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[EXECUTION COPY]
AMENDED AND
RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into as of this 8th day of May,
2008, by and between, Security Capital Assurance Ltd, a Bermuda
corporation (the “ Company ”), and Paul S.
Giordano (the “ Executive ”) to amend
and restate an agreement between the parties dated as of August 2,
2006 (the “ Prior
Agreement ”).
WHEREAS, the Executive had been employed by XL Capital Ltd
as its Executive Vice President, Chief Executive of the Financial
Products & Services Operations, which has included the business
of the Company;
WHEREAS, the Executive and the Company desired that the
Executive cease to be an employee of XL Capital Ltd and become the
President and Chief Executive Officer of the Company on the terms
and subject to the conditions set forth herein, effective upon the
consummation of the initial public offering of the common stock of
the Company;
WHEREAS, the Executive and the
Company now wish to amend the Prior Agreement to bring it into
compliance with the requirements of Section 409A of the Internal
Revenue Code and the treasury regulations and other official
guidance promulgated thereunder.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the Company, and the Executive (the “
Parties ”) agree as follows:
1. EMPLOYMENT.
The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for the term of this
Agreement as set forth in Section 2, below, in the position and
with duties and responsibilities set forth in Section 3, below, and
upon such other terms and conditions as are hereinafter
stated.
2. TERM OF EMPLOYMENT.
The stated term of employment under this Agreement
commenced on August 2, 2006 (the “ Date of the Agreement ”) and shall continue through the close of business
on the third anniversary of the Date of the Agreement, subject to
earlier termination as provided in Section 8, below, and extension
as provided in the next succeeding sentence. On the third
anniversary of the Date of the Agreement and on each anniversary
thereafter, the stated term of employment shall be automatically
extended for an additional one year unless the Company gives notice
in writing to the Executive or the Executive gives notice in
writing to the Company at least three months prior to such
anniversary that the term is not to be so extended.
3. POSITIONS, DUTIES AND
RESPONSIBILITIES.
(a) General
. The Executive shall be employed as President
and Chief Executive Officer of the Company. In such position, the
Executive shall have the duties, responsibilities and authority
normally associated with the office, position and titles of such an
officer of a financial guaranty company, or holding company, whose
shares are publicly traded in the United States. In carrying out
his duties and responsibilities, the Executive shall report to the
Board of Directors of the Company. It is the intention of the
parties that the Executive will serve as a member of the Board of
Directors of the Company. During the term of this Agreement, the
Executive shall also serve as the President and Chief Executive
Officer of SCA Holdings US Inc., the Chief Executive Officer of XL
Capital Assurance Inc. and as a member of the Board of Directors of
XL Financial Assurance Ltd. During the term of this Agreement, the
Executive shall devote his full business time to the business and
affairs of the Company and its subsidiaries, and shall use his best
efforts, skills and abilities to promote the interests of the
Company and its subsidiaries; provided ,
however , the
Executive may serve on up to two boards of directors of other
entities, so long as such service does not interfere with the
Executive’s performance of his duties hereunder or result in
any conflict of interest with the Company.
(b) Performance of
Services . The Executive’s
services under this Agreement, which are global in nature, shall be
performed either in the greater New York City metropolitan area or
Bermuda, as reasonably requested by the Company in accordance with
the guidelines established by the Company from time to time for the
location of the performance of services on behalf of the Company
and its subsidiaries. The Executive acknowledges that the Company
may require the Executive to travel to the extent such travel is
reasonably necessary to perform the services hereunder and that
such travel may be extensive. To the extent reasonably requested by
the Company, the Executive shall allocate greater business time to
a location other than his principal business location, if
necessary.
4. BASE SALARY.
The Executive shall be paid a Base Salary by the Company
not less than US$600,000, payable in accordance with the
Company’s regular pay practices. Such Base Salary shall be
subject to annual review in accordance with the Company’s
practices for executives as in effect from time to time and may be
increased at the discretion of the Compensation Committee of the
Board of Directors of the Company (the “
Compensation Committee ”).
5. BONUSES.
In addition to the Base Salary provided for in Section 4,
above, the Executive shall be eligible for an annual cash bonus
under the Company’s Annual Incentive Compensation Plan as in
effect from time to time, with an annual target bonus equal to 200%
of the Executive’s Base Salary. The Executive may be awarded
such annual bonuses thereunder as may be approved by the
Compensation Committee based on corporate, individual and business
unit performance measures, as appropriate, established or approved
from time to time, by the Compensation Committee. Any annual bonus
shall be paid in cash in a lump sum no later than March 15
following the year for which the annual bonus is paid, unless
deferred at the Executive’s option in accordance with the
provisions of any applicable deferred compensation plan of the
Company or it subsidiaries in effect from time to time. Nothing in
this Section 5 shall confer upon the Executive any right to a
minimum annual bonus.
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6. EMPLOYEE BENEFIT
PROGRAMS.
During the term of the Executive’s employment under
this Agreement, the Executive shall be entitled to participate in
all employee retirement, pension, welfare and benefit programs of
the Company as are in effect from time to time and in which
similarly situated senior executives of the Company are eligible to
participate.
7. BUSINESS EXPENSE REIMBURSEMENT
AND FRINGE BENEFITS.
During the term of the Executive’s employment under
this Agreement, the Executive shall be entitled to participate in
the Company’s travel and entertainment expense reimbursement
programs and its executive fringe benefit plans and arrangements,
all in accordance with the terms and conditions of such programs,
plans and arrangements as in effect from time to time as applied to
the Company’s similarly situated executives.
8. TERMINATION OF
EMPLOYMENT.
(a) Termination due to
Death . In the event the Executive
dies during the term of employment hereunder, the Executive’s
spouse, if the spouse survives the Executive, (or, if the
Executive’s spouse does not survive him, the estate or other
legal representative of the Executive) shall be entitled to receive
the Base Salary as provided in Section 4, above, at the rate in
effect at the time of Executive’s death, to be paid in
accordance with the Company’s regular payroll practices (as
in effect at the time of death), through the end of the sixth month
after the month in which the Executive dies. In addition to the
above, the estate or other legal representative of the Executive
shall be entitled to:
(i)
any annual bonus awarded in accordance with the
Company’s bonus program but not yet paid under Section 5
above, to be paid at the time such bonus would otherwise be due
under Section 5 above, and reimbursement of business expenses
incurred prior to death in accordance with Section 7 above,
(ii) within
45 days after the date of death, a pro rata bonus for the year of
death in an amount determined by the Compensation Committee, but in
no event less than a pro rata portion of the Executive’s
average annual bonus for the immediately preceding three years (or
the period of the Executive’s employment with the Company, if
less),
(iii) the
rights under any options to purchase equity securities of the
Company or other rights with respect to equity securities of the
Company, including any restricted stock or other securities, held
by the Executive determined in accordance with the terms
thereof,
(iv) for a
period of six months following the Executive’s death,
continued medical benefit plan coverage (including dental and
vision benefits if provided under the applicable plans) for the
Executive’s dependents, if any, under the Company’s
medical benefit plans upon substantially the same terms and
conditions (including cost of coverage to the dependents) as is
then in existence for other executives during the coverage
period; provided
, that
, if the Executive’s dependents cannot
continue to participate in the Company plans providing such
benefits, the Company shall otherwise provide such benefits on
substantially the same after-tax basis as if continued
participation had been permitted, and
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(v)
the vested accrued benefits, if any, under the
employee benefit programs of the Company, as provided in Section 6,
above, determined in accordance with the applicable terms and
provisions of such programs.
(b) Termination due to
Disability . In the event (x) the
Executive’s employment hereunder is terminated due to his
disability, as determined under the Company’s long-term
disability plan, or (y) the Executive incurs a separation from
service pursuant to Code Section 409A as a result of his incapacity
due to physical or mental illness (in which case he shall be
terminated for disability at the date of the separation from
service), the Executive shall be entitled to the following
amounts:
(i)
a cash lump sum payment made, within sixty (60)
days after the date of termination, in an amount equal to the Base
Salary as provided in Section 4 above, that would have been paid to
the Executive had he remained employed through the end of the sixth
month after the month in which the Executive’s employment
terminates due to disability,
(ii)
any annual bonus awarded in accordance with the
Company’s bonus program but not yet paid under Section 5
above, to be paid at the time such bonus would otherwise be due
under Section 5 above, and reimbursement of business expenses
incurred prior to termination of employment in accordance with
Section 7(a) above,
(iii)
within 60 days after the date of termination, a
pro rata bonus for the year of termination in an amount determined
by the Compensation Committee, but in no event less than a pro rata
portion of the Executive’s average annual bonus for the
immediately preceding three years (or the period of the
Executive’s employment with the Company, if less),
(iv)
the rights under any options to purchase equity
securities of the Company or other rights with respect to equity
securities of the Company, including any restricted stock or other
securities, held by the Executive, determined in accordance with
the terms thereof,
(v)
for a period of six months following the
termination of the Executive’s employment, continued medical
benefit plan coverage (including dental and vision benefits if
provided under the applicable plans) for the Executive (and the
Executive’s dependents, if any) under the Company’s
medical benefit plans upon substantially the same terms and
conditions (including cost of coverage to the Executive) as is then
in existence for other executives during the coverage
period; provided
, that
, if the Executive cannot continue to
participate in the Company plans providing such benefits, the
Company shall otherwise provide such benefits on substantially the
same after-tax basis as if continued participation had been
permitted; provided further
, however , that, in the event
the Executive becomes re-employed with another employer and becomes
eligible to receive medical benefits from such employer, the
medical benefits described herein shall immediately cease,
and
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(vi)
the vested accrued benefits, if any, under the
employee benefit programs of the Company, as provided in Section 6
above, determined in accordance with the applicable terms and
provisions of such programs.
(c) TERMINATION FOR
CAUSE.
(i) The employment of
the Executive under this Agreement may be terminated by the Company
for Cause, such termination to be effective upon the Company giving
the Executive written notice of termination in accordance with the
provisions of this Agreement. For this purpose, “
Cause ”
shall mean:
| (A) |
conviction of the Executive of
a felony involving moral turpitude, dishonesty or laws to which the
Company or its Affiliates are subject in connection with the
conduct of its or their business; |
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| (B) |
the Executive, in carrying out
his duties for the Company under this Agreement, has been guilty of
(1) willful misconduct or (2) substantial and continual refusal by
the Executive to perform the duties assigned to the Executive
pursuant to the terms hereof; provided ,
however , that
any act or failure to act by the Executive shall not constitute
Cause for purposes of this Section 8(c)(i)(B) if such act or
failure to act was committed, or omitted, by the Executive in good
faith and in a manner he reasonably believed to be in the overall
best interests of the Company, as the case may be. The
determination of whether the Executive acted in good faith and that
he reasonably believed his action to be in the Company’s
overall best interest, as the case may be, will be in the
reasonable and good faith judgment of the Compensation Committee
and/or the Audit Committee; or |
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| (C) |
the Executive’s continued
willful refusal to obey any lawful policy or requirement duly
adopted by the Company’s Board of Directors and the
continuance of such refusal after receipt of written
notice. |
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(ii) In the event of a termination for Cause
under Section 8(c)(i), above, the Executive shall be entitled only
to: |
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| (A) |
Base Salary as provided in
Section 4, above, at the rate in effect at the time of his
termination of employment for Cause, through the date on which
termination for Cause occurs, to be paid in accordance with the
Company’s regular payroll practices, |
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| (B) |
the rights under any options to
purchase equity securities of the Company or other rights with
respect to equity securities of the Company, including any
restricted stock or other securities, held by the Executive,
determined in accordance with the terms thereof, and |
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| (C) |
the vested accrued benefits, if
any, under employee benefit programs of the Company, as provided in
Section 6, above, and re-imbursement of properly incurred
unreimbursed business expenses under the business expense
reimbursement program as described in Section 7, above, determined
in accordance with the applicable terms and provisions of such
employee benefit and expense reimbursement programs;
provided that
the Executive shall not be entitled to any such benefits unless the
terms and provisions of such programs expressly state that the
Executive shall be en titled thereto in the event his employment is
terminated for Cause (as defined in this Agreement or
otherwise). |
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(d) TERMINATION WITHOUT
CAUSE.
(i) Anything in this
Agreement to the contrary notwithstanding, the Executive’s
employment may be terminated by the Company without Cause as
provided in this Section 8(d). A termination due to death or
disability, as described in Section 8(a) or (b), above, or a
termination for Cause, as described in Section 8(c), above, shall
not be deemed a termination without Cause under this Section 8(d).
For the avoidance of doubt, if a notice of non-renewal of this
Agreement pursuant to Section 2 is issued by the Company and,
within six (6) months thereafter, a written notice is issued (x) by
the Company to the Executive of its intention to terminate the
employment relationship with Executive at the end of the Term or
(y) by the Executive to the Company of Executive’s intention
to terminate the employment relationship with the Company at the
end of the Term, the termination of the Executive’s
employment at the end of the Term shall be considered a termination
by the Company without Cause hereunder.
(ii) In the event the
Executive’s employment is terminated by the Company without
Cause (x) prior to a Change in Control or (y) following the
Post-Change Period (as hereinafter defined), the Executive shall be
entitled to:
| (A) |
Base Salary as provided in
Section 4, above, at the rate in effect at the time of his
termination of employment without Cause, through the date on which
termination without Cause occurs, to be paid in accordance with the
Company’s regular payroll practices, |
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| (B) |
provided the Executive
executes, on or before the date that is fifty (50) days following
the date of his termination of employment, a general release of
employment liability claims against the Company and its Affiliates
in substantially the form of Exhibit
C attached hereto and does not revoke
such release prior to the end of the seven day statutory revocation
period, a cash lump sum payment made within sixty (60) days after
termination of employment equal to (x) two times the
Executive’s annual Base Salary, at the annual rate in effect
in accordance with Section 4, above, immediately prior to such
termination and (y) one times the higher of the targeted annual
bonus for the year of such termination, if any, or the average of
the Executive’s annual bonus payable by the Company or its
subsidiaries for the three years immediately preceding the year of
termination (or such shorter period during which the Executive has
been employed by any of such entities), |
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| (C) |
any annual bonus awarded in
accordance with the Company’s bonus program but not yet paid
under Section 5 above, to be paid at the time such bonus would
otherwise be due under Section 5 above, and reimbursement of
business expenses incurred prior to termination of employment in
accordance with Section 7 above, |
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| (D) |
the rights under any options to
purchase equity securities of the Company or other rights with
respect to equity securities of the Company, including any
restricted stock or other securities, held by the Executive,
determined in accordance with the terms thereof, |
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| (E) |
for a period of twenty-four
months following the termination of the Executive’s
employment, continued medical benefit plan coverage (including
dental and vision benefits if provided under the applicable plans)
for the Executive (and the Executive’s dependents, if any)
under the Company’s medical benefit plans upon substantially
the same terms and conditions (including cost of coverage to the
Executive) as is then in existence for other executives during the
coverage period; provided
, that
, if the Executive cannot continue to
participate in the Company plans providing such benefits, the
Company shall otherwise provide such benefits on substan- tially
the same after-tax basis as if continued participation had been
permitted; provided
, however , that, in the event
the Executive becomes reem ployed with another employer and becomes
eligible to receive medical benefits from such employer, the
medical benefits described herein shall immediately cease,
and |
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| (F) |
the vested accrued benefits, if
any, under the employee benefit programs of the Company, as
provided in Section 6 above, determined in accordance with the
applicable terms and provisions of such programs. |
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(iii) In the event the
Executive’s employment is terminated by (x) the Company
without Cause within the twenty-four month period following a
Change in Control (as defined in Exhibit A hereto) (the
“ Post-Change Period
”) or (y) the Executive terminates his
employment for “ Good
Reason ” (as defined in
Exhibit B hereto) during the Post-Change Period, the Executive shall
be entitled to the following, paid in the case of amounts set forth
in (B), (C) (D), and where applicable, (G) below within 60 days
after termination of employment:
| (A) |
Base Salary as provided in
Section 4, above, at the rate in effect at the time of his
termination of employment, through the date on which termination
occurs, to be paid in accordance with the Company’s regular
payroll practices, |
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| (B) |
a cash lump sum payment equal
to two times the Executive’s annual Base Salary, at the rate
in effect in accordance with Section 4, above, or immediately prior
to such termination or Change in Control, whichever is
greater, |
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| (C) |
a cash lump sum payment equal
to two times the higher of (i) the average annual bonus awarded to
the Executive by the Company or its subsidiaries in the three years
prior to the year in which the Change in Control occurs (or shorter
period during which the Executive had been employed by any of such
entities) or (ii) the Executive’s target annual bonus for the
year of termination, |
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| (D) |
a cash lump sum payment equal
to (i) the higher of (x) the bonus actually awarded to the
Executive by the Company for the year immediately preceding the
year in which the Change in Control occurs or (y) the targeted
amount of bonus that would have been awarded to the Executive in
respect of the year in which the termination of employment occurs,
multiplied by (ii) a fraction, the numerator of which is the number
of months or fraction thereof in which the Executive was employed
by the Company in the year of termination of employment, and the
denominator of which is 12, |
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| (E) |
options to purchase equity
securities of the Company or other rights with respect to equity
securities of the Company held by the Executive shall immediately
vest in full and shall continue to be exercisable for three years
from the date of termination of employment, notwithstanding the
Executive’s termination of employment, or the original full
term of the option or other right, if shorter, |
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| (F) |
for a period of twenty-four
months following the termination of the Executive’s
employment, continued medical benefit plan coverage (including
dental and vision benefits if provided under the applicable plans)
for the Executive (and the Executive’s dependents, if any)
under the Company’s medical benefit plans upon substantially
the same terms and conditions (including cost of coverage to the
Executive) as is then in existence for other executives during the
coverage period; provided
, that
, if the Executive cannot continue to
participate in the Company plans providing such benefits, the
Company shall otherwise provide such benefits on substantially the
same after-tax basis as if continued participation had been
permitted; provided
, however , that, in the event
the Executive becomes reemployed with another employer and becomes
eligible to receive medical benefits from such employer, the
medical benefits described herein shall immediately cease,
and |
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| (G) |
full and immediate vesting as
of the date of termination under the Company’s retirement
plans that are not qualified under Code Section 401(a), and, with
regard to those retirement plans that are qualified under Code
Section 401(a) (other than those where any unvested benefit is paid
through a plan that is not subject to Code Section 401(a)), an
economically equivalent benefit as if the unvested benefit under
any plan qualified under Code Section 401(a) fully and immediately
vested shall be paid in a cash lump sum to the Executive within
sixty (60) days after termination of employment. |
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Anything in this Agreement to the contrary notwithstanding,
the Executive shall be entitled to the benefits described in
(A)-(G) above, subject to the proviso below, if the
Executive’s employment with the Company is terminated by the
Company (other than for Cause) within one year prior to the date on
which a Change in Control occurs, and it is reasonably demonstrated
that such termination (i) was at the request of a third party who
has taken steps reasonably calculated or intended to effect the
Change in Control or (ii) otherwise arose in connection with or
anticipation of the Change in Control; provided ,
however , that
in such event, (x) the Executive shall be entitled to the benefits
and payments provided under Section 8(d)(ii) in the form and at the
times provided thereunder, and (y) the Executive shall also be
entitled to the benefits and payments provided under Section
8(d)(iii) in the form and at the times provided under Section
8(d)(iii) payable on a Change in Control, but solely to the extent
that the benefits and payments under Section 8(d)(iii) exceed the
benefits and payments under Section 8(d)(ii).
(iv)
If, in situations where Section 8(d)(iii) does
not apply, at any time during the term of the Executive’s
employment hereunder, (x) duties are assigned to the Executive that
constitute a material diminution in his duties as described under
Section 3 hereof, or (y) the Company does not cure any other
material breach by it of any provision of Sections 3 through 7, 14
and 17 of this Agreement within 30 calendar days following written
notice of same by the Executive (which written notice must be given
within 30 calendar days after such breach), the Executive shall
have the right to terminate his employment within 30 calendar days
of the Company’s failure to rescind such assignment or of
such failure to cure a breach, as the case may be, in both cases in
accordance with the proviso below and such termination shall be
deemed a termination by the Company without Cause under Section
8(d)(ii), above, provided
, in the event of (x) or (y) above, the
Executive shall have given the Company written notice of his
decision within 30 calendar days of such occurrence and shall not,
within 30 calendar days thereafter, have had the assignment of such
duties rescinded or the material breach cured.
(e) VOLUNTARY TERMINATION BY THE
EXECUTIVE. The Executive may voluntarily terminate his employment
prior to the expiration of the term of this Agreement upon at least
thirty (30) days’ prior written notice to the Company (or if
the Board deems a longer period necessary to effect an orderly
transition, the Board may, by prompt written notice to the
Executive, extend the termination date up to an additional sixty
(60) days), provided such termination shall constitute a voluntary
termination and, except as provided in Section 8(d)(iii) or Section
8(d)(iv), above, in such event the Executive shall be limited to
the same rights and benefits as applicable to a termination by the
Company for Cause as provided in Section 8(c), above. A voluntary
termination in accordance with this Section 8(e) shall not be
deemed a breach of this Agreement. A termination of the
Executive’s employment due to disability or death as
described in Section 8(b) or 8(a), above, a termination by the
Executive which the Executive is entitled to treat as a termination
by the Company pursuant to Section 8(d), above, or a termination by
the Executive under Section 8(d)(iv), above, shall not be deemed a
voluntary termination within the meaning of this Section 8(e). For
the avoidance of doubt, a notice of non-renewal of the Agreement
pursuant to Section 2 above issued by the Executive shall not be
considered a voluntary termination within the meaning of this
Section 8(e).
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9. EXCISE TAX
PAYMENTS.
(a) Anything in this Agreement to
the contrary notwithstanding, in the event it shall be determined
that (i) any payment or distribution made, or benefit provided
(including, without limitation, the acceleration of any payment,
distribution or benefit or accelerated vesting or exercisability of
any award) by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 9) (a
“ Payment ”) would be subject to the excise tax imposed by
Section 4999 of the United States Internal Revenue Code of 1986, as
amended (the “ Code
”) (or any successor provision or similar
excise tax), or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the “ Excise Tax ”), (ii) the
aggregate amount of the Executive’s Parachute Payments (as
defined in Section 280G(b)(2)(A) of the Code) is less than 3.25
times the Executive’s Base Amount (as defined in Section
280G(b)(3)(A) of the Code), and (iii) no such Payment would be
subject to the Excise Tax if the payments set forth in Section
8(d)(iii)(B) and (C) hereof were each reduced by up to 20 percent,
then the payments set forth in Section 8(d)(iii)(B) and (C) will
each be reduced to the smallest extent possible (and in no event by
more than 20 percent in the aggregate) such that no Payment is
subject to the Excise Tax.
(b) Anything in this Agreement to
the contrary notwithstanding, in the event it shall be determined
that (i) the aggregate amount of the Executive’s Parachute
Payments equals or exceeds 3.25 times the Executive’s Base
Amount, (ii) the aggregate amount of the Executive’s
Parachute Payments is less than 3.25 times the Base Amount but one
or more Payments would be subject to the Excise Tax even if the
payments set forth in Section 8(d)(iii)(B) and (C) hereof were each
reduced by 20 percent, or (iii) notwithstanding a reduction in
payments pursuant to Section 9(a) above, an Excise Tax is payable
by the Executive on one or more Payments, then, in any such case,
Payments shall not be reduced and the Executive shall be entitled
to receive an additional payment (a “ Gross-Up Payment ”) in
an amount such that after payment by the Executive of all taxes
(including any income or Excise Tax) imposed upon the Gross-Up
Payment and any interest or penalties imposed with respect to such
taxes, the Executive retains from the Gross-Up Payment an amount
equal to the Excise Tax imposed upon the Payments.
(c) Subject to the provisions of
Section 9(d), all determinations required to be made under this
Section 9, including determination of whether a Gross-Up Payment is
required and of the amount of any such Gross-Up Payment, shall be
made by a nationally recognized public accounting firm selected by
the Company (the “ Accounting
Firm ”) which shall provide
detailed supporting calculations both to the Company and the
Executive within 15 business days of the date of termination of the
Executive’s employment, if applicable, or such earlier time
as is reasonably requested. The initial Gross-Up Payment, if any,
as determined pursuant to this Section 9(c), shall be paid to the
Executive within five business days of the receipt of the
Accounting Firm’s determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall
furnish the Executive with a written opinion that he has
substantial authority not to report any Excise Tax on his Federal
income tax return. Any determination by the Accounting Firm meeting
the requirements of this Section 9(c) shall be binding upon the
Company and the Executive, subject only to payments pursuant to the
following sentence based on a determination that additional
Gross-Up Payments should have been made, consistent with the
calculations required to be made hereunder (the amount of such
additional payments are referred to
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herein as the “
Gross-Up Underpayment ”). In the event that the Company exhausts its
remedies pursuant to Section 9(d) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Gross-Up Underpayment that has
occurred and any such Gross-Up Underpayment shall be promptly paid
by the Company to or for the benefit of the Executive. The fees and
disbursements of the Accounting Firm shall be paid by the
Company.
(d) The Executive shall notify
the Company in writing of any claim by the United States Internal
Revenue Service that, if successful, would require the payment by
the Executive of any Excise Tax and, therefore, the payment by the
Company of a Gross-Up Payment. Such notification shall be given as
soon as practicable but not later than 30 business days after the
Executive receives written notice of such claim and shall apprise
the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following the
date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires, in
good faith, to contest such claim (which notice shall set forth the
bases for such contest) and that it will bear the costs and provide
the indemnification as required by this sentence, the Executive
shall, in good faith:
(i)
give the Company any information reasonably
requested by the Company relating to such claim,
(ii)
take such action in connection with contesting
such claim as the Company shall, in good faith, reasonably request
in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an
attorney selected by the Company and reasonably acceptable to the
Executive,
(iii)
cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv)
permit the Company to participate, in
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