Exhibit 10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (this
“ Agreement ”) is made and entered into this 6th
day of February 2008, by and between International Rectifier
Corporation, a Delaware corporation (the “ Corporation
”), and Oleg Khaykin, an individual (the “
Executive ”).
RECITALS
THE CORPORATION AND THE
EXECUTIVE ENTER INTO THIS AGREEMENT on the basis of the following facts,
understandings and intentions:
A.
The Corporation desires
that the Executive be employed by the Corporation to carry out the
duties and responsibilities described below, all on the terms and
conditions hereinafter set forth.
B.
The Executive desires to
accept employment on such terms and conditions.
NOW, THEREFORE
, in consideration of the
above recitals incorporated herein and the mutual covenants and
promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the Corporation and the Executive agree as
follows:
1.
Retention and
Duties.
1.1
Retention
. The
Corporation hereby agrees to engage and employ the Executive for
the Period of Employment (as defined in Section 2) on the
terms and conditions expressly set forth in this Agreement.
The Executive hereby accepts and agrees to such engagement and
employment, on the terms and conditions expressly set forth in this
Agreement.
1.2
Duties . During the
Period of Employment, the Executive shall serve the Corporation as
its President and Chief Executive Officer and shall be principally
responsible for the general supervision, direction and control of
the business and officers of the Corporation, in each case subject
to the general direction of the Corporation’s Board of
Directors (the “ Board ”). During the
Period of Employment, the Executive shall have the powers and
duties customarily attendant to the offices of president and chief
executive officer of a corporation of the size and nature of the
Corporation and such other powers and duties commensurate with his
position as the Board may assign from time to time. The
Executive shall also be subject to the corporate policies of the
Corporation as they are in effect from time to time throughout the
Period of Employment (including, without limitation, the
Corporation’s insider trading policy, Code of Ethics, and
employee policies, as they may change from time to time).
During the Period of Employment, the Executive shall report solely
to the Board. The Corporation shall appoint the Executive to
the Board promptly following the Commencement Date (as defined in
Section 2). In connection with any expiration of the
term of the Executive’s Board seat during the Period of
Employment, the Corporation shall re-nominate the Executive at the
related annual meeting of the Corporation’s
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stockholders
to fill a Board seat, if the Executive is elected as a director,
that would have the longest remaining term of the director seats to
be filled at that meeting (but the Board shall not be required to
change the class of seat the Executive has theretofore filled as a
director) and, in such cases, shall use good faith efforts to keep
the Executive on the Board; provided the Executive is continuing as
an employee of the Corporation, is otherwise willing to serve on
the Board, and satisfies the minimum guidelines and requirements
(if any) established by the Corporation for Board membership
generally.
1.3
No Other Employment; Minimum
Time Commitment . During the
Period of Employment, the Executive shall devote substantially all
of the Executive’s business time, energy and skill to the
performance of the Executive’s duties for the Corporation,
and hold no other employment. Nothing herein shall preclude
the Executive from (i) serving on boards of directors of other
business entities provided that the Board approves such other
service in writing, (ii) engaging in a reasonable level of
charitable activities and community affairs, including serving on
boards of directors or the equivalent, and (iii) managing his
personal and family investments and affairs, provided that such
activities do not violate applicable law or materially interfere or
conflict with the effective discharge of his duties and
responsibilities to the Corporation or the policies of the
Corporation, as they may be in effect from time to time. The
Board has approved the Executive’s service as a member of the
board of directors of Zarlink Semiconductor, Inc.
Notwithstanding the foregoing, however, the Corporation has the
right (upon written notice) to require the Executive to resign from
any board (including, without limitation, the board of directors of
Zarlink Semiconductor, Inc.) or similar body on which he may
now or in the future serve (or reduce his involvement) if the Board
reasonably determines in good faith that such service violates
applicable law or materially interferes or conflicts with the
effective discharge of the Executive’s duties and
responsibilities to the Corporation or that any business related to
such service is then in material competition with any business of
the Corporation or any of its affiliates.
1.4
No Breach of
Contract . The
Executive hereby represents to the Corporation that: (i) the
execution and delivery of this Agreement by the Executive and the
Corporation and the performance by the Executive of the
Executive’s duties hereunder shall not constitute a breach
of, or otherwise contravene, the terms of any other agreement or
policy to which the Executive is a party or otherwise bound;
(ii) the Executive has provided the Corporation with a copy of
any confidentiality, trade secret, non-compete, no solicit, or
similar agreement or policy (or agreement or policy containing any
similar restrictive covenant) to which the Executive is a party or
otherwise bound (each, a “ Restrictive Covenant
Agreement ”); (iii) no Restrictive Covenant
Agreement reasonably will interfere with the effective discharge by
the Executive of his duties to the Corporation; and (iv) the
Executive will not disclose trade secrets or other confidential
information to the Corporation in violation of any applicable law
or any Restrictive Covenant Agreement.
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1.5
Location
. The
Executive acknowledges that the Corporation’s principal
executive offices are currently located in El Segundo,
California. The Executive’s principal place of
employment shall be the Corporation’s principal executive
offices, as (subject to Section 5.5(e)(iii)) they may be moved
from time to time at the discretion of the Corporation. The
Executive agrees that he will be regularly present at the
Corporation’s principal executive offices, subject to travel
in the course of performing his duties for the
Corporation.
2.
Period of Employment .
Subject to earlier
termination as provided in Section 3.5, the “ Period
of Employment ” shall be a period of three (3) years
commencing on March 1, 2008 (the “ Commencement
Date ”) and ending at the close of business on the third
(3rd) anniversary of the Commencement Date (the “
Termination Date ”); provided, however, that this
Agreement shall be automatically renewed, and the Period of
Employment shall be automatically extended for one
(1) additional year on each of the second, third, fourth and
fifth anniversaries of the Commencement Date, unless either party
gives notice, in writing, prior to such anniversary that the Period
of Employment shall not be extended (or further extended, as the
case may be). The term “Period of Employment”
shall include any extension thereof pursuant to the preceding
sentence. Provision of notice that the Period of Employment
shall not be extended or further extended, as the case may be,
shall not constitute a breach of this Agreement and shall not
constitute “Good Reason” for purposes of this
Agreement. Notwithstanding the foregoing, the Period of
Employment is subject to earlier termination as provided below in
this Agreement.
3.
Compensation.
3.1
Base Salary
.
The
Executive’s base salary for the Period of Employment (the
“ Base Salary ”) shall be at the initial rate of
SEVEN HUNDRED AND FIFTY THOUSAND DOLLARS ($750,000) per annum and
shall be paid in accordance with the Corporation’s regular
payroll practices in effect from time to time, but not less
frequently than in monthly installments. During the Period of
Employment, the Board will review the Executive’s Base Salary
on an annual basis (commencing in 2009) and may, in its discretion,
increase (but not decrease) the Base Salary from the rate in effect
immediately preceding any such change.
3.2
Annual
Incentive Bonus
.
During the Period of Employment, the Executive shall be eligible to
receive an annual incentive bonus in an amount to be determined by
the Compensation Committee of the Board (the “
Compensation Committee ”) in good faith (the “
Incentive Bonus ”); provided, however, that the
Executive must be continuously employed with the Corporation
through the last day of a fiscal year to be eligible to receive an
Incentive Bonus for that fiscal year. The Executive’s
target Incentive Bonus opportunity for a fiscal year shall equal
ONE HUNDRED PERCENT (100%)
of the
Executive’s Base Salary at the rate in effect on the last day
of such fiscal year, with the actual bonus amount for any such
fiscal year determined by the Compensation Committee based on
performance targets and objectives (which may be based on the
performance of the Corporation and/or the Executive’s
individual performance, as the Compensation Committee may
determine), and actual performance against those
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targets
and objectives, as determined in good faith by the Compensation
Committee for such year, in consultation with the Executive;
provided, however, that with respect to the Executive’s
Incentive Bonus for the Corporation’s fiscal year ending
June 30, 2008, such bonus shall be prorated based on the
number of days between the Commencement Date and June 30,
2008. Any Incentive Bonus payable to the Executive with
respect to a fiscal year shall be paid as soon as reasonably
practicable after the last day of such fiscal year (and in all
events in the same calendar year as the year in which such fiscal
year ends).
3.3
Signing Bonus
. In
the event that (1) any of (i) Executive’s notice to
Amkor Technology, Inc. (the “ Former Employer
”) or Former Employer otherwise acquiring notice of the
Executive’s appointment to the Board or intention to accept
employment with the Corporation, (ii) public announcement of
Executive’s appointment to the Board or intention to accept
employment with the Corporation, or (iii) commencement of
Executive’s service as a member of the Board or employment
with the Corporation occurs before the time of payment of the
Former Employer’s executive bonuses for its 2007 fiscal year
generally and (2) the Former Employer does not pay the
Executive a bonus with respect to the Former Employer’s 2007
fiscal year or pays the Executive a bonus with respect to such
fiscal year of less than FIVE HUNDRED AND SEVENTY FIVE THOUSAND
DOLLARS ($575,000), the Executive will be entitled to receive a
one-time signing bonus from the Corporation (the “ Signing
Bonus ”) equal to difference between FIVE HUNDRED AND
SEVENTY FIVE THOUSAND DOLLARS ($575,000) and the amount of such
bonus paid by the Former Employer to the Executive with respect to
such fiscal year. (For purposes of clarity, the entitlement
to a Signing Bonus will be determined based on gross bonus amounts
determined before giving effect to tax withholding and other
authorized deductions, but any payment of the Signing Bonus itself
will be subject to required tax withholding.) If the
Executive is entitled to a Signing Bonus, the Corporation shall pay
such bonus to the Executive not later than December 31,
2008. The Executive agrees to use his reasonable efforts to
obtain from the Former Employer the full amount of his bonus for
the Former Employer’s 2007 fiscal year.
3.4
Equity
Incentive Awards
. The
Compensation Committee shall approve the grant to the Executive of
the following awards under the Corporation’s 2000 Incentive
Plan, as amended (the “ Plan ”), such awards to
be granted no later than the later of the Commencement Date
or the date that is the third trading day on the New York Stock
Exchange that follows the day on which the Corporation is current
in its financial statement reporting obligations to the Securities
and Exchange Commission (which is currently expected to be when the
Corporation files its Annual Report on Form 10-K for its
fiscal year ended June 30, 2007, but would be extended until
the third trading day following the filing of any then past due
report for a subsequent fiscal quarter and the amendment of any
incomplete current report requiring the presentment of financial
information) (the later of such dates, the “ Date of
Grant ”):
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·
An option (the “
Option ”) to purchase 750,000 shares of the
Corporation’s common stock. The per-share exercise
price of the Option shall be the closing market price of a share of
the Corporation’s common stock on the Date of Grant, and the
expiration date of the Option shall be the day before the fifth
anniversary of the Date of Grant (subject to earlier termination as
provided in the applicable award agreement). The Option shall
vest and become exercisable in five substantially equal
installments on each of the first five anniversaries of the
Commencement Date, in each case subject to the Executive’s
employment with the Corporation through the applicable vesting date
(and subject to accelerated vesting as provided in Section 5.3
below), provided that the vesting date for the fifth and final such
installment shall not be later than the date that is four years and
nine months after the Date of Grant. The Option shall be
evidenced by a stock option agreement in substantially the form
provided by the Corporation to the Executive and will be subject to
such other terms as are provided therein and in the
Plan.
·
An award of 250,000
restricted stock units (the “ RSU Award ”), such
award to be effective on the Date of Grant and to vest in five
substantially equal installments on each of the first five
anniversaries of the Commencement Date, in each case subject to the
Executive’s employment with the Corporation through the
applicable vesting date (and subject to accelerated vesting as
provided in Section 5.3 below). The restricted stock
units subject to the RSU Award shall be paid, upon vesting, in an
equal number of shares of the Corporation’s common
stock. The RSU Award shall be evidenced by a restricted stock
unit award agreement in substantially the form provided by the
Corporation to the Executive and will be subject to such other
terms as are provided therein and in the Plan.
·
If a Change in Control
Event occurs prior to the Date of Grant specified above, the
Executive’s right to the grant of the Option shall
immediately terminate and instead the number of restricted stock
units subject to the RSU Award shall be increased to
(x) 375,000 if the Change in Control Event occurs within six
months after the Commencement Date or (y) 500,000 if the
Change in Control Event occurs on or after the date that is six
months after the Commencement Date (in each case, in lieu of the
250,000 set forth above), and the RSU Award as so increased shall
be granted upon (or, as may be necessary to give effect to the
grant, immediately prior to) the occurrence of the Change in
Control Event; provided, however, the Corporation shall have the
right at its option to pay the Executive a lump sum amount upon or
within thirty (30) days after such Change in Control Event (in lieu
of such RSU Award) equal to the number of shares subject to such
RSU Award that would have been vested at the time of such Change in
Control Event multiplied by the Fair Market Value (as defined in
the Plan) of a share of the Corporation’s common stock at the
time of such Change in Control Event (such amount subject to
required tax withholding).
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·
Subject to
Section 5.3, the vesting of the Option and the RSU Award shall
not, unless otherwise specifically approved by the Board in its
discretion, accelerate in connection with any Change in Control
Event to the extent the awards will continue in effect after such
event or be assumed by a successor company (or a parent
thereof).
The
parties acknowledge and agree that the foregoing awards are
intended to satisfy the Corporation’s obligation to grant
equity incentive awards to the Executive for the initial four years
of the Period of Employment (if employment continues through such
period) and the parties do not anticipate that additional equity
incentive awards will be granted to the Executive during such
period. The amount, timing, and other terms of any future
equity award grants to the Executive shall be determined by the
Board (or the Compensation Committee) in its sole discretion.
The share amounts set forth above are subject to adjustment for
stock splits, stock dividends, reverse stock splits, mergers and
similar events in accordance with the adjustment provisions of the
Plan.
3.5
Compensation for Board
Service . The
Executive shall not be entitled to additional compensation (other
than the compensation otherwise provided for in this Agreement) for
service on the Board or for service as a director, officer, or in
any other capacity with any affiliate of the
Corporation.
4.
Benefits.
4.1
Retirement, Welfare and
Fringe Benefits .
During the Period of Employment, the Executive shall be entitled to
participate in all employee pension and welfare benefit plans and
programs, and fringe benefit plans and programs, made available by
the Corporation to the Corporation’s senior executives
generally, in accordance with the eligibility and participation
provisions of such plans and as such plans or programs may be in
effect from time to time. Unless the Compensation Committee
in its discretion determines otherwise, the Executive shall not,
however, have rights to participate in any bonus or other incentive
plan maintained or adopted by the Corporation (other than as
expressly provided in Sections 3.2 and 3.4).
4.2
Reimbursement of Legal
Expenses . The
Corporation shall reimburse the Executive for or pay the reasonable
legal fees incurred by the Executive relating to the negotiation
and preparation of this Agreement, provided that in no event shall
the Corporation’s obligation with respect to such
reimbursement or payment of such legal fees exceed FIFTEEN THOUSAND
DOLLARS ($15,000).
4.3
Vacation and Other
Leave .
During the
Period of Employment, the Executive shall accrue and be entitled to
take paid time off (or vacation, depending on the
Corporation’s programs in effect from time to time) at a rate
of four (4) weeks per year, subject to scheduling with the
Board and the Corporation’s policies regarding vacation
accruals (including, without limitation, limits on the amount of
vacation that may be accrued and untaken before future accruals
cease).
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4.4
Relocation
Expenses . The
Corporation shall pay or reimburse the Executive for his reasonable
costs incurred in relocating from Scottsdale, Arizona to a location
that is a reasonable commuting distance from the
Corporation’s principal executive offices, including, without
limitation, reasonable costs for brokerage fees, loan and closing
costs, temporary housing, travel associated with locating a
residence and transportation and storage of household goods;
provided that in no event shall the Corporation’s obligation
with respect to such payments or reimbursements exceed ONE HUNDRED
AND FIFTY THOUSAND DOLLARS ($150,000) in the aggregate. The
parties anticipate that such relocation will not occur before
June 1, 2008, but will occur promptly after that
date.
4.5
Supplemental Life/Disability
Insurance . Subject
to eligibility under the then-existing programs, during the Period
of Employment the Corporation shall provide the Executive with
supplemental life insurance and long term disability insurance up
to a cap on supplemental premiums of ONE THOUSAND THREE HUNDRED
DOLLARS ($1,300) annually for life insurance and SEVEN THOUSAND
DOLLARS ($7,000) annually for disability insurance.
5.
Termination.
5.1
Termination by the
Corporation .
The
Executive’s employment with the Corporation, and the Period
of Employment, may be terminated at any time by the Corporation:
(i) with Cause (as defined in Section 5.5), or
(ii) on written notice to the Executive, without Cause, or
(iii) in the event of the Executive’s death, or
(iv) in the event the Executive has a Disability (as defined
in Section 5.5).
5.2
Termination by the
Executive .
The
Executive’s employment with the Corporation, and the Period
of Employment, may be terminated by the Executive with no less than
thirty (30) days advance written notice to the Corporation (such
notice to be delivered in accordance with Section 18);
provided, however, that in the case of a termination for Good
Reason (as defined in Section 5.5), the Executive may provide
immediate written notice of termination once the applicable cure
period (as contemplated by the definition of Good Reason) has
lapsed if the Corporation has not reasonably cured the
circumstances that gave rise to the termination for Good
Reason.
5.3
Benefits Upon
Termination .
If the
Executive’s employment with the Corporation is terminated
during the Period of Employment for any reason by the Corporation
or by the Executive, or upon or following the expiration
of the
Period of Employment (in any case, the date that the
Executive’s employment by the Corporation terminates is
referred to as the “ Severance Date ”), the
Corporation shall have no further obligation to make or provide to
the Executive, and the Executive shall have no further right to
receive or obtain from the Corporation, any payments or benefits
except:
(a)
the Corporation shall pay the Executive (or, in the event of his
death, the Executive’s estate) any Accrued Obligations (as
defined in Section 5.5);
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(b)
if, during the Period of Employment (but not upon or following the
expiration of the Period of Employment), the Executive’s
employment is terminated (x) by the Corporation without Cause
or (y) by the Executive for Good Reason, (any of such
terminations, a “ Qualifying Termination ”), the
Corporation shall, subject to the following provisions of this
Section 5.3 and the provisions of Section 5.4, pay (in
addition to the Accrued Obligations) the Executive the following
severance benefits:
(i)
The Corporation shall pay
the Executive an amount, subject to tax withholding and other
authorized deductions, equal to (A) the sum of (1) the
Executive’s Base Salary at the highest annualized rate in
effect during the one (1) year period immediately prior to the
Severance Date plus (2) such annualized rate of Base Salary
multiplied by the Executive’s highest target Incentive Bonus
percentage in effect during the one-year period immediately prior
to the Severance Date (but not less than 100%), multiplied by
(B) one and one-half (1.5). Such amount is referred to
hereinafter as the “ Severance Benefit .”
Notwithstanding the foregoing, in the event that such termination
of employment occurs at any time during the period commencing two
(2) months prior to the occurrence of a Change in Control
Event (as defined in Section 5.5) and ending on the second
anniversary of such Change in Control Event (the “
Protected Period ”), the one and one-half (1.5)
multiplier in the foregoing clause (B) shall be replaced by a
multiplier of two (2).
Subject to
Section 5.7(a), the Corporation shall pay the Severance
Benefit (if the Executive is entitled to the Severance Benefit) to
the Executive in accordance with the provisions of this
paragraph. If the Executive’s Separation from Service
(as defined in Section 5.5) occurs before a 409A CIC Event (as
defined in Section 5.5), the Severance Benefit shall be paid
in a series of substantially equal separate installments in
accordance with the Corporation’s standard payroll practices
over a period of eighteen (18) consecutive months, with the first
installment payable in the month following the month in which the
Executive’s Separation from Service. (For purposes of
clarity, each such installment shall equal the applicable fraction
of the aggregate Severance Benefit. For example, each
installment would equal one-eighteenth (1/18 th ) of the
Severance Benefit.) If the Executive is receiving such
installment payments and a 409A CIC Event occurs, any remaining
installment payments (commencing with any installment for the month
following the month in which such 409A CIC Event occurs and any
future installments otherwise due) will be paid (without applying a
present value discount) in the month following the month in which
the 409A CIC Event occurs. If the Executive’s
Separation from Service occurs on or within twenty four (24) months
after a 409A CIC Event, the Severance Benefit shall be paid in a
single lump sum payment in the month following the month in which
the Executive’s Separation from Service occurs.
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(ii)
The Executive shall be
entitled to accelerated vesting of a portion of the Option and RSU
Award (to the extent then outstanding and otherwise not fully
vested) as follows: (A) the vesting schedule applicable
to each of the Option and RSU Award shall, for this purpose, be
deemed to have been a 5-year monthly vesting schedule over the
sixty (60) months following the Commencement Date, and (B) the
portion of the Option and RSU Award that, under such monthly
vesting schedule, would have otherwise been scheduled to vest based
on the Executive’s continued employment (had the
Executive’s employment not terminated) during the period of
eighteen (18) months following the Severance Date shall become
fully vested and, in the case of the Option, exercisable as of the
Severance Date, and the Option, to the extent exercisable, shall
remain exercisable until the earlier of the first anniversary of
the Severance Date, the end of the maximum term of the Option, or a
termination of the option in connection with a change in control or
similar event as provided in the Plan. However, in the case
of a Qualifying Termination during the Protected Period, the Option
and RSU Award (to the extent then outstanding and otherwise not
fully vested) shall become fully vested and, in the case of the
Option, exercisable as of the Severance Date, and the Option, to
the extent exercisable, shall remain exercisable until the earlier
of the first anniversary of the Severance Date, the end of the
maximum term of the Option, or a termination of the option in
connection with a change in control or similar event as provided in
the Plan.
Notwithstanding the
foregoing, if a Qualifying Termination occurs prior to the Date of
Grant, the Executive’s right to the grant of the Option shall
immediately terminate and instead the number of restricted stock
units subject to the RSU Award shall be increased to
(x) 375,000 if the Qualifying Termination occurs within six
months after the Commencement Date or (y) 500,000 if the
Qualifying Termination occurs on or after the date that is six
months after the Commencement Date (in each case, in lieu of the
250,000 set forth above), and the RSU Award as so increased shall
be granted upon (or, as may be necessary to give effect to the
grant, immediately prior to) the Severance Date and the provisions
of the preceding paragraph regarding accelerated vesting shall
apply with respect to the RSU Award as so increased.
(iii)
The Corporation will pay
or reimburse the Executive for his premiums charged to continue
medical coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act (“ COBRA ”), at the same or
reasonably equivalent medical coverage for the Executive (and, if
applicable, the Executive’s eligible dependents) as in effect
immediately prior to the Severance Date, to the extent that the
Executive elects such continued coverage; provided that the
Corporation’s obligation to make any payment or reimbursement
pursuant to this clause (iii) shall commence with continuation
coverage for the month following the month in which the
Executive’s Separation from Service occurs and shall
cease
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with continuation coverage
for the eighteenth (18 th ) month following the month in
which the Executive’s Separation from Service occurs (or, if
earlier, shall cease upon the first to occur of the
Executive’s death, the date the Executive becomes eligible
for coverage under the health plan of a future employer, or the
date the Corporation ceases to offer group medical coverage to its
active executive employees or the Corporation is otherwise under no
obligation to offer COBRA continuation coverage to the
Executive). To the extent the Executive elects COBRA
coverage, he shall notify the Corporation in writing of such
election prior to such coverage taking effect and complete any
other continuation coverage enrollment procedures the Corporation
may then have in place. The Executive shall promptly notify
the Corporation in writing if he or any of his covered dependents
becomes eligible for coverage under any other health
plan.
(c)
The foregoing provisions of this Section 5.3 shall not affect:
(i) the Executive’s receipt of benefits otherwise due
terminated employees under group insurance coverage consistent with
the terms of the applicable Corporation welfare benefit plan;
(ii) the Executive’s rights under COBRA to continue
participation in medical, dental, hospitalization and life
insurance coverage; (iii) the Executive’s receipt of
benefits otherwise due in accordance with the terms of the
Corporation’s Retirement Savings Plan; (iv) any rights
that the Executive may have under and with respect to a stock
option, restricted stock or other equity-based award, to the extent
that such award was granted before the Severance Date and to the
extent expressly provided in the written agreement evidencing such
award; or (v) any right to indemnification the Executive may
have from the Corporation or the Executive’s right to be
covered under any applicable insurance policy, with respect to any
liability the Executive incurred or might incur as an employee,
officer or director of the Corporation or its
affiliates.
5.4
Release; Exclusive
Remedy.
(a)
This Section 5.4 shall apply notwithstanding anything else
contained in this Agreement to the contrary. As a condition
precedent to any Corporation obligation to the Executive pursuant
to Section 5.3(b), the Executive shall, upon or promptly
following his last day of employment with the Corporation:
(i) provide the Corporation with a valid, executed, written
release of claims (in substantially the form attached hereto as
Exhibit A , with such changes to such form as the
Corporation may determine necessary or appropriate to help ensure
that the release contemplated by such form is maximally enforceable
in accordance with applicable law) and such release shall have not
been revoked by the Executive pursuant to any revocation rights
afforded by applicable law; and (ii) satisfy his obligations
under Section 5.4(c). The Corporation shall have no
obligation to make any payment to the Executive pursuant to
Section 5.3(b) unless and until the release contemplated
by this Section 5.4 is executed and delivered, and not revoked
by the Executive pursuant to any revocation rights afforded by
applicable law.
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(b)
The Executive agrees that the payments contemplated by
Section 5.3 shall constitute the exclusive and sole remedy for
any termination of his employment and in such case the Executive
covenants not to assert or pursue any other remedies, at law or in
equity, with respect to any termination of employment. The
Corporation and the Executive acknowledge and agree that there is
no duty of the Executive to mitigate damages under this Agreement,
and there shall be no offset against any amounts due to the
Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that the Executive may
obtain. All amounts paid to the Executive pursuant to
Section 5.3 shall be paid without regard to whether the
Executive has taken or takes actions to mitigate damages and,
subject to all applicable laws and regulations, shall not be
subject to setoff, counterclaim, recoupment, defense or other right
which the Corporation may have against the Executive or
others.
(c)
The Executive agrees that, upon or promptly following the
termination of the Executive’s employment with the
Corporation (regardless of the reason), he will resign from the
Board (if he is then a member of the Board), from the board of
directors or similar governing body of any affiliate of the
Corporation on which he may then serve, and from any other position
which he may then hold with the Corporation and its
affiliates.
5.5
Certain Defined
Terms .
(a)
As used herein, “ Accrued Obligations ”
means:
(i)
any Base Salary that had accrued but had not been paid (including
accrued and unpaid vacation time) prior to the Severance
Date;
(ii)
any Incentive Bonus payable pursuant to Section 3.2 with
respect to the fiscal year preceding the fiscal year in which the
Severance Date occurs (if the Executive was employed by the
Corporation on the last day of that fiscal year) that had not
previously been paid; and
(iii)
any reimbursement due to the Executive pursuant to Section 4.2
for expenses incurred by the Executive prior to the Severance
Date.
Subject to
Section 5.7, the Accrued Obligations shall be paid promptly
after the Severance Date.
(b)
As used herein, “ Cause ” shall mean that,
during the Period of Employment, any of the following events or
contingencies exists or has occurred:
(i)
the Executive is convicted of, or pleads guilty or nolo
contendere to, a felony (whether or not involving the
Corporation or any of its affiliates); or
(ii)
the Executive commits an act of willful and material misconduct
involving the Corporation or any of its affiliates; or
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(iii)
the Executive willfully and repeatedly fails or refuses to perform
his duties as required by this Agreement; or
(iv)
a willful and material violation by the Executive of any written
rule, regulation or policy of the Corporation; or
(v)
a willful and material breach by the Executive of any provision of
this Agreement.
However, no act or
failure to act, on the Executive’s part shall be considered
“willful” unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the
Executive’s action or omission was in the best interest of
the Corporation, and in the case of clauses (ii) through
(v) of the foregoing definition, there shall be no
determination of Cause hereunder unless the Executive shall have
received written notice from the Board stating the nature of the
act or omission asserted to constitute Cause and affording the
Executive at least ten (10) days to correct such act or
omission. A determination by the Board that Cause exists
shall be effective only if approved at a Board meeting (in person
or telephonic) by at least a majority of the Board (not counting
the Executive if he is then a member of the Board). The
Executive is entitled to be present (with counsel) at such meeting
and respond to any basis that may be asserted as constituting Cause
(a summary of which shall be supplied to the Executive in writing
at least five (5) days before any such meeting).
(c)
As used herein, “ Change in Control Event ”
shall have the meaning ascribed to such term in the
Corporation’s 2000 Incentive Plan; provided, however, that as
used in this Agreement, the exception in clause (D) of the
first bullet point under paragraph (3) of such term as so
defined (the exception for acquisitions by any member of or entity or group
affiliated with the Lidow family) shall not apply.
(d)
As used herein, “ Disability ” shall mean a
physical or mental impairment which has resulted in the
Executive’s entitlement to commencement of long-term
disability benefits under the Company’s long-term disability
policy applicable to the Executive or, in the absence of such a
policy, a physical or mental impairment which has rendered the
Executive unable to perform the essential functions of his
employment with the Corporation, even with reasonable accommodation
that does not impose an undue hardship on the Corporation, for more
than 90 calendar days in any 12-month period, unless a longer
period is required by federal or state law, in which case that
longer period would apply. In the absence of an applicable
long-term disability policy as described above, the determination
of whether or not a Disability exists for purposes of this
Agreement shall be based upon the findings of a qualified medical
doctor reasonably agreed to by the Corporation and the Executive
(or, in the event of the Executive’s incapacity, his legal
representative). In the absence of agreement between the
Corporation and the Executive, each party shall nominate a
qualified medical doctor, and the two
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doctors so nominated shall select a third
qualified medical doctor, who shall make the determination as to
Disability.
(e)
As used herein, “ Good Reason ”
shall mean the occur
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