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(ii)
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pro-rata annual cash incentive for the fiscal year in which termination occurs based on actual performance through the end of the fiscal year,
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(iii)
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monthly severance payments (“Severance Payments”) equal to 1/12th of annual base salary at the rate in effect immediately prior to termination and 1/12th target annual cash incentive for 24 months following termination,
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(iv)
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Medical Continuation (as defined in the Agreement) through reimbursement of premiums for 24 months following termination, and
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(v)
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if “retirement” treatment is not applicable, continued vesting of his outstanding options, restricted stock awards and other long-term equity awards for a period of 24 months following termination.
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If upon a Change in Control (as defined in the Agreement), or within 24 months following a Change in Control, the Company terminates Mr. Saltiel’s employment other than for Cause, death or Disability, or Mr. Saltiel leaves the Company for Good Reason, the Agreement provides that Mr. Saltiel is eligible to receive the same benefits that the immediately preceding paragraph describes, except that the Severance Payment would be paid in a lump sum rather than in installments.
Additionally, pursuant to the Company’s 2011 Omnibus Incentive Plan, as amended (the “Plan”), and applicable award agreements, all options and RSUs outstanding on the date of a Change in Control (as defined in the Plan) would accelerate and vest. For PSUs, the end of each performance period is changed from the last day of the three-year performance period to the date that the Change in control has occurred, and the performance measures are then applied to determine the payout under the awards.
These payments and the provision of benefits are generally subject to the execution of a release and compliance with restrictive covenants prohibiting competition, solicitation of employees and interference with business relationships during employment and thereafter during the applicable restriction period. Certain payments, including the Severance Payments, may be delayed for six months to avoid the applicability of the excise tax pursuant to Internal Revenue Code Section 409A.
If Mr. Saltiel remains employed by the Company on or after the fifth anniversary of the Effective Date, and if the Company terminates his employment other than for Cause, death or Disability prior to that date, or if Mr. Saltiel leaves for Good Reason prior to that date, Mr. Saltiel will be deemed to have satisfied any requirement that his age plus years of service equal at least 80 for the purposes of equity awards that the Company granted pursuant to the Plan prior to his departure, and he will be considered “retired” when he leaves the Company’s employ; and, after he leaves the Company, Mr. Saltiel will continue to vest in any equity awards that the Company granted to him pursuant to the retirement provisions of the applicable award agreements. To receive the retirement benefit of continued vesting, Mr. Saltiel must meet the Company’s Equity Ownership Guidelines measured as of the fifth anniversary of the Effective Date (if his employment is not terminated prior to that date) and continue to adhere to the restrictive covenants described above.
In addition, Mr. Saltiel is expected to enter into the Company’s standard indemnification agreement with directors, officers and certain employees of the Company (the “Indemnification Agreement”), whereby the Company agrees to indemnify, defend and hold harmless its executive officers from and against losses and expenses incurred as a result of their services as an officer of the Company, subject to the terms and conditions provided in the agreement. The foregoing description of the Agreement and the Indemnification Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the relevant agreement, a copy of each of which is attached to, and is incorporated by reference into, this Current Report on Form 8-K.
Lane Separation
In connection with Mr. Saltiel’s appointment as CEO, the Company separated Mr. Lane’s appointment prior to his planned retirement date without Cause (as defined in Mr. Lane’s employment agreement). Mr. Lane is eligible to receive certain severance and other payments pursuant to his employment agreement, as amended, with the Company.