EXHIBIT 10.13
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (the
“Agreement”) is made and entered into as of
October 26, 2005 (the “Effective Date”) by and
between HEALTH CARE PROPERTY INVESTORS, INC., a Maryland
corporation (together with its successors and assigns,
“Corporation”), and JAMES F. FLAHERTY III
(“Officer”).
RECITALS
A.
Corporation and
Officer desire to enter into a new employment agreement upon the
terms set forth in this Agreement; and
B.
Corporation
desires to continue to employ Officer as its Chief Executive
Officer and President, and Officer is willing to accept such
employment by Corporation, on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of
the mutual covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the parties
hereto do hereby agree as follows:
AGREEMENT
THE PARTIES AGREE AS
FOLLOWS:
1.
Duties
. During
the Employment Period (as defined below), Officer agrees to be
employed by and to serve Corporation as its Chief Executive Officer
and President. Corporation agrees to employ and retain
Officer in such capacities. Officer shall report to
Corporation’s Board of Directors (the “Board”)
and at all times during the Employment Period shall have powers and
duties commensurate with the positions of Chief Executive Officer
and President of a company the size and nature of the
Corporation. Officer shall devote substantially all of
Officer’s business time, energy, and skill to the performance
of Officer’s duties for Corporation and shall hold no other
employment. Nothing herein shall preclude Officer from
serving on (and receiving compensation for) boards of directors of
other for-profit business entities as the Board approves in
writing, which approval shall not be unreasonably withheld or
engaging in a reasonable level of charitable activities and
community affairs, including serving on charitable, community or
educational boards or from managing his personal and family
investments provided that such activities do not materially
interfere with the effective discharge of his duties and
responsibilities to Corporation. For purposes of clarity, the
Board has approved Officer’s service on the board of
directors of Quest Diagnostics.
2.
Term of
Employment .
(a)
Definitions
. For
purposes of this Agreement the following terms shall have the
following meanings:
(i)
“
Termination For Cause ” shall mean termination by the
Board of Officer’s employment with Corporation by reason of
Officer’s: (A) willful and
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continued failure to
substantially perform his duties with Corporation after a written
demand for substantial performance is delivered to Officer by the
Board, which demand, based on a good faith determination of the
Board after reasonable inquiry, specifically identifies the manner
in which the Board believes that Officer has not substantially
performed his duties (except for any such failure resulting from
his incapacity due to physical or mental illness or any such actual
or anticipated failure after Officer’s issuance of a Notice
of Termination (as defined in Section 2(a)(viii)) either
(1) for Good Reason (as defined in Section 2(a)(iii), or
(2) in connection with a Covered Resignation (as defined in
Section 2(a)(iv)), (B) willful and continued failure to
substantially follow and comply with the specific and lawful
directives of the Board, as reasonably determined by the Board
after a written demand for substantial performance is delivered to
Officer by the Board, which demand, based on a good faith
determination of the Board after reasonable inquiry, specifically
identifies the manner in which the Board believes that Officer has
not substantially performed his duties (except for any such failure
resulting from Officer’s incapacity due to physical or mental
illness or any such actual or anticipated failure after his
issuance of a Notice of Termination for Good Reason or in
connection with a Covered Resignation), (C) willful commission
of an act of fraud or dishonesty resulting in material economic or
financial injury to Corporation, or (D) willful engagement in
illegal conduct or gross misconduct, in each case which is
materially and demonstrably injurious to Corporation; provided,
however, that Officer’s employment shall not be deemed to
have been terminated in a Termination For Cause if such termination
took place as a result of any act or omission believed by Officer
in good faith to have been in the best interests of
Corporation. Notwithstanding the foregoing, Officer shall not
be deemed to have been terminated in a Termination for Cause unless
and until there shall have been delivered to Officer a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board (after reasonable notice to Officer and an
opportunity for Officer, together with Officer’s counsel, to
be heard before the Board, and after the reasonable opportunity to
cure contemplated by clause (A) or (B) above in the case
of a termination pursuant to either such clause), finding that in
the Board’s good faith opinion Officer had engaged in conduct
set forth above in this Section 2(a)(i) and specifying
the particulars thereof in reasonable detail.
(ii)
“
Termination Other Than For Cause ” shall mean
termination by Corporation of Officer’s employment hereunder
other than (A) a Termination For Cause, (B) a termination
due to Officer’s Disability, or (C) in circumstances
where a Termination Upon a Change in Control is
applicable.
(iii)
“
Termination For Good Reason ” shall mean termination
by Officer of his employment hereunder for Good Reason, other than
in circumstances where a Termination Upon a Change in Control is
applicable. “ Good Reason ” shall mean,
without Officer’s express written consent (except in the case
of Section 2(a)(iii)(G)), the occurrence of any of the
following circumstances unless, in the case of Sections
2(a)(iii)(A), (B), (D), (E), (F), (G), (H) or (I), such
circumstances are fully corrected (provided such circumstances are
capable of correction) within 30 days after a written demand for
substantial performance is delivered to Corporation by
Officer:
(A)
the assignment to Officer of any
duties inconsistent with Officer’s duties pursuant to
Section 1, the failure to elect or reelect Officer as
Chief
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Executive Officer and President of Corporation
and as a member of the Board, or the removal by Corporation or the
Board of Officer from any such position, or any other action by
Corporation that results in a material diminution in
Officer’s position, authority, duties or responsibilities as
Chief Executive Officer and President of Corporation;
(B)
a change in the reporting
structure such that Officer reports to someone other than the
Board;
(C)
Corporation’s reduction of
Officer’s rate of Base Salary or Target Bonus as in effect on
the Effective Date or as the same may be increased from time to
time;
(D)
the relocation of
Corporation’s offices at which Officer is principally
employed as of the Effective Date (“Officer’s Principal
Location”) to a location more than thirty (30) miles from
such location, or Corporation’s requiring Officer to be based
anywhere other than Officer’s Principal Location, except for
required travel on Corporation’s business to an extent
substantially consistent with Officer’s business travel
obligations prior to the Effective Date;
(E)
Corporation’s failure to pay
to Officer any portion of Officer’s current compensation or
to pay to Officer any portion of an installment of deferred
compensation due under any deferred compensation program of
Corporation, including any deferred performance award, within seven
(7) days of the date such compensation is due;
(F)
a material reduction in
Officer’s level of participation in any of
Corporation’s short and/or long-term incentive compensation
plans, employee benefit or retirement plans, or policies, practices
or arrangements in which Officer participated in during the
Employment Period; provided, however, except as set forth in clause
(C) above, that reductions in the levels of participation in
any such plan, policy, practice or arrangement shall not be deemed
to be “Good Reason” if Officer’s reduced level of
participation in each such plan, policy, practice or arrangement
remains substantially consistent (both in terms of the amount of
benefits provided and the level of Officer’s participation
relative to other participants as existed prior to the reduction)
with the level of participation of Corporation’s other senior
executive officers in each such plan, policy, practice or
arrangement;
(G)
Corporation’s failure to
obtain the assumption in writing of its obligation to perform this
Agreement by any successor to all or substantially all of the
business assets of Corporation within 15 days after a merger,
consolidation, sale or similar transaction (without regard to
whether or not Officer consented to such transaction);
or
(H)
any purported termination of
Officer’s employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of
Section 2(a)(viii) hereof (and, if applicable, the
requirements of Section 2(a)(i) hereof), which purported
termination shall not be effective for purposes of this
Agreement.
Officer’s right to terminate
Officer’s employment pursuant to this
Section 2(a)(iii) shall not be affected by
Officer’s incapacity due to physical or mental illness.
Officer’s continued employment shall not constitute consent
to, or a waiver of rights with respect to, any
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circumstance constituting Good Reason
hereunder. After a Change in Control, any good faith
determination by Officer that Good Reason exists as to
circumstances arising upon, after or in connection with such Change
in Control shall be presumed correct and shall be binding upon
Corporation.
(iv)
“
Covered Resignation ” shall mean a termination by
Officer of Officer’s employment with Corporation by Officer
providing a Notice of Termination within the thirty (30) day period
following the first anniversary of the occurrence of a Change in
Control.
(v)
“
Voluntary Termination ” shall mean termination by
Officer of Officer’s employment by Corporation other than
(i) a Termination For Good Reason, (ii) a termination
pursuant to a Covered Resignation, or (iii) a termination by
reason of Officer’s death or Disability.
(vi)
“
Termination Upon a Change in Control ” shall mean
(A) a termination by Officer of Officer’s employment
with Corporation (1) pursuant to a Covered Resignation, or
(2) for Good Reason at any time by delivering upon or within
the two-year period following a Change in Control a Notice of
Termination to Corporation, or (B) a termination by
Corporation of Officer’s employment, other than a Termination
For Cause or upon Disability, at any time by delivering upon or
within the two-year period following a Change in Control a Notice
of Termination to Officer; in each case other than a termination by
reason of Officer’s death.
(vii)
“ Change
in Control ” shall be deemed to occur if:
(A)
any Person (as defined in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the “ Exchange Act ”)) is or becomes
the Beneficial Owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Corporation
representing 25% or more of the combined voting power of
Corporation’s then outstanding securities entitled to vote
generally in the election of directors (“ Outstanding
Corporation Voting Securities ”); provided, however, that
for purposes of this subsection (A), the following shall not
constitute a Change in Control: (1) any acquisition by
Corporation or any corporation controlled by Corporation,
(2) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Corporation or any corporation
controlled by Corporation, or (3) any acquisition by a Person
of 25% of the Outstanding Corporation Voting Securities as a result
of an acquisition of common stock of Corporation by Corporation
which, by reducing the number of shares of common stock of
Corporation outstanding, increases the proportionate number of
shares beneficially owned by such Person to 25% or more of the
Outstanding Corporation Voting Securities; provided, however, that
if a Person shall become the beneficial owner of 25% or more of the
Outstanding Corporation Voting Securities by reason of a share
acquisition by Corporation as described above and shall, after such
share acquisition by Corporation, become the beneficial owner of
any additional shares of common stock of Corporation, then such
acquisition of additional shares shall constitute a Change in
Control;
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(B)
during any period of not more than
two consecutive years commencing after the execution of this
Agreement, individuals who at the beginning of such period
constitute the Board, together with any new director(s) whose
election by the Board or nomination for election by
Corporation’s stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved in the manner
set forth in this clause (B) (which shall not include any
director designated by a person who has entered into an agreement
with Corporation to effect a transaction described in Sections
2(a)(vii)(A), (C) or (D)), cease for any reason to constitute
at least a majority of the Board;
(C)
the consummation by Corporation of
a merger or consolidation, or a sale or other disposition of all or
substantially all of the assets of Corporation (“ Business
Combination ”), except for a merger or consolidation
which would result in the beneficial owners of the Outstanding
Corporation Voting Securities immediately prior thereto continuing
to beneficially own (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
66-2/3% of the combined voting power of the then-outstanding voting
securities of the corporation resulting from such Business
Combination (including, without limitation, a corporation that, as
a result of such transaction, owns Corporation or all or
substantially all of Corporation’s assets either directly or
through one or more subsidiaries) in substantially the same
proportion as their ownership immediately prior to such Business
Combination; provided, however, that a merger or consolidation
effected to implement a recapitalization of Corporation (or similar
transaction) in which no Person acquires beneficial ownership of
more than 25% of the Outstanding Corporation Voting Securities
shall not constitute a Change in Control except as otherwise
provided above in clause (A); or
(D)
the stockholders of Corporation
approve a plan of complete liquidation of Corporation or an
agreement for the sale or disposition by Corporation of all or
substantially all of Corporation’s business
assets.
(viii)
“ Notice
of Termination ” shall mean a notice that indicates the
specific termination provision in this Agreement relied upon and
sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Officer’s employment
under the provision so indicated. The Notice of Termination
shall also set forth the applicable Date of Termination (which date
shall be consistent with
Section 2(ix) hereof).
(ix)
“ Date
of Termination ” shall mean (A) if Officer’s
employment is terminated due to Officer’s death, the date of
Officer’s death; (B) if Officer’s employment is
terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that Officer shall not have returned
to the full-time performance of Officer’s duties during such
thirty (30)-day period), and (C) if Officer’s employment
is terminated pursuant to Section 2(a)(i),
Section 2(a)(ii), Section 2(a)(iii) or
Section 2(a)(iv) or for any other reason (other than
death or Disability (as defined in Section 2(c)), the date
specified in the Notice of Termination (which shall not be less
than thirty (30) days from the date such Notice of Termination is
given, except that in the case of a Termination for Cause the Date
of Termination may be as early as the date such Notice of
Termination is given, and in the case of a termination for Good
Reason or in connection with a Covered Resignation the Date of
Termination shall not be less than sixty (60) days from the date
such Notice of Termination is given, and in all cases
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the Date of Termination
shall not be more than ninety (90) days from the date such Notice
of Termination is given).
(x)
“
Accrued and Other Obligations ” shall
mean:
(A)
any Base Salary that had accrued,
but had not been paid (including accrued and unpaid vacation time),
as of the Date of Termination, which will be paid upon or promptly
following the Date of Termination; and
(B)
any bonus payable pursuant to
Section 3(b) with respect to any fiscal year (if Officer
was employed by Corporation on the last day of that fiscal year)
that had not previously been paid, which will be paid upon or
promptly following the Date of Termination or, if later, at the
same time bonuses are paid by Corporation generally to other
executives with respect to such fiscal year; and
(C)
any reimbursement due to Officer
pursuant to Section 3(c)(iv) for expenses incurred by
Officer prior to the Date of Termination, which will be paid upon
or promptly following the Date of Termination or, if later,
promptly following Officer’s request for reimbursement of
such expenses and submission of receipts and other appropriate
documentation thereof in accordance with Corporation’s usual
policies; and
(D)
any vested deferred compensation,
including, without limitation, any deferred and vested performance
award, any stock units or other equity-based awards that were
vested and subject to a deferral election by Officer as of the Date
of Termination, and any pension plan, profit sharing plan, and
supplemental retirement plan benefits of Officer that were accrued
and vested as of the Date of Termination; which, in each case, will
be paid in accordance with the terms and conditions of the
applicable plan, program, award or agreement; and
(E)
any rights, payments or benefits
under any other applicable plans, programs, policies or
arrangements of Corporation in which Officer participated as of the
Date of Termination (or if the basis for Good Reason is pursuant to
Section 2(a)(iii)(F), the plan, program, policy or arrangement
in which Officer participated in immediately prior to the action
giving rise to Good Reason), including, without limitation, any
equity or long-term incentive plan or pursuant to any
then-outstanding equity awards granted by Corporation to Officer,
to the full extent of Officer’s rights under any such plans,
policies, arrangements or agreements.
(b)
Basic
Term . The term of
employment hereunder shall commence on the Effective Date and
continue for a continuous period of three (3) years, subject
to earlier termination as provided in this Section 2 (the
“Employment Period”). Thereafter, unless either
party provides written notice to the other of its intent not to
extend the Employment Period at least sixty (60) days prior to each
anniversary of the Effective Date, the Employment Period shall be
extended for an additional year, so that at all times the
Employment Period shall be for a period of at least three
(3) years, unless earlier terminated as provided in this
Agreement; provided, further, that if a Change in Control occurs
during the Employment Period, the term of this Agreement shall
continue in effect for a period of not less than thirty-six (36)
months beyond
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the month in which such
Change in Control occurred. A determination by either party
not to renew the Employment Period in accordance herewith and
delivery of a notice of such non-renewal shall not be deemed a
breach of this Agreement. The Employment Period shall
terminate at Corporation’s regular close of business on the
Date of Termination (or, if the Date of Termination is not a
regular business day, at 6:00 p.m. Pacific Time on the Date of
Termination).
(c)
Termination by
Corporation . Corporation may
terminate Officer’s employment hereunder (i) for Cause
(but only in accordance with Section 2(a)(i) and only
after the requisite Board vote has been obtained), or
(ii) without Cause, or (iii) in the event of
Officer’s Disability. For purposes of this Agreement,
the term “Disability” shall mean a physical or mental
impairment which renders Officer unable to perform the essential
functions of his position, even with reasonable accommodation which
does not impose an undue hardship on Corporation, for a period of
at least six (6) months. Except as provided below, the
determination of whether a Disability exists shall be made by a
medical doctor selected by Corporation and Officer. If the
parties cannot agree on a medical doctor, each party shall select a
medical doctor and the two doctors shall select a third medical
doctor who shall be the approved medical doctor for this
purpose.
(d)
Termination by
Officer . Officer may terminate
his employment hereunder at any time (i) for Good Reason
(subject to Corporation’s opportunity to cure, if applicable,
the circumstance(s) giving rise to Good Reason in the time period
set forth in Section 2(a)(iii)), or (ii) pursuant to a
Covered Resignation, or (iii) pursuant to a Voluntary
Termination or upon thirty (30) days’ written Notice of
Termination to Corporation, in the event of Officer’s
Disability.
(e)
Termination by
Death . Officer’s
employment hereunder shall terminate upon Officer’s
death.
(f)
Terminations
in General . Any termination of
Officer’s employment pursuant to Section 2(c),
2(d) or 2(e) shall not be deemed to be a breach of this
Agreement. Any termination of Officer’s employment
pursuant to Section 2(c), 2(d) or due to Officer’s
Disability shall be communicated by the terminating party by a
Notice of Termination.
3.
Salary,
Benefits and Bonus Compensation .
(a)
Base
Salary . During the Employment
Period, Corporation agrees to pay to Officer a base salary at an
annualized rate of $575,000.00 per annum (“Base
Salary”) payable in accordance with Corporation’s
regular payroll practices in effect from time to time, but not less
frequently than monthly installments. Officer’s Base
Salary and other incentives shall be reviewed annually by the
Compensation Committee of the Board (the “Compensation
Committee”), which may increase (but not decrease)
Officer’s Base Salary and grant such other incentives as it,
in its sole discretion, determines appropriate. After any
such increase in Base Salary, the term “Base Salary”
shall refer to the increased amount.
(b)
Bonuses
. Officer
shall be eligible to receive a bonus for each year (or portion
thereof) during the Employment Period and any extensions thereof,
provided that,
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except as otherwise provided
herein, Officer has remained employed by Corporation for the entire
year. Officer’s target bonus opportunity for any
particular year (“Target Bonus”) shall equal two
hundred percent (200%) of Officer’s Base Salary in effect for
that year. The amount of bonus payable to Officer for any
particular year will be determined by the Compensation Committee,
in its sole discretion, taking into account the performance of the
Corporation and Officer for that particular year. All such
bonuses shall be payable within 45 days after the end of the year
to which such bonus relates.
(c)
Additional
Benefits . During the Employment
Period, Officer shall be entitled to the following employee and
fringe benefits:
(i)
Officer
Benefits . Officer shall be
eligible to participate in such of Corporation’s benefits and
deferred compensation plans as are now generally available or later
made generally available to executive officers of Corporation on a
basis no less favorable than provided to such other executive
officers, including, without limitation, profit sharing plans,
annual physical examination, dental and medical plans, personal
catastrophe and disability insurance, and retirement plans.
Officer shall be eligible to participate in Corporation’s
2000 Stock Incentive Plan and any successor plan or any other
equity or long-term incentive plan of Corporation. On the
Effective Date, Corporation also agrees to grant Officer a
restricted stock unit award in the form attached hereto as
Exhibit A. Notwithstanding anything else contained
herein to the contrary, during the Employment Period in no event
shall Officer be eligible to participate in or receive benefits
under any severance plan, program, policy, arrangement or agreement
of Corporation other than this Agreement.
Section 4(b)(viii) of this Agreement shall apply in the
event that any payment, entitlement, benefit or distribution to
Officer or for Officer’s benefit during the Employment Period
(whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise and whether pursuant to
or by reason of any other agreement, policy, plan, program or
arrangement, including without limitation any stock option,
restricted stock, restricted stock unit, stock appreciation right
or similar right, or the lapse or termination of any restriction on
or the vesting or exercisability of any of the foregoing) would be
subject to the excise tax imposed by Section 4999 of the Code
or to any similar tax imposed by federal, state or local law or any
interest or penalties imposed with respect to such excise or other
similar tax.
(ii)
Vacation
. Officer
shall be entitled to five (5) weeks of vacation during each
year during the Employment Period, prorated for partial
years. Upon Officer’s completion of fifteen (15) years
of service to Corporation, Officer’s vacation accrual rate
shall increase to six (6) weeks per year effective on and
after such date.
(iii)
Life
Insurance . During the Employment
Period, Corporation shall at its expense procure and keep in effect
term life insurance on the life of Officer, payable to such
beneficiaries as Officer may from time to time designate, in the
aggregate amount of $2,000,000. Such policy shall be owned by
Officer or by a member of his immediate family.
(iv)
Reimbursement
for Expenses . During the Employment
Period, Corporation shall reimburse Officer for reasonable and
properly documented (in accordance with the Corporation’s
policies as in effect from time to time) out-of-pocket
business
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and/or entertainment
expenses incurred by Officer in connection with his duties under
this Agreement. In addition, Corporation shall promptly pay
Officer’s legal fees and other expenses incurred in the
negotiation and preparation of this Agreement (including its
Exhibits) and the Indemnification Agreement to be entered into by
and between Corporation and Officer on or about the date of this
Agreement (the “ Indemnification Agreement ”)
promptly upon receiving copies of the invoices for such fees and
expenses.
4.
Severance
Compensation . If Officer’s
employment by Corporation is terminated during the Employment
Period for any reason by Corporation or Officer, or upon or
following the Employment Period in the absence of a successor
employment agreement by and between Officer and Corporation to the
contrary, Corporation shall have no further obligation to provide
to Officer, and Officer shall have no further right to receive or
obtain from Corporation, any severance payments or benefits
except:
(a)
Accrued and
Other Obligations . Corporation shall pay
Officer (or, in the event of his death, Officer’s estate) the
Accrued and Other Obligations, subject to tax withholding and other
authorized deductions. Officer shall also be entitled to any
amounts or advances required by Section 6(h)(iii) or
pursuant to the Indemnification Agreement or any similar successor
indemnification agreement by and between Officer and
Corporation. If Officer’s employment by Corporation
terminates after (but not during) the Employment Period, Officer
shall be eligible for participation in any severance program, plan
or policy then in effect on the same terms and conditions generally
applicable to Corporation’s senior executives (other than as
provided in individual employment agreements) or, if the program,
plan or policy is of general applicability, to Corporation’s
employees generally. For purposes of clarity, this
Section 4(a) does not require a duplication of any
Accrued or Other Obligation, reimbursement or other payment or
benefit, otherwise payable in the circumstances pursuant to any
other applicable plan, program, policy, arrangement or
award.
(b)
Termination
Upon a Change in Control . If, during the
Employment Period (but not following the expiration of the
Employment Period), Officer’s employment is terminated in a
Termination Upon a Change in Control, Corporation shall pay or
provide Officer (in addition to the payments and entitlements in
Section 4(a)) the following benefits, subject to tax
withholding and other authorized deductions:
(i)
Corporation shall
pay Officer, at the time specified in Section 4(e), a lump sum
cash amount equal to Officer’s Target Bonus for the year in
which the Date of Termination occurs, pro-rated based on the number
of days in such year that had elapsed as of the Date of
Termination.
(ii)
Corporation shall
pay to Officer, at the time specified in Section 4(e), a lump
sum cash severance payment equal to the sum of (x) three
(3) times Officer’s Base Salary (at the greater of the
highest annualized rate in effect in the year preceding the Date of
Termination or the year in which the Date of Termination occurs),
plus (y) three (3) times the greater of Officer’s Target
Bonus for the year in which the Date of Termination occurs or the
highest annual bonus received by Officer in the three
(3) years immediately prior to the Change in Control (for
purposes of the foregoing clause, Corporation and Officer hereby
agree
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that Officer’s annual
bonuses for the years 2002, 2003 and 2004 were $100,000, $1
million, and $1 million, respectively).
(iii)
For a period of
three (3) years following the Date of Termination, Corporation
shall continue to provide Officer and Officer’s eligible
family members, based on the cost sharing arrangement between
Officer and Corporation on the date of the Change in Control, with
medical and dental health benefits at least equal in the aggregate
to those which would have been provided to Officer and
Officer’s eligible family members if Officer’s
employment had not been terminated or, if more favorable to
Officer, as in effect generally at any time thereafter; provided,
however, that if Officer becomes re-employed with another employer
and he and his dependents are eligible to receive medical and
dental health benefits under another employer’s plans,
Corporation’s obligations under this
Section 4(b)(iii) shall be reduced to the extent
comparable benefits with respect to Officer and his dependents are
actually received by Officer following Officer’s termination,
and any such benefits actually received by Officer shall be
reported to Corporation. In the event Officer and his
dependents are or become ineligible under the terms of such benefit
plans or programs to continue to be so covered through the end of
the three-year period following the Date of Termination, in such
event, Corporation shall provide Officer and his dependents with
substantially equivalent coverage through other sources or shall
provide Officer with a lump sum payment in such amount that, after
all taxes on that amount, shall be equal to the cost to Officer of
providing Officer such benefit coverage until the end of such
period. The lump sum payment shall be determined on a present
value basis using the interest rate provided in
Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the “Code”) on the Date of
Termination (the “Interest Rate”). In addition,
during the three-year period following the Date of Termination,
Corporation shall continue to pay the premiums for the term life
insurance policy described in
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