Exhibit 10.3
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT,
made and entered into as of this 27 day of August, 2008, by and
between, Syncora Holdings Ltd, a Bermuda corporation (the “
Company ”), and Edward B. Hubbard (the “
Executive ”) to amend and restate an agreement between
the parties dated as of December 21, 2006 (the “
Prior Agreement ”).
WHEREAS,
the Executive had been employed by Syncora Guarantee Inc.
(“SGI”) as President & Chief Operating Officer,
which has included the business of the Company;
WHEREAS,
the Executive and the Company desired that the Executive continue
to be the President & Chief Operating Officer of SGI 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 (the “ IPO ”);
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 Operating Officer of SGI. In such positions, 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. In carrying out his duties and
responsibilities, the Executive shall report to the Chief Executive
Officer of SGI or the Company. 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.
(b)
Performance of Services . The Executive’s services
under this Agreement, which are global in nature, shall be
performed in the greater New York City metropolitan area, 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, and acceptable to Executive, 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 of not less
than US$375,000.00, 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, but
not decreased, 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 150% 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
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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.
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 on the
same terms as such other similarly situated senior executives of
the Company.
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 on the same terms
as such other similarly situated senior executives of the
Company.
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:
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(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,
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(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
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immediately preceding three years
(or the period of the Executive’s employment with the
Company, if less),
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(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,
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(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 immediate family members, if any, under the
Company’s medical benefit plans upon substantially the same
terms and conditions (including cost of coverage to the immediate
family members) as is then in existence for other senior executives
during the coverage period; provided , that, if the
Executive’s immediate family members 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.
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(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:
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(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,
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(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 above,
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(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
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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),
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(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,
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(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
immediate family members, 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 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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(vi)
the vested accrued benefits, if any, under the employee benefit
pro-grams 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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(c) Termination for Cause
.
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(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:
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(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
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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
reimbursement 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 entitled 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 .
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(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
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Agreement pursuant to
Section 2 is issued by the Company and, within three (3)
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.
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(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:
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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 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
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 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 pro-gram 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, or rights to any cash-based long term incentives,
determined in accordance with the terms thereof or the applicable
plan,
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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
immediate family members, 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 senior 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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(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 (A), (B), (C), (D) and, where applicable, (G)
below within 60 days after termination of
employment:
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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, through the
date on which termination occurs,
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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, if any,
for the year of such termination,
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(D)
a cash lump sum 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,
if any, 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, and cash-based long term incentives in accordance with
the terms of the applicable plan,
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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
immediate family members, 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 senior 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 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 provisions 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 there under, 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).
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(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.
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(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 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 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
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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).
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 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
11
required and of the amount of any
such Gross-Up Payment, shall be made by a nationally recognized
independent 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
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