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DEF 14A
ACETO CORP filed this Form DEF 14A on 10/20/2017
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL

 

On February 13, 2015, we entered into revised change in control agreements with Messrs. Guccione, Roth, Eilender and DeBenedittis, and on August 1, 2016, we entered into a change in control agreement with Mr. Kaczmarek. These agreements (other than the agreement with Mr. Kaczmarek) superseded and replaced in their entirety Change in Control Agreements entered into with such individuals on July 2, 2012.  The agreements provide “double trigger” change in control severance protections, which means no amount will become payable under the agreements unless a “change in control” of Aceto occurs and an executive’s employment is terminated by Aceto other than for “cause” or by the executive for “good reason” within a specified period following the change in control. 

 

Each agreement will automatically terminate if the executive ceases to be an employee of Aceto for any reason prior to the occurrence of a “change in control” (as defined in each agreement).  In addition, the Company can terminate each agreement on one year’s prior written notice; provided that, if a “change in control” of the Company occurs while the agreement is in effect, no such termination notice shall become effective until the second anniversary of the “change in control.”

 

If, during the two (2) year period following the occurrence of a “change in control,” an executive’s employment is terminated by the Company other than for “cause” (as defined in each agreement) or by the executive for “good reason” (as defined in each agreement), subject to the provisions regarding Sections 280G and 4999 of the Code summarized below, the executive will be entitled to the following (in lieu of any payments under the Company’s severance policy):

 

a cash lump sum equal to two (2) times (or, in the case of Mr. DeBenedittis 1.75 times), the sum of the executive’s base salary and annual performance award for the fiscal year preceding the “change in control,” and

 

continued participation in the Company’s group health plan, at the Company’s expense, for a period of two (2) years.

 

To the extent not theretofore already vested, one hundred percent (100%) of the executive’s then-outstanding and unvested “equity awards” (as defined in each agreement) will become vested in full. If, however, an outstanding equity award is to vest and/or the amount of the award to vest is to be determined based on the achievement of performance criteria, then the equity award will vest as to one hundred percent (100%) of the amount of the equity award assuming the performance criteria had been achieved at target levels for the relevant performance period(s).

 

To the extent any amount or benefit to be provided pursuant to the agreement or otherwise (collectively, the “Payments”) would be treated as an “excess parachute payment,” as that phrase is defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), then the amounts and benefits the executive would otherwise receive shall be either (i) paid or allowed in full; or (ii) reduced (but not below zero) to the maximum amount which may be paid without causing any Payment to be nondeductible to the Company under Section 280G of the Code, or subject the executive to an excise tax under Section 4999 of the Code, whichever would result in the executive’s receipt, on an after-tax basis, of the greatest amount of Payments.

 

On December 16, 2014, we entered into an Employment Agreement (the “ Guccione Employment Agreement”) with Mr. Guccione, effective as of January 1, 2015. That agreement provided that if the Company terminated Mr. Guccione’s employment other than for cause pursuant to the Guccione Employment Agreement or Mr. Guccione terminated his employment for good reason pursuant to the Guccione Employment Agreement, regardless of whether such termination occurred during or after the employment term, the Company would be required to (a) continue to pay Mr. Guccione’s base salary, at the rate then in effect, for the 24 month period following the date of termination, (b) make a lump sum cash payment to Mr. Guccione which would be based upon and equal to the past two years earned “Performance Award” and (c) accelerate the vesting to the date of termination on all outstanding unvested Stock Options, Restricted Stock Units and Restricted Stock Awards the Company had previously granted to Mr. Guccione, subject to the exercise provisions in the Corporate Trading Policy.

 

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