Attached files
TheStreet.com
CEO Term
Sheet for Daryl Otte
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Base
Salary: $425,000 annualized rate, with potential annual increases
at the discretion of the Compensation
Committee
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Target
Bonus: $320,000/year, contingent on achieving performance goals
established by TSCM’s Compensation Committee (with input from Daryl) for
each performance year, with potential annual increases to the targeted
amount at the discretion of the Compensation
Committee.
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Long-Term
Incentive Opportunity: One-time grant of 650,000
restricted stock units (RSUs) (payable in full-value TSCM shares in
accordance with the terms of the annual vesting schedule described below,
unless the payment date is accelerated or the RSUs are forfeited, as
provided below). Daryl will have the option to elect to have his tax
withholding obligation in connection with the RSUs satisfied through the
withholding of shares underlying the RSU
award.
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Grant of RSUs: Granted
as soon as practicable after assumption of full CEO
role
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Vesting of
RSUs:
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Annual Vesting: Unless
vesting is accelerated pursuant to an event described herein, or the RSUs
are forfeited prior to vesting, RSUs shall vest according to the following
schedule:
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65,000
RSUs shall vest on the 1st
anniversary of the RSU grant date;
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An
additional 65,000 RSUs shall vest on the 2nd anniversary of the RSU grant
date;
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An
additional 65,000 RSUs shall vest on the 3rd anniversary of the RSU grant
date;
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An
additional 65,000 RSUs shall vest on the 4th anniversary of the RSU grant
date;
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The
remaining 390,000 RSUs shall vest on the 5th anniversary of the RSU grant
date.
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Shares of
TSCM stock underlying RSUs that vest according to the above schedule shall be
distributed to Daryl free and clear of all vesting restrictions (net of shares
withheld to pay taxes, if so elected by Daryl) within 30 days following the
applicable vesting date of such RSUs.
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Accelerated Vesting:
Unvested RSUs that have not been forfeited shall have their vesting
accelerated upon the occurrence of any one of the following
events:
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A
change-in-control (CIC) event (for purposes of this Term Sheet, having the
same definition as provided in the 2007 Performance Incentive Plan);
or
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An
involuntary termination of Daryl’s employment as CEO without Cause
(“Cause” generally defined as egregious acts such as fraud, commission of
a felony, etc., determined in the good faith judgment of TSCM’s
Compensation Committee); or
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A
voluntary termination by Daryl for Good Reason (with “Good Reason” having
the definition ascribed to such term under the “Good Reason” safe harbor
provisions of Section 409A of the Internal Revenue Code and the Treasury
Regulations promulgated thereunder (“Section 409A”), all as determined in
good faith by TSCM’s Compensation
Committee).
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Death or Disability: In
the event of Daryl’s death or disability (generally defined as a physical
or mental condition incapacitating Daryl from the ability to effectively
execute his role as CEO, as determined in good faith by TSCM’s
Compensation Committee) before the occurrence of any one of the “Full
Vesting” events described above, Daryl shall vest in a prorated number of
the RSUs, with the proration determined as a function of the length of
time served by Daryl as CEO prior to death or disability in relation to
the two-year period following grant of the RSUs (e.g., a disability at the
1st
anniversary of the RSU grant date would result in vesting and accelerated
delivery of 50% of the RSU award, net of any RSUs that have already vested
prior to death or disability). As an example, and for the avoidance of
doubt, if a death or disability happens immediately after the 1st
anniversary of the RSU grant date, the net number of RSUs that would vest
under this provision would equal [(650,000/2) – 65,000 (the RSUs that
vested according to their normal annual schedule)] =
260,000).
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Payment Acceleration
Events: Unless sooner forfeited due to a “Forfeiture Event”
described below, and other than the distribution of shares underlying RSUs
that have vested according to their regular vesting schedule (i.e., the
10%, 10%, 10%, 10%, 60% schedule described above in this Term Sheet), all
outstanding and previously undistributed RSUs shall be paid to Daryl on an
accelerated basis following any of the employment termination events
described below, with delivery of the RSU value occurring at the times
described below:
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Consummation
of a CIC, with delivery of RSU value occurring within 30 days after the
effective date of the CIC; or
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An
involuntary termination of Daryl’s employment without Cause, in which
case, delivery of RSU value will occur within 30 days after the effective
date of termination; or
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A
voluntary termination by Daryl for Good Reason in which case, delivery of
RSU value will occur within 30 days after the effective date of
termination; or
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Disability
(as defined in Section 409A), in which case, delivery of RSU value will
occur within 30 days after the effective date of Disability;
or
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Death,
in which case, delivery of RSU value will occur within 30 days after
death.
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Forfeiture Events: All
RSUs that have not been paid to Daryl by delivery of the underlying shares
(except in the case of voluntary termination without Good Reason, in which
case the prior clause shall be deemed to refer to RSUs that have not
vested) prior to the 5th
anniversary of the date of grant of the RSUs shall be forfeited without
payment (regardless of the vested status of the RSUs) if any one of the
following occurs prior to delivery (vesting, in the case of voluntary
termination without Good Reason) of the TSCM shares underlying the RSU
awards:
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TSCM
involuntarily terminates Daryl’s employment as CEO or his status as a
Director for “Cause”; or
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Daryl
voluntarily terminates his employment as CEO without Good Reason prior to
the fifth anniversary of his assumption of the full CEO role;
or
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Daryl
engages in competitive activity (to be defined in the RSU award agreement)
with TSCM within two years after his service as CEO and Board membership
terminates; or
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Daryl
breaches the provisions to be included within the RSU award agreement
pertaining to non-solicitation of employees and clients of TSCM (within
the two-year period following employment termination), confidentiality of
information, or disparagement of
TSCM.
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In
addition, TSCM reserves the right to claw back RSU value delivered if within two
years after delivery of the RSU value Daryl engages in competitive activities
that violate the terms of the non-compete/non-solicit covenants to be included
in the RSU award agreement, or if he violates the non-disparagement or
confidentiality provisions of the RSU award agreement.
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General
Severance: In the event that, prior to the effective date of a CIC,
Daryl’s employment is involuntarily terminated by TSCM without Cause, then
subject to the caveat prohibiting payment of both general severance and
CIC severance (as described below), TSCM shall pay Daryl a general
severance amount determined according to the following
formula:
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Four
weeks of base pay (at the rate in effect immediately prior to termination)
for each full year of service completed as full-time TSCM CEO;
plus
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1.33
weeks of base pay (at the rate in effect immediately prior to termination)
for each full year of service as a Board member of
TSCM.
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Subject
to the CIC caveat prohibiting payment of both general severance and CIC
severance (as described below), TSCM shall pay Daryl the general severance
within 30 days following the effective date of termination. In the event that
Daryl qualifies to receive CIC severance, and if prior to the payment of CIC
severance TSCM has already paid Daryl general severance amounts, the full value
of such general severance amounts paid shall be offset against any CIC severance
payable to Daryl.
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Change-in-Control
Severance: Subject to the caveat prohibiting payment of both
general severance and CIC severance (as described above), if a CIC occurs
within two-years after assuming full CEO role, Daryl would be paid 2x
(base pay + target bonus) = $1,490,000 (at 2009 pay
rates).
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The
payment will be designed so as to minimize the possibility of parachute
excise taxes.
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In
the event parachute excise taxes apply, TSCM will provide gross-up
protection to neutralize the impact of the excise taxes to
Daryl.
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For
all purposes of this Term Sheet, Daryl shall receive the described
benefits associated with a CIC (i.e., CIC severance and RSU vesting) if
Daryl is employed as CEO at the time events or efforts are initiated that
directly lead to consummation of a CIC, provided that such a CIC will only
so qualify for this provision if the consummation of the CIC occurs within
six months of Daryl’s last day of
employment.
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Payment
shall be made within 30 days after the effective date of the CIC, unless a
delay is necessary to avoid imposition of additional taxes under Section
409A (in which case, the delay shall be for the minimum time frame
necessary to avoid additional 409A
taxes).
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Perks and
Health and Welfare Benefits: Daryl will be eligible to
receive perquisites and general health and welfare benefit coverage at a
level at least equal to those provided to any other full-time executive of
TSCM.
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Internal
Revenue Code Section 409A Saving Clause: TSCM will make all
reasonable efforts to deliver the value in connection with RSUs and CIC
severance in a manner that avoids imposition of additional taxes under
Internal Revenue Code Section 409A.
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Signed,
this 15th day of
May, 2009
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/s/ William Gruver
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/s/ Daryl Otte
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William
Gruver, Compensation Committee Chair
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Daryl
Otte
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of
TheStreet.com
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