Document:

Exhibit 10.5

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made by and among Nexeo Solutions, LLC, a Delaware limited liability company, and any successor thereto (the “Employer”), Nexeo Solutions, Inc., a Delaware corporation (the “Company”), and David A. Bradley (“Executive”), to be effective June 9, 2016 (the “Effective Date”), in connection with the closing of the merger (the “Merger”) pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of March 21, 2016, by and among WL Ross Holding Corp., a Delaware corporation, TPG Accolade, LP, a Delaware limited partnership, Nexeo Solutions Holdings, LLC, a Delaware limited liability company (“Holdings”), and certain related affiliates of the foregoing Merger Agreement parties, whereby Holdings emerged as the surviving entity and a subsidiary of the Company.

 

W I T N E S S E T H:

 

A.                                    Upon the closing of the Merger, the Company became the ultimate parent of the Employer;

 

B.                                    Executive is currently employed by the Employer pursuant to that certain Employment Agreement, dated as of March 29, 2011 between Executive and the Employer (the “Prior Employment Agreement”);

 

C.                                    The Employer currently employs Executive as the President and Chief Executive Officer of the Employer, and Executive currently serves as the President and Chief Executive Officer of the Company and certain of its other direct and indirect subsidiaries and as a member of the Company’s Board of Directors;

 

D.                                    The Company desires to enter into this Agreement to guarantee certain of the obligations of the Employer under this Agreement;

 

E.                                    The Employer desires to enter into this Agreement, which will supersede in its entirety the Prior Employment Agreement, and thereby continue to employ Executive on the terms and conditions, and for the consideration, hereinafter set forth, and Executive desires to continue to be employed by the Employer, and to commit himself to serve or continue to serve the Employer, the Company, Holdings, and their respective affiliates on such terms and conditions and for such consideration.

 

NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and obligations contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Employer and Executive agree as follows:

 

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ARTICLE I
 DEFINITIONS

 

In addition to the terms defined in the body of this Agreement, for purposes of this Agreement, the following capitalized words shall have the meanings indicated below:

 

1.1                               “Board” shall mean the Board of Directors of the Company.

 

1.2                               “Cause” shall mean (a) a breach by Executive of Executive’s obligations under Article II (other than as a result of physical or mental incapacity), (b) commission by Executive of an act of fraud, embezzlement, misappropriation, willful misconduct or breach of fiduciary duty against the Employer or any of its affiliates, (c) a material breach by Executive of Articles VI or VII of this Agreement, (d) Executive’s conviction, plea of no contest or nolo contendere, deferred adjudication or unadjudicated probation for any felony or any crime involving moral turpitude, (e) the failure of Executive to carry out, or comply with, in any material respect, any lawful and material directive of the Board, or (f) Executive’s unlawful use (including being under the influence) or possession of illegal drugs. For purposes of the previous sentence, no act or failure to act on Executive’s part shall be deemed “willful” unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executive’s action or omission was in the best interest of the Employer.  Any act, or failure to act, pursuant to any directive of the Board, as reflected in a resolution duly adopted by the Board, or based upon the advice of counsel for the Employer shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Employer.  No termination of the Executive’s employment shall be deemed to be for Cause unless and until (i) if the reason for termination is due to conduct described in items (a) or (e) of this definition and if Executive is reasonably able to fully remedy, cure, or rectify such reason for termination, the Employer provides the Executive 30 days following the date of the Notice of Termination within which period to fully remedy, cure, or rectify the situation giving rise to the Employer’s allegations of Cause, and the Executive fails to remedy, cure, or rectify such situation within such period, and (ii) there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of at least three fourths of the entire membership of the Board (excluding the Executive) at a meeting of the Board at which at least a quorum is present (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel for the Executive, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in this definition, and specifying the particulars thereof in detail.  Furthermore, no termination of the Executive’s employment shall be deemed to be for Cause during any period beginning on the date of the Executive’s delivery to the Employer of a notice of intent to terminate for Good Reason and ending on the earlier of the Executive’s termination for Good Reason or the date that is 90 days after the notice of intent to terminate for Good Reason.

 

1.3                               “Change in Control” shall mean the occurrence of any of the following events:

 

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(a)                                 A “change in the ownership of the Company” which shall occur on the date that any one person, or more than one person acting as a group, acquires ownership of stock in 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; however, if any one person or more than one person acting as a group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons will not be considered a “change in the ownership of the Company” (or to cause a “change in the effective control of the Company” within the meaning of Section 1.3(b) below) and an increase of the effective percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this paragraph; provided, further, however, that for purposes of this Section 1.3(a), any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company shall not constitute a Change in Control.  This Section 1.3(a) applies only when there is a transfer of the stock of the Company (or issuance of stock), and stock in the Company remains outstanding after the transaction.

 

(b)                                 A “change in the effective control of the Company” which shall occur on the date that either (1) any one person, or more than one person acting as a group, acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company, except for any acquisition (i) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (ii) by any shareholder of the Company that beneficially owns at least five percent (5%) of the outstanding stock of the Company as of immediately following the closing of the Merger; or (2) a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.  For purposes of a “change in the effective control of the Company,” if any one person, or more than one person acting as a group, is considered to effectively control the Company within the meaning of this Section 1.3(b), the acquisition of additional control of the Company by the same person or persons is not considered a “change in the effective control of the Company,” or to cause a “change in the ownership of the Company” within the meaning of Section 1.3(a) above.

 

(c)                                  A “change in the ownership of a substantial portion of the Company’s assets” which shall occur on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) assets of the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all the assets of the Company immediately prior to such acquisition or acquisitions.  For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.  Any transfer of assets to an entity that is 

 

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controlled by the shareholders of the Company immediately after the transfer, as provided in guidance issued pursuant to Section 409A, shall not constitute a Change in Control.

 

For purposes of this Section 1.3, the terms “ownership,” “own” or “owned” shall refer to “beneficial ownership” as that term is used in Rule 13d-3 and Rule 13d-5 (or any successor provisions) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the terms “person” and “group” shall mean such terms as used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act (or any successor provisions).  In addition, for purposes of this Section 1.3, “Company” includes (i) the Company and (ii) the Employer. Notwithstanding anything in this Section 1.3 to the contrary, none of the following transactions shall constitute a Change of Control for purposes of this Agreement (a) any transaction commonly known as a Reverse Morris Trust transaction, as determined in good faith by the Board, or (b) the acquisition by TPG VI Neon I, L.P., TPG VI Neon II, L.P., TPG VI FOF Neon, L.P., or any of their respective affiliates of additional (x) shares of the Company, (y) voting power with respect to the Company, or (z) assets of the Company.

 

1.4                               “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

1.5                               “Date of Termination” shall mean the date Executive’s employment with the Employer is considered to have terminated pursuant to Section 3.5.

 

1.6                               “Good Reason” shall mean the occurrence of any of the following events:

 

(a)                                 a material default in the performance of the Employer’s obligations under this Agreement, including, without limitation, the obligations in Article IV;

 

(b)                                 a material diminution of Executive’s authority, duties, or responsibilities as President and Chief Executive Officer or a change in Executive’s reporting relationship such that he is required to report to a corporate officer or employee instead of reporting directly to the Board; or

 

(c)                                  the change in the primary physical location of the Company’s business that is 100 miles or more from the primary physical location of the Company’s business on the Effective Date.

 

Notwithstanding the foregoing provisions of this Section 1.6 or any other provision in this Agreement to the contrary, any assertion by Executive of a termination of employment for “Good Reason” shall not be effective unless all of the following conditions are satisfied: (i) the condition described in the foregoing clauses of this Section 1.6 giving rise to Executive’s termination of employment must have arisen without Executive’s consent; (ii) Executive must provide written notice to the Employer of such condition in accordance with Section 9.1 within 30 days of the initial existence of the condition; (iii) the condition specified in such notice must remain uncorrected for 30 days after receipt of such notice by the Employer; and (iv) the date of Executive’s termination of employment must occur within 90 days after the initial existence of the condition specified in such notice.

 

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1.7                               “Notice of Termination” shall mean a written notice delivered to the other party indicating the specific termination provision in this Agreement relied upon for termination of Executive’s employment and the intended Date of Termination and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

 

1.8                               “Release Expiration Date” means the date that is 21 days following the date upon which the Employer timely delivers to Executive the Release (which shall occur no later than seven days after the Date of Termination) or, in the event that such termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967, as amended), the date that is 45 days following such delivery date.

 

1.9                               “Section 409A” shall mean section 409A of the Code and the Treasury Regulations and other interpretative guidance issued thereunder.

 

1.10                        “Section 409A Payment Date” shall mean the earlier of (a) the date of Executive’s death or (b) the date that is six months after the Date of Termination of Executive’s employment with the Employer.

 

ARTICLE II
 EMPLOYMENT AND DUTIES

 

2.1                               Employment; Effective Date.  The Employer agrees to continue to employ Executive, and Executive agrees to continue to be employed by the Employer, pursuant to the terms of this Agreement, beginning as of the Effective Date and continuing for the period of time set forth in Article III of this Agreement, subject to the terms and conditions of this Agreement.

 

2.2                               Positions.  From and after the Effective Date, Executive shall serve as President and Chief Executive Officer of the Employer, the Company, and Holdings and, in so doing, shall perform the normal duties associated with such position and such other duties as may be assigned from time to time by the Board, subject to the general direction, approval and control of the Board.

 

2.3                               Duties and Services.  Executive agrees to serve in the position(s) referred to in Section 2.2 and to perform diligently and to the best of Executive’s abilities the duties and services appertaining to such position(s), as well as such additional duties and services appropriate to such position(s) which the parties mutually may agree upon from time to time.  Executive shall comply with the policies maintained and established by the Employer that are of general applicability to the Employer’s executives, as such policies may be amended from time to time.

 

2.4                               Other Interests.  Executive agrees, during the period of Executive’s employment by the Employer, to devote Executive’s full business time and best efforts to the business and affairs of the Employer, the Company, and any subsidiary or affiliate of either entity.  Notwithstanding the foregoing, the parties acknowledge and agree that Executive may (a) engage in and manage Executive’s passive personal investments and (b) engage in charitable and civic activities; provided, however, that in each case such activities shall be permitted so long as such 

 

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activities do not conflict with the business and affairs of the Employer or any of its affiliates or interfere with Executive’s performance of Executive’s duties hereunder or competitive with the business of the Employer or any of its affiliates.  Furthermore, after prior written notice to the Board, Executive may pursue additional activities, which may include service on boards or committees of other companies or entities, as to which the Board consents, which consent shall not be unreasonably withheld or delayed.

 

2.5                               Conflicts of Interest. Executive shall promptly disclose to the Board any actual or potential conflict of interest involving Executive upon Executive becoming aware of such actual or potential conflict of interest, in compliance with the Employer’s Conflict of Interest Policy in effect as of the Effective Date.

 

2.6                               Duty of Loyalty.  Executive acknowledges and agrees that Executive owes a fiduciary duty of loyalty, fidelity, and allegiance to act in the best interests of the Employer and to do no act that would materially injure the business, interests, or reputation of the Employer or any of its affiliates. In keeping with these duties, Executive shall make full disclosure to the Employer of all business opportunities pertaining to the Employer’s and its affiliates’ businesses and shall not appropriate for Executive’s own benefit business opportunities concerning the subject matter of the fiduciary relationship.

 

ARTICLE III
 TERM AND TERMINATION OF EMPLOYMENT

 

3.1                               Term.  Unless sooner terminated pursuant to other provisions hereof, the Employer agrees to employ Executive hereunder for the period beginning on the Effective Date and ending on September 30, 2019 (the “Initial Expiration Date”); provided, however, that beginning on the Initial Expiration Date, and on each anniversary of the Initial Expiration Date thereafter, if Executive’s employment under this Agreement has not been terminated pursuant to Section 3.2 or 3.3, then said term of employment shall automatically be extended for an additional one-year period unless on or before the date that is 90 days prior to the first day of any such extension period, either party shall give written notice (a “Notice of Non-Renewal”) to the other that no such automatic extension shall occur, in which case the term of employment shall terminate on the Initial Expiration Date or the anniversary of the Initial Expiration Date immediately following the giving of such notice, as applicable.

 

3.2                               Employer’s Right to Terminate.  Notwithstanding the provisions of Section 3.1, the Employer may terminate Executive’s employment under this Agreement at any time for any of the following reasons by providing Executive with a Notice of Termination:

 

(a)                                 upon Executive’s inability to, or a determination that Executive will be unable to, perform, with or without reasonable accommodation, the essential functions of his position hereunder for a period of 180 consecutive days due to mental or physical incapacity, as determined by mutual agreement of a physician selected by the Employer or its insurers and a physician selected by Executive; provided, however, if the opinion of the Employer’s physician and Executive’s physician conflict, the Employer’s physician and Executive’s physician shall together agree upon a third physician, whose opinion shall be binding (“Disability”); or

 

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(b)                                 Executive’s death; or

 

(c)                                  for Cause; or

 

(d)                                 for any other reason whatsoever or for no reason at all, in the sole discretion of the Employer.

 

3.3                               Executive’s Right to Terminate.  Notwithstanding the provisions of Section 3.1, Executive shall have the right to terminate Executive’s employment under this Agreement for Good Reason or for any other reason whatsoever or for no reason at all, in the sole discretion of Executive, by providing the Employer with a Notice of Termination.  In the case of a termination of employment by Executive pursuant to this Section 3.3, the Date of Termination specified in the Notice of Termination shall not be less than 15 nor more than 60 days, respectively, from the date such Notice of Termination is given, and the Employer may require a Date of Termination earlier than that specified in the Notice of Termination (and, if such earlier Date of Termination is so required, it shall not change the basis for Executive’s termination nor be construed or interpreted as a termination of employment pursuant to Section 3.1 or Section 3.2).

 

3.4                               Deemed Resignations.  Unless otherwise agreed to in writing by the Employer and Executive prior to the termination of Executive’s employment, any termination of Executive’s employment shall constitute (a) an automatic resignation of Executive as an officer of the Company, Holdings, the Employer and each affiliate of any such entities, (b) an automatic resignation of Executive from the Board (if applicable) and from the board of directors of any affiliate of the Employer, and from the board of directors or similar governing body of any corporation, limited liability entity, or other entity in which the Employer or any affiliate holds an equity interest and with respect to which board or similar governing body Executive serves as the Employer’s or such affiliate’s designee or other representative, and (c) an automatic revocation of any power of attorney granted to Executive for the benefit of Employer or any of its affiliates.

 

3.5                               Meaning of Termination of Employment.  For all purposes of this Agreement, Executive shall be considered to have terminated employment with the Employer when Executive incurs a “separation from service” with the Employer within the meaning of section 409A(a)(2)(A)(i) of the Code and applicable administrative guidance issued thereunder.

 

ARTICLE IV
 COMPENSATION AND BENEFITS

 

4.1                               Base Salary.  During the term of this Agreement, Executive shall receive a minimum, annualized base salary of $900,000 (the “Base Salary”). Executive’s annualized base salary shall be reviewed periodically by the Board (or a committee thereof) and, in the sole discretion of the Board (or a committee thereof), such annualized base salary may be increased (but not decreased) effective as of any date determined by the Board (or a committee thereof)  Executive’s Base Salary shall be paid in equal installments in accordance with the Employer’s standard policy regarding payment of compensation to executives but no less frequently than monthly.

 

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4.2                               Bonuses.  During Executive’s employment hereunder, Executive shall be eligible to participate in the Employer’s annual cash incentive program, which shall provide Executive with an opportunity to receive an annual bonus (payable in a single lump sum) based on criteria determined in the discretion of the Board or a committee thereof (the “Annual Bonus”), it being understood that (a) the target bonus at planned or targeted levels of performance shall equal a percentage of Executive’s Base Salary as determined in the sole discretion of the Board (or a committee thereof) no later than the time the performance criteria are established, provided, that such target bonus shall not be less than 125% of Executive’s Base Salary then in effect (the “Target Annual Bonus”), and (b) the actual amount of each Annual Bonus shall be determined in the discretion of the Board or a committee thereof.  Payment of an Annual Bonus, if any, shall be subject to the attainment of pre-established goals established by the Board or a committee thereof. Such goals may be adjusted or varied by the Board or a Committee thereof at its sole discretion from year to year.  The Executive shall be entitled to an Annual Bonus, as determined by the Board or a committee thereof, if the Executive is employed by the Employer on the last day of the fiscal year, and the Employer shall pay each Annual Bonus no later than the 31st of December next following the end of the fiscal year.

 

4.3                               Long-Term Incentive Compensation.  Effective as of the Effective Date, Executive shall be eligible to participate in the Employer’s or its affiliate’s long-term incentive plan(s) providing for equity-based awards, which awards may consist of restricted stock, restricted stock units, performance share units, stock options, stock appreciation rights, or other equity or non-equity related awards, as each such plan may exist from time to time.  The terms and conditions of Executive’s participation in such plan(s) (including, without limitation, the form of awards, the purchase price (if any), vesting conditions, exercise rights, payment terms, termination provisions, and transfer restrictions) shall be determined by the Board or the Compensation Committee thereof.

 

4.4                               Other Benefits.  During Executive’s employment hereunder, Executive shall be allowed to participate in all benefit plans and programs of the Employer, including improvements or modifications of the same, which are now, or may hereafter be, available to other senior executives of the Employer generally (for the avoidance of doubt, such plans, practices, policies or programs shall not include any plan, practice, policy or program which provides benefits in the nature of severance or continuation pay), subject to the terms and conditions of the applicable plans and programs in effect from time to time.  The Employer shall not, however, by reason of this Section 4.4, be obligated to institute, maintain, or refrain from changing, amending, or discontinuing any such benefit plan or program, so long as such changes are similarly applicable to other senior executives generally.

 

4.5                               Expenses.  The Employer shall reimburse Executive for all reasonable out-of-pocket business expenses incurred by Executive in performing services hereunder, including all reasonable expenses of travel and living expenses while away from home on business or at the request of and in the service of the Employer; provided, in each case, that such expenses are incurred and accounted for in accordance with the policies and procedures of the Employer in effect from time to time.  Any such reimbursement of expenses shall be made by the Employer upon or as soon as practicable following receipt of supporting documentation reasonably satisfactory to the Employer (but in any event not later than the close of Executive’s taxable year following the taxable year in which the expense is incurred by Executive); provided, however, 

 

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that, upon Executive’s termination of employment with the Employer, in no event shall any additional reimbursement be made prior to the Section 409A Payment Date to the extent such payment delay is required under section 409A(a)(2)(B)(i) of the Code.  In no event shall any reimbursement be made to Executive for such fees and expenses after the later of (a) the first anniversary of the date of Executive’s death or (b) the date that is five years after the date of Executive’s termination of employment with the Employer (other than by reason of Executive’s death).  For the sake of clarity, all qualifying expense reimbursements described in this Section 4.5 shall be made by the Employer within the time periods prescribed above, and no reimbursement timing limitation included in this Section 4.5 shall operate to excuse the Employer from making any reimbursement due under this Section 4.5.

 

4.6                               Vacation and Sick Leave.  During Executive’s employment hereunder, Executive shall be entitled to vacation and sick leave in accordance with the Employer’s policies applicable to its senior executives as may exist from time to time, which such vacation shall accrue and be taken in accordance with the Employer’s vacation policies in effect from time to time.  Executive’s right, if any, to carry over unused vacation from one calendar year to the next shall be determined by the Employer’s vacation policy in effect from time to time.

 

4.7                               Offices.  Subject to Articles II, III, and IV hereof, Executive agrees to serve without additional compensation, if elected or appointed thereto, as a director of the Employer or any of the Employer’s affiliates and as a member of any committees of the board of directors of any such entities, in one or more executive positions of any of the Employer’s affiliates, and pursuant to a power of attorney for the benefit of Employer, the Company, or Holdings, or any of their respective affiliates.

 

ARTICLE V
 EFFECT OF TERMINATION OF EMPLOYMENT ON COMPENSATION

 

5.1                               For Cause; Without Good Reason; Other than for Death or Disability.  If Executive’s employment hereunder shall terminate pursuant to a termination by the Employer for Cause or pursuant to Executive’s resignation for other than Good Reason (except on account of Executive’s death or Disability), then all compensation and all benefits to Executive hereunder shall terminate contemporaneously with such termination of employment, except that Executive shall be entitled to (a) payment in a lump-sum in cash within sixty (60) days after the Date of Termination (or such earlier date as required by applicable law), of all accrued and unpaid Base Salary to the Date of Termination, (b) reimbursement for all incurred but unreimbursed expenses for which Executive is entitled to reimbursement in accordance with Section 4.5, and (c) benefits to which Executive is entitled under the terms of any applicable benefit plan or program of the Employer or an affiliate, but, for the avoidance of doubt, excluding any portion of Executive’s Annual Bonus accrued through the Date of Termination to the extent not previously paid (such amounts set forth in (a), (b), and (c) shall be collectively referred to herein as the “Accrued Rights”).

 

5.2                               Death or Disability.  If Executive’s employment hereunder shall terminate for any reason described in Section 3.2(a) or 3.2(b), then all compensation and all benefits to Executive hereunder shall terminate contemporaneously with such termination of employment, except that (a) Executive shall be entitled to receive the Accrued Rights, (b) the Employer shall 

 

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pay to Executive any earned but unpaid Annual Bonus for the relevant performance year ending prior to the Date of Termination, which amount shall be payable in a lump-sum on or before the date such annual bonuses are paid to executives who have continued employment with the Employer (but in no event earlier than 60 days following the Date of Termination or later than December 31 of the year following the year for which the Annual Bonus was earned) and (c) the Employer shall pay to Executive an Annual Bonus for the performance year in which the Date of Termination occurs, prorated through and including the Date of Termination (based on the ratio of the number of days Executive was employed by the Employer during such year to the number of days in such year), based on achievement of the applicable performance goals and payable in a lump-sum on or before the date such Annual Bonuses are paid to executives who have continued employment with the Employer (but in no event earlier than 60 days following the Date of Termination or later than December 31 of the year following the year for which the Annual Bonus was earned).

 

5.3                               Without Cause or for Good Reason.  If Executive’s employment hereunder shall terminate pursuant to Executive’s resignation for Good Reason, by delivery of a Notice of Non-Renewal to the Executive by the Employer pursuant to Section 3.1 or by action of the Employer pursuant to Section 3.2 for any reason other than those encompassed by Section 3.2(a), 3.2(b), or 3.2(c), then all compensation and all benefits to Executive hereunder shall terminate contemporaneously with such termination of employment, except that (i) Executive shall be entitled to receive the Accrued Rights, and (ii) if, on the Date of Termination, the Employer does not have a right to terminate Executive’s employment under Section 3.2(c) and subject to: (A) Executive’s delivery, by the Release Expiration Date, and non-revocation in the time provided by the Employer to do so, of an executed release of all claims in a form acceptable to the Employer (the “Release”), which Release shall release the Employer and each of its affiliates, and the foregoing entities’ respective shareholders, members, partners, officers, managers, directors, fiduciaries, employees, representatives, agents and benefit plans (and fiduciaries of such plans) from any and all claims, including any and all causes of action arising out of Executive’s employment with the Employer and any of its affiliates or the termination of such employment, but excluding all claims to severance payments Executive may have under this Article V; and (B) Executive’s continued compliance with Article VI and Article VII of this Agreement, Executive shall receive the following additional compensation and benefits from the Employer (but no other additional compensation or benefits after such termination):

 

(a)                                 Unpaid Prior Year Annual Bonus: The Employer shall pay to Executive any earned but unpaid Annual Bonus for the performance year ending prior to the Date of Termination, which amount shall be payable in a lump-sum on or before the date such annual bonuses are paid to executives who have continued employment with the Employer (but in no event earlier than 60 days following the Date of Termination or later than December 31 of the year following the year for which the Annual Bonus was earned);

 

(b)                                 Severance Payment: The Employer shall pay to Executive an amount equal to two (2) times the sum of (i) Executive’s Base Salary as of the Date of Termination and (ii) the Target Annual Bonus in effect for the fiscal year immediately preceding the Date of Termination, which amount shall be paid in substantially equal installments in accordance with the customary payroll practices of the Company (but no

 

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less frequently than monthly) over a period of 24 months (the “Severance Period”), with the first such installment paid on the first regular payroll date after the 60th day following the Date of Termination; and

 

(c)                                  Post-Employment Health Coverage: Provided that Executive timely elects to continue coverage for Executive and Executive’s spouse and eligible dependents, if any, under the Employer’s group health plans under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), and/or sections 601 through 608 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Employer shall promptly reimburse Executive on a monthly basis for the amount Executive pays to effect and continue coverage under the Employer’s group health plan through the earlier of (i) the end of the 24-month period following the Date of Termination, or (ii) the date Executive becomes eligible to receive medical and dental coverage from a subsequent employer (and any such eligibility shall be promptly reported to the Employer by Executive).

 

(d)                                 Long-Term Incentive Compensation.  Any outstanding performance share unit award granted in 2016 (the “PSU Award”) pursuant to the Nexeo Solutions, Inc. 2016 Long Term Incentive Plan (the “Plan”) that remains outstanding as of the Date of Termination will be settled in accordance with the terms of such award (and all capitalized words used in this Section 5.3(d) that are not otherwise defined in this Agreement shall have the meaning given such terms under the PSU Award Agreement, including Appendix A thereto); provided, however, that the Performance Period under such award shall be deemed to end on the Date of Termination, and settlement of such award will be based upon actual achievement of the Performance Goals (determined pursuant to Appendix A of such award agreement, with TSR measured through the Date of Termination and with EBITDA Performance measured on a cumulative basis through the end of the most recent fiscal quarter completed prior to the Date of Termination) for the revised Performance Period, as determined in good faith by the Committee and prorated through and including the Date of Termination (based on the number of days Executive was employed by the Employer during the Performance Period as compared to the number of days in the original Performance Period).  Vesting and/or exercisability of all other outstanding equity-based awards granted to Executive shall be determined pursuant to the terms and conditions of the governing plans and award agreements, as applicable.

 

5.4                               Without Cause or for Good Reason following Change in Control.  If, before the second anniversary following the effective date of a Change in Control, Executive’s employment hereunder shall terminate pursuant to Executive’s resignation for Good Reason, by delivery of a Notice of Non-Renewal to the Executive by the Employer pursuant to Section 3.1 or by action of the Employer pursuant to Section 3.2 for any reason other than those encompassed by Section 3.2(a), 3.2(b), or 3.2(c), then all compensation and all benefits to Executive hereunder shall terminate contemporaneously with such termination of employment, except that (i) Executive shall be entitled to receive the Accrued Rights, and (ii) if, on the Date of Termination, the Employer does not have a right to terminate Executive’s employment under Section 3.2(c) and subject to: (A) Executive’s delivery, by the Release Expiration Date, and non-revocation in the time provided by the Employer to do so, of an executed Release acceptable to 

 

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the Employer; and (B) Executive’s continued compliance with Article VI and Article VII of this Agreement, Executive shall receive the following additional compensation and benefits from the Employer (but no other additional compensation or benefits after such termination):

 

(a)                                 Unpaid Prior Year Annual Bonus: The Employer shall pay to Executive any earned but unpaid Annual Bonus for the performance year ending prior to the Date of Termination, which amount shall be payable in a lump-sum on or before the date such annual bonuses are paid to executives who have continued employment with the Employer (but in no event earlier than 60 days following the Date of Termination or later than December 31 of the year following the year for which the Annual Bonus was earned);

 

(b)                                 Prorated Current Year Annual Bonus: The Employer shall pay to Executive a bonus for the performance year in which the Date of Termination occurs in an amount equal to the Annual Bonus for such year as determined in good faith by the Board in accordance with the criteria established pursuant to Section 4.2 above and based on performance for such year, which amount shall be prorated through and including the Date of Termination (based on the ratio of the number of days Executive was employed by the Employer during such year to the number of days in such year), payable in a lump-sum on or before the date such annual bonuses are paid to executives who have continued employment with the Employer (but in no event earlier than 60 days after the Date of Termination nor later than the fifteenth day of the third month next following such year); provided, however, that if this paragraph applies with respect to an Annual Bonus that is intended to constitute performance-based compensation within the meaning of, and for purposes of, section 162(m) of the Code, then this paragraph shall apply with respect to such Annual Bonus only to the extent the applicable performance criteria have been satisfied as certified by a committee of the Board as required under section 162(m) of the Code;

 

(c)                                  Severance Payment: The Employer shall pay to Executive an amount equal to two (2) times the sum of (i) Executive’s Base Salary as of the Date of Termination and (ii) the Target Annual Bonus in effect on the Date of Termination, which amount shall be paid in substantially equal installments in accordance with the customary payroll practices of the Company (but no less frequently than monthly) over the Severance Period, with the first such installment paid on the first regular payroll date after the 60th day following the Date of Termination; and

 

(d)                                 Post-Employment Health Coverage: Provided that Executive timely elects to continue coverage for Executive and Executive’s spouse and eligible dependents, if any, under the Employer’s group health plans under COBRA and/or sections 601 through 608 of ERISA, the Employer shall promptly reimburse Executive on a monthly basis for the amount Executive pays to effect and continue coverage under the Employer’s group health plan through the earlier of (i) the end of the 24-month period following the Date of Termination, or (ii) the date Executive becomes eligible to receive medical and dental coverage from a subsequent employer (and any such eligibility shall be promptly reported to the Employer by Executive).

 

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(e)                               Long-Term Incentive Compensation.  Vesting and/or exercisability of all outstanding equity-based awards granted to Executive shall be determined pursuant to the terms and conditions of the governing plans and award agreements, as applicable.

 

For the avoidance of doubt, if Executive is entitled to any payments or benefits under this Section 5.4, Executive shall not be entitled to any payments or benefits under Section 5.3.

 

5.5                               After-Acquired Evidence.  Notwithstanding any provision of this Agreement to the contrary, in the event that the Employer determines that Executive is eligible to receive the payments and benefits under Section 5.3 or 5.4 but, after such determination, the Employer subsequently acquires evidence or determines that a Cause condition existed pursuant to Section 1.2(b), (d) or (f) prior to the Date of Termination that, had the Employer been fully aware of such condition, would have resulted in the termination of Executive’s employment pursuant to Section 3.2(c), then the Employer shall have the right to cease the payment of any future installments of the payments and benefits under Sections 5.3 or 5.4 (as applicable), subject to unanimous adoption by the Board of a resolution confirming such finding of Cause and approving of the termination of any such future installments.

 

5.6                               Mitigation/Offset.  The Executive shall not be required to mitigate the amount of any amounts payable to the Executive pursuant to this Article V by seeking other employment or otherwise, nor shall any amounts payable to the Executive pursuant to this Article V be reduced by any compensation earned by other employment or otherwise.  Notwithstanding the foregoing, this Section 5.6 shall not prevent the Employer from terminating the post-employment health coverage and/or reimbursement under Section 5.3(c) or Section 5.4(d), as applicable, due to Executive’s coverage from subsequent employment pursuant to the terms of Section 5.3(c) or Section 5.4(d).

 

ARTICLE VI
 PROTECTION OF INFORMATION

 

6.1                               Confidential Information of the Employer.  For purposes of this Article VI, the term “the Employer” shall include the Employer and each of its affiliates, and any reference to “employment” or similar terms shall include a director and/or consulting relationship.  Executive acknowledges that the Employer has trade, business and financial secrets and other confidential and proprietary information (collectively, the “Confidential Information”). Confidential information includes, but is not limited to, sales materials, technical information, strategic information, business plans, processes and compilations of information, records, specifications and information concerning customers or venders, customer lists, and information regarding methods of doing business. For the avoidance of doubt, Confidential Information herein includes any information that was Confidential Information as defined in the Prior Employment Agreement and provided or disclosed to Executive prior to the Effective Date.  As defined herein, Confidential Information shall not include information that is generally known (other than through any default by Executive) to other persons or entities who can obtain economic value from its disclosure or use.

 

6.2                               Policies Relating to Confidential Information.  Executive is aware of those policies implemented by the Employer to keep its Confidential Information secret, including 

 

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those policies limiting the disclosure of information on a need-to-know basis, requiring the labeling of documents as “confidential,” and requiring the keeping of information in secure areas. Executive acknowledges that the Confidential Information has been developed or acquired by the Employer through the expenditure of substantial time, effort and money and provides the Employer with an advantage over competitors who do not know or use such Confidential Information.

 

6.3                               No Unauthorized Use or Disclosure.  During and following Executive’s employment by the Employer, Executive shall hold in confidence and not directly or indirectly disclose or use or copy or make lists of any Confidential Information except to the extent authorized in writing by the Board or compelled by legal process, other than to an employee of the Employer or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by Executive of his duties as an employee of the Employer. Executive agrees to use reasonable efforts to give the Employer notice of any and all attempts to compel disclosure of any Confidential Information, in such a manner so as to provide the Employer with written notice at least five (5) days before disclosure or within one (1) business day after Executive is informed that such disclosure is being or will be compelled, whichever is earlier. Such written notice shall include a description of the information to be disclosed, the court, government agency, or other forum through which the disclosure is sought, and the date by which the information is to be disclosed, and shall contain a copy of the subpoena, order or other process used to compel disclosure.  Executive further agrees not to use any Confidential Information for the benefit of any person or entity other than the Employer.  Nothing herein will prevent Executive from: (a) making a good faith report of possible violations of applicable law to any governmental agency or entity; or (b) making disclosures that are protected under the whistleblower provisions of applicable law.  Further, an individual (including Executive) shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  In addition, an individual who files a lawsuit for retaliation by an employer of reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (1) files any document containing the trade secret under seal; and (2) does not disclose the trade secret, except pursuant to court order.

 

6.4                               Surrender of Materials Upon Termination. All records, files, documents and materials, or copies thereof, relating to the Employer’s and its affiliates’ business which Executive shall prepare, or use, or be provided with as a result of his employment with the Employer, shall be and remain the sole property of the Employer or its affiliates, as the case may be, and shall be returned promptly by Executive to the Employer upon termination of Executive’s employment with the Employer.

 

6.5                               Inventions; Assignment.  All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the Employer’s business, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that Executive may discover, invent or originate during the term of this Agreement, either alone or with others and during work hours or by the use of the facilities of the Employer 

 

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(“Inventions”), shall be the exclusive property of the Employer. Executive shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other documents the Employer may deem necessary to protect or perfect its rights therein, and shall assist the Employer, at the Employer’s expense, in obtaining, defending and enforcing the Employer’s rights therein. Executive hereby appoints the Employer as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Employer to protect or perfect its rights to any Inventions.

 

6.6                               Previous Patents.  Executive attaches hereto, concurrently with the execution of this Agreement, an itemized list and brief description of all patents and patented information obtained by Executive prior to Executive’s employment with the Employer, if any exist, and which are to be excluded from this Agreement. Executive waives any rights he may have to any and all unpatented information, ideas, concepts, improvements, discoveries and inventions related to the Employer’s business, if any exist, conceived and owned by Executive prior to Executive’s employment with the Employer.

 

6.7                               Remedies.  Executive acknowledges that money damages would not be a sufficient remedy for any breach of this Article VI by Executive, and the Employer or its affiliates shall be entitled to enforce the provisions of this Article VI by terminating payments then owing to Executive under this Agreement or otherwise and to specific performance and injunctive relief as remedies for such breach or any threatened breach.  Such remedies shall not be deemed the exclusive remedies for a breach of this Article VI but shall be in addition to all remedies available at law or in equity, including the recovery of damages from Executive and Executive’s agents. However, if it is determined by the Employer acting in good faith that Executive has not committed a breach of this Article VI, then the Employer shall resume the payments and benefits due under this Agreement and pay to Executive all payments and benefits that had been suspended pending such determination.

 

ARTICLE VII
 NON-COMPETITION AGREEMENT

 

7.1                               Confidentiality.  For purposes of this Article VII, the term “the Employer” shall include the Employer and each of its affiliates, and any reference to “employment” or similar terms shall include a director and/or consulting relationship.  Executive acknowledges and agrees that he has previously been provided Confidential Information relating to the Employer during his employment prior to the Effective Date.  Executive further acknowledges and agrees that during Executive’s employment by the Employer following the Effective Date, including the term of this Agreement, the Employer shall provide Executive with additional and new Confidential Information of the Employer as described in Article VI. Accordingly, in consideration for the (a) Confidential Information previously provided to Executive, (b) the Employer’s commitment to provide additional and new Confidential Information to Executive, (c) the treatment of long-term equity awards that were outstanding immediately prior to the Merger, (d) the grants of new long-term equity awards granted in connection with the Merger,  and (e) in the case of Executive’s termination pursuant to Sections 5.3 or 5.4, the severance payments described therein, and in order to protect the value of the Confidential Information to the Employer, Executive agrees that during the Term of Non-Competition (as defined below) or the Term of Non-Solicitation (as defined below), whichever is longer, he will not directly or 

 

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indirectly disclose or use or disclose for any reason whatsoever any Confidential Information obtained by reason of his employment with the Employer or any predecessor, except as required to conduct the business of the Employer. The obligations of Executive set forth in the preceding sentence are in addition to, and not in lieu of, the obligations of Executive set forth in Article VI of this Agreement. The “Term of Non-Competition” shall be defined as that term beginning on the Effective Date and continuing until the second anniversary of the Date of Termination. “The Term of Non-Solicitation” shall be defined as that term beginning on the Effective Date and continuing until the second anniversary of the Date of Termination:

 

7.2                               Non-Competition; Non-Solicitation.  Executive acknowledges and agrees that the nature of the Confidential Information which the Employer has provided and commits to provide him during his employment by the Employer would make it difficult, if not impossible, for him to perform in a similar capacity for a Competing Business (as defined below) without disclosing or utilizing the Confidential Information. Executive further acknowledges and agrees that the Employer’s business is conducted throughout the world in a highly competitive market. Accordingly, Executive agrees that he will not (other than for the benefit of the Employer pursuant to this Agreement) directly or indirectly, individually or as an officer, director, employee, shareholder, consultant, contractor, partner, joint venturer, agent, equity owner or in any capacity whatsoever (1) during the Term of Non-Competition, engage in a Competing Business (as defined below), or (2) during the Term of Non-Solicitation, (i) hire, attempt to hire, or contact or solicit with respect to hiring any employee of the Employer and/or its affiliates, or (ii) solicit, divert or take away any customers or customer leads (as of the Termination Date) of the Employer and/or its affiliates.

 

7.3                               Competing Business.  For the purposes of this Article VII, “Competing Business” shall mean a business engaged in the distribution of chemicals or plastics or the provision of environmental services in any country in which the Company (including any subsidiary or affiliate of the Company) achieves $25 million or more in annual gross revenues, determined on an aggregated basis for all such entities in the Company’s controlled group, for the 12-month period preceding the Date of Termination.

 

7.4                               Access to Knowledge.  During the term of Non-Competition, Executive will not use Executive’s access to, knowledge of, or application of Confidential Information to perform any duty for any Competing Business; it being understood and agreed to that this Section 7.4 shall be in addition to and not be construed as a limitation upon the covenants in Section 7.2 hereof.

 

7.5                               Reasonableness.  Executive acknowledges that the geographic boundaries, scope of prohibited activities, and time duration of the preceding paragraphs are reasonable in nature and are no broader than are necessary to maintain the confidentiality and the goodwill of the Employer and the confidentiality of its Confidential Information and to protect the other legitimate business interests of the Employer.

 

7.6                               Severability.  If any court determines that any portion of this Article VII is invalid or unenforceable, the remainder of this Article VII shall not thereby be affected and shall be given full effect without regard to the invalid provisions. If any court construes any of the provisions of this Article VII, or any part thereof, to be unreasonable because of the duration or 

 

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scope of such provision, such court shall have the power to reduce the duration or scope of such provision and to enforce such provision as so reduced.

 

7.7                               Independent Agreement.  Executive’s covenant under this Article VII shall be construed as an agreement independent of any other provision of this Agreement; and the existence of any claim or cause of action of Executive against the Employer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Employer of this covenant.

 

7.8                               Relief.  Executive and the Employer agree and acknowledge that the limitations as to time, geographical area, and scope of activity to be restrained as set forth in this Article VII are reasonable and do not impose any greater restraint than is necessary to protect the legitimate business interests of the Employer.  Executive and the Employer also acknowledge that money damages would not be a sufficient remedy for any breach of this Article VII by Executive, and the Employer or its affiliates shall be entitled to enforce the provisions of this Article VII by terminating payments then owing to Executive under this Agreement or otherwise and to specific performance and injunctive relief as remedies for such breach or any threatened breach.  Such remedies shall not be deemed the exclusive remedies for a breach of this Article VII but shall be in addition to all remedies available at law or in equity, including the recovery of damages from Executive and Executive’s agents.

 

7.9                               Attorneys’ Fees.  In the event that it is necessary for either party to employ the services of an attorney in the course of litigation or arbitration regarding a breach or alleged breach of this Article VII, the prevailing party in such litigation or arbitration (as determined by the court or arbitrator, as applicable), shall be entitled to recover all reasonable attorneys’ fees, costs, and expenses incurred in connection therewith.

 

ARTICLE VIII
 CERTAIN EXCISE TAXES

 

Notwithstanding anything to the contrary in this Agreement, if Executive is a “disqualified individual” (as defined in section 280G(c) of the Code), and the payments and benefits provided for in this Agreement, together with any other payments and benefits which Executive has the right to receive from the Employer or any of its affiliates, would constitute a “parachute payment” (as defined in section 280G(b)(2) of the Code), then the payments and benefits provided for in this Agreement shall be either (a) reduced (but not below zero) so that the present value of such total amounts and benefits received by Executive from the Employer and its affiliates will be one dollar ($1.00) less than three times Executive’s “base amount” (as defined in section 280G(b)(3) of the Code) and so that no portion of such amounts and benefits received by Executive shall be subject to the excise tax imposed by section 4999 of the Code, or (b) paid in full, whichever produces the better net after-tax position to Executive (taking into account any applicable excise tax under section 4999 of the Code and any other applicable taxes, including any federal, state, municipal, and local income or employment taxes, and taking into account the phase out of itemized deductions and personal exemptions).  The reduction of payments and benefits hereunder, if applicable, shall be made by reducing, first, payments or benefits to be paid in cash hereunder in the order in which such payment or benefit would be paid or provided (beginning with such payment or benefit that would be made last in time and 

 

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continuing, to the extent necessary, through to such payment or benefit that would be made first in time) and, then, reducing any benefit to be provided in-kind hereunder in a similar order, in all instances in accordance with Section 409A.  The determination as to whether any such reduction in the amount of the payments and benefits provided hereunder is necessary shall be made by the Employer in good faith; provided, however, that (a) no portion of Executive’s payments or benefits the receipt or enjoyment of which Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of section 280G(b) of the Code will be taken into account; (b) no portion of Executive’s payments or benefits will be taken into account which, in the opinion of tax counsel (“Tax Counsel”) for the Employer or the Company does not constitute a parachute payment (including by reason of section 280G(b)(4)(A) of the Code); (c) in calculating the applicable excise tax under section 4999 of the Code, no portion of Executive’s payments or benefits will be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the base amount that is allocable to such reasonable compensation; and (d) the value of any non-cash benefit or any deferred payment or benefit will be determined by Tax Counsel or the Employer or the Company’s independent auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.  At the time that payments are made under this Agreement, the Employer and/or the Company will provide Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations, including any opinions or other advice the Employer and/or the Company received from Tax Counsel, the Employer’s or the Company’s independent auditor, or other advisors or consultants (and any such opinions or advice which are in writing will be attached to the statement).  If a reduced payment or benefit is made or provided, and through error or otherwise, that payment or benefit, when aggregated with other payments and benefits from the Employer (or its affiliates) used in determining if a “parachute payment” exists, exceeds one dollar ($1.00) less than three times Executive’s base amount, then Executive shall immediately repay such excess to the Employer or the Company upon notification that an overpayment has been made.  The fact that Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Article VIII will not limit or otherwise affect any other rights of Executive under this Agreement or otherwise.  All determinations required by this Article VIII will be made at the expense of the Employer or the Company.  However, nothing in this Article VIII shall require the Employer to be responsible for, or have any liability or obligation with respect to, Executive’s excise tax liabilities under section 4999 of the Code.

 

ARTICLE IX
 MISCELLANEOUS

 

9.1                               Notices.  For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given (a) when received if delivered personally or by courier, (b) on the date receipt is acknowledged if delivered by certified mail, postage prepaid, return receipt requested, or (c) one day after transmission if sent by facsimile transmission with confirmation of transmission, as follows:

 

	
If   to Executive, addressed to:
    	
David   A. Bradley
    
	
 
    	
58   Hollymead
    

 

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Spring,   TX 77381
    
	
 
    	
 
    
	
If   to the Employer, addressed to:
    	
Nexeo   Solutions, LLC
    
	
 
    	
3   Waterway Square Place
    
	
 
    	
Suite 1000
    
	
 
    	
The   Woodlands, TX 77380
    
	
 
    	
Attention:   Chief Legal Officer
    

 

or to such other address as either party may furnish to the other in writing in accordance herewith, except that notices or changes of address shall be effective only upon receipt.

 

9.2                               Arbitration.

 

(a)                                 Subject to Section 9.2, any dispute, controversy or claim between Executive and the Employer or any of its affiliates arising out of or relating to this Agreement or Executive’s employment with the Employer will be finally settled by arbitration in Houston, Texas before, and in accordance with the then-existing American Arbitration Association (“AAA”) Employment Arbitration Rules.  The arbitration award shall be final and binding on both parties.  Any arbitration conducted under this Section 9.2 shall be heard by a single arbitrator (the “Arbitrator”) selected in accordance with the then-applicable rules of the AAA. The Arbitrator shall expeditiously hear and decide all matters concerning the dispute.  Except as expressly provided to the contrary in this Agreement, the Arbitrator shall have the power to (i) gather such materials, information, testimony and evidence as the Arbitrator deems relevant to the dispute before him or her (and each party will provide such materials, information, testimony and evidence requested by the Arbitrator), and (ii) grant injunctive relief and enforce specific performance.  The decision of the Arbitrator shall be reasoned, rendered in writing, be final and binding upon the disputing parties and the parties agree that judgment upon the award may be entered by any court of competent jurisdiction; provided, however, that the parties agree that the Arbitrator and any court enforcing the award of the Arbitrator shall not have the right or authority to award punitive or exemplary damages to any disputing party.  The party whom the Arbitrator determines is the prevailing party in such arbitration shall receive, in addition to any other award pursuant to such arbitration or associated judgment, reimbursement from the other party of all reasonable legal fees and costs associated with such arbitration and associated judgment.

 

(b)                                 Notwithstanding Section 9.2, either party may make a timely application for, and obtain, judicial emergency or temporary injunctive relief to enforce any of the provisions of Article VI and Article VII in any court of competent jurisdiction; provided, however, that the remainder of any such dispute (beyond the application for emergency or temporary injunctive relief) shall be subject to arbitration under Section 9.2(a).

 

(c)                                  By entering into this Agreement and entering into the arbitration provisions of Section 9.2(a), THE PARTIES EXPRESSLY ACKNOWLEDGE AND AGREE THAT THEY ARE KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVING THEIR RIGHTS TO A JURY TRIAL.

 

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(d)                                 Nothing in Section 9.2(a) shall prohibit a party to this Agreement from (i) instituting litigation to enforce any arbitration award, or (ii) joining the other party to this Agreement in a litigation initiated by a person or entity that is not a party to this Agreement.

 

(e)                                  This Agreement shall in all respects be construed according to the laws of the State of Texas without regard to its conflict of laws principles that would result in the application of the laws of another jurisdiction.  With respect to any claim or dispute related to or arising under this Agreement, the parties hereby consent to the arbitration provisions of Section 9.2(a) and recognize and agree that should any resort to a court be necessary and permitted under this Agreement, then, subject to Section 9.2(b), they consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Houston, Texas.

 

9.3                               No Waiver.  No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

9.4                               Severability.  If a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement, and all other provisions shall remain in full force and effect.

 

9.5                               Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

 

9.6                               Withholding of Taxes and Other Employee Deductions.  The Employer may withhold from any benefits and payments made pursuant to this Agreement all federal, state, city, and other taxes and withholdings as may be required pursuant to any law or governmental regulation or ruling and all other customary deductions made with respect to the Employer’s employees generally.

 

9.7                               Headings.  The Article and Section headings have been inserted for purposes of convenience and shall not be used for interpretive purposes.

 

9.8                               Gender and Plurals. Wherever the context so requires, the masculine gender includes the feminine or neuter, and the singular number includes the plural and conversely.

 

9.9                               Affiliate.  As used in this Agreement, the term “affiliate” means, with respect to a person, (a) any other person controlling, controlled by, or under common control with the first person or (b) any joint venture in which the first person is a joint venturer; the term “control,” and correlative terms, means the power, whether by contract, equity ownership or otherwise, to direct the policies, management, or other business activities of a person; and “person” means an individual, partnership, corporation, limited liability company, trust or unincorporated organization, business entity organized under foreign law, or a government or agency or political subdivision thereof.  For the avoidance of doubt, references to the Employer’s affiliates shall include but not be limited to the Company, Holdings, and each of their respective direct and indirect subsidiaries.

 

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9.10                        Successors; Assigns; Third Party Beneficiaries.  This Agreement shall be binding upon and inure to the benefit of the Employer and any successor of the Employer.  In addition, the Employer may assign this Agreement and Executive’s employment to any affiliate of the Employer or to any successor (whether by merger, purchase or otherwise) to all or substantially all of the equity, assets or businesses of the Employer or any of its affiliates at any time without the consent of Executive, and any assign of the Employer shall be deemed to be the Employer for purposes of this Agreement.  Except as provided in the foregoing sentences of this Section 9.10, this Agreement and the rights and obligations of the parties hereunder are personal, and neither this Agreement nor any right, benefit, or obligation of either party hereto shall be subject to voluntary or involuntary assignment, alienation, or transfer, whether by operation of law or otherwise, without the prior written consent of the other party.  In addition, any payment owed to Executive hereunder after the date of Executive’s death shall be paid to Executive’s estate.  Each affiliate of the Employer shall be a third party beneficiary of, and may directly enforce, Executive’s obligations under Articles VI and VII.

 

9.11                        Term.  Termination of this Agreement shall not affect any right or obligation of any party which is accrued or vested prior to such termination.  Without limiting the scope of the preceding sentence, the provisions of Articles V, VI, and VII and those provisions necessary to interpret and apply them shall survive any termination of the employment relationship and/or of this Agreement.

 

9.12                        Entire Agreement.  Except as provided in any signed written agreement contemporaneously or hereafter executed by the Employer and Executive, this Agreement (a) constitutes the entire agreement of the parties with regard to the subject matter hereof, (b) supersedes all prior agreement, arrangements, and understandings, written or oral, relating to the subject matter hereof, and (c) contains all the covenants, promises, representations, warranties, and agreements between the parties with respect to employment of Executive by the Employer.  Without limiting the scope of the preceding sentence, all understandings and agreements preceding the date of execution of this Agreement and relating to the subject matter hereof (including but not limited to the Prior Employment Agreement and any other employment agreements, confidentiality agreements, noncompete agreements, or other agreements) are hereby null and void and of no further force and effect.  Executive acknowledges and agrees that he has received all payments, benefits and other compensation to which he is entitled or could ever be entitled under the Prior Employment Agreement, and any and all claims to payment, benefits or other compensation under the Prior Employment Agreement are hereby waived by Executive.

 

9.13                        Modification; Waiver.  Any modification to or waiver of this Agreement will be effective only if it is in writing and signed by the parties to this Agreement.

 

9.14                        Actions by the Board.  Any and all determinations or other actions required of the Board hereunder that relate specifically to Executive’s employment by the Employer or the terms and conditions of such employment shall be made by the members of the Board other than Executive if Executive is a member of the Board, and Executive shall not have any right to vote or decide upon any such matter.

 

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9.15                        Executive’s Representations and Warranties.  Executive represents and warrants to the Employer that (a) Executive does not have any agreements with any prior employers or other third parties that will prohibit Executive from working for the Employer or fulfilling Executive’s duties and obligations to the Employer pursuant to this Agreement, and (b) Executive has complied with any and all duties imposed on Executive with respect to Executive’s former employers, including without limitation any requirements with respect to return of property.

 

9.16                        Defense of Claims.  During the period of Executive’s employment by the Employer and thereafter, upon request from the Employer, Executive shall cooperate with the Employer and its affiliates in the defense of any claims or actions that may be made by or against the Employer or any of its affiliates that relate to Executive’s actual or prior areas of responsibility.  The Employer shall pay or reimburse Executive for all of Executive’s reasonable travel and other direct out-of-pocket expenses reasonably incurred, to comply with Executive’s obligations under this Section 9.16, so long as Executive provides reasonable documentation of such expenses and obtains the Employer’s prior approval before incurring such expenses.  To the extent that the Employer requests such services at any time after the expiration of the Severance Period, such services may be performed by the Executive as his schedule reasonably permits, and the Employer shall pay a mutually agreed reasonable hourly rate to the Executive for the provision of such services.

 

9.17                        Section 409A.  The parties hereby agree that this Agreement is intended to satisfy the requirements of Section 409A with respect to amounts, if any, subject thereto and shall be interpreted, construed, and administered consistent with such intent. To the extent permitted under Section 409A without causing any payment or benefit provided hereunder to be subject to additional taxes and interest under Section 409A, each payment made under this Agreement shall be deemed to be a separate payment for purposes of Section 409A. Notwithstanding any provision in this Agreement to the contrary, if Executive is a “specified employee” (as such term is defined in Section 409A and as determined by the Employer in accordance with any method permitted under Section 409A) and any payment or benefit provided for herein would be subject to additional taxes and interest under Section 409A if Executive’s receipt of such payment or benefit is not delayed until the Section 409A Payment Date, then such payment or benefit shall not be provided to Executive (or Executive’s estate, if applicable) until the Section 409A Payment Date.  Notwithstanding anything to the contrary in this Agreement or elsewhere, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treasury Regulation § 1.409A-l(b)(9)(v)(A) or (C) (relating to certain reimbursements and in-kind benefits) shall be paid or provided only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following the calendar year in which Executive’s “separation from service” occurs; and provided further that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which Executive’s “separation from service” occurs.  To the extent any expense reimbursement or the provision of any in-kind benefit is determined to be subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise) (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of any such expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (iii) such

 

22

 

payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred.

 

9.18                        Guaranty.  The Company, as the ultimate parent corporation of the Employer, unconditionally and irrevocably guarantees to the Executive the timely payment and performance of the financial obligations of the Employer owed to the Executive under this Agreement upon the terms and conditions set forth herein.

 

9.19                        Clawback.  Notwithstanding any provisions in this Agreement to the contrary, any compensation, payments, or benefits provided hereunder, whether in the form of cash or otherwise, shall be subject to a clawback to the extent necessary to comply with the requirements of any applicable law, including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, section 304 of the Sarbanes Oxley Act of 2002, or any regulations promulgated thereunder, or any policy adopted by the Employer or the Company pursuant to any such law (whether in existence as of the Effective Date or later adopted).

 

[Signatures begin on next page.]

 

23

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of June         , 2016.

 

 

	
 
    	
NEXEO   SOLUTIONS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Michael B. Farnell, Jr.
    
	
 
    	
 
    	
Michael   B. Farnell, Jr.
    
	
 
    	
 
    	
Executive   Vice President and
    
	
 
    	
 
    	
Chief   Legal Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DAVID   A. BRADLEY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/   David A. Bradley
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
As   guarantor pursuant to Section 9.18 of the Agreement:
    
	
 
    	
 
    	
 
    
	
 
    	
NEXEO   SOLUTIONS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Michael B. Farnell, Jr.
    
	
 
    	
 
    	
Michael   B. Farnell, Jr.
    
	
 
    	
 
    	
Executive   Vice President and
    
	
 
    	
 
    	
Chief   Legal Officer
    

 

Employment Agreement as Amended and Restated Effective June 9, 2016

David BradleyEXHIBIT 10.6

 

NEXEO SOLUTIONS, INC.

 

SEVERANCE PLAN FOR U.S. OFFICERS AND EXECUTIVES

 

Amended and Restated, Effective as of June 9, 2016

 

 

NEXEO SOLUTIONS, INC.

SEVERANCE PLAN FOR U.S. OFFICERS AND EXECUTIVES

 

(Amended and Restated, Effective as of June 9, 2016)

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE I
    	
PURPOSE, INTENT AND TERM OF PLAN
    	
 
    	
1
    
	
Section 1.01
    	
 
    	
Purpose and Intent of the Plan
    	
 
    	
1
    
	
Section 1.02
    	
 
    	
Term of the Plan
    	
 
    	
1
    
	
Section 1.03
    	
 
    	
Adoption of the Plan
    	
 
    	
1
    
	
ARTICLE II
    	
DEFINITIONS
    	
 
    	
1
    
	
Section 2.01
    	
 
    	
“Alternative Position”
    	
 
    	
1
    
	
Section 2.02
    	
 
    	
“Applicable Date”
    	
 
    	
1
    
	
Section 2.03
    	
 
    	
“Base Salary”
    	
 
    	
1
    
	
Section 2.04
    	
 
    	
“Board”
    	
 
    	
2
    
	
Section 2.05
    	
 
    	
“Cause”
    	
 
    	
2
    
	
Section 2.06
    	
 
    	
“Change of Control”
    	
 
    	
2
    
	
Section 2.07
    	
 
    	
“COBRA”
    	
 
    	
4
    
	
Section 2.08
    	
 
    	
“Code”
    	
 
    	
4
    
	
Section 2.09
    	
 
    	
“Code Section 409A”
    	
 
    	
4
    
	
Section 2.10
    	
 
    	
“Committee”
    	
 
    	
4
    
	
Section 2.11
    	
 
    	
“Company”
    	
 
    	
4
    
	
Section 2.12
    	
 
    	
“Effective Date of Restatement”
    	
 
    	
4
    
	
Section 2.13
    	
 
    	
“Eligible Employee”
    	
 
    	
4
    
	
Section 2.14
    	
 
    	
“Employee”
    	
 
    	
4
    
	
Section 2.15
    	
 
    	
“Employer”
    	
 
    	
4
    
	
Section 2.16
    	
 
    	
“ERISA”
    	
 
    	
4
    
	
Section 2.17
    	
 
    	
“Exchange Act”
    	
 
    	
5
    
	
Section 2.18
    	
 
    	
“Good Reason”
    	
 
    	
5
    
	
Section 2.19
    	
 
    	
“Installment Payments”
    	
 
    	
5
    
	
Section 2.20
    	
 
    	
“Involuntary Termination”
    	
 
    	
5
    
	
Section 2.21
    	
 
    	
“Key Employee”
    	
 
    	
5
    
	
Section 2.22
    	
 
    	
“Lump Sum Amount”
    	
 
    	
5
    
	
Section 2.23
    	
 
    	
“Merger”
    	
 
    	
5
    
	
Section 2.24
    	
 
    	
“Notice Pay”
    	
 
    	
6
    
	
Section 2.25
    	
 
    	
“Officer”
    	
 
    	
6
    
	
Section 2.26
    	
 
    	
“Participant”
    	
 
    	
6
    
	
Section 2.27
    	
 
    	
“Participation Agreement”
    	
 
    	
6
    
	
Section 2.28
    	
 
    	
“Performance Year”
    	
 
    	
6
    
	
Section 2.29
    	
 
    	
“Permanent Disability”
    	
 
    	
6
    
	
Section 2.30
    	
 
    	
“Plan”
    	
 
    	
7
    
	
Section 2.31
    	
 
    	
“Plan Administrator”
    	
 
    	
7
    
	
Section 2.32
    	
 
    	
“Postponement Period”
    	
 
    	
7
    
						

 

 

TABLE OF CONTENTS
  (continued)

 

	
 
    	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 2.33
    	
 
    	
“Prior Participant”
    	
 
    	
7
    
	
Section 2.34
    	
 
    	
“Pro Rata Bonus Payment”
    	
 
    	
7
    
	
Section 2.35
    	
 
    	
“Release”
    	
 
    	
7
    
	
Section 2.36
    	
 
    	
“Release Revocation Period”
    	
 
    	
7
    
	
Section 2.37
    	
 
    	
“Separation from Service”
    	
 
    	
7
    
	
Section 2.38
    	
 
    	
“Separation from Service Date”
    	
 
    	
7
    
	
Section 2.39
    	
 
    	
“Severance Benefits”
    	
 
    	
7
    
	
Section 2.40
    	
 
    	
“Severance Payment”
    	
 
    	
8
    
	
Section 2.41
    	
 
    	
“Severance Period”
    	
 
    	
8
    
	
Section 2.42
    	
 
    	
“Subsidiary”
    	
 
    	
8
    
	
Section 2.43
    	
 
    	
“Subsidy Period”
    	
 
    	
8
    
	
Section 2.44
    	
 
    	
“Target Bonus Amount”
    	
 
    	
8
    
	
Section 2.45
    	
 
    	
“Termination of Employment in Connection with a   Change of Control”
    	
 
    	
8
    
	
Section 2.46
    	
 
    	
“Voluntary Termination”
    	
 
    	
8
    
	
ARTICLE III
    	
PARTICIPATION AND ELIGIBILITY FOR BENEFITS
    	
 
    	
8
    
	
Section 3.01
    	
 
    	
Participation
    	
 
    	
8
    
	
Section 3.02
    	
 
    	
Conditions
    	
 
    	
9
    
	
ARTICLE IV
    	
DETERMINATION OF SEVERANCE BENEFITS
    	
 
    	
10
    
	
Section 4.01
    	
 
    	
Amount of Severance Benefits Upon Involuntary   Termination (Not in Connection with Change of Control)
    	
 
    	
10
    
	
Section 4.02
    	
 
    	
Amount of Severance Benefits Upon a Termination of   Employment in Connection with a Change of Control
    	
 
    	
11
    
	
Section 4.03
    	
 
    	
Severance Benefits for Prior Participants
    	
 
    	
12
    
	
Section 4.04
    	
 
    	
Termination for Cause
    	
 
    	
12
    
	
Section 4.05
    	
 
    	
Reduction of Severance Benefits
    	
 
    	
12
    
	
Section 4.06
    	
 
    	
Accrued or Vested Benefits
    	
 
    	
13
    
	
ARTICLE V
    	
METHOD AND DURATION OF SEVERANCE BENEFITS   PAYMENTS
    	
 
    	
13
    
	
Section 5.01
    	
 
    	
Timing of Payment for Severance Benefits (Not in   Connection with a Change of Control)
    	
 
    	
13
    
	
Section 5.02
    	
 
    	
Timing of Payment for Severance Benefits Due Upon a   Termination of Employment in Connection with a Change of Control
    	
 
    	
14
    
	
Section 5.03
    	
 
    	
Method of Payment
    	
 
    	
14
    
	
Section 5.04
    	
 
    	
Code Section 409A
    	
 
    	
14
    
	
Section 5.05
    	
 
    	
Termination of Eligibility for Benefits
    	
 
    	
15
    
	
ARTICLE VI
    	
THE PLAN ADMINISTRATOR
    	
 
    	
16
    
	
Section 6.01
    	
 
    	
Named Fiduciary
    	
 
    	
16
    
	
Section 6.02
    	
 
    	
Authority and Duties
    	
 
    	
16
    
	
Section 6.03
    	
 
    	
Compensation of the Plan Administrator
    	
 
    	
16
    
	
Section 6.04
    	
 
    	
Records, Reporting and Disclosure
    	
 
    	
16
    
	
ARTICLE VII
    	
AMENDMENT, TERMINATION AND DURATION
    	
 
    	
17
    
						

 

ii

 

TABLE OF CONTENTS
  (continued)

 

	
 
    	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.01
    	
 
    	
Amendment, Suspension and Termination
    	
 
    	
17
    
	
Section 7.02
    	
 
    	
Duration
    	
 
    	
17
    
	
ARTICLE VIII
    	
DUTIES OF THE COMPANY, THE COMMITTEE AND THE   PLAN ADMINISTRATOR
    	
 
    	
17
    
	
Section 8.01
    	
 
    	
Records
    	
 
    	
17
    
	
Section 8.02
    	
 
    	
Payment
    	
 
    	
17
    
	
Section 8.03
    	
 
    	
Discretion
    	
 
    	
17
    
	
ARTICLE IX
    	
CLAIMS PROCEDURES
    	
 
    	
18
    
	
Section 9.01
    	
 
    	
General Claims Information
    	
 
    	
18
    
	
Section 9.02
    	
 
    	
Initial Claim Application
    	
 
    	
18
    
	
Section 9.03
    	
 
    	
Appeals of Denied Benefit Claims
    	
 
    	
19
    
	
Section 9.04
    	
 
    	
Arbitration; Expenses
    	
 
    	
19
    
	
ARTICLE X
    	
MISCELLANEOUS
    	
 
    	
20
    
	
Section 10.01
    	
 
    	
Nonalienation of Benefits
    	
 
    	
20
    
	
Section 10.02
    	
 
    	
Plan Year
    	
 
    	
20
    
	
Section 10.03
    	
 
    	
Notices
    	
 
    	
20
    
	
Section 10.04
    	
 
    	
Successors
    	
 
    	
20
    
	
Section 10.05
    	
 
    	
No Mitigation
    	
 
    	
20
    
	
Section 10.06
    	
 
    	
No Contract of Employment
    	
 
    	
21
    
	
Section 10.07
    	
 
    	
Severability of Provisions
    	
 
    	
21
    
	
Section 10.08
    	
 
    	
Heirs, Assigns, and Personal Representatives
    	
 
    	
21
    
	
Section 10.09
    	
 
    	
Headings and Captions
    	
 
    	
21
    
	
Section 10.10
    	
 
    	
Gender and Number
    	
 
    	
21
    
	
Section 10.11
    	
 
    	
Unfunded Plan
    	
 
    	
21
    
	
Section 10.12
    	
 
    	
Payments to Incompetent Persons
    	
 
    	
21
    
	
Section 10.13
    	
 
    	
Lost Payees
    	
 
    	
21
    
	
Section 10.14
    	
 
    	
Benefits are Not Insured
    	
 
    	
21
    
	
Section 10.15
    	
 
    	
Controlling Law
    	
 
    	
22
    
	
Section 10.16
    	
 
    	
Taxes
    	
 
    	
22
    
	
Section 10.17
    	
 
    	
Clawback
    	
 
    	
22
    
	
Section 10.18
    	
 
    	
Effect of Plan
    	
 
    	
22
    
	
Section 10.19
    	
 
    	
Certain Excise Taxes
    	
 
    	
22
    
						

 

iii

 

ARTICLE I
 PURPOSE, INTENT AND TERM OF PLAN

 

Section 1.01         Purpose and Intent of the Plan.  The purpose of the Plan is to provide Eligible Employees with certain compensation and benefits in the event that such Employee’s employment with the Company or a Subsidiary is terminated involuntarily.  The Plan is not intended to be an “employee pension benefit plan” or “pension plan” within the meaning of section 3(2) of ERISA.  Rather, the Plan is intended to be a “welfare benefit plan” within the meaning of section 3(1) of ERISA and to meet the requirements of a “severance pay plan” within the meaning of regulations published by the Secretary of Labor at Title 29, Code of Federal Regulations, section 2510.3-2(b).  Accordingly, no employee shall have a vested right to benefits paid by the Plan.  The terms of the Plan are intended to, and shall be interpreted so as to, comply in all respects with the provisions of Code Section 409A and the regulations and rulings promulgated thereunder and, if necessary, any provision shall be held null and void to the extent such provision (or any part thereof) fails to comply with Code Section 409A or the regulations or rulings promulgated thereunder.

 

Section 1.02         Term of the Plan.  The Plan shall generally be effective as of the Effective Date of Restatement and shall supersede any prior plan, program or policy under which the Company or any Subsidiary provided severance benefits prior to the Effective Date of Restatement.  The Plan shall continue until terminated pursuant to Article VII of the Plan.

 

Section 1.03         Adoption of the Plan.  The Plan was originally adopted by the Compensation Committee of the Board of Directors of Nexeo Solutions, LLC on December 8, 2011, effective as of the same date, but has been amended and restated effective June 9, 2016, which is the Effective Date of Restatement.

 

ARTICLE II
 DEFINITIONS

 

Section 2.01         “Alternative Position” shall mean a position with the Employer that:

 

(a)           does not materially reduce the Employee’s position or duties held immediately prior to the time of the Employer’s alternative offer of employment;

 

(b)           provides the Employee with a Base Salary and Target Bonus Amount that are materially comparable to the Base Salary and Target Bonus Amount that applied to Employee’s position that Employee held immediately prior to the time of the Employer’s alternative offer of employment; and

 

(c)           does not require the Employee to regularly perform the required duties of his or her employment outside the greater Houston metropolitan area.

 

Section 2.02         “Applicable Date” shall have the meaning given such term in Section 5.01 of the Plan.

 

Section 2.03         “Base Salary” shall mean the Participant’s annual base salary in effect as of the Participant’s Separation from Service Date.

 

1

 

Section 2.04                            “Board” shall mean the Board of Directors of Nexeo Solutions, Inc.

 

Section 2.05                            “Cause”shall mean (a) a breach by the Participant of the Participant’s employment obligations to the Employer (other than as a result of physical or mental incapacity), (b) commission by the Participant of an act of fraud, embezzlement, misappropriation, willful misconduct or breach of fiduciary duty against the Employer or any of its affiliates, (c) a material breach by the Participant of any of the covenants contained in the Participation Agreement, (d) the Participant’s conviction, plea of no contest or nolo contendere, deferred adjudication or unadjudicated probation for any felony or any crime involving moral turpitude, (e) the failure of the Participant to carry out, or comply with, in any material respect, any lawful and material directive of the Chief Executive Officer, the Chief Financial Officer, or the Participant’s supervisor, as applicable to the Participant, or (f) the Participant’s unlawful use (including being under the influence) or possession of illegal drugs.  For purposes of the previous sentence, no act or failure to act on the Participant’s part shall be deemed “willful” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Employer.  Any act, or failure to act, based upon authority given pursuant to a directive of the Board, as reflected in a resolution duly adopted by the Board, or based upon the advice of counsel for the Employer shall be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Employer.  If the reason for termination is due to conduct described in items (a) or (e) of this definition, no termination of the Participant’s employment shall be deemed to be for Cause unless the Employer notifies the Participant of the failure, breach, or conduct that constitutes Cause and the Participant fails to cure such failure, breach, or conduct within thirty (30) days of such notice.  In addition, no termination of a Participant’s employment shall be deemed to be for Cause during any period beginning on the date of the Participant’s delivery to the Employer of a notice of intent to terminate for Good Reason and ending on the earlier of the Participant’s termination for Good Reason or the date that is 90 days after the notice of intent to terminate for Good Reason.

 

Section 2.06                            “Change of Control” shall mean the occurrence of any of the following events:

 

(a)                                 A “change in the ownership of the Company” which shall occur on the date that any one person, or more than one person acting as a group, acquires ownership of stock in 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; however, if any one person or more than one person acting as a group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons will not be considered a “change in the ownership of the Company” (or to cause a “change in the effective control of the Company” within the meaning of Section 2.06(b) below) and an increase of the effective percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this paragraph; provided, further, however, that for purposes of this Section 2.06(a), any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company shall not constitute a Change of

 

2

 

Control.  This Section 2.06(a) applies only when there is a transfer of the stock of the Company (or issuance of stock), and stock in the Company remains outstanding after the transaction.

 

(b)                                 A “change in the effective control of the Company” which shall occur on the date that either (1) any one person, or more than one person acting as a group, acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company, except for any acquisition (i) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (ii) by any shareholder of the Company that beneficially owns at least five percent (5%) of the outstanding stock of the Company as of immediately following the closing of the Merger; or (2) a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.  For purposes of a “change in the effective control of the Company,” if any one person, or more than one person acting as a group, is considered to effectively control the Company within the meaning of this Section 2.06(b), the acquisition of additional control of the Company by the same person or persons is not considered a “change in the effective control of the Company,” or to cause a “change in the ownership of the Company” within the meaning of Section 2.06(a) above.

 

(c)                                  A “change in the ownership of a substantial portion of the Company’s assets” which shall occur on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) assets of the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all the assets of the Company immediately prior to such acquisition or acquisitions.  For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.  Any transfer of assets to an entity that is controlled by the shareholders of the Company immediately after the transfer, as provided in guidance issued pursuant to Section 409A, shall not constitute a Change of Control.

 

For purposes of this Section 2.06, the terms “ownership”, “own,” or “owned” shall refer to “beneficial ownership” as that term is used in Rule 13d-3 and Rule 13d-5 (or any successor provisions) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the terms “person” and “group” shall mean such terms as used in section 13(d)(3) or section 14(d)(2) of the Exchange Act (or any successor provisions).  In addition, for purposes of this Section 2.06, “Company” includes (i) the Company and (ii) the Employer. Notwithstanding anything in this Section 2.06 to the contrary, none of the following transactions shall constitute a Change of Control for purposes of this Agreement (a) any transaction commonly known as a Reverse Morris Trust transaction, as determined in good faith by the Board, or (b) the acquisition by TPG VI Neon I, L.P., TPG VI Neon II, L.P., TPG VI FOF Neon,

 

3

 

L.P., or any of their respective affiliates of additional (x) shares of the Company, (y) voting power with respect to the Company, or (z) assets of the Company.

 

Section 2.07                            “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the regulations promulgated thereunder.

 

Section 2.08                            “Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

 

Section 2.09                            “Code Section 409A” shall mean section 409A of the Code, the regulations promulgated thereunder, and any additional guidance issued by the Internal Revenue Service related thereto.

 

Section 2.10                            “Committee” shall mean the Compensation Committee of the Board or such other committee appointed by the Board to assist the Company in making determinations required under the Plan in accordance with its terms.  Except with respect to any unanimous Committee action described in Section 5.05(b), the Committee may delegate all or part of its authority under the Plan to an individual or another committee.

 

Section 2.11                            “Company” shall mean Nexeo Solutions, Inc., a Delaware corporation.

 

Section 2.12                            “Effective Date of Restatement” shall mean June 9, 2016.

 

Section 2.13                            “Eligible Employee” shall mean any Employee designated by the Committee as an Eligible Employee and who has executed and returned a Participation Agreement to the Company.  In addition, an Eligible Employee must be:  (a) a senior member of management, (b) who is not (i) covered under any other severance plan or program sponsored by the Company or a Subsidiary that the Plan Administrator has deemed to be a plan or program that would provide duplicative severance benefits to the Employee, or (ii) a party to an employment agreement with the Employer pursuant to which such Employee is entitled to severance benefits.  The Committee (including any delegate of the following authority) shall have the sole authority to determine whether an Employee will be an Eligible Employee.

 

Section 2.14                            “Employee” shall mean an individual who is a common law employee on the payroll of the Employer and shall not include any person providing services to the Company or any Subsidiary through a temporary service or on a leased basis or who is hired by the Company or any Subsidiary as an independent contractor, consultant, or otherwise as a person who is not an employee for purposes of withholding United States federal income or employment taxes, as evidenced by payroll records or a written agreement with the individual, regardless of any contrary governmental agency determination or judicial holding relating to such status or tax withholding.  Notwithstanding the above, in the event that Code Section 409A applies to any payments made hereunder, subsection (iv) of the definition of “Subsidiary” shall apply.

 

Section 2.15                            “Employer” shall mean the Company or any Subsidiary.

 

Section 2.16                            “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

 

4

 

Section 2.17                            “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder.

 

Section 2.18                            “Good Reason” shall mean the occurrence of any of the following events: (a) a material reduction in a Participant’s position or duties; provided, however, that no change in position or duties shall be deemed to be a material reduction unless the Participant also ceases to be the head of the Participant’s functional or business unit; (b) a material and adverse change in the Participant’s compensation, which shall be deemed to include any reduction in the Participant’s Base Salary or target bonus percentage, other than in connection with a reduction in the salaries or target bonus percentages applicable to all Participants, or (c) a requirement that a Participant regularly perform the required duties of his or her employment from a location that is outside the greater Houston metropolitan area.  Notwithstanding the foregoing provisions of this Section 2.18 or any other provision in this Plan to the contrary, any assertion by a Participant of a termination of employment for Good Reason shall not be effective unless all of the following conditions are satisfied: (i) the condition described in the foregoing clauses of this Section 2.18 giving rise to a Participant’s termination of employment must have arisen without the Participant’s consent; (ii) the Participant must provide written notice to the Employer of such condition in accordance with Section 10.03 within 30 days of the initial existence of the condition; (iii) the condition specified in such notice must remain uncorrected for 30 days after receipt of such notice by the Employer; and (iv) the date of the Participant’s termination of employment must occur within 90 days after the initial existence of the condition specified in such notice.

 

Section 2.19                            “Installment Payments” shall mean the amounts scheduled to be paid in regular substantially equal installments, as provided in Section 5.01(b) of the Plan.

 

Section 2.20                            “Involuntary Termination” shall mean the date that (a) a Participant experiences an Employer-initiated Separation from Service for any reason other than Cause, Permanent Disability or death, or (b) a Participant experiences a Separation from Service due to resignation by the Participant for Good Reason, each as provided under and subject to the conditions of Article III.

 

Section 2.21                            “Key Employee” shall mean an Eligible Employee who is a “specified employee” under Code Section 409A, as determined by the Committee or its delegate.  The determination of Key Employees, including the number and identity of persons considered specified employees and the identification date, shall be made by the Plan Administrator in accordance with the provisions of Code Section 409A and the regulations promulgated thereunder.

 

Section 2.22                            “Lump Sum Amount” shall mean the amounts scheduled to be paid in a single lump sum cash payment, as provided in Section 5.02 of the Plan.

 

Section 2.23                            “Merger” shall mean the merger occurring pursuant to that certain Agreement and Plan of Merger, dated as of March 21, 2016, by and among WL Ross Holding Corp., a Delaware corporation, TPG Accolade, LP, a Delaware limited partnership, Nexeo Solutions Holdings, LLC, a Delaware limited liability company (“Holdings”), and certain related

 

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affiliates of the foregoing parties, whereby Holdings emerged as the surviving entity and a subsidiary of the Company.

 

Section 2.24                            “Notice Pay” shall mean the amount that each Eligible Employee who is eligible for Severance Benefits may receive in lieu of providing services during a “Notice Period,” which will be at least thirty (30) calendar days prior to the Eligible Employee’s Separation from Service Date.  In the event that the Employer determines that a Participant’s last day of work shall be prior to the end of his or her Notice Period, such Employee shall be entitled to pay in lieu of notice for the balance of such Notice Period.  Notice Pay paid to an Eligible Employee shall be in addition to, and shall not be offset against, any other Severance Benefits the Participant may be entitled to receive under Article IV.  An Eligible Employee who does not sign, or who revokes his or her signature on, a Release shall only be eligible for Notice Pay. Unless otherwise permitted by the applicable plan documents or laws, an Eligible Employee will not be eligible to apply for short-term disability, long-term disability and/or workers’ compensation during the Notice Period or anytime thereafter.  Notice Pay shall be paid in accordance with Article V.

 

Section 2.25                            “Officer” shall mean any individual who is an officer, as such term is defined pursuant to Rule 16a-1(f) as promulgated under the Exchange Act, of the Company.  For purposes of this definition, Officer shall also mean any officer of any of the Company’s Subsidiaries who performs policy making functions, within the context of Rule 16a-1(f).

 

Section 2.26                            “Participant” shall mean any Eligible Employee who meets the requirements of Article III and thereby becomes eligible for Severance Benefits.

 

Section 2.27                            “Participation Agreement” shall mean the form agreement presented to each Eligible Employee by the Plan Administrator prior to his or her entry into this Plan that shall evidence the Eligible Employee’s agreement to participate in this Plan, to comply with all terms, conditions and restrictions within this Plan, and to comply with certain restrictive covenants, including confidentiality and non-competition restrictions, where applicable.  The Committee (including the applicable delegate thereof) shall determine the terms and conditions of each Participation Agreement, and Participation Agreements may vary between each Eligible Employee.  The Participation Agreement in effect with respect to an Eligible Employee may be amended (or superseded with a new Participation Agreement) following his or her entry into the Plan by mutual agreement of the parties thereto, including for purposes of Sections 4.01 and 4.02 of the Plan.

 

Section 2.28                            “Performance Year” shall mean the twelve (12) month period used by the Employer to measure performance for annual bonuses at the time of the Participant’s Separation from Service.

 

Section 2.29                            “Permanent Disability” shall mean that an Employee has a permanent and total incapacity from engaging in any employment for the Employer for physical or mental reasons.  A “Permanent Disability” shall be deemed to exist if the Employee meets the requirements for disability benefits under the Employer’s long-term disability plan or under the requirements for disability benefits under the Social Security law then in effect, or if the

 

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Employee is designated with an inactive employment status at the end of a disability or medical leave.

 

Section 2.30                            “Plan” shall mean the Nexeo Solutions, Inc. Severance Plan for U.S. Officers and Executives as set forth herein, and as the same may from time to time be amended.

 

Section 2.31                            “Plan Administrator” shall mean the individual(s) appointed by the Committee to administer the terms of the Plan as set forth herein and if no individual is appointed by the Committee to serve as the Plan Administrator for the Plan, the Plan Administrator shall be the Executive Vice President and Chief Human Resources Officer of the Company.  Notwithstanding the preceding sentence, in the event the Plan Administrator is entitled to Severance Benefits under the Plan, the Committee or its delegate shall act as the Plan Administrator for purposes of administering the terms of the Plan with respect to the Plan Administrator.  The Plan Administrator may delegate all or any portion of its authority under the Plan to any other person(s).

 

Section 2.32                            “Postponement Period” shall mean, for a Key Employee, the period of six (6) months after such Key Employee’s Separation from Service Date (or such other period as may be required by Code Section 409A).

 

Section 2.33                            “Prior Participant” shall mean a Participant whose governing Participation Agreement was effective prior to the Effective Date of Restatement and who has not executed a new Participation Agreement in the form presented to the Participant following the Effective Date of Restatement.

 

Section 2.34                            “Pro Rata Bonus Payment” shall mean the amount calculated in accordance with Section 4.02(c) of this Plan.

 

Section 2.35                            “Release” shall mean the “Separation of Employment Agreement and General Release,” as provided by the Employer, or such other agreement between the Employer and Participant under which the Participant releases potential claims against the Employer in exchange for Severance Benefits.

 

Section 2.36                            “Release Revocation Period” shall mean the period described in Section 3.02(a) of the Plan.

 

Section 2.37                            “Separation from Service” shall mean “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i) and the applicable regulations and rulings promulgated thereunder.

 

Section 2.38                            “Separation from Service Date” shall mean, with respect to a Participant, the date on which such Participant experiences a Separation from Service.

 

Section 2.39                            “Severance Benefits” shall mean, as applicable, any Severance Payment, Pro Rata Bonus Payment and the Employer subsidy portion of COBRA coverage that a Participant is eligible to receive pursuant to Article IV of the Plan.

 

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Section 2.40                            “Severance Payment” shall mean the amounts calculated in accordance with Section 4.01(b) or 4.02(b) of this Plan, as applicable.

 

Section 2.41                            “Severance Period” shall mean the eighteen (18) month period during which a Participant is entitled to receive any Severance Benefits under this Plan, beginning with the Participant’s Separation from Service Date.

 

Section 2.42                            “Subsidiary” shall mean (a) a subsidiary company (wherever incorporated) of the Company; (b) any separately organized business unit, whether or not incorporated, of the Company; (c) any employer that is required to be aggregated with the Company pursuant to Code section 414 and the regulations promulgated thereunder; and (d) any service recipient or employer that is within a controlled group of corporations as defined in Code sections 1563(a)(1), (2) and (3) where the phrase “at least 50%” is substituted in each place “at least 80%” appears and any service recipient or employer within trades or businesses under common control as defined in Code section 414(c) and Treas. Reg. § 1.414(c)-2 where the phrase “at least 50%” is substituted in each place “at least 80%” appears, provided, however, that when the relevant determination is to be based upon legitimate business criteria (as described in Treas. Reg. § 1.409A-1(b)(5)(iii)(E) and § 1.409A-1(h)(3)), the phrase “at least 20%” shall be substituted in each place “at least 80%” appears as described above with respect to both a controlled group of corporations and trades or business under common control.

 

Section 2.43                            “Subsidy Period” shall mean the period described in Section 4.01(c).

 

Section 2.44                            “Target Bonus Amount” shall mean an amount equal to the product of the Eligible Employee’s annual Base Salary and the Eligible Employee’s target bonus percentage for the applicable Performance Year of the Employer, or, if the Eligible Employee did not have a target bonus percentage for such Performance Year, his or her target bonus percentage shall be fifty percent (50%).  For these purposes, the “target bonus percentage” shall be the highest target percentage in effect for the Eligible Employee in the applicable Performance Year.

 

Section 2.45                            “Termination of Employment in Connection with a Change of Control” shall mean an Involuntary Termination that occurs on or at any time within the twenty-four (24) month period immediately following a Change of Control.

 

Section 2.46                            “Voluntary Termination” shall mean any Separation from Service due to retirement or termination of employment that is not initiated by the Company or any Subsidiary.

 

ARTICLE III
 PARTICIPATION AND ELIGIBILITY FOR BENEFITS

 

Section 3.01                            Participation.  Each Eligible Employee in the Plan who incurs an Involuntary Termination and who satisfies all of the conditions of Section 3.02 shall be eligible to receive the Severance Benefits described in the Plan.  An Eligible Employee shall not be eligible to receive any other severance benefits from the Company or Subsidiary on account of an Involuntary Termination, unless otherwise provided in the Plan.

 

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Section 3.02                            Conditions.

 

(a)                                 Eligibility for any Severance Benefits is expressly conditioned on the occurrence of the following within sixty (60) days following the Participant’s Separation from Service Date (the “Release Revocation Period”):  (i) execution, non-revocation and delivery of a Release in the form provided by the Employer; (ii) compliance by the Participant with all of the terms and conditions of such Release; and (iii) to the extent permitted in Section 4.05 of the Plan, execution of a written agreement that authorizes the deduction of amounts owed to the Employer prior to the payment of any Severance Benefits (or in accordance with any other schedule as the Plan Administrator may, in its sole discretion, determine to be appropriate).  Notwithstanding the form and timing of payments noted elsewhere within this Plan, in the event that the Employer has not received a properly executed Release by the Participant by the sixtieth (60th) day following the Participant’s Separation from Service Date, the Participant shall not be entitled to receive any payments or benefits pursuant to this Plan.  The Employer shall endeavor to deliver the final form of the Release for the Participant’s consideration within the three (3) day period immediately following the Participant’s Separation from Service Date in order to ensure that the Participant has adequate time to complete each of the Participant’s requirements set forth herein.

 

(b)                                 For purposes of clarity, an Eligible Employee will not be eligible to receive Severance Benefits pursuant to this Plan in the event of any type of termination of employment other than in connection with an Involuntary Termination.  The circumstances in which an Eligible Employee will not be eligible to receive Severance Benefits, include, but are not limited to, the following circumstances:

 

(i)                                     The Eligible Employee voluntarily terminates employment other than for Good Reason;

 

(ii)                                  The Employer provides written notice to the Eligible Employee that his or her employment will terminate on a job-end date that is no more than 3 months after the date of such notice, and the Eligible Employee resigns employment before the job-end date specified by the Employer;

 

(iii)                               The Eligible Employee’s employment is terminated for Cause;

 

(iv)                              The Eligible Employee voluntarily retires;

 

(v)                                 The Eligible Employee’s employment is terminated due to the Eligible Employee’s death or Permanent Disability;

 

(vi)                              The Eligible Employee does not return to work at the end of an approved leave of absence;

 

(vii)                           The Eligible Employee does not satisfy the conditions for Severance Benefits set forth in Section 3.02(a); or

 

(viii)                        The Eligible Employee continues in employment with the Company or a Subsidiary or refuses the Employer’s offer to continue in

 

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employment in the same or in an Alternative Position with the Company or a Subsidiary.

 

(c)                                  The Plan Administrator has the sole discretion to determine an Eligible Employee’s eligibility to receive Severance Benefits.

 

(d)                                 An Eligible Employee returning from approved military leave will be eligible for Severance Benefits if:  (i) he/she is eligible for reemployment under the provisions of the Uniformed Services Employment and Reemployment Rights Act (“USERRA”); (ii) his/her pre-military leave job is eliminated; and (iii) the Employer’s circumstances are changed so as to make reemployment in another position impossible or unreasonable, or re-employment would create an undue hardship for the Employer.  If the Eligible Employee returning from military leave qualifies for Severance Benefits, his/her Severance Benefits will be calculated as if he/she had remained continuously employed from the date he/she began his/her military leave.  The Eligible Employee must also satisfy any other relevant conditions for payment set forth in this Article III, including execution of a Release.

 

ARTICLE IV
 DETERMINATION OF SEVERANCE BENEFITS

 

Section 4.01                            Amount of Severance Benefits Upon Involuntary Termination (Not in Connection with Change of Control).  Subject to Article III and Section 5.05, the Severance Benefits to be provided to a Participant upon an Involuntary Termination shall consist of the following, as applicable:

 

(a)                                 Notice Pay.  The Participant will receive Notice Pay, if applicable.

 

(b)                                 Severance Payment. The Employer shall pay to the Participant a cash payment in an amount equal to one and one-half (1.5) times the sum of (i) the Participant’s Base Salary in effect for the year in which the Participant’s termination occurs and (ii) the Participant’s Target Bonus Amount for the Performance Year immediately preceding the Performance Year during which the Participant’s Separation from Service occurs.

 

(c)                                  Subsidized Medical and Dental Benefits.  The Participant (and his/her spouse, domestic partner or child(ren), as applicable) shall be eligible for continued coverage under the Employer’s medical and dental plans as required by and pursuant to COBRA.  The Employer shall provide COBRA coverage only if such coverage is timely elected by the Participant or other qualified beneficiary (as defined by COBRA).  If the Participant timely elects COBRA coverage, subject to the other provisions in this Section 4.01(c), then during the Severance Period, the Participant will be responsible for paying the employee portion of the applicable premium under the respective plan(s) at the same rate and at the same time as such employee contributions are paid by similarly-situated active employees of the Employer, and the Employer shall be responsible for the remainder of the premiums.  Such coverage shall be provided through an arrangement that satisfies the requirements of Sections 105 and 106 of the Code such that the benefits

 

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or reimbursements under such arrangement are not includible in the Participant’s income.  The Employer may satisfy the requirement of the preceding sentence by providing such benefits through an arrangement that requires the Employer to impute income, on a schedule pursuant to the Employer’s regular payroll practices but no less frequently than monthly, to the Participant in an amount equal to the Employer premium subsidy provided to similarly-situated active employees of the Employer, with the Participant being responsible for any income taxes thereon.  The medical and dental plan coverage provided on a subsidized basis pursuant to this Section 4.01(c) will cease upon the expiration of the Severance Period, or if earlier, upon such time that (i) the Participant does not pay the required premium within the applicable time period, (ii) the Participant obtains new employment and is eligible for group health plan coverage from the Participant’s new employer, (iii) the Participant terminates COBRA coverage for any other reason, or (iv) any other event occurs that, pursuant to COBRA, permits the earlier termination of COBRA coverage (the “Subsidy Period”).  If the Subsidy Period is less than the applicable COBRA coverage period, then, effective for the first premium payment due after the Subsidy Period expires, the Participant will be required to pay the entire premium for COBRA coverage and shall be responsible for paying such premium during the remainder of the applicable COBRA coverage period, which shall end as provided under COBRA.

 

Section 4.02                            Amount of Severance Benefits Upon a Termination of Employment in Connection with a Change of Control.  Subject to Article III and Section 5.05, the Severance Benefits to be provided to a Participant upon a Termination of Employment in Connection with a Change of Control shall consist of the following, as applicable:

 

(a)                                 Notice Pay.  The Participant will receive Notice Pay, if applicable.

 

(b)                                 Severance Payment. The Employer shall pay to the Participant a lump sum cash payment in an amount equal to one and one-half (1.5) times the sum of (i) the Participant’s Base Salary in effect for the year in which the Participant’s termination occurs and (ii) the Participant’s Target Bonus Amount for the year in which the Participant’s termination occurs.

 

(c)                                  Pro Rata Bonus Payments.  A Participant shall be eligible to receive a bonus for the Performance Year in which the Termination of Employment in Connection with a Change of Control occurs in an amount equal to the Target Bonus Amount for such year as determined in good faith by the Board based on performance for such year, which amount shall be prorated through and including the Separation from Service Date (based on the ratio of the number of days the Participant was employed by the Employer during such Performance Year to the number of days in such Performance Year), payable in a lump-sum on or before the date such annual bonuses are paid to executives who have continued employment with the Employer (but in no event earlier than 60 days after the Separation from Service Date, nor later than the fifteenth day of the third month next following the end of the calendar year (or if later the end of the Company’s fiscal year) during which the Performance Year ends); provided, however, that if this paragraph applies with respect to an annual bonus that is intended to constitute performance-based compensation within the meaning of, and for purposes of, section 162(m) of the Code,

 

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then this paragraph shall apply with respect to such annual bonus only to the extent the applicable performance criteria have been satisfied as certified by a committee of the Board as required under section 162(m) of the Code.

 

(d)                                 Subsidized Medical and Dental Benefits.  The Participant (and his/her spouse, domestic partner or child(ren), as applicable) shall be eligible for continued coverage under the Employer’s medical and dental plans as required by and pursuant to COBRA.  The Employer shall provide COBRA coverage only if such coverage is timely elected by the Participant or other qualified beneficiary (as defined by COBRA).  If the Participant timely elects COBRA coverage, subject to the other provisions in this Section 4.02(d), then during the Severance Period, the Participant will be responsible for paying the employee portion of the applicable premium under the respective plan(s) at the same rate and at the same time as such employee contributions are paid by similarly-situated active Employer employees, and the Employer shall be responsible for the remainder of the premiums.  Such COBRA coverage shall be provided through an arrangement that satisfies the requirements of sections 105 and 106 of the Code such that the benefits or reimbursements under such arrangement are not includible in the Participant’s income.  The Employer may satisfy the requirement of the preceding sentence by providing such benefits through an arrangement that requires the Employer to impute income, on a schedule pursuant to the Employer’s regular payroll practices but no less frequently than monthly, to the Participant in an amount equal to the Employer premium subsidy provided to similarly-situated active employees of the Employer, with the Participant being responsible for any taxes thereon.  The medical and dental plan coverage provided on a subsidized basis pursuant to this Section 4.02(d) will cease upon the expiration of the Subsidy Period.  If the Subsidy Period is less than the applicable COBRA coverage period, then, effective for the first premium payment due after the Subsidy Period expires, the Participant will be required to pay the entire premium for COBRA coverage and shall be responsible for paying such premium during the remainder of the applicable COBRA coverage period, which shall end as provided under COBRA.

 

Section 4.03                            Severance Benefits for Prior Participants.  Notwithstanding anything to the contrary in Section 4.01 or 4.02 above, the Severance Benefits to be provided to a Prior Participant upon an Involuntary Termination shall consist of the payments and benefits that such Participant would have been entitled to under the corresponding provisions of the Plan that existed prior to the Effective Date of Restatement of the Plan and not the Severance Benefits provided under Section 4.01 or 4.02, as applicable.

 

Section 4.04                            Termination for Cause.  If any Eligible Employee’s employment terminates on account of termination by the Employer for Cause, the Eligible Employee shall not be entitled to receive Severance Benefits under this Plan and shall be entitled only to those benefits that are required to be provided to the Eligible Employee by applicable law.

 

Section 4.05                            Reduction of Severance Benefits.  With respect to amounts paid under the Plan that are not subject to Code Section 409A, the Plan Administrator reserves the right to make deductions in accordance with applicable law for any monies owed to the Employer by the Eligible Employee or the value of Employer property that the Eligible Employee has retained in

 

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his/her possession.  With respect to amounts paid under the Plan that are subject to Code Section 409A, the Plan Administrator reserves the right to make deductions in accordance with applicable law for any monies owed to the Employer by the Eligible Employee or the value of Employer property that the Eligible has retained in his/her possession; provided, however, that such deductions cannot exceed $5,000 in the aggregate in any Employer fiscal year.

 

Section 4.06                            Accrued or Vested Benefits.  In the event that an Eligible Employee’s employment with the Employer or any successor is terminated for any reason, any accrued or vested benefits that the Eligible Employee may be due or owed with respect to plans or arrangements outside of this Plan will be governed by the terms and conditions of the applicable plan or arrangement rather than this Plan.

 

ARTICLE V
 METHOD AND DURATION OF SEVERANCE BENEFITS PAYMENTS

 

Section 5.01                            Timing of Payment for Severance Benefits (Not in Connection with a Change of Control).  To ensure that the Participant has properly considered the Release Revocation Period and subject to Sections 5.04, 5.05 and Article IX, the Severance Benefits to which a Participant is entitled, as determined pursuant to Section 4.01, shall be paid on, or commence on, the sixtieth (60th) day following the Participant’s Separation from Service Date.  In the event that any payments that should have been made to the Eligible Employee pursuant to this Plan, but, due to the delay in payments pursuant to the Release Revocation Period were not paid to the Participant, such payments will be aggregated, without interest, and payable in a lump sum along with the first payment scheduled to be paid on the sixtieth (60th) day following the Participant’s Separation from Service Date.  Any Notice Pay to which a Participant may be entitled shall not be subject to the execution of a Release and shall be paid no later than the date that is thirty (30) days after the Participant’s Separation from Service Date.  Severance Benefits shall be paid as follows:

 

(a)                                 Subsidized Medical and Dental Benefits.  Subsidized medical and dental benefits shall be provided in accordance with the provisions of Section 4.01(c), above; provided, however, that during the Release Revocation Period, the Participant shall be required to pay the entire premium to effectuate any elected COBRA coverage, and the Employer shall reimburse the Participant on the sixtieth (60th) day following the Participant’s Separation from Service Date for the difference between the amount Executive paid to effect and continue such coverage during the Release Revocation Period and the employee contribution amount that active similarly situated employees of the Employer paid for the same or similar coverage under such group health plans.

 

(b)                                 Severance Payment.  The Severance Payment (the “Installment Payments”) shall be paid over the Severance Period in substantially equal regular installments in accordance with the Employer’s normal payroll practices, but no less frequently than monthly.

 

Notwithstanding the preceding provisions of this Section 5.01, to the extent, if any, that the aggregate amount of Severance Benefits that would otherwise be paid pursuant to the provisions of this Section 5.01 after the fifteenth day of the third month following the end of the calendar

 

13

 

year, or if later the end of the Company’s fiscal year, in which the Participant’s Separation from Service Date occurs (the “Applicable Date”) exceeds the maximum exemption amount under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A), then such excess shall be paid to the Participant in a lump sum on the Applicable Date (or the first business day preceding the Applicable Date if the Applicable Date is not a business day), and the installments of Severance Benefits payable after the Applicable Date shall be reduced by such excess (beginning with the installment first payable after the Applicable Date and continuing with the next succeeding installment until the aggregate reduction equals such excess).  However, in the event that the Participant is subject to a Postponement Period, all amounts that would have been paid to the Participant but for such a Postponement Period shall be aggregated, without interest, and payable in a lump sum along with the first installment payment scheduled to follow the Postponement Period.

 

Section 5.02                            Timing of Payment for Severance Benefits Due Upon a Termination of Employment in Connection with a Change of Control.  Subject to Sections 5.04, 5.05 and Article IX, the Severance Payment and Pro Rata Bonus Payment (the “Lump Sum Amounts”) to which a Participant is entitled, as determined pursuant to Section 4.02, shall be paid in a single lump sum cash payment to the Participant on the 60th day following the Participant’s Separation from Service Date if the Change of Control is also a “change in control event” as defined in Code Section 409A; provided, however, that if the Change of Control is not a “change in control event” as defined in Code Section 409A, the Lump Sum Amounts to which a Participant is entitled, as determined pursuant to Section 4.02, shall be paid in accordance with Section 5.01.  Subsidized medical and dental benefits shall be provided or paid in accordance with the provisions of Section 4.02 and 5.01(a), above.  Any Notice Pay to which a Participant may be entitled shall not be subject to the execution of a Release and shall be paid no later than the date that is thirty (30) days after the Participant’s Separation from Service Date.  In the event that the Participant is subject to a Postponement Period, any portion of the Severance Benefits that would have been paid to the Participant but for such a Postponement Period shall be paid, without interest, in a lump sum on the first business day immediately following the completion of the Postponement Period.

 

Section 5.03                            Method of Payment.  In no event will interest be credited on the unpaid balance for which a Participant may become eligible.  Payment shall be mailed to the last address provided by the Participant to the Employer or by such other reasonable method as determined by the Plan Administrator.  The Employer may withhold from any amounts payable under this Plan any federal, state or local taxes as the Employer is required to withhold pursuant to any law or government regulation or ruling.  In the event of a Participant’s death prior to the completion of all payments to which a Participant is entitled, the remaining payments shall be paid to the Participant’s estate in a single lump sum payment within ninety (90) days following the date of the Participant’s death.  Notwithstanding anything to the contrary herein, no payments due to any Eligible Employee under this Plan shall be made following the twenty-four (24)-month period immediately following the Eligible Employee’s Separation from Service.

 

Section 5.04                            Code Section 409A.

 

(a)                                 Notwithstanding any other provision of the Plan to the contrary, if required by Code Section 409A, no Severance Benefits shall be paid to a Participant who

 

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is a Key Employee during the Postponement Period.  If the Participant dies during the Postponement Period, however, amounts withheld pursuant to this Section 5.04(a) shall be paid to the Participant’s estate no later than ninety (90) days after the Participant’s death.

 

(b)                                 This Plan is intended to provide certain benefits that meet the requirements of the “short-term deferral” exception, the “separation pay” exception, and other exceptions under Code Section 409A, but neither the Company nor the Employer makes any representation or warranty that the payments and benefits provided under this Agreement qualify for such exceptions under Code Section 409A, and in no event shall the Company or the Employer be liable for or indemnify any Participant for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by a Participant on account of non-compliance with Code Section 409A.  Notwithstanding any other provision of the Plan to the contrary, if required by Code Section 409A, payments may only be made under this Plan upon an event and in a manner permitted by Code Section 409A.  For purposes of Code Section 409A, each individual payment that constitutes part of the Severance Benefits shall be treated as a separate payment from any other such payment.  All reimbursements and in-kind benefits (including any Employer premium subsidy imputed as income to a Participant pursuant to Sections 4.01(c) or 4.02(d) of the Plan) provided under the Plan shall be made or provided in accordance with the requirements of Code Section 409A including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the period of time specified in the Plan, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement, or in-kind benefits is not subject to liquidation or exchange for another benefit.  In no event may a Participant designate the year of payment for any amounts payable under the Plan.

 

Section 5.05                            Termination of Eligibility for Benefits.

 

(a)                                 All Eligible Employees shall cease to be eligible to participate in the Plan, and all Severance Benefits payable to a Participant shall cease upon the occurrence of the earlier of:

 

(i)                                     Subject to Article VII, the termination or modification of the Plan; or

 

(ii)                                  The completion of the provision of Severance Benefits to the Participant.

 

(b)                                 Notwithstanding any other provision of the Plan to the contrary, if the Committee or the Plan Administrator determines either before or during the Severance Period that (i) a Cause condition existed pursuant to Section 2.04(b), (d), or (f) prior to the date of a Participant’s Separation from Service due to an Involuntary Termination

 

15

 

that, had the Employer been fully aware of such condition, would have resulted in the termination of the Participant’s employment for Cause or (ii) a Participant has failed to abide by any of the covenants contained in the Participation Agreement, then the Company may deny Severance Benefits not yet in pay status, and any Severance Benefits currently payable to the Participant shall immediately cease, subject to unanimous adoption by the Committee of a resolution confirming such finding and approving of the termination of such Severance Benefits.  Any remedy under this Section 5.05(b) shall be in addition to, and not in place of, any other remedy, including injunctive relief, that the Company may have.

 

ARTICLE VI
 THE PLAN ADMINISTRATOR

 

Section 6.01                            Named Fiduciary.  The Plan Administrator shall be the named fiduciary for purposes of ERISA.

 

Section 6.02                            Authority and Duties.  It shall be the duty of the Plan Administrator, on the basis of information supplied to it by the Company and the Committee, to properly administer the Plan.  The Plan Administrator shall have the full power, authority and discretion to construe, interpret and administer the Plan, to make factual determinations, to correct deficiencies therein, and to supply omissions.  All decisions, actions and interpretations of the Plan Administrator shall be final, binding and conclusive upon the parties with respect to denied claims for Severance Benefits.  The Plan Administrator may adopt such rules and regulations and may make such decisions as it deems necessary or desirable for the proper administration of the Plan.

 

Section 6.03                            Compensation of the Plan Administrator.  The Plan Administrator shall receive no compensation for services as such.  However, all reasonable expenses of the Plan Administrator shall be paid or reimbursed by the Company upon proper documentation.  The Plan Administrator shall be indemnified by the Company against personal liability for actions taken in good faith in the discharge of the Plan Administrator’s duties.

 

Section 6.04                            Records, Reporting and Disclosure.  The Plan Administrator shall keep a copy of all records relating to the payment of Severance Benefits to Participants and former Participants and all other records necessary for the proper operation of the Plan.  All Plan records shall be made available to the Committee, the Company and to each Participant for examination during business hours except that a Participant shall examine only such records as pertain exclusively to the examining Participant and to the Plan.  The Plan Administrator shall prepare and shall file as required by law or regulation all reports, forms, documents and other items required by ERISA, the Code, and every other relevant statute, each as amended, and all regulations thereunder (except that the Employer or any supplemental unemployment benefits trust, as payor of the Severance Benefits, shall prepare and distribute to the proper recipients all forms relating to withholding of income or wage taxes, Social Security taxes, and other amounts that may be similarly reportable).

 

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ARTICLE VII
 AMENDMENT, TERMINATION AND DURATION

 

Section 7.01                            Amendment, Suspension and Termination.  Except as otherwise provided in this Section 7.01, the Board or its delegate shall have the right, at any time and from time to time, to amend, suspend or terminate the Plan in whole or in part, for any reason or without reason, and without either the consent of or the prior notification to any Participant, by a formal written action; provided, however, that (i) any amendment that became effective within the six (6) month period prior to the date of either a Participant’s Involuntary Termination or a Change of Control, and that had the effect of reducing or eliminating benefits under the Plan, shall be deemed to be not effective, and (ii) no such amendment, suspension or termination may occur during the period that starts on the date of the consummation of a Change of Control and ends on the date that is twenty-four (24) months following the Change of Control.  No such amendment shall give the Employer the right to recover any amount paid to a Participant prior to the date of such amendment or to cause the cessation of Severance Benefits already approved for a Participant who has executed a Release as required under Section 3.02.  Any amendment or termination of the Plan must comply with all applicable legal requirements including, without limitation, compliance with Code Section 409A and the regulations and rulings promulgated thereunder, securities, tax, or other laws, rules, regulations or regulatory interpretation thereof, applicable to the Plan.

 

Section 7.02                            Duration.  Unless terminated sooner by the Board or its delegate, the Plan shall continue in full force and effect until termination of the Plan pursuant to Section 7.01; provided, however, that after the termination of the Plan, if any Participants terminated employment on account of an Involuntary Termination prior to the termination of the Plan and are still receiving Severance Benefits under the Plan, the Plan shall remain in effect with respect to such Participants until all of the obligations of the Employer under the Plan are satisfied with respect to such Participants.

 

ARTICLE VIII
 DUTIES OF THE COMPANY, THE COMMITTEE
 AND THE PLAN ADMINISTRATOR

 

Section 8.01                            Records.  The Company or a Subsidiary thereof shall supply to (a) the Committee, all records and information necessary to the performance of the Committee’s duties pursuant to this Plan, and (b) the Plan Administrator, all records and information necessary to the performance of the Plan Administrator’s duties pursuant to this Plan.

 

Section 8.02                            Payment.  Payments of Severance Benefits to Participants shall be made in such amount as determined by the Plan Administrator under Article IV, from the general assets of the Employer.

 

Section 8.03                            Discretion.  Any decisions, actions or interpretations to be made under the Plan by the Board, the Committee and the Plan Administrator, acting on behalf of either, shall be made in each of their respective sole discretion, not in any fiduciary capacity and need not be uniformly applied to similarly situated individuals and such decisions, actions or interpretations shall be final, binding and conclusive upon all parties.  As a condition of participating in the

 

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Plan, the Eligible Employee acknowledges that all decisions and determinations of the Board, the Committee and the Plan Administrator shall be final and binding on the Eligible Employee, his or her beneficiaries and any other person having or claiming an interest under the Plan on his or her behalf.

 

ARTICLE IX
 CLAIMS PROCEDURES

 

Section 9.01         General Claims Information.  Each Participant under this Plan may only contest the administration of the Severance Benefits awarded by completing and filing with the Plan Administrator a written request for review in the manner specified by the Plan Administrator.  No appeal is permissible as to an Eligible Employee’s eligibility for or a Participant’s amount of Severance Benefits, which are decisions made solely within the discretion of the Company.  No person may submit or file any dispute, controversy, or claim in any judicial proceeding for any alleged wrongful denial of Plan benefits unless the claims procedures described in this Article IX are exhausted and a final determination is made by the Plan Administrator.  If an Eligible Employee or Participant or other interested person challenges a decision by the Plan Administrator, any review will be limited to the facts, evidence and issues presented to the Plan Administrator during the claims procedure set forth in this Article IX.  Facts and evidence that become known to the terminated Eligible Employee or Participant or other interested person after having exhausted the claims procedure must be brought to the attention of the Plan Administrator for reconsideration of the claims administrator.  Issues not raised with the Plan Administrator will be deemed waived.

 

Section 9.02         Initial Claim Application.  If an Eligible Employee or his or her authorized representative (each a “Claimant”) makes a written request alleging a right to receive Plan benefits or alleging a right to receive an adjustment in Plan benefits being paid, the Plan Administrator shall treat it as a benefit claim.  All benefit claims under the Plan shall be sent to the Plan Administrator and must be received within 30 days after employment termination.  A Claimant submitting an application for such Severance Benefits shall do so in the form and manner specified by the Plan Administrator (the “Claim Application”).  Each Claim Application must be supported by relevant and appropriate information as requested by the Plan Administrator.  In the event that any claim relating to the administration of Severance Benefits is denied in whole or in part, the Claimant whose claim has been so denied shall be notified of such denial in writing by the Plan Administrator (the “Initial Denial”) within a reasonable period of time, but not more than ninety (90) days after the Plan Administrator’s receipt of the Claim Application (the “Initial Claim Period”).  The Initial Claim Period may be extended up to an additional ninety (90) days if the Plan Administrator determines that special circumstances require an extension of time for processing the Claim Application and the Plan Administrator provides the Claimant with written notice of such extension to the Claimant prior to the end of the initial 90-day period, which notice shall specify the special circumstances requiring the extension and the date by which the Plan Administrator expects a determination to be made.  The Initial Denial shall:  (a) specify the reason or reasons for denial, (b) make specific reference to the Plan provisions on which the determination was based, (c) if applicable, describe any additional material or information necessary for the claimant to perfect the claim (explaining why such material or information is needed), and (d) describe the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to

 

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bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.  If it is determined that payment is to be made, any such payment shall be made within ninety (90) days after the date by which notification is required.

 

Section 9.03         Appeals of Denied Benefit Claims.  All appeals shall be made by the following procedure:

 

(a)           A Claimant whose claim has been denied shall provide the Plan Administrator with a written notice of appeal of the denial within sixty (60) calendar days after receiving the Initial Denial.  Such notice shall set forth all of the facts upon which the appeal is based and may include documents, records or other information relating to the claim for benefits.  Upon request, a Claimant shall be provided reasonable access to, and copies of, free of charge, all documents, records and other information that is relevant to the Claimant’s claim for benefits.  Appeals not timely filed shall be barred.

 

(b)           A named fiduciary of the Plan (which named fiduciary shall not be either the person who denied the initial claim for benefits or the subordinate of the same) shall consider the claimant’s written appeal, all documents, records, facts or evidence submitted by the Claimant with the written appeal without deference to the initial adverse benefit determination and without regard to whether such information was submitted or considered by the Plan Administrator in making the initial benefit determination.

 

(c)           A written determination with regards to the appeal shall be made within a reasonable period of time, but not more than sixty (60) days after the Claimant’s request for review is received (the “Appeal Period”).  The Appeal Period may be extended up to an additional sixty (60) days if the Plan Administrator determines that special circumstances require an extension of time for processing the claim and the Plan Administrator provides the Claimant with written notice of such extension prior to the end of the initial 60-day period, which notice shall specify the special circumstances requiring the extension and the date by which the plan expects to render the determination on review.  The determination on appeal shall be binding upon all parties.  If the determination is adverse to the Claimant, the written determination shall:  (i) specify the reason or reasons for denial, (ii) make specific reference to the Plan provisions on which the determination was based, (iii) include a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to a the claimant’s claim for benefits, and (iv) state that the claimant has the right to bring an action under ERISA section 502(a).  If the final determination is that payment shall be made, then any such payment shall be made within ninety (90) days after the date by which notification of the final determination is required.

 

Section 9.04         Arbitration; Expenses.  In the event of any dispute under the provisions of this Plan, other than a dispute in which the primary relief sought is an equitable remedy such as an injunction, the parties shall have the dispute, controversy or claim settled by arbitration in Harris County, Texas (or such other location as may be mutually agreed upon by the Employer and the Claimant) in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association.  Any award entered by the

 

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arbitrator shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction.  This arbitration provision shall be specifically enforceable.  The arbitrator shall have no authority to modify any provision of this Plan or to award a remedy for a dispute involving this Plan other than a benefit specifically provided under or by virtue of the Plan.  If the Claimant substantially prevails on any material issue, which is the subject of such arbitration or lawsuit, the Company shall be responsible for all of the fees of the American Arbitration Association and the arbitrator and any expenses relating to the conduct of the arbitration (including the Company’s and Claimant’s reasonable attorneys’ fees and expenses); in this event, any such fees and expenses are limited to those typically incurred in the usual course of arbitration proceedings and shall not be negotiable or determinable by the Claimant, and payment to the Claimant of such amounts shall occur within ninety (90) days after the date of entry of judgment (entered in accordance with applicable law in any court of competent jurisdiction) of the final, binding and non-appealable arbitration settlement.  Otherwise, each party shall be responsible for its own expenses relating to the conduct of the arbitration (including reasonable attorneys’ fees and expenses) and shall share the fees of the American Arbitration Association.

 

ARTICLE X
 MISCELLANEOUS

 

Section 10.01       Nonalienation of Benefits.  None of the payments, benefits or rights of any Participant shall be subject to any claim of any creditor of any Participant, and, in particular, to the fullest extent permitted by law, all such payments, benefits and rights shall be free from attachment, garnishment (if permitted under applicable law), trustee’s process, or any other legal or equitable process available to any creditor of such Participant.  No Participant shall have the right to alienate, anticipate, commute, plead, encumber or assign any of the benefits or payments that he may expect to receive, continently or otherwise, under this Plan.

 

Section 10.02       Plan Year.  The Plan shall be administered on a fiscal year basis.  Accordingly, the Plan year shall be the twelve-consecutive-month period commencing October 1st each year, except for the first Plan year, which commenced on the date the Plan was originally effective and ended on September 30, 2012.

 

Section 10.03       Notices.  All notices and other communications required hereunder shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service.  In the case of the Participant, mailed notices shall be addressed to him or her at the home address which he or she most recently communicated to the Employer in writing.  In the case of the Company or the Employer, mailed notices shall be addressed to the Plan Administrator.

 

Section 10.04       Successors.  Any successor to the Company shall assume the Company’s obligations under this Plan and shall benefit from, and be entitled to assert, any rights under this Plan.

 

Section 10.05       No Mitigation.  Except as otherwise provided in Section 4.05, a Participant shall not be required to mitigate the amount of any Severance Benefit provided for in this Plan by seeking other employment or otherwise, nor shall the amount of any Severance

 

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Benefits provided for herein be reduced by any compensation earned by other employment or otherwise, except if the Participant is re-employed by the Employer as an Employee, in which case Severance Benefits shall cease on the date of the Participant’s re-employment.

 

Section 10.06       No Contract of Employment.  Neither the establishment of the Plan, nor any modification thereof, nor the creation of any fund, trust or account, nor the payment of any benefits shall be construed as giving any Eligible Employee or any person whosoever, the right to be retained in the service of the Employer, and all Eligible Employees shall remain subject to discharge to the same extent as if the Plan had never been adopted.

 

Section 10.07       Severability of Provisions.  If any provision of this Plan shall be held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included.

 

Section 10.08       Heirs, Assigns, and Personal Representatives.  This Plan shall be binding upon the heirs, executors, administrators, successors and assigns of the parties, including each Participant, present and future.

 

Section 10.09       Headings and Captions.  The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

 

Section 10.10       Gender and Number.  Where the context admits:  words in any gender shall include any other gender, and, except where otherwise clearly indicated by context, the singular shall include the plural, and vice-versa.

 

Section 10.11       Unfunded Plan.  The Plan shall not be funded.  No Participant shall have any right to, or interest in, any assets of the Company that may be applied by the Company to the payment of Severance Benefits.

 

Section 10.12       Payments to Incompetent Persons.  Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipting therefore shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Company, the Committee, the Plan Administrator and all other Employer parties with respect thereto.

 

Section 10.13       Lost Payees.  A benefit shall be deemed forfeited if the Committee and/or the Plan Administrator is unable to locate a Participant to whom a Severance Benefits is due.  Such Severance Benefits may be reinstated if application is made by the Participant for the forfeited Severance Benefits while this Plan is in operation.

 

Section 10.14       Benefits are Not Insured.  The Plan is a severance plan.  The Pension Benefits Guaranty Corporation under Title IV of ERISA does not insure benefits under this Plan.

 

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Section 10.15       Controlling Law.  This Plan shall be governed by and construed in accordance with the laws of the State of Texas without reference to principles of conflict of laws of Texas or any other jurisdiction, and, where applicable, the laws of the United States.

 

Section 10.16       Taxes.  Any payment or delivery required under this Plan shall be subject to all legal requirements regarding tax withholding, filing, reporting and other obligations.

 

Section 10.17       Clawback.  Notwithstanding any provisions in this Plan to the contrary, any compensation, payments, or benefits provided hereunder, whether in the form of cash or otherwise, shall be subject to a clawback to the extent necessary to comply with the requirements of any applicable law, including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, section 304 of the Sarbanes Oxley Act of 2002, or any regulations promulgated thereunder, or any policy adopted by the Company or a Subsidiary pursuant to any such law (whether in existence as of the Effective Date of Restatement or later adopted).

 

Section 10.18       Effect of Plan.  Except with respect to any individual written employment or severance agreements between an Eligible Employee and the Company or a Subsidiary, this Plan supersedes all prior oral or written policies, plans, or arrangements of the Company or Subsidiary covering or applying to, and all prior oral or written communications to, Eligible Employees with respect to the subject matter hereof, and all such prior policies, plans, or arrangements and communications are hereby null and void and of no further force and effect.

 

Section 10.19       Certain Excise Taxes.  Notwithstanding anything to the contrary in this Plan, if an Eligible Employee is a “disqualified individual” (as defined in section 280G(c) of the Code), and the payments and benefits provided for in this Plan, together with any other payments and benefits which the Eligible Employee has the right to receive from the Company or any of its affiliates, would constitute a “parachute payment” (as defined in section 280G(b)(2) of the Code), then the payments and benefits provided for in this Plan shall be either reduced (but not below zero) so that the present value of such total amounts and benefits received by the Eligible Employee from the Company and its affiliates will be one dollar ($1.00) less than three times the Eligible Employee’s “base amount” (as defined in section 280G(b)(3) of the Code) and so that no portion of such amounts and benefits received by the Eligible Employee shall be subject to the excise tax imposed by section 4999 of the Code, or paid in full, whichever produces the better net after-tax position to the Eligible Employee (taking into account any applicable excise tax under section 4999 of the Code and any other applicable taxes, including any federal, state, municipal, and local income or employment taxes, and taking into account the phase out of itemized deductions and personal exemptions).  The reduction of payments and benefits hereunder, if applicable, shall be made by reducing, first, payments or benefits to be paid in cash hereunder in the order in which such payment or benefit would be paid or provided (beginning with such payment or benefit that would be made last in time and continuing, to the extent necessary, through to such payment or benefit that would be made first in time) and, then, reducing any benefit to be provided in-kind hereunder in a similar order, in all instances in accordance with Code Section 409A.  The determination as to whether any such reduction in the amount of the payments and benefits provided hereunder is necessary shall be made by the Company in good faith; provided, however, that no portion of the Eligible Employee’s payments or benefits the receipt or enjoyment of which the Eligible Employee shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of section 280G(b)

 

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of the Code will be taken into account; no portion of the Eligible Employee’s payments or benefits will be taken into account which does not constitute a parachute payment (including by reason of section 280G(b)(4)(A) of the Code); in calculating the applicable excise tax under section 4999 of the Code, no portion of the Eligible Employee’s payments or benefits will be taken into account which constitutes reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the base amount that is allocable to such reasonable compensation; and the value of any non-cash benefit or any deferred payment or benefit will be determined in accordance with the principles of sections 280G(d)(3) and (4) of the Code.  If a reduced payment or benefit is made or provided and through error or otherwise that payment or benefit, when aggregated with all other payments and benefits from the Company (or its affiliates) used in determining if a “parachute payment” exists, exceeds one dollar ($1.00) less than three times Eligible Employee’s base amount, then the Eligible Employee shall immediately repay such excess to the Company upon notification that an overpayment has been made.  The fact that a Eligible Employee’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 10.19 will not limit or otherwise affect any other rights of the Eligible Employee under this Plan or otherwise.  All determinations required by this Section 10.19 will be made at the expense of the Company.  However, nothing in this Section 10.19 shall require the Employer to be responsible for, or have any liability or obligation with respect to, the Eligible Employee’s excise tax liabilities under section 4999 of the Code.

 

[Signature Page to Follow]

 

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IN WITNESS WHEREOF, Nexeo Solutions, Inc. has executed this Nexeo Solutions, Inc. Severance Plan for U.S. Officers and Executives, as amended and restated effective as of June 9, 2016.

 

	
 
    	
NEXEO   SOLUTIONS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Lisa P. Britt
    
	
 
    	
 
    
	
 
    	
Lisa   P. Britt
    
	
 
    	
Executive   Vice President &
    
	
 
    	
Chief   Human Resources Officer
    

 

Nexeo Solutions, Inc. Severance Plan for U.S. Officers and Executives

as Amended and Restated Effective June 9, 2016

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