The employment agreement further provides that upon a change in control, all outstanding performance-based awards will vest based on actual performance as of the date of the change in control, prorated based on the period of time that has elapsed during the performance period. In addition, if a Qualifying Termination occurs on or within one year after a change in control, then Mr. Smith will be entitled to receive: (i) a lump sum payment equal to two times the sum of his base salary and target bonus, (ii) the prorated bonus, (iii) a lump sum payment equal to the cost of 18 months of health, prescription drug, dental and vision coverage premiums less the portion of such premiums payable by active employees of the Company and (iv) the prior year bonus. In addition, Mr. Smith will be entitled to receive full vesting of any outstanding equity awards, provided that any outstanding performance-based awards granted on or after the change in control will vest at the greater of target and actual achievement as of the termination date.
The employment agreement also provides that Mr. Smith will be subject to certainnon-competition andnon-solicitation restrictions for 12 months following the termination of his employment for any reason.
Appointment of Bhairav Patel as Executive Vice President of Finance and Accounting
In connection with the previously announced internalization of the Company’s management function, the Special Committee has appointed Bhairav Patel as Executive Vice President of Finance and Accounting, effective as of January 1, 2019. In this role, Mr. Patel will continue to serve as the Company’s principal accounting officer.
All required information relating to Mr. Patel’s biography, work experience, family relationships and transactions with related persons was included in the Company’s definitive proxy statement filed with the Securities and Exchange Commission on April 30, 2018 and such information is incorporated herein by reference.
On December 18, 2018, Mr. Patel entered into an employment agreement with the Company, effective as of January 1, 2019. The employment agreement is subject to an initial three year term followed by successive one year renewal terms. The employment agreement provides that Mr. Patel will receive an annual base salary of $325,000 and a minimum cash bonus equal to $325,000 for 2019. Mr. Patel will also receive a cash transition bonus equal to $50,000 on January 1, 2020, subject to his continued employment on such date. Beginning in 2020, Mr. Patel will be eligible to participate in a discretionary annual cash bonus plan with a target bonus amount equal to 100% of his base salary, with potential payouts ranging from 50% to 150% of his base salary (provided that the threshold performance criteria established for such year have been achieved).
Pursuant to the employment agreement, Mr. Patel will receive a transition award under the Plan with a $500,000 grant date value, 33.33% of which will be in the form of stock options and 66.67% in the form of restricted stock units. The transition awards will vest ratably over the three year period following the grant date, subject to Mr. Patel’s continued employment through the applicable vesting dates. Beginning in 2019, Mr. Patel will also be eligible to receive annual equity awards under the Plan with a target value equal to 100% of his base salary, 75% of which will be in the form of performance-based restricted stock or restricted stock units and 25% in the form of time-based restricted stock. The performance-based awards will vest based on the achievement of performance goals over a three year performance period, with potential payouts ranging from 50% to 150% of target (provided that the threshold performance criteria have been achieved), and the time-based awards will vest ratably over a three year period, in each case, subject to continued employment through the applicable vesting dates.
The employment agreement provides that if a Qualifying Termination occurs other than on or within one year following a change in control and Mr. Patel executes a release of claims in favor of the Company, then Mr. Patel will be entitled to receive the following payments and benefits: (i) a lump sum payment equal to the sum of his base salary and target bonus (and if such termination occurs prior to January 1, 2020, the cash transition bonus), (ii) the prorated bonus, (iii) a lump sum payment equal to the cost of 12 months of health, prescription drug, dental and vision coverage premiums less the portion of such premiums payable by active employees of the Company and (iv) to the extent no yet paid, the cash transition bonus. In addition, Mr. Patel will be entitled to receive accelerated vesting of his outstanding equity awards as follows: (i) full vesting of any transition awards, (ii) with respect to any annual time-based awards which vest in annual or shorter installments, vesting in the portion of the award that would have otherwise vested during the year following the date of termination, (iii) with respect to any other annual time-based awards, vesting of a prorated portion of the award based on the period of time elapsed during the applicable vesting period and (iv) with respect to any annual performance-based awards, vesting based on actual achievement of applicable performance criteria as of the date of termination, prorated based on the period of time that has elapsed during the applicable performance period. If such termination occurs on or after the end of a given year but before the date that annual bonuses in respect of such year are paid, then Mr. Patel will receive the prior year bonus.
The employment agreement further provides that upon a change in control, all outstanding performance-based awards will vest based on actual performance as of the date of the change in control, prorated based on the period of time that has elapsed during the performance period. In addition, if a Qualifying Termination occurs on or within one year after a change in control, then Mr. Patel will be entitled to receive: (i) a lump sum payment equal to two times the sum of his base salary and target
3
