Exhibit 10.4
RYDER SYSTEM,
INC.
EXECUTIVE SEVERANCE PLAN
Effective as of January 1, 2007
Amended and Restated Effective as of January 1, 2009
PREAMBLE
Ryder System, Inc. (the
“Company”) adopted the Ryder System, Inc. Executive
Severance Plan (the “Plan”) to set forth its severance
pay policy as it applies to Eligible Employees (as defined in this
Plan) of the Company and all of its subsidiaries and affiliates
effective as of January 1, 2007 for employees elected and
promoted to or employed as an officer on or after January 1,
2007, and January 31, 2008 for employees who were already
serving as officers on or before December 31, 2006 (each shall
be considered an “Effective Date”), unless otherwise
prohibited by law. The Company hereby amends and restates the Plan
in order to ensure compliance with Section 409A of the Code
and the regulations and guidance promulgated thereunder. As used
herein, the masculine pronoun shall include the feminine, and the
singular shall include the plural, unless a contrary meaning is
clearly intended.
The Plan is intended to fall within
the definition of a top hat “employee welfare benefit
plan” under Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”). This
document is intended to serve as the Plan document and the summary
plan description of the Plan. This document supersedes and replaces
any prior plan, summary plan descriptions, agreements (whether oral
or written), summaries, policies, publications, memos or notices
regarding the Plan and any other severance, termination, or
separation benefits (including such benefits payable after a Change
of Control) for Eligible Employees.
All rights of Participants to
benefits relating to this Plan shall be governed by the Plan and
the executed agreement and general release executed by the Company
and the Participant in connection with a Participant’s
termination of employment. Any employee who participates in this
Plan shall not be entitled to any severance, separation, notice, or
termination benefits under any other severance or change of control
policy, plan, agreement or practice of (i) the Company
(including any previously executed severance, employment or change
of control severance agreements); (ii) any predecessor
agreement; or (iii) any respective subsidiary or affiliate
thereof, or pursuant to which the Company is bound or obligated to
provide such benefits. Except as set forth in this Plan, all such
other severance (whether voluntary or involuntary) or change of
control policies, plans, agreements and practices of the Company or
any of its subsidiaries or affiliates in effect for Eligible
Employees prior to the applicable Effective Date of this Plan shall
be deemed amended and superseded in their entirety by this Plan to
the extent that they would provide benefits to Participants upon
their termination of employment.
In the event that the terms of the
Plan are inconsistent with other documents or other written or
verbal communications provided by the Company or its
representatives with respect to this severance program, the terms
of the Plan shall govern. The Plan may not be amended or changed
except in accordance with the provisions set forth below.
Section 1
Definitions
Capitalized terms used in the Plan
and not elsewhere defined herein shall have the meanings set forth
in this Section:
1.1 “ Accrued Benefits
” means (i) earned but unpaid base salary accrued
through the Termination Date and any accrued but unpaid vacation
time to the extent carried to the Termination Date under Company
policy; (ii) unreimbursed expenses incurred in accordance with
applicable Company policy through the Termination Date;
(iii) unpaid amounts under the terms of any incentive plan in
which the Participant participates as of the Termination Date, if
and to the extent that the Participant is entitled under the terms
of any such plan to receive a payment as of the Termination Date;
and (iv) all other payments, benefits or perquisites to which
the Participant may be entitled through the Termination Date,
subject to and in accordance with, the terms of any applicable
compensation arrangement or benefit, or any equity or perquisite
arrangement, plan, program or grant.
1.2 “ Base Salary
” means the Participant’s annual base salary in effect
on the Termination Date, or, on or before the second anniversary of
a Change of Control, and if higher, the highest annual base salary
in effect during the six (6) month period immediately
preceding the Change of Control. Base Salary for this purpose shall
not include or reflect bonuses, overtime pay, compensatory
time-off, commissions, incentive or deferred compensation, employer
contributions towards employee benefits, cost of living adjustment,
or any other additional compensation, and shall not be reduced by
any contributions made on the Participant’s behalf to any
plan of the Company under Section 125, 132, 401(k), or any
other analogous section of the Code.
1.3 “ Benefits Continuation
Period ” means the period for each applicable benefit
beginning on the Termination Date and ending on the earliest of
(i) the day on which the Participant is eligible to receive
coverage for such benefit from a new employer; (ii) in the
case of such benefits which require employee contributions, the
date the Participant fails to timely make such required employee
contributions pursuant to the Company’s or plan’s
instructions (after giving effect to applicable grace periods) or
otherwise cancels his coverage in accordance with the terms of the
relevant plan(s); or (iii) the last day of the
Participant’s Severance Period.
1.4 “ Cause ”
means: (i) fraud, misappropriation, or embezzlement by the
Participant against the Company or any of its subsidiaries and/or
affiliates, (ii) conviction of or plea of guilty or nolo
contendere to a felony, (iii) conviction of or plea of guilty
or nolo contendere to a misdemeanor involving moral turpitude or
dishonesty, (iv) willful failure to report to work for more
than thirty (30) continuous days not attributable to eligible
vacation or supported by a licensed physician’s statement,
(v) a material breach by the Participant of Section 9 of
this Plan (Restrictive Covenants), (vi) willful failure to
perform the Participant’s key job duties or responsibilities,
or (vii) any other activity which would constitute grounds for
termination for cause by the Company or its subsidiaries or
affiliates, including but not limited to material violations of the
Company’s Principles of Business Conduct or any analogous
code of ethics or similar policy. Notwithstanding the foregoing, if
a Change of Control has occurred within one year preceding a Cause
determination, “Cause” shall not include subsections
(vi) or (vii) of the preceding sentence, provided that
subsections (vi) and (vii) shall continue to apply to any
terminations that are deemed to have retroactively occurred
pursuant to Section 5.3(b). For the purposes of this
Section 1.4, any good faith interpretation by the Company of
the foregoing definition of “Cause” shall be conclusive
on the Participant. For purposes of the Plan “Cause”
shall be determined by such Participant’s direct supervisor
and the Chief Human Resources Officer (“CHRO”). In the
event that a Participant is a direct report to the CHRO, then the
decision shall be made by the CHRO and the Chief Financial
Officer.
1.5 “ Change of Control
” Except as provided below, for the purpose of this Plan, a
“Change of Control” shall be deemed to have occurred
if:
(a) any
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “1934 Act”)) (a
“Person”) becomes the beneficial owner, directly or
indirectly, of thirty percent (30%) or more of the combined voting
power of the Company’s outstanding voting securities
ordinarily having the right to vote for the election of directors
of the Company; provided, however, that for purposes of this
subparagraph (a), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition by any employee benefit
plan or plans (or related trust) of the Company and its
subsidiaries and affiliates or (ii) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subparagraph (c) of this
Section 1.5; or
(b) the
individuals who, as of the January 1, 2007 ,
constituted the Board of Directors of the Company (the
“Board” generally and as of January 1, 2007 the
“Incumbent Board”) cease for any reason to constitute
at least a majority of the Board, provided that any person becoming
a director subsequent to January 1, 2007 whose election, or
nomination for election, was approved by a vote of the persons
comprising at least a majority of the Incumbent Board (other than
an election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election
contest, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the 1934 Act (as in effect on
January 23, 2000)), shall be, for purposes of this Plan,
considered as though such person were a member of the Incumbent
Board; or
(c) there is
a reorganization, merger or consolidation of the Company (a
“Business Combination”), in each case, unless,
following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Company’s outstanding common stock and
outstanding voting securities ordinarily having the right to vote
for the election of directors of the Company immediately prior to
such Business Combination beneficially own, directly or indirectly,
more than fifty percent (50%) of, respectively, the then
outstanding shares of common stock and the combined voting power of
the then outstanding voting securities ordinarily having the right
to vote for the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
Company’s outstanding common stock and outstanding voting
securities ordinarily having the right to vote for the election of
directors of the Company, as the case may be, (ii) no Person
(excluding any corporation resulting from such Business Combination
or any employee benefit plan or plans (or related trust) of the
Company or such corporation resulting from such Business
Combination and their subsidiaries and affiliates) beneficially
owns, directly or indirectly, 30% or more of the combined voting
power of the then outstanding voting securities of the corporation
resulting from such Business Combination and (iii) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(d) there is
a liquidation or dissolution of the Company approved by the
shareholders; or
(e) there is a sale of all or
substantially all of the assets of the Company.
Notwithstanding anything in this
Section 1.5 to the contrary, for purposes of
Sections 5.3(a), a Change of Control shall only be deemed to
occur if such transactions or events would give rise to a
“change in ownership or effective control” or a change
in the “ownership of a substantial portion of the
assets” under Section 409A of the Code, and the rulings
and regulations issued thereunder.
1.6 “ Change of Control
Termination ” means (i) an Involuntary Termination
or (ii) a termination of the Participant’s employment by
the Participant for Good Reason, either of which occurs within
twelve (12) months after a Change of Control.
1.7 “ Code ”
means the Internal Revenue Code of 1986, as amended, supplemented
or substituted from time to time.
1.8 “ Committee ”
means the Compensation Committee of the Company’s Board of
Directors.
1.9 “ Company Entity
” has the meaning set forth in Section 13.7(e).
1.10 “ Disability
” means (i) the Participant is unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than twelve (12) months; (ii) the Participant
is, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than twelve
(12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and
health plan of the Company; or (iii) a determination by the Social
Security Administration that a Participant is totally disabled.
1.11 “ Eligible
Employees ” means (i) all active officers of the
Company employed or residing in the United States in a management
level 14 or above (or other classification designating officer
status, as those classifications may change from time to time), and
(ii) who have not entered into any agreements or arrangements
providing severance or change of control benefits with the
Company.
1.12 “ Equity Compensation
Opportunities ” means the Participant’s ability to
obtain equity in the Company (or a comparable cash-based incentive
program) through a compensatory arrangement. Equity Compensation
Opportunities are measured using the valuation method applied by
the Company for financial accounting purposes and the Board may
take into account in determining that no reduction has occurred any
exercises, cashing out, or other liquidity in favor of the
Participant that is either triggered by the Participant or
occurring in connection with a Change of Control. Changes in the
underlying value of the stock shall not be treated as a reduction
in the Equity Compensation Opportunities, and the Company may take
into account in replacing the value of pre-Change of Control equity
compensation with post-Change of Control equity compensation (or a
comparable cash-based incentive program) that the Participant may
have received value for his equity compensation in the Change of
Control.
1.13 “ ERISA ”
means the Employee Retirement Income Security Act of 1974, as
amended, supplemented or substituted from time to time.
1.14 “ Good Reason
” only applies within one (1) year following a Change of
Control, except as otherwise provided in Section 5.3(c), and
only occurs when, without the Participant’s consent, the
Company: (i) requires the Participant to be based or to
perform services at any site or location more than fifty
(50) miles from the site or location at which the Participant
is based at the time of the Change of Control, except for travel
reasonably required in the performance of the Participant’s
responsibilities (which does not materially exceed the level of
travel required of the Participant in the six (6) month period
immediately preceding the Change of Control), or
(ii) materially reduces the aggregate value of the
compensation (which includes the Participant’s base salary,
target bonus opportunity under the Company’s annual bonus
plan or program, Equity Compensation Opportunities and cash
perquisites), payable to the Participant, or (iii) materially
and adversely changes the Participant’s duties and
responsibilities. For the avoidance of doubt, a change in reporting
relationship or title shall not constitute “Good
Reason.” A Participant’s termination of employment
shall only constitute a termination for Good Reason if the
Participant terminates employment on or prior to the first
anniversary of the date on which the circumstances providing a
basis for such termination initially occurred. In addition, the
Participant’s continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
surrounding Good Reason until ninety (90) days have elapsed
since the occurrence of the circumstance he would assert
constitutes Good Reason and the Participant has not provided notice
in accordance with Section 1.16 prior to the end of such
ninety (90) day period.
1.15 “ Involuntary
Termination ” means the termination of a
Participant’s employment by the Company for any reason other
than death, Disability or Cause; provided, however, that an
Involuntary Termination of a Participant’s employment shall
not occur if:
(a) the
termination of the Participant’s employment is due to the
transfer of the Participant’s employment between the Company
and a Company Entity, or among the Company and one or more Company
Entities;
(b) the
termination results from the sale or transfer of all or any portion
of the operations of the Company or any of its subsidiaries and
affiliates (the “Disposed Business”) (by means of a
stock or asset disposition, or other similar transaction) which
sale or transfer does not constitute a Change of Control, and
either (i) the Participant’s employment is transferred
to the purchaser or transferee of the Disposed Business or (ii) the
Participant terminates his employment with the Company or any of
its subsidiaries or affiliates notwithstanding that the Participant
received an offer of employment from either the purchaser or
transferee of the Disposed Business or the Company or any of its
subsidiaries and affiliates, as determined by the Company in its
sole discretion; or
(c) the
termination follows a Change of Control and either (i) the
Participant’s employment is transferred to the purchaser or
transferee of the Disposed Business and the obligations of this
Plan are assumed by the purchaser or transferee or (ii) the
Participant terminates his employment with the Company or any of
its subsidiaries or affiliates or does not accept an offer of
employment from a purchaser or transferee notwithstanding that the
Participant received an offer of employment from either the
purchaser or transferee of the Disposed Business or the Company or
any of its subsidiaries and affiliates which offer included a
continuation of the obligations of this Plan, as determined by the
Company in its sole discretion.
In no event shall an “Involuntary Termination” occur
if the Participant terminates his employment with the Company or
any of its subsidiaries or affiliates for any reason. In the event
of the occurrence of any of the events set forth in subsection
(b) and (c) above, the Company’s obligations under
this Plan shall terminate immediately and the Participant shall not
be entitled to any amounts or benefits hereunder but shall still be
required to comply with Section 9 hereof. This Plan shall,
however, continue in effect if the Participant’s employment
is transferred between or among the Company and Company Entities,
as contemplated in subsection (a) above.
1.16 “ Notice of
Termination ” means written notice (i) specifying
the effective date of the Participant’s termination (which
shall not be less than thirty (30) days after the date of such
notice in the case of a termination on account of Disability or the
Participant’s voluntary termination other than for Good
Reason); (ii) solely with respect to the Participant
terminating for Good Reason, citing the specific provisions of this
Plan and the facts and circumstances, in reasonable detail,
providing a basis for such termination, provided that if the basis
for such Good Reason is capable of being cured by the Company, the
Participant will provide the Company with an opportunity to cure
the Good Reason within thirty (30) calendar days after receipt
of such notice, and (iii) solely with respect to the Company
terminating the Participant’s employment on account of
Disability, its intent to terminate his employment on account of
Disability.
1.17 “ Participant
” means an Eligible Employee who has satisfied the conditions
for participation set forth in Section 2.
1.18 “ Plan ”
means this Ryder System, Inc. Executive Severance Plan.
1.19 “ Plan
Administrator ” shall mean the Company’s Chief
Human Resources Officer or his designate.
1.20 “ Release ”
means a severance agreement and general release in such form as the
Company, in its sole discretion, determines appropriate that is
executed by the Participant and the Company in connection with the
termination of the Participant’s employment with the Company
or any of its subsidiaries and affiliates. If the Participant is
subject to the Older Workers Benefit Protection Act
(“OWBPA”), the Release shall be revocable until the end
of the seventh (7 th ) calendar day after Participant
executes the Release
1.21 “ Release Effective
Date ” means, if the Participant is covered by the OWBPA
on his Termination Date, the later of: (i) the eighth (8th)
calendar day after the execution of the Release, provided that the
Participant has not revoked the Release prior to such date, or
(ii) the Termination Date. If the Participant is not covered
by the OWBPA on his Termination Date, the Release Effective Date
means the later of: (i) the date on which the Release is
executed by the Participant, or (ii) the Termination Date.
1.22 “ Severance Period
” means: (i) one (1) year following the Termination
Date if not in connection with a Change of Control Termination, or
(ii) eighteen (18) months following the Termination Date
if in connection with a Change of Control Termination.
1.23 “ Specified
Employee ” means a Participant who is deemed to be a
“specified employee” in accordance with the policies
and procedures adopted by the Company and shall generally include
any Participant who is an officer of the Company.
1.24 “ Target Bonus
” means the Participant’s stated target annual
incentive award opportunity which the Participant is eligible to
receive under the Company’s annual incentive compensation
plan or awards for the year in which the Termination Date
occurs.
1.25 “ Termination Date
” means the effective date of the termination of the
Participant’s employment with the Company.
1.26 “ Trustee ”
has the meaning set forth in Section 8.
Section 2
Participation
An Eligible Employee shall
participate in the Plan after the completion of twelve (12)
consecutive months of continuous employment with the Company
provided, however, that any:
(a) employee of the Company who is not an Eligible Employee as
of the Effective Date of the Plan shall become a Participant only
if, upon becoming an Eligible Employee, he executes an
acknowledgement form (the “Form”) agreeing to abide by
the terms of this Plan within sixty (60) days after being
presented with such Form by the Company; and
(b) Eligible Employee who as of the Effective Date of the Plan
is subject to an agreement with the Company providing for
severance, separation, notice or termination benefits, whether oral
or written, (including such benefits payable after a Change of
Control) shall become a Participant only if he executes the Form
within sixty (60) days after being presented with such Form by
the Company.
Section 3
Notice of Termination
Any termination of employment shall
be communicated by a Notice of Termination to the other party. No
notice period is required other than as required in
Section 1.16.
Section 4
Conditions and Eligibility for Severance Benefits
4.1 Conditions for
Eligibility . Subject to the conditions and limitations of this
Section 4 and elsewhere in the Plan, a Participant shall be
entitled to the severance benefits described herein only upon
satisfaction of all the following conditions (and all other
applicable conditions contained herein):
(a) he
suffers an Involuntary Termination, a Change of Control
Termination, or a termination pursuant to Section 5.3(c)
herein;
(b) he
timely executes without modification and in its entirety a Release
within fifty (50) days of the Termination Date, and such
Release becomes effective so that the Participant no longer has any
right to revoke such Release within sixty (60) days of the
Termination Date;
(c) if
requested by the Company or any subsidiary or affiliate, he
delivers a resignation letter, acceptable to the Company, from all
offices, directorships and fiduciary positions in which the
Participant was serving;
(d) he
returns to the Company any property of the Company or its
subsidiaries or affiliates which has come into his possession or
control; and
(e) he
remains actively at work through the date of termination designated
in the Notice of Termination, unless the Company agrees in writing
to release the Participant from employment earlier than such date
of termination, or in the case of a resignation as of a future
date, the Company chooses unilaterally to shorten the period before
the resignation’s effective date.
4.2 Exclusions . Each
Participant shall cease to be entitled to severance benefits, upon
the earliest to occur of the following:
(a) the end
of the Severance Period;
(b) his
breach of any provision of the Release, the Plan or any other
Company agreement executed by the Participant including, but not
limited to, the Form referenced in Section 2 or the refusal to
execute the Form;
(c) the
revocation, invalidity, unenforceability, or untimely execution of
the Release;
(d) his
reemployment by the Company, or any of its subsidiaries or
affiliates;
(e) with
respect to the continuation of benefits described in
Section 5.1(d), 5.3(c)(iii) or 6.1(d), the end of the Benefits
Continuation Period; and/or
(f) termination pursuant to the last sentence in
Sections 5.1(d), 5.3(c)(iii) or 6.1(d).
4.3 Early Termination of
Payments .
(a) If a
Participant dies prior to payment of all severance benefits to
which he is entitled, all Company obligations under the Plan shall
cease except that the Accrued Benefits (if unpaid at the time of
death) shall be paid to the Participant’s surviving spouse
or, if no spouse survives, to the Participant’s estate.
(b) If the
Participant is receiving severance benefits under Sections 5
or 6, and (A) if the Participant is reemployed by the Company (or
any subsidiary, affiliate or successor) or breaches the
Plan’s terms or the Release, or (B) if the Company (or
any subsidiary, affiliate or successor) discovers information that
would have permitted the Company to terminate the Participant for
Cause or if the Company or any subsidiary, affiliate or successor
discovers a breach of Section 9, payment of severance benefits
shall immediately cease, and the Participant shall no longer be
entitled to any severance benefits with respect to such
termination. If severance benefits cease because of re-employment
and the Company has paid severance in a lump sum, the Company (or
any subsidiary or successor) shall have the right to require that
the Participant repay to the applicable entity the value of the
severance benefits that would not yet have been paid before
re-employment if he had been receiving the severance in
semi-monthly installments, and the Participant shall no longer be
entitled to any severance benefits with respect to such
termination. If the severance ceases because of a Cause
determination or a breach of Section 9, the Company (or any
subsidiary or successor) shall have the right to require that the
Participant repay to the applicable entity the full value of any
previously received severance. The remedies described in this
paragraph are in addition to any other remedies that may be
available to the Company in the event of the occurrence of any of
the circumstances described in this paragraph.
Section 5
Severance Benefits Other than as a Result of a Change of
Control
5.1 Benefits . If a
Participant experiences an Involuntary Termination other than as a
result of a Change of Control and complies with all of the other
terms and conditions of the Plan, he shall be eligible to
receive:
(a) the
Accrued Benefits, payable in a lump sum as soon as administratively
feasible following the Release Effective Date, or such other date
as their terms require;
(b) continuation of the Participant’s Base Salary for
the Severance Period payable in installments in accordance with the
Company’s standard payroll practices, but no less frequently
than monthly, beginning within sixty (60) days following the
Termination Date (with the first payment to include amounts accrued
between the Termination Date and the first payment date); provided
that, if the sixtieth (60th) day following the Termination Date
falls in the calendar year following the calendar year in which the
Termination Date occurs, payments will not commence prior to the
first day of the calendar year following the calendar year in which
the Termination Date occurs; provided further that, in the event
the Participant is a Specified Employee on the Termination Date,
payment shall be made in accordance with the following
provisions:
(i) If the
aggregate value of the payments due to the Participant pursuant to
this Section 5.1(b) during the six (6) month period
following his Termination Date, does not exceed two (2) times
the lesser of: (x) the Specified Employee’s base salary
for the year prior to the year in which the Termination Date
occurs; or (y) the maximum amount that may be taken into account
under a qualified retirement plan pursuant to
Section 401(a)(17) of the Code for the year in which the
Termination Date occurs (such amount, the “Separation Pay
Limit”), the Participant shall receive continuation of his
Base Salary for the Severance Period payable in installments in
accordance with the Company’s standard payroll practices, but
no less frequently than monthly, as set forth above.
(ii) If the
aggregate value of the payments due to the Participant pursuant to
this Section 5.1(b) during the six (6) month period
following his Termination Date exceeds the Separation Pay Limit,
the Participant shall not receive any payments of continued Base
Salary in excess of the Separation Pay Limit during such six (6)
month period. Any amounts in excess of the Separation Pay Limit
which would have otherwise been paid during the six (6) month
period following the Participant’s Termination Date shall be
paid in a lump sum on the first day following the six-month
anniversary of the Participant’s Termination Date. Beginning
with the first payroll cycle occurring on or after the first day
following the six-month anniversary of the Participant’s
Termination Date and continuing until the end of the Severance
Period, the Participant shall receive continuation payments of the
Participant’s Base Salary in installments in accordance with
the Company’s standard payroll practices, but no less
frequently than monthly.
(iii) For
purposes of Section 409A of the Code, each installment payment
of Base Salary made pursuant to this Section 5.1(b) shall be
treated as a separate payment of compensation.
(c) a lump
sum payment equal to the pro-rata Target Bonus for the year in
which the Termination Date occurs which shall be paid (i) when
such annual bonuses are paid to non-terminated employees (or, if
later, upon the satisfaction of all conditions for the payment of
benefits hereunder, but in no event shall such payment occur later
than March 15 of the calendar year following the year in which
the Termination Date occurs) and (ii) based on the actual financial
performance of the Company for the year in which the Termination
Date occurs;
(d) continuation of medical, prescription, dental, vision and
health care reimbursement benefits for the Benefits Continuation
Period for the Participant and his family through the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, supplemented
or substituted from time to time (“COBRA”), in
accordance with the applicable plans, programs or policies of the
Company, and on such terms applicable to comparably situated active
employees during such period (which shall offset the
Company’s COBRA obligation); provided that the Participant
shall continue to pay to the Company any applicable contribution
amounts that the Participant would otherwise have to pay for such
benefits if the Participant was still employed by the Company;
provided further that if the Participant continues to receive
benefits pursuant to this Section 5.1(d) during a period of
time during which, in the absence of the benefits provided in this
Section 5.1(d), the Participant would not otherwise be
entitled to COBRA continuation coverage under Section 4980B of
the Code, the Participant shall receive reimbursement for all
medical expenses which are covered by the applicable plans,
programs, or policies on the date no later than December 31 of
the calendar year immediately following the calendar year in which
the applicable expenses have been incurred. If the Participant
fails to accept available coverage from another employer or fails
to notify the Company (or, following a Change of Control, the
Company or the Trustee) within thirty (30) days of the
Participant’s eligibility to receive coverage under another
employer’s plan, the Participant’s coverage under this
Section 5.1(d) shall immediately terminate and the Participant
shall cease to be entitled to any such benefits under this Plan and
shall be required within three (3) months after such failure
to reimburse the Company for the greater of any premiums or any
benefits paid after such failure, and the Participant agrees that
the Company may offset against such reimbursement or deduct such
reimbursement from any payments due to the Participant by the
Company, in full or partial payment of such reimbursement; provided
that no such offset shall be made in violation of Section 409A
of the Code;
(e) if the
Participant is covered by any Company-sponsored supplemental
long-term disability insurance program as of the Termination Date,
the Company shall continue to pay for the Participant’s
coverage until the end of the Severance Period. At the end of the
Severance Period, the Participant shall be entitled to keep this
policy if he continues to pay the annual premiums;
(f) if the
Participant is covered by any Company-sponsored executive life
insurance program as of the Termination Date, the Company shall
continue to pay for the Participant’s coverage until the end
of the Severance Period. At the end of the Severance Period, the
Participant will have thirty-one (31) days from the last day
of the Severance Period to convert his life insurance coverage to
an individual policy;
(g) professional outplacement services as determined in the
Company’s sole discretion until the earliest of (i) six
(6) months after the end of the Severance Period,
(ii) the date on which the Participant obtains another
full-time job, (iii) the date on which the Participant becomes
self-employed, and (iv) the date on which the Participant has
received all services or benefits due under the applicable
Company-sponsored outplacement program. The Company will not pay
the Participant cash in lieu of professional outplacement services;
and
(h) any
benefits or rights to which the Participant is entitled under any
of the Company’s stock or equity plans in accordance with the
terms and conditions of any such plans.
5.2 Payment of Severance
Benefits . Notwithstanding anything herein to the contrary, no
payments hereunder (other than Accrued Benefits payable pursuant to
their terms) shall be made to a Participant prior to the Release
Effective Date. In the event that (a) a Participant does not
execute a release within fifty (50) days following the
Termination Date or (b) the Release Effective Date does not
occur within sixty (60) days following the Termination Date, a
Participant shall not be entitled to any payments or benefits
hereunder (other than the Accrued Benefits payable pursuant to
their terms); provided that, if the Participant becomes entitled to
payments and benefits pursuant to Section 5.3(c), the
Participant shall not be entitled to any payments or benefits
hereunder in the event that (a) the Participant does not
execute a release within fifty (50) days following the date of
the Change of Control or (b) the Release Effective Date does
not occur within sixty (60) days following the date of the
Change of Control.
5.3 Terminations Prior to a
Change of Control .
(a) If a
Change of Control occurs and the Participant is then receiving, or
is entitled to receive, payments and benefits pursuant
Section 5.1 of the Plan on account of his prior termination of
employment, the Company shall pay to the Participant, in a lump
sum, within seven (7) calendar days after the Change of
Control, an amount (in lieu of future payments) equal to the
present value of all future cash payments due under
Section 5.1(b) of the Plan using the prime commercial lending
rate published by the Trustee at the time the Change of Control
occurs, but the Company and the Participant shall continue to be
liable to each other for all other obligations under this Plan. In
the event that the Participant was a Specified Employee on his
Termination Date, if the sum of the payments which the Participant
previously received in accordance with Section 5.1(b) and the
payment set forth in this Section 5.3(a) exceeds the
Separation Pay Limit, any amounts in excess of the Separation Pay
Limit shall be paid on the later of (i) the first day
following the six-month anniversary of the Termination Date and
(ii) within seven (7) calendar days after the Change of
Control. For the avoidance of doubt, in the event that the
provisions of this Section 5.3(a) become effective, they shall
supersede the provisions of Section 5.1(b).
(b) If a
Change of Control occurs and (i) the Participant experienced
an Involuntary Termination within twelve (12) months prior to
the date on which the Change of Control occurs and (ii) it is
reasonably demonstrated by the Participant that such Involuntary
Termination either (A) was at the request of a third party who
has taken steps reasonably calculated to effect a Change of Control
or (B) otherwise arose in connection with or in anticipation
of a Change of Control, then, in addition to the payments and
benefits set forth in Section 5.1, the Participant shall be
entitled to the following: (x) a lump sum payment equal to 50%
of the Participant’s Base Salary payable as soon as
practicable but no later than sixty (60) days following the
Change of Control; provided that if the Participant was a Specified
Employee on his Termination Date, such payment shall be paid on the
later of (1) as soon as practicable but no later than sixty
(60) days following the Change of Control and (2) the
first day following the six-month anniversary of the
Participant’s Termination Date; (y) the difference
between the Target Bonus and the pro-rata Target Bonus paid to the
Participant pursuant to Section 5.1(c), which shall be paid as
soon as practicable following the Change of Control but no later
than March 15 of the calendar year following the calendar year
in which the Change of Control occurs; and (z) for purposes of
determining the Severance Period for benefits provided under
Sections 5.1(d), (e), and (f), the Participant’s
Severance Period shall be
