Document:

Exhibit 10.26

 

HAWAIIAN TELCOM HOLDCO, INC. 
 EXECUTIVE SEVERANCE PLAN

 

(amended and restated effective March 11, 2014)

 

INTRODUCTION

 

The purpose of the Hawaiian Telcom Holdco, Inc. Executive Severance Plan (the “Plan”) is to retain key employees and to encourage such employees to use their best business judgment in managing the affairs of Hawaiian Telcom Holdco, Inc. and its subsidiaries and affiliates (the “Company”). Therefore, Hawaiian Telcom Holdco, Inc. is willing to provide the severance benefits described below to protect these employees in the event of an involuntary termination. It is further intended that this Plan will complement other compensation program components to assure a sound basis upon which the Company will retain key employees.

 

Article 1 
 Definitions and Exclusions

 

Whenever used in this Plan, the following words and phrases shall have the meanings set forth below. When the defined meaning is intended, the term is capitalized:

 

1.1.                            “Base Salary” means the total amount of base salary payable to a participant at the salary rate in effect immediately prior to the participant’s Separation from Service with the Company. Base Salary does not include bonuses, reimbursed expenses, credits or benefits under any plan of deferred compensation, to which the Company contributes, or any additional cash compensation or compensation payable in a form other than cash.

 

1.2.                            “Board of Directors” shall mean the Board of Directors of Hawaiian Telcom Holdco, Inc..

 

1.3.                            “Cause” to terminate a participant’s employment shall include any of the following facts or circumstances:

 

(a)         the participant’s failure to follow a legal order of the Board of Directors, other than any such failure resulting from the participant’s Disability, and such failure is not remedied within 30 days after receipt of written notice;

 

(b)         the participant’s gross or willful misconduct in the performance of duties that causes or is reasonably likely to cause damage to the Company;

 

(c)          the participant’s conviction of felony or crime involving material dishonesty or moral turpitude;

 

(d)         the participant’s fraud or, other than with respect to a de minimis amount, personal dishonesty involving the Company’s assets; or

 

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(e)          the participant’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing the participant’s duties and responsibilities to the Company.

 

Prior to a termination pursuant to subsection 1.3(c) above, the Company shall conduct a reasonable investigation to determine, based on the information reasonably available to the Company, whether Cause for termination exists.

 

1.4.                            “Compensation Committee” means the Compensation Committee of the Board of Directors.

 

1.5.                            “Disability” shall mean the absence of a participant from the participant’s duties to the Company on a full-time basis for a total of 6 months during any 12-month period as a result of incapacity due to mental or physical illness, which determination is made by a physician selected by the Company and acceptable to the participant or the participant’s legal representative (such agreement as to acceptability not to be withheld unreasonably). Notwithstanding the foregoing, a Disability shall not be “incurred” hereunder until, at the earliest, the last day of the 6th month of such absence and in no event shall the participant be determined to be Disabled unless such physician determines that such illness can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

 

1.6.                            “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

1.7.                            “General Release” means a full and complete general waiver and release of all claims that a participant may have against the Company or persons affiliated with the Company in the form provided by the Company.

 

1.8.                            “Good Reason” means a participant’s resignation due to the occurrence of any of the following conditions which occurs without the participant’s written consent, provided that the requirements regarding advance notice and an opportunity to cure set forth below are satisfied:

 

(a)                                 a material diminution in the authority, duties or responsibilities of the participant or the supervisor to whom the participant is required to report;

 

(b)                                 the Company’s material breach of this Plan or the participant’s employment offer letter or employment agreement (including, without limitation, the Company’s material failure to provide payments or benefits required under this Plan or the participant’s employment offer letter or employment agreement); or

 

(c)                                  the relocation of the participant’s principal office, without his or her consent, to a location that is in excess of 100 miles from Honolulu, Hawaii.

 

In order for a participant to resign for Good Reason, the participant must provide written notice to Hawaiian Telcom Holdco, Inc. of the existence of the Good Reason condition within 90 days of the initial existence of such Good Reason condition. Upon receipt of such

 

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notice, Hawaiian Telcom Holdco, Inc. will have 30 days during which it may remedy the Good Reason condition. If the Good Reason condition is not remedied within such 30 day period, the participant may resign based on the Good Reason condition specified in the notice effective no later than 30 days following the expiration of Hawaiian Telcom Holdco, Inc.’s 30-day cure period.

 

1.9.                            “Involuntary Separation from Service” shall have the meaning set forth in Treasury Regulation 1.409A-1(n).

 

1.10.                     “Separation from Service” shall have the meaning set forth in Treasury Regulation 1.409A-1(h).

 

Article 2 
 Eligibility for Benefits

 

2.1.                            Eligibility. The Company’s executives at the Senior Vice President and higher level, hired by the Company after December 7, 2012, are eligible for Plan benefits. Exceptions (additions or deletions) to the eligibility requirements can be made only by Hawaiian Telcom Holdco, Inc.’s Chief Executive Officer, with the approval of the Compensation Committee.

 

2.2.                            Benefits.  If a participant experiences (a) a Separation from Service as a result of the participant’s death or Disability or (b) an Involuntary Separation from Service by the Company without Cause or as a result of the participant’s resignation for Good Reason, the Company shall pay to the participant the severance benefits described in Section 3.2.  Notwithstanding anything stated herein or in any other plan, program, arrangement or agreement otherwise, a participant receiving benefits under this Plan shall not be eligible for severance benefits under any other severance plan, policy or arrangement sponsored by the Company or any other written agreement by and between the Company and the participant, including without limitation, any employment offer letter or employment agreement, whether entered into before or after this Plan is adopted by the Company.

 

2.3.                            Notice of Termination.  Any termination of a participant’s employment by the Company or by the participant (other than termination that occurs as a result of the participant’s death) shall be communicated by a written notice to the other party indicating the specific basis for the termination, referencing the applicable provisions of this Plan, and specifying a termination date.  Any notice of termination submitted by a participant shall specify a termination date that is at least 30 days following the date of such notice; provided, however, the Company may, in its sole discretion, change the termination date to any date following the Company’s receipt of the notice of termination. Except as set forth below with respect to a termination as a result of a participant’s Disability, any notice of termination submitted by the Company may provide for any termination date (e.g., the date the participant receives the notice of termination, or any date thereafter specified by the Company in its sole discretion). Any notice of termination submitted by the Company where the basis for the termination is a participant’s Disability shall specify a termination date that is 30 days after receipt of such notice by the participant, and participant’s termination shall be effective as of such date,

 

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provided that, within the 30 days after such receipt, the participant shall not have returned to the full-time performance of his or her duties.  This Section 2.3 shall be construed in a manner consistent with the requirements of the Americans with Disabilities Act and Hawaii Employment Practices law. The failure by a participant or the Company to set forth in the notice of termination any fact or circumstance that contributes to a showing of Cause or Good Reason shall not waive any right of the participant or the Company or preclude the participant or the Company from asserting such fact or circumstance in enforcing the participant’s or the Company’s rights.

 

2.4.                            Plan Administration. The Compensation Committee, or such other committee as may be appointed by the Board of Directors from time to time, shall administer this Plan (the “Plan Administrator”). The Plan Administrator is responsible for the general administration and management of this Plan and shall have all powers and duties necessary to fulfill its responsibilities, including, but not limited to, the discretion to interpret and apply this Plan and to determine all questions relating to eligibility for benefits. This Plan shall be interpreted in accordance with its terms and their intended meanings. However, the Plan Administrator and all plan fiduciaries shall have the discretion to interpret or construe ambiguous, unclear, or implied (but omitted) terms in any fashion they deem to be appropriate in their sole discretion, and to make any findings of fact needed in the administration of this Plan. The validity of any such interpretation, construction, decision, or finding of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall be upheld unless clearly arbitrary or capricious.

 

Article 3 
 Severance Benefits

 

3.1.                            Termination for Cause or Resignation without Good Reason.  If a participant’s employment is terminated by the Company for Cause, or by participant without Good Reason, the participant shall not be entitled to any severance payments or benefits.

 

3.2.                            Termination.

 

(a)         Termination upon Death or Disability. In the event the CEO experiences a Separation from Service as a result of his death or Disability, the Company will pay the CEO (or the CEO’s estate), within 30 days following the date of such Separation from Service, a lump-sum cash payment in an amount equal to his annual bonus under the Company’s Performance Compensation Plan (“Annual Bonus”) to the extent declared or earned but not yet paid for a completed calendar year.  If a participant other than the CEO experiences a Separation from Service as a result of such participant’s death or Disability, such participant (or the participant’s estate) will receive the following severance payments and benefits from the Company:

 

(i)             Severance Pay.  The Company will continue to pay, in separate and distinct equal installment payments in accordance with the Company’s regular payroll practice at the time of the participant’s Separation from Service, the participant’s Base Salary for the period beginning on the date of such Separation from Service and ending on the six (6) month anniversary of the date of the participant’s Separation from Service.

 

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(ii)          Performance Compensation Plan Award Severance.  The Company will pay the participant a pro-rated amount of his or her annual award under the Company’s Performance Compensation Plan for the year of termination, with such prorated amount equal to the award the participant would have received had he or she continued to be employed by the Company until the date such awards are paid multiplied by a fraction, the numerator of which is the total number of days the participant was employed by the Company during the calendar year and the denominator of which is 365, based on actual performance in relation to the performance targets set forth in the Performance Compensation Plan (such amount to be determined in good faith by the Compensation Committee and paid in the calendar year following the calendar year in which the participant’s Separation from Service occurs at such time as awards are paid to other executive officers who participate in the Performance Compensation Plan).

 

(b)         Termination without Cause or Resignation for Good Reason. If a participant experiences an Involuntary Separation from Service by the Company without Cause or as a result of the participant’s resignation for Good Reason, the participant will receive the following severance payments and benefits from the Company:

 

(i)             Severance Pay.

 

(A)                   In the case of the CEO, the Company will, so long as the CEO executes and does not revoke a General Release and provided such General Release becomes effective no later than the 60th day after the date of the CEO’s Separation from Service (the “CEO Release Deadline”), pay the CEO a lump-sum cash payment in an amount equal to two times the sum of the CEO’s Base Salary and his target level Annual Bonus for the year of termination.  Additionally, if the CEO is employed on the last day of the calendar year and his employment is terminated by the Company without Cause or the CEO resigns his employment for Good Reason following such date but before the date of payment of the Annual Bonus and the CEO has not yet been paid such Annual Bonus, the CEO’s earned but not yet paid Annual Bonus will be added to the lump-sum cash payment described in the preceding sentence.  Subject to the provisions of Section 3.3 and provided the CEO executes and does not revoke a General Release and such General Release becomes effective by the CEO Release Deadline, the foregoing payments will be made (x) within 30 days following the date of the CEO’s Separation from Service, but following the expiration of the CEO’s period to revoke the General Release, to the extent such payments are exempt from Section 409A (as defined below) or (y) on the 60th day following the date of the CEO’s Separation from Service (or such later date as provided in Section 3.3) to the extent such payments do not qualify for any reason to be exempt from Section 409A.  In addition to the foregoing, the CEO will retain the right to the benefits conferred under his restricted stock unit agreements.

 

(B)                   In the case of participants other than the CEO, the Company will continue to pay, in separate and distinct equal installment payments in accordance with Company’s standard payroll procedures at the time of the participant’s Separation from Service, the participant’s Base Salary for the period beginning on the date of such Separation from Service and ending on the earliest to occur of (a) the twelve month

 

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anniversary of the date of the participant’s Separation from Service, (b) the first date the participant violates any restrictive covenant that may be described in his or her employment offer letter or employment agreement, including, without limitation, any non-competition, non-solicitation, non-disparagement or confidentiality covenant, (c) the fifth day following the date of the participant’s termination in the event the Company has not received by that date a General Release executed by the participant and the participant’s voluntary waiver of any review period, or (d) the first date of the participant’s revocation of the General Release (such period ending on the earliest of such dates, the “Severance Period”).

 

(ii)          Health Insurance.  Continued coverage (at the Company’s expense), for the Severance Period, for the participant and any dependents under the Company group health plan in which the participant and any dependents were entitled to participate immediately prior to the Separation from Service, excluding Exec-U-Care or similar supplemental coverage policies for senior executives. If the foregoing coverage is not available, and if the participant elects to continue his or her health insurance coverage (excluding Exec-U-Care or similar supplemental coverage policies for senior executives) under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), then the Company will pay 100% of the participant’s monthly premiums due for such COBRA coverage from the first date on which the participant loses health coverage as an employee of the Company (with any payments commencing after such date being made retroactively to such date) through the date the Company has paid for COBRA premiums for a length of time equal to the Severance Period or, if earlier, the expiration of the participant’s coverage under COBRA or the date when the participant receives substantially equivalent health insurance coverage in connection with new employment or self-employment.

 

(iii)       Performance Compensation Plan Award Severance.  In the case of participants other than the CEO, the Company will pay such participant a pro-rated amount of his or her annual award under the Company’s Performance Compensation Plan for the year of termination, with such prorated amount equal to the award the participant would have received had he or she continued to be employed by the Company until the date such awards are paid multiplied by a fraction, the numerator of which is the total number of days the participant was employed by the Company during the calendar year and the denominator of which is 365, based on actual performance in relation to the performance targets set forth in the Performance Compensation Plan (such amount to be determined in good faith by the Compensation Committee and paid in the calendar year following the calendar year in which the participant’s Separation from Service occurs at such time as awards are paid to other executive officers who participate in the Performance Compensation Plan).

 

3.3.                            Code Section 409A. For purposes of Section 409A of the Internal Revenue Code of 1986, as amended, the regulations and other guidance there under and any state law of similar effect (collectively “Section 409A”), each payment that is paid pursuant to this Plan is hereby designated as a separate payment.  The parties intend that all payments made or to be made under this Plan comply with, or are exempt from, the requirements of Section 409A so that none of the payments or benefits will be subject to the adverse tax penalties imposed under Section 409A, and any ambiguities herein will be interpreted to so comply or be so exempt.  Specifically, any severance payments made in connection with the participant’s

 

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Separation from Service under this Plan and paid on or before the 15th day of the 3rd month following the end of the participant’s first tax year in which the participant’s Separation from Service occurs or, if later, the 15th day of the 3rd month following the end of the Company’s first tax year in which the participant’s Separation from Service occurs, shall be exempt from Section 409A to the maximum extent permitted pursuant to Treasury Regulation Section 1.409A-1(b)(4) and any additional severance provided in connection with the participant’s Separation from Service under this Plan shall be exempt from Section 409A to the maximum extent permitted pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) (to the extent it is exempt pursuant to such section it will in any event be paid no later than the last day of the participant’s 2nd taxable year following the taxable year in which the participant’s Separation from Service occurs).  Notwithstanding the foregoing, if any of the payments provided in connection with the participant’s Separation from Service do not qualify for any reason to be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(4), Treasury Regulation Section 1.409A-1(b)(9)(iii), or any other applicable exemption and the participant is, at the time of the participant’s Separation from Service, a “specified employee,” as defined in Treasury Regulation Section 1.409A-1(i), each such payment will not be made until the first regularly scheduled payroll date of the 7th month after the participant’s Separation from Service and, on such date (or, if earlier, the date of the participant’s death), the participant will receive all payments that would have been paid during such period in a single lump sum.  Any lump sum payment of delayed payments pursuant to the preceding sentence shall be paid with interest to reflect the period of delay, with such interest to accrue at the prime rate in effect at Citibank, N.A. at the time of the participant’s Separation from Service. Any remaining payments due under the Plan shall be paid as otherwise provided herein. The determination of whether the participant is a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i) as of the time of such Separation from Service shall made by the Company in accordance with the terms of Section 409A.

 

Article 4 
 Employment Status

 

4.1.                            Right to Terminate Employment. This Plan shall not be deemed to constitute an employment contract between the Company and any participant. Nothing contained herein shall give any participant the right to be retained in the employ of the Company or to interfere with the right of the Company to discharge the participant at any time, nor shall it give the Company the right to require the participant to remain in its employ or to interfere with the participant’s right to terminate employment at any time.

 

4.2.                            Status During Benefit Period. Commencing upon the date of the participant’s Separation from Service, the participant shall cease to be an employee of the Company for any purpose. The payment of severance benefits under this Plan shall be payments to a former employee.

 

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Article 5 
 Claims and Review Procedures

 

5.1.                            Claims Procedure. Severance benefits will be provided to each participant in the amount determined hereunder by Hawaiian Telcom Holdco, Inc.  If a participant believes he or she has not been provided with the severance pay benefits to which he or she is entitled under this Plan, then the participant may file a request for review within 90 days after the date he or she should have received such benefits according to the Plan.  The request for review must be submitted to the Plan Administrator.  The Plan Administrator will respond to the request for review within 90 days after it is received, setting forth the reasons for its determination in writing.  If the participant’s request for review is denied, the participant or the participant’s duly authorized representative may, within 60 days after receiving written notice of such denial, file a written appeal with the Plan Administrator setting forth the reasons for disagreeing with the initial determination including any documents or records which support the participant’s appeal.  The Plan Administrator shall respond to this appeal within 60 days after it is received, setting forth the reasons for its determination in writing.  The participant may review pertinent Plan documents and his or her employment records, and as part of the written request for review may submit issues and comments concerning the claim.

 

5.2.                            Authority. In determining whether to approve or deny any claim or any appeal from a denied claim, the Plan Administrator shall exercise its discretionary authority to interpret the Plan and the facts presented with respect to the claim, and its discretionary authority to determine eligibility for benefits under the Plan. Any approval or denial shall be final and conclusive upon all persons.

 

5.3.                            Exhaustion of Remedies. Except as required by applicable law, no action at law or equity shall be brought to recover a benefit under the Plan unless and until the claimant has: (a) submitted a claim for benefits, (b) been notified by the Plan Administrator that the benefits (or a portion thereof) are denied, (c) filed a written request for a review of denial with the Plan Administrator, and (d) been notified in writing that the denial has been affirmed.

 

Article 6 
 Information Required by ERISA

 

6.1.                            Plan Information.  The Plan is administered by Hawaiian Telcom Holdco, Inc.  The Plan sponsor’s and Plan Administrator’s name, address, telephone number, employer identification number and Plan number are as follows:

 

	
Plan Name:
    	
Hawaiian Telcom Holdco, Inc. Executive   Severance Plan
    
	
 
    	
 
    
	
Plan Sponsor/
    	
Hawaiian Telcom Holdco, Inc.
    
	
Administrator:
    	
c/o Compensation Committee
    
	
 
    	
1177 Bishop Street
    
	
 
    	
Honolulu, Hawaii   96813
    
	
 
    	
 
    
	
Telephone No.:
    	
(808) 546-4511
    
	
Employer I.D. No.:
    	
16-1710376
    
	
Plan No.:
    	
507
    
	
Plan Year:
    	
January 1 through December 31
    
	
Effective Date:
    	
December 17, 2012
    

 

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6.2.                            Type of Plan.  This is an unfunded welfare benefit severance plan.  The Company provides benefits from its general assets.

 

6.3.                            Agent for Service of Legal Process. The name and address of the person designated as agent for service of legal process is the same as the name and address of the Plan Administrator.

 

6.4.                            Statement of ERISA Rights.  Participants in this Plan are entitled to certain rights and protections under ERISA.  ERISA provides that all Plan participants shall be entitled to:

 

(a)        Examine, without charge, at the Plan Administrator’s office, all Plan documents, including the Plan instrument (which is this document) and copies of all documents filed by the Plan Administrator with the Department of Labor.

 

(b)        Copies of all Plan documents and other Plan information may also be obtained upon written request to the Plan Administrator; provided, however, that a reasonable charge may be made for copies.

 

In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of this Plan.  The people who operate the Plan have a duty to do so prudently and in the interest of Plan participants and beneficiaries.  However, employees and agents of the Company carrying out their responsibilities with respect to the Plan are acting as representatives of the Company and not as fiduciaries in their own right.  No one, including a participant’s employer or any other person, may fire a participant or otherwise discriminate against a participant in any way to prevent a participant from obtaining benefits or exercising the participant’s rights under ERISA.  If a participant’s claim for benefits is denied in whole or in part, the participant must receive a written explanation of the reason for this denial.  A participant has the right to have the Plan Administrator review and reconsider the participant’s claim, as described elsewhere in this document.

 

Under ERISA, there are several steps a participant can take to enforce the above rights.  For instance, if a participant requests certain materials required to be furnished by the Plan and the participant does not receive them within 30 days, a participant may file suit in federal court.  In such a case, the court may require that the participant be provided with the materials and may fine the Company up to $100 a day until the participant receives them, unless the materials were not sent because of reasons beyond the Plan Administrator’s control.  If a participant has a claim for benefits which is denied or ignored in whole or in part, the participant may file suit in a state or federal court.  If a participant is discriminated against for asserting the participant’s rights, the participant may seek assistance from the United States Department of Labor or the participant may file suit in federal court.  The court will decide who should pay the court costs and legal fees.  If a participant is successful, the court may order the person the participant has sued to pay these costs and fees.  If a participant loses, the court may order the participant to pay these costs and fees if, for example, it finds the participant’s claim is frivolous.

 

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If any participant has any questions about this Plan, the participant should contact the Plan Administrator.  If any participant has any questions about this statement or about the participant’s rights under ERISA, the participant should contact the nearest office of the Labor-Management Services Administration, United States Department of Labor.

 

6.5.                            Plan Administration and Interpretations.  Hawaiian Telcom Holdco, Inc. is the named fiduciary, which has the authority to control and manage the operation and administration of the Plan.  Hawaiian Telcom Holdco, Inc. shall make such rules, regulations and computations and shall take such other actions to administer the Plan as it may deem appropriate.  Hawaiian Telcom Holdco, Inc. shall have sole and complete discretion to interpret and administer the terms of the Plan and to determine eligibility for benefits and the amount of any such benefits pursuant to the terms of the Plan.  In administering the Plan, Hawaiian Telcom Holdco, Inc. shall act in a nondiscriminatory manner to the extent legally required and shall at all times discharge its duties with respect to the Plan in accordance with the standards set forth in Section 404(a)(1) and other applicable sections of ERISA.

 

Article 7 
 Amendment and Termination

 

It is intended that the Plan shall continue from year to year, subject to an annual review by the Board of Directors or the Compensation Committee. However, the Board of Directors and the Compensation Committee reserves the right to modify, amend or terminate the Plan at any time; provided, that no amendment or termination shall be made that would materially and adversely affect the rights of any participant without his or her consent.

 

Article 8 
 Miscellaneous

 

8.1.                            Benefits Non-Assignable. No right or interest of a participant in this Plan shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including but not by way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy, assignments for the benefit of creditors, receiverships, or in any other manner, excluding transfer by operation of law as a result solely of mental incompetency.

 

8.2.                            Withholding and Required Deductions. The severance benefits payable under this Plan are subject to all withholding and any other deductions required by applicable law.

 

8.3.                            Applicable Law. This Plan is a welfare plan subject to ERISA and it shall be interpreted, administered, and enforced in accordance with that law.

 

8.4.                            Severability. If any provision of this Plan is held invalid or unenforceable by a court of competent jurisdiction, all remaining provisions shall continue to be fully effective.

 

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8.5.                            Binding Agreement. This Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the participants and their heirs, executors, administrators and legal representatives.

 

IN WITNESS WHEREOF, Hawaiian Telcom Holdco, Inc. has caused this amended and restated Plan to be executed by its duly authorized officer effective as of the 11th day of March, 2014.

 

 

	
 
    	
HAWAIIAN   TELCOM HOLDCO, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Eric K. Yeaman
    
	
 
    	
 
    	
Eric   K. Yeaman
    
	
 
    	
 
    	
Its   President and Chief   Executive Officer
    

 

11Exhibit 10.16

 

OFFICER WITH EMPLOYMENT AGREEMENT

 

UNITED ONLINE, INC.

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

 

RECITALS

 

A.            The Board has adopted the Plan for the purpose of retaining the services of selected Employees and consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

 

B.            Participant is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s issuance of shares of Common Stock to the Participant under the Plan.

 

C.            All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix A; provided, however, that any capitalized terms not defined in this Agreement shall have the meaning set forth in the Plan.

 

NOW, THEREFORE, it is hereby agreed as follows:

 

1.     Grant of Restricted Stock Units.  The Corporation hereby awards to the Participant, as of the Award Date, Restricted Stock Units under the Plan. Each Restricted Stock Unit represents the right to receive one share of Common Stock on the date that unit vests in accordance with the express provisions of this Agreement. The number of shares of Common Stock subject to the awarded Restricted Stock Units, the applicable vesting schedule for those shares, the dates on which those vested shares shall become issuable to Participant and the remaining terms and conditions governing the award (the “Award”) shall be as set forth in this Agreement.

 

AWARD SUMMARY

 

	
Award   Date:
    	
<Award   Date>
    
	
 
    	
 
    
	
Number   of Shares Subject to Award:
    	
<#   of Shares Awarded> shares of Common Stock (the “Shares”)
    
	
 
    	
 
    
	
Vesting   Schedule:
    	
The   Shares shall vest in a series of                    (      ) successive installments as   follows:                      .   Such vesting schedule is hereby designated the “Normal Vesting Schedule” for   the Shares. Should any scheduled vesting date under the Normal Vesting   Schedule otherwise occur on a date on which the Common Stock is not traded on   the Stock Exchange serving as the primary market for the Common Stock, then   that vesting date shall instead be deemed to occur on the last day prior to   such scheduled vesting date on which the Common Stock is so traded. The Shares   shall also be subject to accelerated vesting in accordance with the   provisions of Paragraphs 3(b) and 5 of this Agreement.
    

 

 

	
Issuance   Schedule
    	
Each   Share in which the Participant vests in accordance with the Normal Vesting   Schedule shall be issued, subject to the Corporation’s collection of all   applicable Withholding Taxes, on the applicable vesting date specified for   that Share or as soon thereafter as administratively practicable, but in no   event later than the close of the calendar year in which such vesting date   occurs or (if later) the fifteenth day of the third calendar month following   such vesting date (the “Issuance Date”). The applicable Withholding Taxes are   to be collected pursuant to the procedures set forth in Paragraph 7 of this   Agreement.
    

 

2.     Limited Transferability.  Prior to actual receipt of the Shares which vest hereunder, the Participant may not transfer any interest in the Award or the underlying Shares. Any Shares which vest hereunder but which otherwise remain unissued at the time of the Participant’s death may be transferred pursuant to the provisions of the Participant’s will or the laws of inheritance or to the Participant’s designated beneficiary or beneficiaries of this Award. The Participant may also direct the Corporation to re-issue the stock certificates for any Shares which in fact vest and become issuable under the Award during his or her lifetime to one or more designated family members or a trust established for the Participant and/or his or her family members. The Participant may make such a beneficiary designation or certificate directive at any time by filing the appropriate form with the Plan Administrator or its designee.

 

3.     Cessation of Service.

 

(a)           Except as otherwise provided in Paragraph 3(b) below, should the Participant cease Service for any reason prior to vesting in one or more Shares subject to this Award, then the Award will be immediately cancelled with respect to those unvested Shares, and the number of Restricted Stock Units will be reduced accordingly. The Participant shall thereupon cease to have any right or entitlement to receive any Shares under those cancelled units.

 

(b)           The following provisions shall apply to the Award with respect to the Participant’s termination of employment:

 

(i)            If the Participant’s employment is terminated by the Corporation without Cause or by Participant for Good Reason, then upon the Participant’s satisfaction of the Release Condition, the Award will vest on an accelerated basis as to that number of additional shares in which the Participant would have otherwise been vested at the time of such termination had the Participant completed an additional twelve (12) months of employment with the Corporation and had the Award been structured so as to vest in successive equal monthly installments over the vesting schedule. In no event will the number of additional Shares which vest on such an accelerated basis exceed the number of Shares unvested under the Award immediately prior to the date of such termination. Except to the extent another issuance date may be required to comply with any applicable requirements of Section 409A of the Code, the Shares that vest on an accelerated basis in accordance with this Paragraph 3(c)(i) will be issued to the Participant within the sixty (60)-day period following the date of the Participant’s Separation from Service as a result of the Participant’s termination without Cause or the Participant’s resignation for Good Reason, provided that the Release required of the Participant has become effective and enforceable in accordance with its terms following the expiration of the applicable revocation period in effect for that Release.  However, should such sixty (60)-day period span two taxable years, the issuance shall be effected during the portion of that period that occurs in the second taxable year if required in order to comply with Section 409A of the Code.

 

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(ii)           If the Participant’s employment is terminated by the Corporation without Cause or by the Participant for Good Reason within the period commencing with the execution by the Corporation of a definitive agreement for a Change in Control and ending with the earlier of (i) the termination of that agreement without the consummation of such Change in Control or (ii) the expiration of the twenty-four (24)-month period measured from the date such Change in Control occurs, then upon the Participant’s satisfaction of the Release Condition, the Award (or replacement award, as the case may be) will fully vest on an accelerated basis to the extent then unvested.  Except to the extent another issuance date may be required to comply with any applicable requirements of Section 409A of the Code, the Shares (or replacement awards or cash proceeds, as the case may me) underlying the Award that vests on an accelerated bases in accordance with this Paragraph 3(c)(ii) will be issued or distributed to the Participant within the sixty (60)-day period following the date of the Participant’s Separation from Service as a result of the Participant’s termination without Cause or the Participant’s resignation for Good Reason, provided that the Release required of the Participant has become effective and enforceable in accordance with its terms following the expiration of the applicable revocation period in effect for that Release.  However, should such sixty (60)-day period span two taxable years, the issuance shall be effected during the portion of that period that occurs in the second taxable year if required in order to comply with Section 409A of the Code.

 

(iii)          Upon the Participant’s Separation from Service as a result of the Participant’s death or Disability, the Award will vest on an accelerated basis as to that number of additional Shares in which the Participant would have otherwise been vested on the date of such Separation from Service had the Participant completed an additional twelve (12) months of employment with the Corporation and had the Award been structured so as to vest in successive equal monthly installments over the vesting schedule.  Except to the extent that another issuance date may be required in order to comply with any applicable requirements of Section 409A of the Code, the Shares underlying the Award that vests on an accelerated basis in accordance with this Paragraph 3(b)(iii) will be issued on the date of such Separation from Service or as soon as administratively practicable thereafter, but in no event later than the later of (A) the end of the calendar year in which such separation from Service occurs or (B) the 15th day of the third calendar month following the date of such Separation from Service.

 

4.     Stockholder Rights and Dividend Equivalents

 

(a)           The holder of this Award shall not have any stockholder rights, including voting or dividend rights, with respect to the Shares subject to the Award until the Participant becomes the record holder of those Shares upon their actual issuance following the Corporation’s collection of the applicable Withholding Taxes.  Notwithstanding the foregoing, should any dividend or other distribution, whether regular or extraordinary, payable in cash or other property (other than shares of Common Stock) be declared and paid on the outstanding Common Stock while one or more Shares remain subject to this Award (i.e., those Shares are not otherwise issued and outstanding for purposes of entitlement to the dividend or distribution), then the following provisions shall govern the Participant’s interest in that dividend or distribution:

 

(i)            If the dividend is a regularly-scheduled cash dividend on the Common Stock, then the Participant shall be entitled to a current cash distribution from the Corporation equal to the cash dividend the Participant would have received with respect to the Shares at the time subject to this Award had those Shares actually been issued and outstanding and entitled to that cash

 

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dividend. Each cash dividend equivalent payment under this subparagraph (i) shall be paid within five (5) business days following the payment of the actual cash dividend on the outstanding Common Stock, subject to the Corporation’s collection of all applicable federal, state and local income and employment withholding taxes.

 

(ii)           For any other dividend or distribution, a special book account shall be established for the Participant and credited with a phantom dividend equivalent to the actual dividend or distribution which would have been paid on the Shares at the time subject to this Award had they been issued and outstanding and entitled to that dividend or distribution; provided, however, that no such crediting shall occur if it would result in the Participant receiving credit for the same dividend or distribution more than once, as determined in the sole discretion of the Plan Administrator.  As the Shares subsequently vest hereunder, the phantom dividend equivalents so credited to those Shares in the book account shall also vest, and those vested dividend equivalents shall be distributed to the Participant (in the same form the actual dividend or distribution was paid to the holders of the Common Stock entitled to that dividend or distribution) concurrently with the issuance of the vested Shares to which those phantom dividend equivalents relate.  However, each such distribution shall be subject to the Corporation’s collection of the Withholding Taxes applicable to that distribution. In no event shall any such phantom dividend equivalents vest or become distributable unless the Shares to which they relate vest in accordance with the terms of this Agreement.

 

5.     Change of Control.

 

(a)           Any Restricted Stock Units subject to this Award at the time of a Change in Control may be assumed by the successor entity (or parent thereof) or otherwise continued in full force and effect or may be replaced with a cash retention program of the successor entity (or parent thereof) which preserves the Fair Market Value of the unvested shares of Common Stock subject to the Award at the time of the Change in Control and provides for the subsequent vesting and concurrent payout of that value in accordance with the same vesting and issuance schedule that would otherwise be in effect for those shares in the absence of such Change in Control.  In the event of such assumption or continuation of the Award or such replacement of the Award with a cash retention program, no accelerated vesting of the Restricted Stock Units shall occur at the time of the Change in Control.  Notwithstanding the foregoing, no such cash retention program shall be established for the Restricted Stock Units subject to this Award to the extent such program would otherwise be deemed to constitute a deferred compensation arrangement subject to the requirements of Code Section 409A and the Treasury Regulations thereunder.

 

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(b)           In the event the Award is assumed or otherwise continued in effect, the Restricted Stock Units subject to the Award shall be adjusted immediately after the consummation of the Change in Control so as to apply to the number and class of securities into which the Shares subject to those units immediately prior to the Change in Control would have been converted in consummation of that Change in Control had those Shares actually been issued and outstanding at that time.  To the extent the actual holders of the outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor entity (or parent thereof) may, in connection with the assumption or continuation of the Restricted Stock Units subject to the Award at that time, but subject to the Plan Administrator’s approval prior to the Change in Control, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in the Change in Control transaction, provided the substituted common stock is readily tradable on an established U.S. securities exchange.

 

(c)           Any Restricted Stock Units which are assumed or otherwise continued in effect in connection with a Change in Control or replaced with a cash retention program under Paragraph 5(a) shall be subject to the vesting acceleration provisions set forth in Paragraph 3(b) of this Award.

 

(d)           If the Restricted Stock Units subject to this Award at the time of the Change in Control are not assumed or otherwise continued in effect or replaced with a cash retention program in accordance with Paragraph 5(a), then those units shall vest immediately prior to the closing of the Change in Control. The Shares subject to those vested units shall be converted into the right to receive for each such Share the same consideration per share of Common Stock payable to the other stockholders of the Corporation in consummation of that Change in Control, and such consideration shall be distributed to Participant on the effective date of such Change in Control or as soon as administratively practicable thereafter, but in no event later than three (3) business days following the effective date of that Change in Control. Such distribution shall be subject to the Corporation’s collection of the applicable Withholding Taxes pursuant to the provisions of Paragraph 7.

 

(e)           This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

 

6.     Adjustment in Shares. The total number and/or class of securities issuable pursuant to this Award shall be subject to adjustment upon certain corporate events as set forth in Article One, Section V(H) of the Plan.  The adjustments shall be made in such manner as the Plan Administrator deems appropriate, and those adjustments shall be final, binding and conclusive.

 

7.     Issuance of Shares of Common Stock.

 

(a)           On each applicable Issuance Date for the Shares which vest in accordance with the provisions of this Agreement, the Corporation shall issue to or on behalf of the Participant the vested shares of Common Stock (which may be in electronic form) to be issued on such date, subject to the Corporation’s collection of the applicable Withholding Taxes.

 

(b)           Until such time as the Corporation provides the Participant with notice to the contrary, the Corporation shall collect the applicable Withholding Taxes through an automatic Share withholding procedure pursuant to which the Corporation will withhold, on the applicable Issuance Date for the Shares that vest under the Award, a portion of those vested Shares with a Fair Market Value (measured as of the applicable tax date for such Shares) equal to the amount of such Withholding Taxes (the “Share Withholding Method”); provided, however, that the amount of any Shares so withheld shall not exceed the amount necessary to satisfy the Corporation’s required tax withholding obligations using

 

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the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to supplemental taxable income. Participant shall be notified in writing in the event such Share Withholding Method is no longer available.

 

(c)           Should any Shares vest under the Award when the Share Withholding Method is not available, then the Withholding Taxes shall be collected from the Participant through either of the following alternatives:

 

·      the Participant’s delivery of his or her separate check payable to the Corporation in the amount of such Withholding Taxes, or

 

·      the use of the proceeds from a next-day sale of the Shares issued to the Participant, provided and only if (i) such a sale is permissible under the Corporation’s trading policies governing the sale of Common Stock, (ii) the Participant makes an irrevocable commitment, on or before the vesting date for those Shares, to effect such sale of the Shares and (iii) the transaction is not otherwise deemed to constitute a prohibited loan under Section 402 of the Sarbanes-Oxley Act of 2002.

 

(d)           The Corporation shall concurrently, with each issuance of vested Shares in accordance with the foregoing provisions of this Paragraph 7, distribute to the Participant any outstanding phantom dividend equivalents credited with respect to those Shares. The Corporation shall collect the Withholding Taxes with respect to each distribution of such phantom dividend equivalents by withholding a portion of that distribution equal to the amount of the applicable Withholding Taxes, with the cash portion of the distribution to be the first portion so withheld, or through such other tax withholding arrangement as the Corporation deems appropriate.

 

(e)           Except as otherwise provided in Paragraph 5 or Paragraph 7(b), the settlement of all Restricted Stock Units which vest under the Award shall be made solely in shares of Common Stock.  No fractional share of Common Stock shall be issued pursuant to this Award, and any fractional share resulting from any calculation made in accordance with the terms of this Agreement shall be rounded down to the next whole share of Common Stock.

 

8.     Compliance with Laws and Regulations.  The issuance of shares of Common Stock pursuant to the Award shall be subject to compliance by the Corporation and Participant with all applicable requirements of law relating thereto and with all applicable regulations of the Stock Exchange on which the Common Stock is listed for trading at the time of such issuance.

 

9.     Notices.  Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices and directed to the attention of Stock Plan Administrator.  Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the most current address then indicated for Participant on the Corporation’s employee records or delivered electronically to Participant through the Corporation’s electronic mail system.  All notices shall be deemed effective upon personal delivery or delivery through the Corporation’s electronic mail system or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

 

10.  Successors and Assigns.  Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Participant, Participant’s assigns, the legal representatives, heirs and legatees of Participant’s estate and any beneficiaries of the Award designated by Participant.

 

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11.  Construction.  This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan.  All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.  In the event of a conflict between the terms of this Agreement and the terms of the Participant’s Employment Agreement, the terms set forth in this Agreement shall control.

 

12.  Governing Law.  The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State’s conflict-of-laws rules.

 

13.  Employment at Will.  Nothing in this Agreement or in the Plan shall confer upon Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Participant) or of Participant, which rights are hereby expressly reserved by each, to terminate Participant’s Service at any time for any reason, with or without cause.

 

14.  Code Section 409A.

 

(a)           It is the intention of the parties that the provisions of this Agreement comply with the requirements of the short-term deferral exception of Section 409A of the Code and Treasury Regulations Section 1.409A-1(b)(4).  Accordingly, to the extent there is any ambiguity as to whether one or more provisions of this Agreement would otherwise contravene the requirements or limitations of Code Section 409A applicable to such short-term deferral exception, then those provisions shall be interpreted and applied in a manner that does not result in a violation of the requirements or limitations of Code Section 409A and the Treasury Regulations thereunder that apply to such exception.

 

(b)           If and to the extent this Agreement may be deemed to create an arrangement subject to the requirements of Code Section 409A, then the following provisions shall apply:

 

·              No Shares or other amounts which become issuable or distributable under this Agreement by reason of Participant’s cessation of Service shall actually be issued or distributed to Participant until the date of the Participant’s Separation from Service due to such cessation of Service or as soon thereafter as administratively practicable, but in no event later than the later of (i) the close of the calendar year in which such Separation from Service occurs or (ii) the fifteenth day of the third calendar month following the date of such Separation from Service.

 

·              No Shares or other amounts which become issuable or distributable under this Agreement by reason of Participant’s cessation of Service shall actually be issued or distributed to Participant prior to the earlier of (i) the first day of the seventh (7th) month following the date of the Participant’s Separation from Service or (ii) the date of Participant’s death, if Participant is deemed at the time of such Separation from Service to be a specified employee under Section 1.409A-1(i) of the Treasury Regulations issued under Code Section 409A, as determined by the Plan Administrator in accordance with consistent and uniform standards applied to all other Code Section 409A arrangements of the Corporation, and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). The deferred Shares or other distributable amount shall be issued or distributed in a lump sum on the first day of the seventh (7th) month following the date of Participant’s Separation from 

 

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Service or, if earlier, the first day of the month immediately following the date the Corporation receives proof of Participant’s death.

 

·              No amounts that vest and become payable under Paragraph 5 of this Agreement by reason of a Change in Control shall be distributed to the Participant at the time of such Change in Control, unless that transaction also qualifies as a change in control event under Code Section 409A and the Treasury Regulations thereunder.  In the absence of such a qualifying change in control, the distribution shall not be made until the date or dates on which those amounts are to be distributed pursuant to the Normal Vesting Schedule or (to the extent applicable) the provisions of Paragraph 5(c) of this Agreement.

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

 

	
 
    	
UNITED ONLINE, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
Francis Lobo
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PARTICIPANT
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name: <Participant Name>
    

 

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APPENDIX A

 

DEFINITIONS

 

The following definitions shall be in effect under the Agreement:

 

A.            Agreement shall mean this Restricted Stock Unit Issuance Agreement.

 

B.            Award shall mean the award of restricted stock units made to the Participant pursuant to the terms of this Agreement.

 

C.            Award Date shall mean the date the restricted stock units are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

 

D.            Board shall mean the Corporation’s Board of Directors.

 

E.            Cause shall have the meaning assigned to such term in the Employment Agreement.

 

F.             Change in Control shall have the meaning set forth in the Plan.

 

G.            Code shall mean the Internal Revenue Code of 1986, as amended.

 

H.            Common Stock shall mean shares of the Corporation’s common stock.

 

I.             Corporation shall mean United Online, Inc., a Delaware corporation, and any successor entity to all or substantially all of the assets or voting stock of United Online, Inc. which shall by appropriate action adopt the Plan.

 

J.             Disability shall mean the Participant’s inability to engage in any substantial activity necessary to perform his or her duties and responsibilities under his or her Employment Agreement by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than twelve (12) months.

 

K.            Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

 

L.            Employment Agreement shall mean the Employment Agreement or Offer Letter Agreement between the Participant and the Corporation (or any Parent or Subsidiary) in effect on the Award Date.

 

M.           Fair Market Value per share of Common Stock on any relevant date shall be the closing price per share of Common Stock at the close of regular trading hours (i.e., before after-hours trading begins) on the date in question on the Stock Exchange serving as the primary market for the Common Stock, as such price is reported by the National Association of Securities Dealers (if primarily traded on the Nasdaq Global or Global Select Market) or as officially quoted in the composite tape of transactions on any other Stock Exchange on which the

 

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Common Stock is then primarily traded.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

N.            Good Reason shall have the meaning assigned to such term in the Employment Agreement.

 

O.            1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

P.             Participant shall mean the person to whom the Award is made pursuant to the Agreement.

 

Q.            Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

R.            Plan shall mean the Corporation’s 2010 Incentive Compensation Plan, as amended and restated from time to time.

 

S.             Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

 

T.            Release shall mean the release agreement referred to in the definition of Release Condition.

 

U.            Release Condition shall mean the following requirements: (i) Participant must execute and deliver to the Corporation, within twenty-one (21) days (or forty-five (45) days to the extent such longer period is required under applicable law) after the effective date of Participant’s termination of employment, a comprehensive agreement releasing the Corporation and its officers, directors, employees, stockholders, subsidiaries, affiliates, representatives and other related parties from all claims that Participant may have with respect to such parties relating to Participant’s employment with the Corporation and the termination of that employment relationship and containing such other and additional terms as the Corporation deems satisfactory and (ii) such release must become effective and enforceable after the expiration of any applicable revocation period under federal or state law.

 

V.            Separation from Service means the Participant’s cessation of Employee status and shall be deemed to occur at such time as the level of bona fide services the Participant is to render as an Employee (or non-employee consultant) permanently decreases to a level that is not more than twenty percent (20%) of the average level of services the Participant rendered as an Employee during the immediately preceding thirty-six (36) months (or such shorter period of time in which the Participant has been in Employee status). Any such determination, however, shall be made in accordance with the applicable standards of the Treasury Regulations issued under Code Section 409A.

 

W.           Service shall mean the Participant’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor. For purposes of this

 

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Agreement, Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) Participant no longer performs services in any of the foregoing capacities for the Corporation (or any Parent or Subsidiary) or (ii) the entity for which Participant performs such services ceases to remain a Parent or Subsidiary of the Corporation, even though Participant may subsequently continue to perform services for that entity. Except to the extent otherwise required by law or expressly authorized by the Plan Administrator or by the Corporation’s written policy on leaves of absence in effect at the time of such leave, no Service credit shall be given for vesting purposes for any period the Participant is on a leave of absence.

 

X.            Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

 

Y.            Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

Z.            Withholding Taxes shall mean the federal, state and local income taxes and the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the issuance of the shares of Common Stock which vest under the Award and any phantom dividend equivalents distributed with respect to those shares in accordance with the terms of the Plan.

 

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