Template -- 2009 Revisions
CHANGE OF
CONTROL SEVERANCE AGREEMENT
AS
AMENDED
[ TIERS I, II &
III 1
]
This
Agreement (“Agreement”) is dated as of
, 20[09], by and between SUPERVALU INC., a Delaware corporation
(the “Company”), and
(the “Executive”).
WHEREAS,
the Company’s Board of Directors (the “Board”)
considers the continued services of key executives of the Company
to be in the best interests of the Company and its stockholders;
and
WHEREAS,
the Board desires to assure and has determined that it is
appropriate and in the best interests of the Company and its
stockholders to reinforce and encourage the continued attention and
dedication of key executives of the Company to their duties of
employment without personal distraction or conflict of interest in
circumstances arising from the possibility or occurrence of a
Change of Control of the Company; and
WHEREAS,
the Board has authorized the Company to enter into continuity
agreements with those key executives of the Company who are
designated by the Executive Personnel and Compensation Committee of
the Board of Directors (the “Committee”), such
agreements to set forth the severance compensation which the
Company agrees under certain circumstances to pay such executives;
and
WHEREAS,
Executive is a key executive of the Company and has been designated
by the Committee as an executive to be offered such a continuity
compensation agreement with the Company.
NOW,
THEREFORE, in consideration of the promises and the mutual
covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Company and Executive agree as
follows:
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1)
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General Principles
. This Agreement is
effective on the first date that it has been signed by both the
Company and Executive. Words and phrases used with initial capital
letters shall have the meaning assigned to them in Section 17
and in other Sections of this Agreement unless, in the context in
which used, it would be unreasonable to do so. The captions given
to Sections of this Agreement are solely for convenience of
reference and shall not be considered in construing this
Agreement.
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2)
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Employment following Change of
Control .
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a)
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Employment Continued
. If a Change of Control
occurs, Executive’s employment shall be continued hereunder
for the Employment Period, subject to Executive’s Separation
from Service as described hereinafter. Any existing employment
agreement between Executive and the Company shall continue to be
effective following the Change of Control, but severance amounts
under this Agreement shall be reduced by amounts payable under any
such employment agreement.
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b)
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Terms of Continued
Employment .
During the Employment Period, the following shall apply.
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1
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Tier I - the
CEO; Tier II – the EVPs; Tier III – those remaining
corporate officers who are offered this form of
Agreement.
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i)
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Executive shall have at least the
same titles and responsibilities as those in effect immediately
prior to the Change of Control unless mutually agreed
otherwise.
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ii)
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Executive shall receive an annual
base salary which is not less than the highest base salary in
effect for Executive at any time in the twelve (12) months
preceding the Change of Control, and the Company shall review the
salary annually with a view to increasing it; provided any such
increase shall be in the sole discretion of the Board. Once
increased, base salary cannot be decreased.
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iii)
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If
Executive has not been terminated, for the year of the Change of
Control and for each year thereafter during which Executive is
employed, Executive shall be paid an annual bonus which shall be no
less than the highest of (A) the bonus which Executive would
have received under the Company’s bonus plans as they were in
effect prior to the Change of Control (based upon actual
performance in the year up to the Change of Control), (B) the
average of the annual bonuses paid or payable in respect of the
three years prior to the Change of Control, or
(C) Executive’s Target Bonus immediately prior to the
Change of Control. In addition, Executive shall be afforded long
term incentive opportunities that are not less than the level in
effect prior to the Change of Control.
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iv)
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Executive shall be provided with,
pension, general insurance, vacation, fringe benefits, perquisites
(including an automobile allowance, if any), the use of an office
and support staff that are commensurate with the pension, general
insurance, vacation, fringe benefits, perquisites (including an
automobile allowance, if any), the use of an office and support
staff provided to Executive immediately prior to the Change of
Control or, if more favorable to Executive, at the level made
available to other similarly situated executive officers of the
Company after the Change of Control.
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v)
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Executive’s place of
employment following a Change of Control shall be no farther than
forty-five (45) miles from Executive’s place of
employment prior to the Change of Control.
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3)
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Payment upon Separation from Service
Incident to a COC .
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a)
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Payment Triggers
. Executive shall be
entitled to the severance benefits provided in Section 4
hereof if, and only if, Executive has a Separation from Service and
that Separation from Service occurs either:
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i)
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prior to a Change of Control, as a
result of an Anticipatory Separation, or
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ii)
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within two (2) years following
a Change of Control:
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(1)
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by
the Company without Cause, or
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(2)
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by
Executive for Good Reason.
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b)
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Excluded Separations
. Without limiting the
generality of the foregoing, if Executive has a Separation from
Service prior to a Change of Control for any reason other than an
Anticipatory Separation, this Agreement (excluding the covenants in
Section 11) shall terminate and have no effect and Executive
shall receive only such severance payments, if any, as are provided
in any other existing agreement between Executive and the Company.
If Executive has a Separation from Service after a Change of
Control other than by the Company without Cause or by Executive for
Good Reason, this Agreement (excluding the covenants in
Section 11) shall terminate and have no effect and Executive
shall receive only such severance payments, if any, as are provided
in any other existing agreement between Executive and the
Company.
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c)
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Death & Disability
. Notwithstanding the
foregoing, Executive shall not be entitled to severance benefits
under this Agreement if Executive’s Separation from Service
is on account of Executive’s death or Disability.
Executive’s death or Disability subsequent to a Separation
from Service which would otherwise give rise to severance benefits
under this Agreement will not disqualify Executive’s estate
or Executive from receiving the severance benefits.
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d)
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Notice of Termination by
Company . Any
purported Separation from Service of Executive by the Company
(whether for Cause or without Cause) shall be communicated by a
Notice of Termination to Executive. No purported Separation from
Service of Executive by the Company shall be effective without a
Notice of Termination having been given.
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e)
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Good Reason Notice by
Executive .
Any purported Separation from Service by Executive for Good Reason
shall be communicated by a Notice of Termination to the Company. An
Executive’s Separation from Service will not be for Good
Reason unless (i) Executive gives the Company written notice
of the event or circumstance which Executive claims is the basis
for Good Reason within six (6) months of such event or
circumstance first occurring, and (ii) the Company is given
thirty (30) days from its receipt of such notice within which
to cure or resolve the event or circumstance so noticed. If the
circumstance is cured or resolved within said 30 days,
Executive’s Separation from Service will not be for Good
Reason.
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4)
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Compensation Upon Separation from
Service Incident to a Change of Control . If, pursuant to Section 3,
Executive has a Separation from Service that qualifies Executive
for benefits under this Section 4, and upon Executive’s
timely execution and non-rescission of a Release of Claims, as
further described in Section 12(c) below, Executive shall be
entitled to the following payments and benefits.
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a)
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Lump Sum Severance
. On the tenth
(10 th )business day following such
Separation from Service (or at such later time as may be provided
under Section 4(h)), the Company shall pay or cause to be paid
to Executive a lump sum cash amount equal to [
2 ] times the sum of
(i) Executive’s annual Base Salary , and
(ii) Executive’s Target Bonus.
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b)
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Other Remuneration
.
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i)
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Salary and Vacation Pay
. In addition, at the
time of the payment under Section 4(a), Executive shall be
entitled to an additional lump sum cash payment equal to the sum of
(A) Executive’s earned but unpaid salary through the
date of Separation from Service, and (B) an amount, if any, of
accrued vacation pay, in each case, in full satisfaction of
Executive’s rights thereto. In addition, Executive shall be
entitled to payment of annual bonus plan and long term incentive
plan amounts, if any, due but not yet paid as of the Separation
from Service with respect to years or cycles that were completed
before the Separation from Service.
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ii)
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Interrupted Annual Bonus
. In addition, Executive
shall receive a pro-rated payment of such bonus as would have been
earned based on actual performance for the annual bonus cycle that
includes the Separation from Service. This pro-rated annual bonus
will be determined on the basis of actual performance through the
Separation from Service. Except to the extent Executive has elected
to defer payment of such amount pursuant to a deferred compensation
plan, the pro-rated amount shall paid at the same time other
bonuses are paid under the annual bonus plan. In all events,
however, this payment under the annual bonus plan shall be paid not
later than the later of (A) March 15 following the end of the
calendar year in
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2
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For Tier I
– “three (3).” For Tier II – “two
(2).” For Tier III – “one (1).”
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which the Separation from Service
occurs, or (B) May 15 following the end of the
Company’s fiscal year in which the Separation from Service
occurs.
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c)
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No Effect on Other
Agreements .
Except as expressly provided in this Agreement, nothing in this
Agreement shall be interpreted or relied upon as a basis to amend,
modify, accelerate or defer, or otherwise change any contributions
to or payments that may be due from any other plan or arrangement
that are deferred compensation subject to section 409A of the
Internal Revenue Code of 1986, as amended (the
“Code”).
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d)
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Continued Welfare
Benefits .
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i)
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In General . Executive shall be entitled to
continued medical, dental and life insurance coverage for Executive
and Executive’s eligible dependents on the same basis as in
effect prior to the Change of Control or Executive’s
Separation from Service, whichever is deemed to provide for more
substantial benefits, until the earlier of (A) the end of the
Separation Period, or (B) the commencement of comparable
coverage with a subsequent employer or under a plan of
Executive’s spouse’s employer.
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ii)
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Impossibility
. If the Company
determines that it is not able to provide the coverage required
above under the general terms and provisions of the Company’s
welfare benefit plans consistent with the underwriting, regulatory
and tax treatment intended for those plans, then the Company shall
reimburse Executive for the cost of obtaining substantially similar
benefits (the “Benefit Payment”) and shall pay
Executive an additional amount, such that after payment of all
applicable federal, state and local income and payroll taxes
imposed upon Executive as a result of the Benefit Payment,
Executive retains an amount equal to the amount of the Benefit
Payment.
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e)
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Outplacement . If so requested by Executive,
outplacement services shall be provided by a professional
outplacement provider mutually acceptable to Executive and the
Company at a cost to the Company of not more than Twenty-Five
Thousand Dollars ($25,000). Such services may be provided by direct
payment to the outplacement provider (and not by reimbursement to
Executive). However, services shall be paid or reimbursed only if
the services are provided during the period beginning with the
Separation from Service and ending on the December 31 of the
second calendar year following the calendar year in which the
Separation from Service occurred.
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f)
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Indemnification; Liability
Insurance .
The Company shall maintain, for a period not less than six years
following Executive’s Separation from Service,
indemnification policies and liability insurance coverage for
Executive’s benefit comparable to those indemnification
policies and liability insurance coverage provided by the Company
for Executive’s benefit prior to the Change of
Control.
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g)
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Withholding . Payments and benefits provided
pursuant to this Section 4 or any other provision of this
Agreement shall be subject to any applicable income, payroll and
other taxes required to be withheld.
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h)
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Limitations on Payment of Deferred
Compensation . To the extent that any payments
or benefits to be provided to Executive under this Agreement would
be considered deferred compensation under section 409A of the
Code and Executive is, as of Separation from Service, a
“specified employee” as defined in regulations issued
under section 409A of the Code, then any such payments that
would otherwise be due and payable during the first six
(6) months following and on account of a Separation from
Service shall instead be paid to Executive upon the earlier of
(i) six months and one day after the date of Executive’s
Separation from Service or (ii) any other date permitted under
section 409A(a)(2) and section 409A(a)(3). To the extent
that any
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payments or benefits to be provided
to Executive under this Agreement would be considered deferred
compensation under section 409A of the Code, the provisions of
this Agreement pertaining thereto shall be construed and
administered to comply with section 409A. Neither the Company
nor any of its officers, directors, agents or affiliates shall be
obligated, directly or indirectly, to Executive or any other person
for any taxes, penalties, interest or like amounts that may be
imposed on Executive or other person on account of any amounts paid
or payable under this Agreement or on account of any failure to
comply with section 409A.
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a)
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Reduction Alternative
. Anything in this
Agreement to the contrary notwithstanding, if it is determined (as
hereafter provided) that any payment or distribution by the Company
to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar
right, or the lapse or termination of any restriction on or the
vesting or exercisability of any of the foregoing (a
“Payment”), would be subject to the excise tax imposed
by section 4999 of the Code (or any successor provision
thereto) by reason of being “contingent on a change in
ownership or control” of the Company, within the meaning of
section 280G of the Code (or any successor provision thereto)
or to any similar tax imposed by state or local law, or any
interest or penalties with respect to such excise tax (such tax or
taxes, together with any such interest and penalties, are hereafter
collectively referred to as the “Excise Tax”), then if
a reduction in the amount of payments under Section 4(a) of
this Agreement sufficient to avoid the excise tax would result in
an increase in the total amount of all Payments that would be
retained by Executive, net of all applicable taxes, then and only
then, the payments due under Section 4(a) shall be reduced to
the amount that, when considered with all Payments taken into
account under section 280G is One Dollar ($1.00) less than the
smallest sum that would subject Executive to the excise
tax.
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b)
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Determinations
. If at any time
Executive disagrees with any part of the Company’s
determinations as to the application of Section 5(a), the
disputed matter shall be referred to the nationally recognized firm
of certified public accountants (the “Accounting Firm”)
used by the Company prior to the Change of Control (or, if such
Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected
by Executive). The Accounting Firm shall be directed by the Company
or Executive to submit its determination and detailed supporting
calculations to both the Company and Executive within fifteen
(15) calendar days after the Separation from Service, if
applicable, and any other such time or times as may be requested by
the Company or Executive. In connection with making determinations
under this Section 5, the Accounting Firm shall take into
account the value of any reasonable compensation for services to be
rendered by Executive before or after the Change of Control,
including any restrictive covenants that may apply to Executive and
the Company shall cooperate in the valuation of any such services,
including any restrictive covenants.
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c)
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Process . The Company and Executive shall
each provide the Accounting Firm access to and copies of any books,
records and documents in the possession of the Company or
Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm
in connection with the preparation and issuance of the
determination contemplated by Section 5(b) hereof.
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d)
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Fees and Expenses
. The fees and expenses
of the Accounting Firm for its services in connection with the
determinations and calculations contemplated by Section 5
hereof shall be borne by the Company. If such fees and expenses are
initially advanced by Executive, the Company shall reimburse
Executive the full amount of such fees and expenses on the fifth
business day after receipt from Executive of a statement therefore
and reasonable evidence of Executive’s payment
thereof.
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6)
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Obligations Absolute; No Mitigation;
No Effect On Other Rights .
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a)
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Absolute . The obligations of the Company to
make the payment to Executive, and to make the arrangements,
provided for herein are absolute and unconditional and may not be
reduced by any circumstances, including without limitation any
set-off, counterclaim (including without limitation, pursuant to
Section 11), recoupment, defense or other right which the
Company may have against Executive or any third party at any
time.
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b)
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No Mitigation
. Executive shall not be
required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise, and no such
payment shall be offset or reduced by the amount of any
compensation or benefits provided to Executive in any subsequent
employment.
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c)
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Other Agreements
. The provisions of this
Agreement, and any payment provided for herein, shall not supersede
or in any way limit the rights, benefits, duties or obligations
which Executive may now or in the future have under any benefit,
incentive or other plan or arrangement of the Company or any other
agreement with the Company.
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7)
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Not an Employment
Agreement .
Subject to the terms of this or any other agreement or arrangement
between the Company and Executive that may then be in effect,
nothing herein shall prevent the Company from terminating
Executive’s employment.
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8)
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Successors; Binding Agreement;
Assignment .
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a)
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Company’s
Successors .
The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business of the Company, by agreement
to expressly, absolutely and unconditionally assume and agree to
perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall
be a material breach of this Agreement and shall entitle Executive
to terminate Executive’s employment with the Company or such
successor for Good Reason immediately prior to or at any time after
such succession. As used in this Agreement, “Company”
shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all or substantially all of the
Company’s business or assets which executes and delivers an
agreement provided for in this Section 8(a) or which otherwise
becomes bound by all the terms and provisions of this Agreement by
operation of law, including any parent or subsidiary of such a
successor.
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b)
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Executive’s
Successors .
This Agreement shall inure to the benefit of and be enforceable by
Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If Executive should die while any amount would be payable
to Executive hereunder if Executive had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive’s
estate or designated beneficiary. Neither this Agreement nor any
right arising hereunder may be assigned or pledged by
Executive.
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9)
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Notice . For purpose of this Agreement,
notices and all other communications provided for in this Agreement
or contemplated hereby shall be in writing and shall be deemed to
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