time or reason for such termination, shall be referred to herein as the “Employment Period.” The termination of Executive’s employment shall not affect any of the obligations that expressly extend beyond, or are not contingent upon, continued employment, including the obligations in Sections 10, 11 and 12.

 

2.     Duties and Responsibilities of Executive .     During the Employment Period, Executive agrees to dedicate all of his working time, best efforts, skill, and attention to the business of the Company and, as applicable its Affiliates (the Company and the Company’s Affiliates are collectively referred to as the “Company Group”), agrees to remain loyal to the Company Group, and not to engage in any conduct that creates a conflict of interest to, or damages the reputation of, the Company Group. Executive understands that he will be placed in a position of special trust and confidence concerning the interests of the Company Group. The Executive shall have such authority and responsibilities as are commensurate with his position, and he shall perform such executive duties as may be reasonably assigned by the Board of Directors of the Company (the “Board”) from time to time; such duties may include providing services to members of the Company Group. Executive will work diligently to perform the duties of any position to which he is assigned in a reasonable, timely, and professional manner, and shall comply with all applicable policies and rules of the Company Group. Executive may, without violating this Agreement, (i) as a passive investment, own publicly traded securities in such form or manner as will not require any services by Executive in the operation of the entities in which such securities are owned; (ii) engage in charitable and civic activities; or (iii) with the prior written consent of the Board, engage in other personal and passive investment activities, in each case, so long as such interests or activities do not interfere with Executive’s ability to fulfill Executive’s duties and responsibilities under this Agreement

 

 


 

 

and are not inconsistent with Executive’s obligations to the Company Group or competitive with the business of the Company Group. Executive acknowledges and agrees that Executive owes the Company Group fiduciary duties, including duties of loyalty and disclosure, and that the obligations described in this Agreement are in addition to, and not in lieu of, the obligations to the Company Group under common law.

 

3.     Compensation . As compensation for all services rendered pursuant to this Agreement, the Company will provide the Executive the following during the Employment Period:

 

(a)     Base Salary .    During the Employment Period, the Company will pay to the Executive an annual base salary of $500,000 (the “Base Salary”), which amount may be increased (but not decreased) from time to time at the sole discretion of the Board (or a committee thereof). The Executive’s Base Salary shall be paid in substantially equal installments in accordance with the Company’s policy regarding payment of compensation to similarly situated executives contemporaneously employed by the Company as may exist from time to time, but no less frequently than monthly, provided that Executive authorizes the Company to make any deductions from his compensation, including his final paycheck, that are deemed necessary by the Company to comply with state or federal laws on withholdings, to compensate for property not returned, to offset any harm Executive caused to the Company, or to recover advances paid to Executive or money that the Executive otherwise owes to the Company (subject to the intention to comply with Section 409A (as defined below)).

 

(b)     Signing Bonus . Executive shall be entitled to earn a signing bonus (the “Signing Bonus”), subject to the terms and conditions of this Agreement. The Signing Bonus shall be earned and paid as follows:

 

(i)    $250,000 will be due and payable in cash upon Executive entering into this Agreement;

 

(ii)    $250,000 will be due and payable in cash upon the first anniversary of the Effective Date, provided that Executive remains continuously employed by the Company through the date of such anniversary; and

 

(iii)    The Company shall grant Executive as of the Effective Date an award of $500,000 in phantom units (with the value of a common unit of the MLP determined as of the date of grant of such award) pursuant to and subject to the terms and conditions of the Calumet GP, LLC Amended and Restated Long-Term Incentive Plan and the applicable award agreement thereunder, which phantom units shall vest on the second anniversary of the Effective Date, provided that Executive remains continuously employed by the Company through the date of such anniversary.

 

(c)     Annual Incentive Arrangements . For the 2015 calendar year and each subsequent calendar year that Executive is employed hereunder (each, a “Bonus Year”), Executive shall be eligible to receive an annual incentive award (“Annual Incentive Award”) under the applicable incentive or bonus compensation plan of the Company that is applicable to similarly situated executives contemporaneously employed by the Company (the “Annual Incentive Plan”) based on an annual target incentive opportunity determined by the Board (or a committee thereof); generally, the annual target incentive opportunity will be no less than 100% of Executive’s Base Salary and no more than 200% of Executive’s Base Salary. The Annual Incentive Award for the 2015 calendar year shall be prorated based on the portion of such calendar year Executive is employed with the Company hereunder. However, the annual target incentive opportunity may be adjusted from time to time by the Board (or a committee thereof) in its sole discretion (the most recently established target incentive opportunity referred to herein as the “Target Bonus”). Each Annual Incentive Award, if any, will be paid as soon as administratively practicable after the Board (or a committee thereof) certifies whether the applicable performance targets for the applicable Bonus Year have been achieved, but in no event later than the 15th day of the third month following the end of such Bonus Year. Notwithstanding anything in this Section 3(c) to the contrary, but subject to the provisions of Section 8, Executive shall be entitled to receive payment of an Annual Incentive Award for a Bonus Year, if any, only if Executive is employed by the Company on the date such Annual Incentive Award is paid.     

 

(d)     Long-term Incentive Arrangements .    During the Employment Period, the Executive shall be eligible to participate in such equity compensation arrangements or plans, if any, offered by the Company to similarly-situated executives contemporaneously employed by the Company (the “LTIP”) on such terms and conditions as the

 

 


 

 

Board (or a committee thereof) shall determine from time to time, provided that any awards pursuant to the LTIP for the 2015 calendar year shall be prorated based on the portion of such calendar year Executive is employed with the Company hereunder. With respect to awards granted for (i) such portion of the 2015 calendar year as Executive is employed hereunder and the 2016 calendar year, the vesting of such awards shall be based 50% upon continued service of Executive with the Company and 50% upon achievement of applicable performance metrics with respect to the Company and the MLP, (ii) the 2017 calendar year, the vesting of such awards shall be based 25% upon continued service of Executive with the Company and 75% upon achievement of applicable performance metrics with respect to the Company and the MLP and (iii) for the calendar year 2018 and, in the Company’s discretion, later calendar years, 100% upon achievement of applicable performance metrics with respect to the Company and the MLP. All awards granted to the Executive under the LTIP, if any, shall be subject to and governed by the terms and provisions of the LTIP as in effect from time to time and the award agreements evidencing such awards. Nothing herein shall be construed to give Executive any rights to any amount or type of grant or award or any specific terms or conditions regarding any such grant or award except as provided in such award or grant to Executive provided in writing and authorized by the Board (or a committee thereof).

 

(e)     Total Compensation Opportunity . The compensation opportunities set forth in Sections 3(a), (c) and (d) are intended to be competitive with compensation offered by the Company’s peers to such peers’ similarly-situated executives and such compensation will be reassessed by the Board (or a committee thereof) at least annually to determine overall competitiveness relative to the market and to make such adjustments, subject to the first sentence of Section 3(a), as the Board, in its sole discretion, determines to be appropriate with respect to any one or more components of Executive’s total compensation.    

 

4.     Business Expenses .     The Company agrees to reimburse Executive for Executive’s reasonable, out-of-pocket business-related expenses actually incurred in the performance of Executive’s duties under this Agreement, so long as Executive timely submits all documentation for such reimbursement, as required by Company policy in effect from time to time. Any such reimbursement of expenses shall be made by the Company upon or as soon as practicable following receipt of such documentation (but in any event not later than the close of Executive’s taxable year following the taxable year in which the expense is incurred by Executive). In no event shall any reimbursement be made to Executive for such expenses incurred after the date of the termination of Executive’s employment with the Company.

 

5.     Benefits; Automobile . During the Employment Period, Executive will be entitled, if and to the extent eligible, to participate in the same benefit plans that are available to other similarly-situated executives contemporaneously employed by the Company, subject to applicable law and the terms and conditions of the applicable plans and programs in effect from time to time, on the same terms as such other executives. The Company may at any time or from time to time amend, modify, suspend or terminate any employee benefit plan, program, or arrangement for any reason without the Executive’s consent, if such amendment, modification, suspension, or termination is consistent with the amendment, modification, suspension, or termination for other similarly-situated executives contemporaneously employed by the Company. Further, during the Employment Period, the Company shall provide the Executive with the use of an automobile, for personal and business use (including vehicle property damage and liability insurance in appropriate amounts) or an allowance in an amount sufficient to provide the Executive, on a month-to-month basis, for the monthly cost of an automobile substantially similar to such automobile as the Company would otherwise have provided to the Executive.

 

6.     GP Distribution Rights Payments .

(a)    Executive shall be entitled to receive, subject to the terms of this Agreement, cash payments based on distributions received by the Company with respect to the Incentive Distribution Rights and General Partner Interests (each as defined in the First Amended and Restated Agreement of Limited Partnership of Calumet Specialty Products Partners, L.P., as amended)) of the MLP held by the Company (such interests held by the Company, the “MLP Interests”) (Executive’s right to such payments, the “GP Distribution Payment Right”). The GP Distribution Payment Right shall entitle Executive to an amount (the “GP Distribution Payment Right Amount”) equal to five percent (5%) of the excess, if any, determined on a per distribution basis of (i) the amount, aggregated with respect to all MLP Interests, of each corresponding distribution received by the Company with respect to the MLP Interests over (ii) such portion of an

 

 


 

 

annualized total of $21,000,000 in distributions as relates to each applicable calendar quarter, for so long as the GP Distribution Payment Right remains outstanding. Subject to vesting and the GP Distribution Payment Right remaining outstanding, GP Distribution Payment Right Amounts will paid each calendar quarter. All payments of GP Distribution Payment Right Amounts shall be paid by the Company.

(b)    The GP Distribution Payment Right shall be subject to vesting and forfeiture as provided herein. Except as otherwise provided herein, the GP Distribution Payment Right shall vest on the second anniversary of the Effective Date, subject to Executive’s continuous employment with the Company from the Effective Date through the date of such anniversary. The date on which the GP Distribution Payment Right vests shall be referred to in this Section 6 as the “Vesting Date.”

(c)    If, prior to the Vesting Date, the Company receives distributions with respect to the MLP Interests, the Company shall credit the amount of each GP Distribution Payment Right Amount to a notional bookkeeping account and upon vesting, if any, of the GP Distribution Payment Right, shall pay such notional amounts accumulated in such bookkeeping account to Executive without interest in a lump sum in cash within 10 days following the Vesting Date.

(d)    Subject to Section 6(f), with respect to any distributions paid to the Company with respect to the MLP Interests following the Vesting Date, the corresponding GP Distribution Payment Right Amounts shall be paid to Executive in a lump sum in cash within 10 days after the Company’s receipt of such distribution.

(e)    If, prior to the second anniversary of the Effective Date, Executive (i) dies or suffers a Disability, in either case while in the employment of the Company pursuant to this Agreement, (ii) has his employment with the Company terminated by the Company without Cause at a time when Executive is otherwise willing and able to continue providing services hereunder or (iii) terminates his employment with the Company for Good Reason, the date of such event shall be the Vesting Date, the GP Distribution Payment Right shall automatically vest as of the date of such event, and any GP Distribution Payment Right Amounts accumulated in a notional bookkeeping account shall be paid to Executive (or Executive’s estate in the case of Executive’s death) without interest in a lump sum in cash within 10 days following the Vesting Date.

(f)    The GP Distribution Payment Right and all rights thereunder (including any GP Distribution Payment Right Amounts accumulated in a notional bookkeeping account) shall automatically cease to be outstanding and shall terminate and be forfeited for no consideration, regardless of whether before, on or after the Vesting Date, on the date of the earliest of (i) termination of Executive’s employment for any reason other than by the Company without Cause or by Executive for Good Reason, (ii) Executive’s Disability, (iii) the fifth anniversary of the Effective Date or (iv) a Transaction Event (as defined below); provided, however, that Executive shall be entitled to payment of any GP Distribution Payment Right Amounts accumulated in a notional bookkeeping account if the GP Distribution Payment Right vests prior to or on the same day as the date of termination of the GP Distribution Payment Right.

(g)    For purposes of this Section 6 only, “Disability” means (i) the inability of Executive to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months or (ii) the receipt of income replacements by Executive, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, for a period of not less than three (3) months under the Company’s accident and health plan.

(h)    Neither the GP Distribution Payment Right nor the rights relating thereto (including any GP Distribution Payment Right Amounts accumulated in a notional bookkeeping account) may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by Executive. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the GP Distribution Payment Right or the rights relating thereto (including any GP Distribution Payment Right Amounts accumulated in a notional bookkeeping account) shall be wholly ineffective and, if any such attempt is made, the GP Distribution Payment Right will be forfeited by Executive and all of Executive’s rights to the GP Distribution Payment Right and all rights relating thereto (including any GP Distribution Payment Right Amounts accumulated in a notional bookkeeping account) shall immediately terminate and be forfeited for no consideration.

 

 


 

 

(i)    Executive shall not have any rights of an equityholder of either the Company or of the MLP with respect to the GP Distribution Payment Right (including, without limitation, any voting rights).

(j)    In the event of any distribution (whether in the form of MLP Interests, other securities or property other than cash), recapitalization, split, reverse split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of MLP Interests or other securities of the MLP, issuance of warrants or other rights to purchase MLP Interests or other securities of the MLP, or other similar transaction or event, the Company shall, in such manner as it may deem equitable, adjust the number and type of MLP Interests (or other securities or property) with respect to the GP Distribution Payment Right.

(k)    Notwithstanding any other provisions in this Agreement to the contrary, any amount paid with respect to the GP Distribution Payment Right that is subject to recovery under any law, government regulation or stock exchange listing requirement will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company or the MLP pursuant to any such law, government regulation or stock exchange listing requirement).

7.     Company Transaction Bonus . Executive shall be entitled to earn a transaction bonus (the “Transaction Bonus”) of five percent (5%) of the excess, if any, of (i) the value realized by equityholders of the Company upon a “Transaction Event” over (ii) four hundred million dollars ($400,000,000), which amount shall (i) be increased by the amount of contributions to the MLP by the Company in the event of equity offerings by the MLP and (ii) exclude any value realized by equityholders of the Company with respect to direct holdings of limited partner interests in the MLP, subject to the terms and conditions of this Agreement. Subject to Executive remaining continuously employed by the Company through the date of a Transaction Event, Executive shall be entitled to receive the Transaction Bonus in a single lump sum in cash or property (as determined by the Company in its sole discretion, which property may include such property as received by the Company in connection with the Transaction Event) within 10 days after the Transaction Event; provided, however, that if a Transaction Event does not occur prior to the fifth anniversary of the Effective Date (such fifth anniversary, the “Transaction Bonus Sunset Date”), Executive shall not be entitled to any Transaction Bonus; provided further, in the event no Transaction Event has occurred by the Transaction Bonus Sunset Date but as of such date the Company has executed an outstanding definitive agreement with respect to a transaction that, if consummated, would constitute a Transaction Event, the Transaction Bonus Sunset Date shall be extended, but only with respect to the definitive agreement described in this clause, until the earlier of (i) the consummation of the transactions contemplated by such agreement or (ii) the termination of such agreement in accordance with its terms. For purposes of this Agreement, “Transaction Event” means the first to occur of the following events: (i) any “person” or “group”, within the meaning of those terms as used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than an Affiliate, becomes the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of all or substantially all of the voting power of the outstanding equity interests of the Company; (ii) the sale or other disposition, including by liquidation or dissolution, of all or substantially all of the assets of the Company in one or more transactions to any person other than an Affiliate; (iii) a conversion of all or substantially all of the Incentive Distribution Rights held by the Company into Units (as defined in the First Amended and Restated Agreement of Limited Partnership of Calumet Specialty Products Partners, L.P., as amended) of the MLP; or (iv) a monetization of all or substantially all of the MLP Interests in a transaction not described in clauses (i) through (iii). All payments of Transaction Bonuses shall be paid by the Company.

8.     Termination of Employment .

 

(a)     Death; Non-Renewal of Agreement; Company’s Right to Terminate Executive’s Employment .    Notwithstanding the provisions of Section 1(b), Executive’s employment by the Company shall automatically terminate upon the death of Executive and upon the end of the Initial Term or any Renewal Term, as applicable, as a result of a notice of non-renewal of the Agreement by either party in accordance with Section 1(b), and the Company shall have the right to terminate Executive’s employment under this Agreement at any time for any of the following reasons:    

 

(i)    upon Executive’s Disability (which for purposes of this Agreement shall not be treated as or deemed to be a termination of Executive’s employment by the Company without Cause). Except as otherwise provided in this Agreement, “Disability” means a determination by Board in accordance with applicable law that as a result of

 

 


 

 

a physical or mental injury or illness, the Executive is unable to perform the essential functions of his job with or without reasonable accommodation for a period of (i) ninety (90) consecutive days or (ii) one hundred eighty (180) days in any one (1) year period;

 

(ii)    for Cause. For the purposes of this Agreement, “Cause” means, (A) indictment for a felony (or a plea of nolo contendere thereto); (B) conduct in connection with Executive’s employment duties or responsibilities that is fraudulent, unlawful, or grossly negligent; (C) willful misconduct; (D) material insubordination or failure by Executive to follow the lawful instructions or directions from the Board or its designee, if such failure is not cured, if curable, by Executive after Executive has been given ten (10) days written notice of such failure; (E) any material breach by Executive of the Agreement, including but not limited to, a breach of the restrictive covenants set forth in Section 10 hereof, if such breach is not cured, if curable, by Executive after Executive has been given ten (10) days written notice of such breach; (F) any acts of dishonesty resulting or intending to result in personal gain or enrichment at the expense of the Company, its subsidiaries or affiliates; or (G) failure to comply with a material policy of the Company, its subsidiaries or affiliates, if such failure is not cured, if curable, by Executive after Executive has been given ten (10) days written notice of such failure; or

 

(iii)    for any other reason whatsoever or for no reason at all, in the sole discretion of the Company.

 

(b)     Executive’s Right to Terminate . Notwithstanding the provisions of Section 1(b), Executive shall have the right to terminate Executive’s employment hereunder for any of the following reasons:    

 

(i)    for Good Reason. For the purposes of this Agreement, “Good Reason” means the existence of any of the following circumstances, without Executive’s prior consent: (A) material diminution in Executive’s total compensation opportunity relative to Executive’s total compensation opportunity in effect on the Effective Date (provided that expiration or forfeiture of the GP Distribution Payment Right or of opportunity to earn the Transaction Bonus shall not constitute such a diminution); (B) material breach by the Company of any of its covenants or obligations under this Agreement; (C) material reduction in Executive’s authority, duties or responsibilities or reporting relationship; (D) the involuntary relocation of the geographic location of Executive’s principal place of employment by more than 100 miles from the location of Executive’s principal place of employment as of the Effective Date; and (E) following a Change in Control (as defined below), the Company’s failure to obtain an agreement from any successor to the Company to assume and agree to perform this Agreement in materially the same manner and to materially the same extent that the Company would be required to perform if no succession had taken place, except where such assumption occurs by operation of law; provided, however, that notwithstanding the foregoing provisions of this Section 8(b) or any other provision of this Agreement to the contrary, any assertion by Executive of a termination for Good Reason shall not be effective unless all of the following conditions are satisfied: (1) the condition described in Section 8(b)(i)(A), (B), (C), (D) or (E) giving rise to Executive’s termination of employment must have arisen without Executive’s consent; (2) Executive must provide written notice to the Board of the existence of such condition(s) within 30 days of the initial existence of such condition(s); (3) the condition(s) specified in such notice must remain uncorrected for 30 days following the Board’s receipt of such written notice; and (4) the date of Executive’s termination of employment must occur within 90 days after the initial existence of the condition(s) specified in such notice); or

 

(ii)    at any time for any other reason whatsoever or for no reason at all upon 60 days advanced written notice to the Board.

 

(c)     Change in Control .    As used herein, a “Change in Control” means, and shall be deemed to have occurred upon, the first to occur of the following events: (i) any “person” or “group,” within the meaning of those terms as used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than the Company or its Affiliates, or Fred M. Fehsenfeld, Jr. or F. William Grube or their respective immediate families or Affiliates, becomes the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the voting power of the outstanding equity interests of the MLP or the Company; (ii) a person or entity other than the Company or an Affiliate of the Company becomes the general partner of the MLP; or (iii) the sale or other disposition, including by liquidation or dissolution, of all or substantially all of the assets of the Company or the MLP in one or more transactions to any person other than an Affiliate of the Company or the MLP. Notwithstanding

 

 


 

 

the foregoing, in any circumstance or transaction in which compensation payable pursuant to this Agreement would be subject to the income tax under Section 409A (as defined below) if the foregoing definition of “Change in Control” were to apply, but would not be so subject if the term “Change in Control” were defined herein to mean a “change in control event” within the meaning of Treasury Regulation § 1.409A-3(i)(5), then “Change in Control” means, but only to the extent necessary to prevent such compensation from becoming subject to the income tax under Section 409A, a transaction or circumstance that satisfies the requirements of both (1) a Change in Control under the applicable clause (i) through (iii) above, and (2) a “change in control event” within the meaning of Treasury Regulation § 1.409A-3(i)(5).     

 

(d)     Effect of Termination .

 

(i)     Termination Due to Non-Renewal of the Agreement by Executive, by the Company for Cause, by Executive without Good Reason . If Executive’s employment hereunder is terminated at the expiration of the Employment Period as a result of the provision of a notice of non-renewal of this Agreement by Executive, for any reason described in Section 8(a)(ii) or pursuant to Executive’s resignation without Good Reason pursuant to Section 8(b)(ii), then (A) all compensation and all benefits to Executive hereunder shall terminate contemporaneously with such termination of employment, except that Executive shall be entitled to (1) payment of all accrued and unpaid Base Salary through the date of such termination of Executive’s employment (the “Termination Date”), which payment shall be paid as soon as administratively practicable following the Termination Date (or as otherwise required by applicable law), (2) reimbursement for all incurred but unreimbursed expenses for which Executive is entitled to reimbursement in accordance with Section 4, and (3) benefits to which Executive is entitled under the terms of any applicable Company benefit plan or program payable at such time as provided in and in accordance with such plans or programs (collectively, the “Accrued Obligations”); and (B) all outstanding unvested LTIP awards granted to Executive prior to the Termination Date (and all rights arising from such awards and from being a holder thereof) shall immediately be forfeited without consideration as of the Termination Date.

 

(ii)     Termination Due to Non-Renewal of the Agreement by the Company, by the Company without Cause or by Executive for Good Reason . If Executive’s employment is terminated at the expiration of the Employment Period as a result of the provision of a notice of non-renewal of this Agreement by the Company, by the Company without Cause pursuant to Section 8(a)(ii) at a time when Executive is otherwise willing and able to continue providing services hereunder, or is terminated by Executive for Good Reason pursuant to Section 8(b)(i), then all compensation and all benefits to Executive hereunder shall terminate contemporaneously with such termination of employment, except that (A) Executive shall be entitled to receive the Accrued Obligations and (B) if Executive (1) executes on or before the Release Expiration Date (as defined below), and does not revoke within the time he is provided to do so, a release of all claims in a form acceptable to the Company (which shall be substantially in the form of release attached hereto as Exhibit A) (the “Release”); and (2) abides by Executive’s continuing obligations under Sections 10, 11 and 12, then:

 

(A)    The Company shall pay to Executive a single lump sum cash payment (the “Severance Payment”) on the 60th day following the Termination Date an amount equal to (x) if such termination occurs at any time other than within the Change in Control Period (as defined below), 150% of the sum of Executive’s Base Salary and Target Bonus, in each case, as in effect as of the Termination Date and (y) if such termination occurs within 24 months following a Change in Control (the “Change in Control Period”), 300% of the sum of Executive’s Base Salary and Target Bonus, in each case, as in effect as of the Termination Date;

 

(B)    If such termination occurs prior to the first anniversary of the Effective Date, the Company shall pay to Executive a single lump sum cash payment equal to $250,000.

 

(C)    Except as otherwise provided in this Section 8(d)(ii)(C), all outstanding unvested LTIP awards granted to Executive prior to the Termination Date (including any outstanding, unvested phantom units granted in accordance with Section 3(b)(iii)) shall immediately become fully vested as of the Termination Date; provided, however, that if any such LTIP awards are subject to a performance requirement (other than continued service by Executive) that has not been satisfied and certified by the Board (or a committee thereof) as of the Termination

 

 


 

 

Date, then only a pro rata portion of such LTIP awards shall become fully vested upon satisfaction of such performance requirement (other than continued service by Executive) and certification thereof by the Board (or a committee thereof), which pro rata portion shall be (i) equal to a fraction, the numerator of which is the number of days during the applicable performance period immediately prior to the Termination Date and the denominator of which is the total number of days during such performance period and (ii) vested and paid no later than the 15th day of the third calendar month following the last day of the applicable performance period;

 

(D)    Executive will be entitled to receive a pro rata portion of the Annual Incentive Award for the Bonus Year in which the Termination Date occurs, which shall be paid upon satisfaction of the Company performance goals (other than continued service by Executive) for the applicable Bonus Year and certification thereof by the Board (or a committee thereof), which pro rata portion shall be (i) equal to a fraction, the numerator of which is the number of days during the applicable Bonus Year immediately prior to the Termination Date and the denominator of which is the total number of days during such performance period and (ii) paid no later than the 15th day of the third calendar month following the last day of the applicable Bonus Year;

 

(E) If Executive timely and properly elects continuation coverage under the Company’s group health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), then:

(1) the Company shall reimburse Executive for the excess, if any, of the monthly amount Executive pays to effect and continue such coverage for himself and his spouse and eligible dependents, if any, as was in effect immediately prior to the Termination Date (such amount, the “Monthly Premium Payment”) over the monthly employee contribution amount as of the Termination Date that active similarly situated employees of the Company pay for the same or similar coverage under such group health plans (such excess, the “Monthly Reimbursement Amount”). Each such reimbursement payment shall be paid to Executive on the Company’s first regularly scheduled pay date in the month immediately following the month in which Executive timely remits the Monthly Premium Payment. Executive shall be eligible to receive such reimbursement payments until the earliest of: (x) the date Executive is no longer eligible to receive COBRA continuation coverage pursuant to the Company’s group health plan (and any such ineligibility shall be promptly reported to the Company in writing by Executive); (y) the date on which Executive becomes eligible to receive coverage under a group health plan sponsored by another employer (and any such eligibility shall be promptly reported to the Company in writing by Executive); and (z) the date that is 18 months after the last day of the calendar month in which the Termination Date occurs; provided, however, that Executive acknowledges and agrees that (i) the election of COBRA continuation coverage and the payment of any premiums due with respect to such COBRA continuation coverage will remain Executive’s sole responsibility, and the Company will assume no obligation for or liability with respect to payment of any such premiums relating to such COBRA continuation coverage, (ii) in no event shall the Company be required to pay a Monthly Reimbursement Amount if such payment could reasonably be expected to subject the Company to sanctions imposed pursuant to section 2716 of the Patient Protection and Affordable Care Act of 2010 and the related regulations and guidance promulgated thereunder (collectively, the “PPACA”) and (iii) if, prior to payment of the first Monthly Reimbursement Amount and subject to Executive’s timely election of COBRA continuation coverage, the Company determines that payment of Monthly Reimbursement Amounts cannot be provided to Executive without subjecting the Company to sanctions imposed pursuant to section 2716 of the PPACA, then the Company shall pay Executive a lump sum cash payment equal to the value of 18 Monthly Reimbursement Amounts, with such payment to be made on the 60th day following the Termination Date; and

(2) On the date that is 18 months after the last day of the calendar month in which the Termination Date occurs (the “ COBRA End Date ”), if Executive was covered during the entirety of the period beginning on the Termination date and ending on the COBRA End Date under the Company’s group health plan pursuant to COBRA continuation coverage and has not become eligible to receive coverage under a group health plan sponsored by another employer as of the COBRA End Date, then the Company shall pay to Executive a lump sum cash payment on the Company’s first regularly scheduled pay date following the COBRA End Date equal to the product of (x) the Monthly Reimbursement Amount and (y) (A) if such termination does not occur within the Change in Control Period, six (6) and (B) if such termination occurs within the Change in Control Period, 18;

 

 


 

 

(F) For the 12-month period beginning on the Termination Date, or until Executive begins other full-time employment with a new employer (and any such employment shall be promptly reported to the Company in writing by Executive), whichever occurs first, Executive shall be entitled to receive outplacement services that are directly related to the termination of Executive’s employment and are provided by a nationally prominent executive outplacement services firm, selected by mutual agreement of Executive and the Company and paid by the Company; provided, however, that the total amount of the expenses paid by the Company pursuant to this Section 8(d)(ii)(E) shall not exceed $50,000, and all amounts paid under this Section 8(d)(ii)(E) shall be paid by the last day of the second calendar year following the calendar year in which the Termination Date occurs; and

(G) If Executive notifies the Company in writing provided to the Board within 10 business days following the Termination Date that Executive desires for the title of the automobile provided to Executive pursuant to Section 5(b) to be transferred to Executive, then the Company shall, as soon as reasonably practicable after its receipt of such notice from Executive, take all reasonably necessary actions to transfer the title of such automobile to Executive’s name; provided, however, that Executive acknowledges that if Executive elects for such title to be transferred, the Company will treat the value of such automobile on the date of such title transfer as imputed income to Executive and take such actions as it determines necessary or advisable to satisfy its tax withholding obligations with respect to such income, including withholding all applicable federal, state, local, payroll and other taxes required to be withheld with respect to such income from Executive’s cash Severance Payment.

(H)    The payments and benefits described in subsections (A) through (G) above shall be referred to in this Agreement as the “Severance Package.”

(iii)     Termination as a result of Executive’s death or Disability . If Executive’s employment is terminated as a result of Executive’s death or Disability pursuant to Section 8(a)(i), the Company shall (A) pay to Executive or Executive’s beneficiaries, as applicable, all Accrued Obligations, (B) except as otherwise provided in this Section 8(d)(iii), cause all outstanding unvested LTIP awards granted to Executive prior to the Termination Date shall immediately become fully vested as of the Termination Date; provided, however, that if any such LTIP awards are subject to a performance requirement (other than continued service by Executive) that has not been satisfied and certified by the Board (or a committee thereof) prior to the Termination Date, then only a pro rata portion of such LTIP awards shall become fully vested upon satisfaction of such performance requirement (other than continued service by Executi


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