EXECUTIVE
EMPLOYMENT AGREEMENT
THIS EXECUTIVE
EMPLOYMENT AGREEMENT (this “
Agreement ”) is made effective __________, (the
“ Effective Date ”) by and between Ross Stores,
Inc. (the “ Company ”), a Delaware corporation,
and __________ (the “ Executive ”).
RECITALS
A.
The
Company wishes to employ the Executive, and the Executive is
willing to accept such employment, as _______________.
B.
It
is now the mutual desire of the Company and the Executive to enter
into a written employment agreement to govern the terms of the
Executive’s employment by the Company as of and following the
Effective Date on the terms and conditions set forth
below.
TERMS AND
CONDITIONS
In
consideration for the promises of the parties set forth below, the
Company and the Executive hereby agree as follows:
1.
Term
.
Subject to the provisions of Section 6 of this Agreement, the term
of employment of the Executive by the Company under this Agreement
(the “ Term of Employment ”) shall be as
follows:
(a)
Initial
Term . The initial
Term of Employment of the Executive by the Company under this
Agreement shall begin on the Effective Date and end on __________
(the “ Initial Term ”), unless extended or
terminated earlier in accordance with this Agreement.
(b)
Renewal
Term . Upon the
timely written request of the Executive to extend the Term of
Employment, the Compensation Committee (the “
Committee ”) of the Board of Directors (the “
Board ”) of the Company shall consider extending the
Executive’s employment with the Company under this Agreement.
To be timely, such request must be delivered to the Company’s
Chief Executive Officer not earlier than twelve (12) months prior
to the end of the then effective Initial Term or Renewal Term and,
in any case, while the Executive remains an employee of the
Company. Such request must contain no proposed modification to the
provisions of this Agreement other than an extension of the Term of
Employment as then in effect for an additional two (2) years.
Within thirty (30) days following the receipt of such notice, the
Chief Executive Officer will discuss such request with the
Committee and advise the Executive, in writing, within thirty (30)
days following its consideration of the Executive’s written
request, of the approval or disapproval of such extension request.
The failure to provide such written advice shall constitute a
denial of the Executive’s request for extension. If the
Executive’s request for an extension is approved, the Term of
Employment shall be extended for two (2) additional years
commencing on the date immediately following the date of expiration
of the Term of Employment in effect at the time of the
Executive’s written request. Such additional two-year period
is referred to herein as a “ Renewal Term
.”
2.
Position and
Duties . During the
Term of Employment, the Executive shall serve as
___________________. As used in this Agreement, the term
“Company” includes Ross Stores, Inc. and each and any
of its divisions, affiliates or subsidiaries (except that, where
the term relates to stock, stockholders, stock options or other
stock-based awards or the Board, it means Ross Stores, Inc.). The
Executive’s employment may be transferred, assigned, or
reassigned to Ross Stores, Inc. or a division, affiliate or
subsidiary of Ross Stores, Inc., and such transfer, assignment, or
re-assignment will not constitute a termination of employment or
“Good Reason” for the Executive’s termination of
employment under this Agreement. During the Term of Employment, the
Executive may engage in outside activities provided those
activities (including but not limited to membership on boards of
directors of not-for-profit and for-profit organizations) do not
conflict with the Executive’s duties and responsibilities
hereunder, and provided further that the Executive gives written
notice to the Board of any significant outside business activity in
which the Executive plans to become involved, whether or not such
activity is pursued for profit.
3.
Principal Place
of Employment. The Executive
shall be employed at the Company’s offices in [Pleasanton,
California] [New York, New York], except for required travel on the
Company’s business to an extent substantially consistent with
present business travel obligations of the Executive’s
position.
4.
Compensation
and Related Matters.
(a)
Salary
.
During the Term of Employment, the Company shall pay to the
Executive a salary at a rate of not less than ___________ Dollars
($_______) per annum. The Executive’s salary shall be payable
in substantially equal installments in accordance with the
Company’s normal payroll practices applicable to senior
executives. Subject to the first sentence of this Section 4(a), the
Executive’s salary may be adjusted from time to time by the
Committee in accordance with normal business practices of the
Company.
(b)
Bonus.
During the Term
of Employment, the Executive shall be eligible to receive an annual
bonus paid under the Company’s existing incentive bonus plan
under which the Executive is eligible (which is currently the
Incentive Compensation Plan) or any replacement plan that may
subsequently be established and in effect during the Term of
Employment. The current target annual bonus the Executive is
eligible to earn upon achievement of 100% of all applicable
performance targets under such incentive bonus plan is ____% of the
Executive’s then effective annual salary rate. The
Executive’s death, termination for Cause or Voluntary
Termination (as described in Sections 6(a), 6(c) and 6(f),
respectively) prior to the Company’s payment of the bonus for
a fiscal year of the Company will cause the Executive to be
ineligible for any annual bonus for that fiscal year or any
pro-rata portion of such bonus.
(c)
Expenses.
During the Term
of Employment, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive
in performing services hereunder, including all reasonable expenses
of travel and living while away from home, provided that such
expenses are incurred and accounted for in accordance with the
policies and procedures established by the Company.
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(d)
Benefits
.
During the Term of Employment, the Executive shall be entitled to
participate in all of the Company’s employee benefit plans
and arrangements in which senior executives of the Company are
eligible to participate. The Company shall not make any changes in
such plans or arrangements which would adversely affect the
Executive’s rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to all senior executives of
the Company and does not result in a proportionately greater
reduction in the rights or benefits of the Executive as compared
with any other similarly situated senior executive of the Company.
The Executive shall be entitled to participate in, or receive
benefits under, any employee benefit plan or arrangement made
available by the Company in the future to its senior executives,
subject to, and on a basis consistent with, the terms, conditions
and overall administration of such plans and arrangements. Except
as otherwise specifically provided herein, nothing paid to the
Executive under any plan or arrangement presently in effect or made
available in the future shall be in lieu of the salary or bonus
otherwise payable under this Agreement.
(e)
Vacations
.
During the Term of Employment, the Executive shall be entitled to
twenty (20) vacation days in each calendar year, and to
compensation in respect of earned but unused vacation days,
determined in accordance with the Company’s vacation plan.
The Executive shall also be entitled to all paid holidays given by
the Company to its senior executives. Unused vacation days shall
not be forfeited once they have been earned and, if still unused at
the time of the Executive’s termination of employment with
the Company, shall be promptly paid to the Executive at their
then-current value, based on the Executive’s daily salary
rate at the time of the Executive’s termination of
employment.
(f)
Services
Furnished . The Company
shall furnish the Executive with office space and such services as
are suitable to the Executive’s position and adequate for the
performance of the Executive’s duties during the Term of
Employment.
5.
Confidential
Information and Intellectual Property.
(a)
Other than in
the performance of the Executive’s duties hereunder, the
Executive agrees not to use in any manner or disclose, distribute,
publish, communicate or in any way cause to be used, disclosed,
distributed, published, or communicated in any way or at any time,
either while in the Company's employ or at any time thereafter, to
any person not employed by the Company, or not engaged to render
services to the Company, any Confidential Information (as defined
below) obtained while in the employ of the Company.
(b)
Confidential
Information includes any written or unwritten information which
relates to and/or is used by the Company or its subsidiaries,
affiliates or divisions, including, without limitation (i) the
names, addresses, buying habits and other special information
regarding past, present and potential customers, employees and
suppliers of the Company, (ii) customer and supplier contracts and
transactions or price lists of the Company and suppliers, (iii)
methods of distribution, (iv) all agreements, files, books, logs,
charts, records, studies, reports, processes, schedules and
statistical information, (v) data, figures, projections, estimates,
pricing data, customer lists, buying manuals or procedures,
distribution manuals or procedures, other policy and procedure
manuals or handbooks, (vi) supplier information, tax records,
personnel histories and records, sales information, and property
information, (vii) information regarding the present or future
phases of business, (viii) ideas, inventions,
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trademarks,
business information, know-how, processes, techniques,
improvements, designs, redesigns, creations, discoveries, trade
secrets, and developments, (ix) all computer software licensed or
developed by the Company or its subsidiaries, affiliates or
divisions, computer programs, computer-based and web-based training
programs, and systems, and (x) finances and financial information,
but Confidential Information will not include information of the
Company or its subsidiaries, affiliates or divisions that (1)
became or becomes a matter of public knowledge through sources
independent of the Executive, (2) has been or is disclosed by the
Company or its subsidiaries, affiliates or divisions without
restriction on its use, or (3) has been or is required or
specifically permitted to be disclosed by law or governmental order
or regulation. The Executive also agrees that, if there is any
reasonable doubt whether an item is public knowledge, to not regard
the item as public knowledge until and unless the Company’s
Chief Executive Officer confirms to the Executive that the
information is public knowledge.
(c)
The provisions
of this Section 5 shall not preclude the Executive from disclosing
such information to the Executive's professional tax advisor or
legal counsel solely to the extent necessary to the rendering of
their professional services to the Executive if such individuals
agree to keep such information confidential.
(d)
The Executive
agrees that upon leaving the Company’s employ the Executive
will remain reasonably available to answer questions from Company
officers regarding the Executive’s former duties and
responsibilities and the knowledge the Executive obtained in
connection therewith.
(e)
The Executive
agrees that upon leaving the Company's employ the Executive will
not communicate with, or give statements to, any member of the
media (including print, television, or radio media) relating to any
matter (including pending or threatening lawsuits or administrative
investigations) about which the Executive has knowledge or
information (other than knowledge or information that is not
Confidential Information) as a result of employment with the
Company. The Executive further agrees to notify the Chief Executive
Officer or his or her designee immediately after being contacted by
any member of the media with respect to any matter affected by this
section.
(f)
The Executive
agrees that all information, inventions, and discoveries, whether
or not patented or patentable, made or conceived by the Executive,
either alone or with others, at any time while employed by the
Company, which arises out of such employment or is pertinent to any
field of business or research in which, during such employment, the
Company, its subsidiaries, affiliates or divisions is engaged or
(if such is known to or ascertainable by the Executive) is
considering engaging (“ Intellectual Property ”)
shall (i) be and remain the sole property of the Company and the
Executive shall not seek a patent with respect to such Intellectual
Property without the prior consent of an authorized representative
of the Company and (ii) be disclosed promptly to an authorized
representative of the Company along with all information the
Executive possesses with regard to possible applications and uses.
Further, at the request of the Company, and without expense or
additional compensation to the Executive, the Executive agrees to
execute such documents and perform such other acts as the Company
deems necessary to obtain patents on such Intellectual Property in
a jurisdiction or jurisdictions
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designated by
the Company, and to assign to the Company or its designee such
Intellectual Property and all patent applications and patents
relating thereto.
(g)
The Executive
and the Company agree that the Executive intends all original works
of authorship within the purview of the copyright laws of the
United States authored or created by the Executive in the course of
the Executive’s employment with the Company will be works for
hire within the meaning of such copyright law.
(h)
Upon
termination of the Executive’s employment, or at any time
upon request of the Company, the Executive will return to the
Company all Confidential Information and Intellectual Property, in
any form, including but not limited to letters, memoranda, reports,
notes, notebooks, books of account, drawings, prints,
specifications, formulae, data printouts, microfilms, magnetic
tapes, disks, recordings, documents, and all copies
thereof.
6.
Termination
.
The Executive’s employment may be terminated during the Term
of Employment only as follows:
(a)
Death
.
The Executive’s employment shall terminate upon the
Executive’s death.
(b)
Disability
.
If, as a result of the Executive’s Disability (as defined
below), the Executive shall have been absent from the
Executive’s duties hereunder on a full-time basis for the
entire period of six consecutive months, and, within thirty days
after written notice of termination is given by the Company (which
may occur before or after the end of such six-month period), the
Executive shall not have returned to the performance of the
Executive’s duties hereunder on full-time basis, the
Executive’s employment shall terminate. For purposes of this
Agreement, the term “ Disability ” shall mean a
physical or mental illness, impairment or condition reasonably
determined by the Board that prevents the Executive from performing
the duties of the Executive’s position under this
Agreement.
(c)
For
Cause . The Company
may terminate the Executive’s employment for Cause. For this
purpose, “ Cause ” means the occurrence of any
of the following (i) the Executive’s continuous failure to
substantially perform the Executive’s duties hereunder
(unless such failure is a result of a Disability as defined in
Section 6(b)), (ii) the Executive’s theft, dishonesty, breach
of fiduciary duty for personal profit or falsification of any
documents of the Company, (iii) the Executive’s material
failure to abide by the applicable code(s) of conduct or other
policies (including, without limitation, policies relating to
confidentiality and reasonable workplace conduct) of the Company,
(iv) knowing or intentional misconduct by the Executive as a result
of which the Company is required to prepare an accounting
restatement, (v) the Executive’s unauthorized use,
misappropriation, destruction or diversion of any tangible or
intangible asset or corporate opportunity of the Company
(including, without limitation, the Executive’s improper use
or disclosure of confidential or proprietary information of the
Company), (vi) any intentional misconduct or illegal or grossly
negligent conduct by the Executive which is materially injurious to
the Company monetarily or otherwise, (vii) any material breach by
the Executive of the provisions of Section 9 [Certain Employment
Obligations] of this Agreement, or (viii) the Executive’s
conviction (including any plea of guilty
5
or nolo
contendere) of any criminal act involving fraud, dishonesty,
misappropriation or moral turpitude, or which materially impairs
the Executive’s ability to perform his or her duties with the
Company. A termination for Cause shall not take effect unless: (1)
the Executive is given written notice by the Company of its
intention to terminate the Executive for Cause; (2) the notice
specifically identifies the particular act or acts or failure or
failures to act which are the basis for such termination; (3) where
practicable, the notice is given within sixty (60) days of the
Company’s learning of such act or acts or failure or failures
to act; and (4) only in the case of clause (i), (iii), (v), (vi) or
(vii) of the second sentence of this Section 6(c), the Executive
fails to substantially cure such breach, to the extent such cure is
possible, within sixty (60) days after the date that such written
notice is given to the Executive.
(d)
Without
Cause. The Company may
terminate the Executive’s employment at any time Without
Cause. A termination “ Without Cause ” is a
termination by the Company of the Executive’s employment with
the Company for any reasons other than the death or Disability of
the Executive or the termination by the Company of the Executive
for Cause as described in Section 6(c).
(e)
Termination by
the Executive for Good Reason . The Executive
may terminate the Executive’s employment with the Company for
“ Good Reason ,” which shall be deemed to occur
if the Executive terminates the Executive’s employment with
the Company within sixty (60) days after written notice to the
Company by the Executive of the occurrence of one or more of the
following conditions, which condition(s) have not been cured within
thirty ( 30 ) business days after the Company’s
receipt of such written notice: (1) a failure by the Company to
comply with any material provision of this Agreement (including but
not limited to the reduction of the Executive’s salary or the
target annual bonus opportunity set forth in Section 4(b), (2) a
significant diminishment in the nature or scope of the authority,
power, function or duty attached to the position which the
Executive currently maintains without the express written consent
of the Executive, or (3) the relocation of the Executive’s
Principal Place of Employment as described in Section 3 to a
location that increases the regular one-way commute distance
between the Executive’s residence and Principal Place of
Employment by more than 25 miles without the Executive’s
prior written consent. In order to constitute a termination of
employment for Good Reason, such termination must occur within two
(2) years following the initial existence of any of the conditions
set forth in this Section 6(e), the Executive must provide written
notice to the Company of the existence of the condition giving rise
to the Good Reason termination within sixty (60) days of the
initial existence of the condition, and the Company shall have
thirty (30) days during which it may remedy the condition and in
the event such condition is timely remedied, the termination shall
not constitute a termination for Good Reason .
(f)
Voluntary
Termination . The Executive
may voluntarily resign from the Executive’s employment with
the Company at any time (a “ Voluntary Termination
”). A voluntary resignation from employment by the Executive
for Good Reason pursuant to Section 6(e) shall not be deemed a
Voluntary Termination.
(g)
Non-Renewal
Termination . If the
Executive fails to request an extension of the Term of Employment
in accordance with Section 1(b) or if the Committee fails to
approve
6
such request,
this Agreement shall automatically expire at the end of the then
current Term of Employment (a “ Non-Renewal
Termination ”).
7.
Notice and
Effective Date of Termination
(a)
Notice
.
Any termination of the Executive’s employment by the Company
or by the Executive during the Term of Employment (other than as a
result of the death of the Executive or a Non-Renewal Termination
described in Section 6(g)) shall be communicated by written notice
of termination to the other party hereto. Such notice shall
indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment under that provision.
(b)
Date of
Termination . The date of
termination of the Executive’s employment shall
be:
(i)
if
the Executive’s employment is terminated by the
Executive’s death, the date of the Executive’s
death;
(ii)
if
the Executive’s employment is terminated due to Disability
pursuant to Section 6(b), the date of termination shall be the last
to occur of the 31st day following delivery of the notice of
termination to the Executive by the Company or the end of the
consecutive six-month period referred to in Section
6(b).
(iii)
if
the Executive’s employment is terminated for any other reason
by either party, the date on which a notice of termination is
delivered to the other party; and
(iv)
if
the Agreement expires pursuant to a Non-Renewal Termination
described in Section 6(g), the parties’ employment
relationship shall terminate on the last day of the then current
Term of Employment without any notice.
8.
Compensation
and Benefits Upon Termination.
(a)
Termination
Due To Disability, Without Cause or For Good Reason
.
If the Executive’s employment terminates pursuant to Section
6(b) [Disability], Section 6(d) [Without Cause], or Section 6(e)
[Termination by Executive for Good Reason], then, subject to
Section 22 [Compliance with Section 409A], in addition to all
salary, annual bonuses, expense reimbursements, benefits and
accrued vacation days earned by the Executive pursuant to Section 4
through the date of the Executive’s termination of
employment, the Executive shall be entitled to the following,
provided that within sixty (60) days following the
Executive’s termination of employment the Executive executes
a general release of claims against the Company and its
subsidiaries, affiliates, stockholders, directors, officers,
employees, agents, successors and assigns in the current form
approved by the Company and attached as Exhibit A (subject to any
amendments required by law or regulation)(the “
Release ”) and the period for revocation, if any, of
such Release has expired without the Release having been
revoked:
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(i)
Salary
.
The Company shall continue to pay to the Executive the
Executive’s salary, at the rate in effect immediately prior
to such termination of employment, through the remainder of the
Term of Employment then in effect.
(ii)
Bonus
.
The Company shall continue to pay to the Executive an annual bonus
through the remainder of the Term of Employment then in effect;
provided, however, that the amount of the annual bonus determined
in accordance with this Section 8(a)(ii) for the fiscal year of the
Company in which such Term of Employment ends shall be prorated on
the basis of the number of days of such Term of Employment
occurring within such fiscal year. The amount of each annual bonus
payable pursuant to this Section 8(a)(ii), prior to any proration,
shall be equal to the annual bonus that the Executive would have
earned had no such termination under Section 8(a)(i) occurred,
contingent on the relevant annual bonus plan performance goals for
the respective year having been obtained. However, in no case shall
any such post-termination annual bonus exceed 100% of the
Executive's target bonus for the fiscal year of the Company in
which the Executive's termination of employment occurs. Such
bonuses shall not be paid until due under the applicable Company
bonus plan.
(iii)
Stock
Options . Stock options
granted to the Executive by the Company and which remain
outstanding immediately prior to the date of termination of the
Executive’s employment, as provided in Section 7(b), shall
immediately become vested in full upon such termination of
employment.
(iv)
Restricted
Stock. Shares of
restricted stock granted to the Executive by the Company which have
not become vested as of the date of termination of the
Executive’s employment, as provided in Section 7(b), shall
immediately become vested on a pro rata basis. The number of such
additional shares of restricted stock that shall become vested as
of the date of the Executive’s termination of employment
shall be that number of additional shares that would have become
vested through the date of such termination of employment at the
rate(s) determined under the vesting schedule applicable to such
shares had such vesting schedule provided for the accrual of
vesting on a daily basis (based on a 365 day year). The pro rata
amount of shares vesting through the date of
termination/non-renewal shall be calculated by multiplying the
number of unvested shares scheduled to vest in each respective
vesting year by the ratio of the number of days from the date of
grant through the date of termination/non-renewal, and the number
of days from the date of grant through the original vesting date of
the respective vesting tranche. Any shares of restricted stock
remaining unvested after such pro rata acceleration of vesting
shall automatically be reacquired by the Company in accordance with
the provisions of the applicable restricted stock agreement, and
the Executive shall have no further rights in such unvested portion
of the restricted stock. In addition, the Company shall waive any
reacquisition or repayment rights for dividends paid on restricted
stock prior to Executive’s termination of
employment.
(v)
Other Equity
Awards. Except as set
forth in Sections 8(a)(iii) and 8(a)(iv), performance share awards
and all other equity awards granted to the Executive by the Company
which remain outstanding immediately prior to the date of
termination of the Executive’s employment, as provided in
Section 7(b), shall vest and be settled in accordance with their
terms.
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The Company
shall have no further obligations to the Executive as a result of
termination of employment described in this Section 8(a) except as
set forth in Section 12.
(b)
Death,
Termination for Cause or Voluntary Termination
.
If the Executive’s employment terminates pursuant to Section
6(a) [Death], Section 6(c) [For Cause] or Section 6(f) [Voluntary
Termination], the Executive (or the Executive’s designee or
the Executive’s estate) shall be entitled to receive only the
salary, annual bonuses, expense reimbursements, benefits and
accrued vacation days earned by the Executive pursuant to Section 4
through the date of the Executive’s termination of
employment. The Executive shall not be entitled to any bonus not
paid prior to the date of the Executive’s termination of
employment, and the Executive shall not be entitled to any prorated
bonus payment for the year in which the Executive’s
employment terminates. Any stock options granted to the Executive
by the Company shall continue to vest only through the date on
which the Executive’s employment terminates, and unless
otherwise provided by their terms, any restricted stock,
performance share awards or other equity awards that were granted
to the Executive by the Company that remain unvested as of the date
on which the Executive’s employment terminates shall
automatically be forfeited and the Executive shall have no further
rights with respect to such awards. The Company shall have no
further obligations to the Executive as a result of termination of
employment described in this Section 8(b) except as set forth in
Section 12. In addition, provided the Executive terminates pursuant
to Death, the Company shall waive any reacquisition or repayment
rights for dividends paid on restricted stock prior to
Executive’s termination of employment.
(c)
Non-Renewal
Termination . If the
Agreement expires as set forth in Section 6(g) [Non-Renewal
Termination], then, subject to Section 22 [Compliance with Section
409A], in addition to all salary, annual bonuses, expense
reimbursements, benefits and accrued vacation days earned by the
Executive pursuant to Section 4 through the date of the
Executive’s termination of employment, the Executive shall be
entitled to the following, provided that within sixty (60) days
following the Executive’s termination of employment the
Executive executes the Release and the period for revocation, if
any, of such Release has expired without the Release having been
revoked:
(i)
Bonus
.
The Company shall pay the Executive an annual bonus for the fiscal
year of the Company in which the date of the Executive’s
termination of employment occurs, which shall be prorated for the
portion of such fiscal year that the Executive is employed by the
Company. The amount of such annual bonus, prior to proration, shall
be equal to the annual bonus that the Executive would have earned
under the Company’s bonus plan for the fiscal year of the
Company in which the Executive’s termination of employment
occurs had the Executive remained in its employment, contingent on
the relevant annual bonus plan performance goals for the year in
which Executive terminates having been obtained. However, in no
case shall any such post-termination annual bonus exceed 100% of
the Executive's target bonus for the fiscal year of the Company in
which the Executive's termination of employment occurs. Such bonus
shall not be paid until due under the applicable Company bonus
plan.
(ii)
Stock
Options . Stock options
granted to the Executive by the Company and which remain
outstanding immediately prior to the date of termination of
the
9
Executive’s
employment, as provided in Section 7(b), shall be vested and
exercisable in accordance with their terms.
(iii)
Restricted Stock. Shares of restricted stock granted to the
Executive by the Company which have not become vested as of the
date of termination of the Executive’s employment, as
provided in Section 7(b), shall immediately become vested on a pro
rata basis. The number of such additional shares of restricted
stock that shall become vested as of the date of the
Executive’s termination of employment shall be that number of
additional shares that would have become vested through the date of
such termination of employment at the rate(s) determined under the
vesting schedule applicable to such shares had such vesting
schedule provided for the accrual of vesting on a daily basis
(based on a 365 day year). The pro rata amount of shares vesting
through the date of termination/non-renewal shall be calculated by
multiplying the number of unvested shares scheduled to vest in each
respective vesting year by the ratio of the number of days from the
date of grant through the date of termination/non-renewal, and the
number of days from the date of grant through the original vesting
date of the respective vesting tranche. Any shares of restricted
stock remaining unvested after such pro rata acceleration of
vesting shall automatically be reacquired by the Company in
accordance with the provisions of the applicable restricted stock
agreement, and the Executive shall have no further rights in such
unvested portion of the restricted stock. In addition, the Company
shall waive any reacquisition or repayment rights for dividends
paid on restricted stock prior to Executive’s termination of
employment.
(iv) Other
Equity Awards. Except as set forth in Sections 8(c)(ii) and
8(c)(iii), performance share awards and all other equity awards
granted to the Executive by the Company which remain outstanding
immediately prior to the date of termination of the
Executive’s employment, as provided in Section 7(b), shall
vest and be settled in accordance with their terms.
The Company
shall have no further obligations to the Executive as a result of
termination of employment described in this Section 8(c) except as
set forth in Section 12.
(d)
Special Change in Control Provisions.
(i)
Change in Control Benefits.
(1)
Without Regard to Termination of Employment. In the event of
a Change in Control (as defined below), all shares of restricted
stock granted to the Executive by the Company shall become vested
in full immediately prior to the consummation of such Change in
Control, and, subject to Section 22 [Compliance with Section 409A],
the Executive shall be entitled to receive an additional salary
equal to _______________________ Dollars ($_______) per month for a
period of two (2) years following the Change in Control unless and
until the Voluntary Termination (as defined in Section 6(f)) of the
Executive’s employment or the termination for Cause (as
defined in Section 6(c)) of the Executive’s employment.
Except as set forth in this Section 8(d)(i)(1) or Section
8(d)(i)(2) below, the treatment of stock options, performance share
awards and all other equity awards granted to the Executive by the
Company which remain outstanding immediately prior to the date of
such Change in Control shall be determined in accordance with their
terms.
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(2)
Upon Certain
Termination of Employment. In addition to
the payments and benefits provided by Section 8(d)(i)(1) above, if
the Executive’s employment is terminated either by the
Company Without Cause (as defined in Section 6(d)) or by the
Executive for Good Reason (as defined in Section 6(e)), in either
case within a period commencing one (1) month prior to and ending
twelve (12) months following a Change in Control, then, subject to
Section 22 [Compliance with Section 409A], the Executive shall be
entitled to the following (in addition to any other payments or
benefits provided under this Agreement), provided that within sixty
(60) days following the Executive’s termination of employment
the Executive executes the Release and the period for revocation,
if any, of such Release has expired without the Release having been
revoked:
a.
Salary
.
The salary that shall be payable to the Executive under Section
8(a)(i) shall be paid for the greater of (i) the remainder of the
Term of Employment then in effect or (ii) a period of two (2) years
commencing on the date of the Executive’s termination of
employment.
b.
Bonus
.
The annual bonus that shall be payable to the Executive under this
Section 8(d)(i)(2)(b) shall be paid for the greater of (i) the
remainder of the Term of Employment then in effect or (ii) a period
of two (2) years commencing on the date of the Executive’s
termination of employment; provided, however, that the amount of
the annual bonus determined in accordance with this Section
8(d)(i)(2)(b) for the fiscal year of the Company in which such Term
of Employment or two-year period, as the case may be, ends shall be
prorated on the basis of the number of days of such Term of
Employment or two-year period occurring within such fiscal year.
The amount of each annual bonus payable pursuant to this Section
8(d)(i)(2(b) prior to any proration, shall be equal to the greater
of (A) the annual bonus earned by the Executive for the most recent
fiscal year of the Company ending prior to the date of the
Executive’s termination of employment or (B) 100% of the
Executive’s target bonus for the fiscal year of the Company
in which the Executive’s termination of employment
occurs.
c.
Health Care Coverage . The Executive shall be entitled to
the continuation of the Executive’s health care coverage
under the Company’s employee benefit plans (including
medical, dental, vision and mental coverage) which the Executive
had at the time of the termination of employment (including
coverage for the Executive’s dependents to the extent such
dependents were covered immediately prior to such termination of
employment) at the Company’s expense for the greater of (i)
the remainder of the Term of Employment then in effect or (ii) a
period of two (2) years commencing on the date of the
Executive’s termination of employment. Such health care
continuation rights will be in addition to any rights the Executive
may have under ERISA Sections 600 and thereafter and Section 4980B
of the Internal Revenue Code (“COBRA
coverage”).
d.
Estate Planning. The Executive shall be entitled to
reimbursement of the Executive’s estate planning expenses
(including attorneys’ fees) on the same basis, if any, as to
which the Executive was entitled to such reimbursements immediately
prior to such termination of employment for the greater of (i) the
remainder of the Term of Employment then in effect or (ii) a period
of two (2) years commencing on the date of termination of
employment.
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(ii)
Change in
Control Defined . A “
Change in Control ” shall be deemed to have occurred
if: (1) any person or group (within the meaning of Rule 13d-3 of
the rules and regulations promulgated under the Securities Exchange
Act of 1934, as amended) shall acquire during the twelve-month
period ending on the date of the most recent acquisition by such
person or group, in one or a series of transactions, whether
through sale of stock or merger, ownership of stock of the Company
that constitutes 35% or more of the total voting power of the stock
of the Company or any successor to the Company; (2) a merger in
which the Company is a party pursuant to which any person or such
group acquires ownership of stock of the Company that, together
with stock held by such person or group, constitutes more than 50%
of the total fair market value or total voting power of the stock
of the Company, or (3) the sale, exchange, or transfer of all or
substantially all of the Company’s assets (other than a sale,
exchange, or transfer to one or more corporations where the
stockholders of the Company before and after such sale, exchange,
or transfer, directly or indirectly, are the beneficial owners of
at least a majority of the voting stock of the corporation(s) to
which the assets were transferred).
(iii)
Excise Tax
Gross-Up . If the
Executive becomes entitled to one or more payments (with a
“payment” for this purpose including the accelerated
vesting of restricted stock, stock options or other equity awards,
or other non-cash benefits or property), whether pursuant to the
terms of this Agreement or any other plan or agreement with the
Company or any affiliated company (collectively, “ Change
in Control Payments ”), which are or become subject to
the tax (the “ Excise Tax ”) imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the “
Code ”), the Company shall pay to the Executive at the
time specified below such amount (the “ Gross-up
Payment ”) as may be necessary to place the Executive in
the same after-tax position as if no portion of the Change in
Control Payments and any amounts paid to the Executive pursuant to
Section 8 had been subject to the Excise Tax. The Gross-up Payment
shall include, without limitation, reimbursement for any penalties
and interest that may accrue in respect of such Excise Tax. For
purposes of determining the amount of the Gross-up Payment, the
Executive shall be deemed: (A) to pay federal income taxes at the
highest marginal rate of federal income taxation for the year in
which the Gross-up Payment is to be made; and (B) to pay any
applicable state and local income taxes at the highest marginal
rate of taxation for the calendar year in which the Gross-up
Payment is to be made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state
and local taxes if paid in such year. If the Excise Tax is
subsequently determined to be less than the amount taken into
account hereunder at the time the Gross-up Payment is made, the
Executive shall repay to the Company at the time that the amount
such reduction in Excise Tax is finally determined (but, if
previously paid to the taxing authorities, not prior to the time
the amount of such reduction is refunded to the Executive or
otherwise realized as a benefit by the Executive) the portion of
the Gross-up Payment that would not have been paid if such Excise
Tax had been used in initially calculating the Gross-up payment,
plus interest on the amount of such repayment at the rate provided
in Section 1274 (b)(2)(B) of the Code. In the event that the Excise
Tax is determined to exceed the amount taken into account hereunder
at the time the Gross-up Payment is made, the Company shall make an
additional Gross-up Payment in respect of such excess (plus any
interest and penalties payable with respect to such excess) at the
time that the amount of such excess is finally
determined.
12
(iv)
The Gross-up
Payment provided for above shall be paid, subject to Section 22
[Compliance with Section 409A], on the 30th day (or such earlier
date as the Excise Tax becomes due and payable to the taxing
authorities) after it has been determined that the Change in
Control Payments (or any portion thereof) are subject to the Excise
Tax; provided, however, that if the amount of such Gross-up Payment
or portion thereof cannot be finally determined on or before such
day, the Company shall pay to the Executive on such day an
estimate, as determined by counsel or auditors selected by the
Company and reasonably acceptable to the Executive, of the minimum
amount of such payments. The Company shall pay to the Executive the
remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the
amount thereof can be determined. In the event that the amount of
the estimated payments exceeds the amount subsequently determined
to have been due, the Executive shall repay such amount on the
fifth day after demand by the Company (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code). The
Company shall have the right to control all proceedings with the
Internal Revenue Service that may arise in connection with the
determination and assessment of any Excise Tax and, at its sole
option, the Company may pursue or forego any and all administrative
appeals, proceedings, hearings, and conferences with any taxing
authority in respect of such Excise Tax (including any interest or
penalties thereon); provided, however, that the Company’s
control over any such proceedings shall be limited to issues with
respect to which a Gross-up Payment would be payable hereunder, and
the Executive shall be entitled to settle or contest any other
issue raised by the Internal Revenue Service or any other taxing
authority. The Executive shall cooperate with the Company in any
proceedings relating to the determination and assessment of any
Excise Tax and shall not take any position or action that would
materially increase the amount of any Gross-up Payment
hereunder.
(e)
Timing of
Payments. Any cash payments to which the Executive is entitled
under Sections 8(a),(c) and (d) shall be payable in accordance with
the Company’s payroll schedule and shall commence as soon as
practicable upon the period for revocation of the Release having
expired (and in any event on or prior to December 31 of the year in
which Executive has a Separation from Service); provided, however,
that in the event that Executive becomes entitled to such payments
in connection with a Separation from Service that occurs on or
after November 1 of any calendar year, such payments shall commence
on the later of (i) the period for revocation of the Release having
expired or (ii) January 1 of the calendar year that immediately
follows the year in which t
