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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into by and between PEDIATRIX MEDICAL GROUP, INC. , a
Florida corporation ("Employer"), and ROGER J. MEDEL, M.D.
("Employee") effective as of the 20th day of August, 2008 (the
"Effective Date").
RECITALS
WHEREAS , Employer is presently engaged in "Employer’s
Business" as defined on Exhibit A hereto;
WHEREAS , Employee is a founder of Employer and currently
serves as Chief Executive Officer of Employer pursuant to an
Employment Agreement effective as of November 11, 2004 (the
"Prior Employment Agreement");
WHEREAS , Employer and Employee desire to replace the
Prior Employment Agreement with this Agreement effective as stated
above and set forth herein the terms and conditions of
Employee’s employment with Employer following termination of
the Prior Employment Agreement; and
WHEREAS , in order to induce Employer to enter into this
Agreement on the terms and conditions set forth herein (including
an increase in compensation over what was provided under the Prior
Employment Agreement), and disclose its trade secrets and
Confidential Information in connection with Employee’s
employment by Employer and provide incentive compensation from time
to time, Employee hereby agrees to be bound by the terms of this
Agreement, including the arbitration, non-competition and related
restrictive covenants set forth herein.
NOW, THEREFORE , in consideration of the premises and
mutual covenants set forth herein, the parties agree as
follows:
1. Employment.
1.1. Employment and Term . Employer hereby agrees to
employ Employee and Employee hereby agrees to serve Employer on the
terms and conditions set forth herein for a "Term" that commences
on the Effective Date and continues for a period of five
(5) years, unless sooner terminated in accordance with the
provisions of Section 4. In this Agreement, the term
"Employment Period" shall refer to the period of time beginning on
the Effective Date and ending on the earlier of the expiration of
the Term or such earlier date as the employment of Employee is
terminated pursuant to the provisions of Section 4 of this
Agreement. Employer and Employee agree that the Prior Employment
Agreement shall terminate and be of no further force and effect as
of the Effective Date.
1.2. Duties of Employee . During the
Employment Period, Employee shall serve as Chief Executive Officer
of Employer and perform such duties as are customary to the
position Employee holds or as may be reasonably assigned to
Employee from time to time by Employer’s Board of Directors
("Employee’s Supervisor"); provided, that such duties
as assigned shall be customary to Employee’s role as an
executive officer of Employer. Employee’s employment shall be
full-time and as such Employee agrees to devote substantially all
of Employee’s attention and professional time to the business
and affairs of Employer. During the Employment Period, Employer
shall promote the proficiency of Employee by, among other things,
providing Employee with Confidential Information, specialized
professional development programs, and information regarding the
organization, administration and operation of Employer. During the
Employment Period, Employee agrees that Employee will not, without
the prior written consent of Employer (which consent shall not be
unreasonably withheld), serve as a director on a corporate board of
directors or in any other similar capacity for any institution
other than Employer. Employee may continue to serve as a director
on any corporate board of directors on which he serves as of the
Effective Date, and he may continue to serve in any other similar
capacity in which he serves as of the Effective Date for any
institution. During the Employment Period, it shall not be a
violation of this Agreement to (i) serve on other civic or
charitable boards or committees, or (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions,
so long as such activities do not interfere with the performance of
Employee’s responsibilities as an employee of Employer in
accordance with this Agreement, including the restrictions of
Section 8 hereof.
1.3. Place of Performance . Employee shall be based at
Employer’s offices located in Sunrise, Florida, except for
required travel relating to Employer’s Business.
2. Base Salary and Performance Bonus.
2.1. Base Salary . Employee shall be paid an annual base
salary of Nine Hundred Fifty Thousand Dollars ($950,000.00) (the
"Base Salary") beginning June 1, 2008 and continuing during
the Employment Period, payable in installments consistent with
Employer’s customary payroll schedule and subject to
applicable withholding for taxes and Employee directed
withholdings. The Compensation Committee of the Board of Directors
of Employer (the "Compensation Committee") shall review the amount
of Employee’s Base Salary on an annual basis no later than
ninety (90) days after the beginning of Employer’s
fiscal year. Any change to Employee’s Base Salary that is
approved by the Compensation Committee shall become the Base Salary
for purposes of this Agreement.
2.2. Performance Bonus . During the Employment Period,
Employee shall be eligible for an annual bonus (the "Performance
Bonus") in accordance with incentive programs approved from time to
time by the Compensation Committee, which programs shall
contemplate a target bonus payment of at least One Hundred Fifty
Percent (150%) of Employee’s Base Salary upon the
fulfillment of reasonable performance objectives set by the
Compensation Committee. Each Performance Bonus shall be paid in the
calendar year immediately following the calendar year in which it
is earned as soon as practicable after the audited financial
statements for Employer for the year for which the bonus is earned
have been released; provided, however, that if calculation of
Employee’s Performance Bonus within such time is not
administratively practicable due to events beyond the control of
Employer, then Employer may delay payment of the Performance Bonus
provided that the payment is made during the first taxable year of
Employee in which the calculation of the amount of the payment is
administratively practicable.
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3. Benefits.
3.1. Expense Reimbursement . Employer shall promptly
reimburse Employee for all out-of-pocket expenses reasonably
incurred by Employee during the Employment Period on behalf of or
in connection with Employer’s Business pursuant to the
reimbursement standards and guidelines of Employer in effect from
time to time. Employee shall account for such expenses and submit
reasonable supporting documentation to Employer in accordance with
Employer’s policies in effect from time to time.
3.2. Employee Benefits . During the Employment Period,
Employee shall be entitled to participate in such health, welfare,
disability, stock purchase, retirement savings and other fringe
benefit plans and programs as may be established and maintained by
Employer from time to time to the extent that such plans and
programs are applicable to other similarly situated employees of
Employer and subject to the provisions of such plans and
programs.
3.3. Leave Time . During the Employment Period, Employer
shall allow Employee thirty eight (38) days of paid time off
each year for vacation, illness, injury, personal days or other
similar purposes in accordance with Employer’s policies in
effect from time to time (prorated for periods of less than a
calendar year). Any paid time off not used during each calendar
year may be carried over into the next year to the extent permitted
by Employer’s policies in effect from time to time.
3.4. Incentive Compensation Plan . During the Employment
Period, Employee shall be eligible to participate in
Employer’s incentive compensation plans that provide for the
issuance of stock options, restricted stock and other awards to its
employees. Employee’s stock-based award each year shall be
determined by the Compensation Committee based on Employee’s
performance and Employer’s performance during the immediately
preceding year and shall be consistent with the Compensation
Committee’s determination of Employee’s stock-based
award in prior years. The terms of any award to Employee and
Employee’s rights and interest in any such award shall be
controlled by this Agreement, the award agreement and the
appropriate incentive compensation plan. Employee acknowledges that
this Section 3 is sufficient consideration for Employee to
enter into this agreement, including the restrictive covenants set
forth in Section 8 below.
3.5. Personal Use of Corporate Aircraft. Corporate
aircraft, whether owned by the Company outright, jointly with
another person or entity, or by fractional interest, may be used by
Employee during the Employment Period for personal matters;
provided, however, (i) the aircraft is not being used,
nor during the period Employee has requested use for personal
matters will it be needed for use, by Employer for business-related
matters, as Employer shall have priority over Employee’s
personal use; and (ii) Employee’s personal use of the
aircraft does not exceed a total of seventy-five (75) hours of
flight in any calendar year without the advance approval of the
Compensation Committee. Such personal use of the aircraft by
Employee shall be treated as imputed income to Employee in
accordance with rules and regulations of the Internal Revenue Code
of 1986, as amended.
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3.6 Legal Fees . Employer shall reimburse
Employee for the reasonable legal fees and expenses incurred by
Employee in connection with the review and negotiation of this
Agreement and the related Restricted Shares Units Agreements.
Employer shall also reimburse Employee for all reasonable legal
fees and expenses that Employee may incur during the Term or within
ten years after the expiration thereof in connection with any
dispute between Employee and the Employer involving this Agreement,
Employee’s employment with the Employer or the termination
thereof, to the greatest extent permitted by law. All
reimbursements described in this paragraph shall be made promptly
after demand is made by Employee and Employee’s provision to
the Employer of reasonably satisfactory evidence of such fees and
expenses, but no later than the last day of the calendar year
following the calendar year in which Employee incurs such fees and
expenses.
4. Termination.
4.1. Termination for Cause . Employer may terminate
Employee’s employment under this Agreement for Cause. As used
in this Agreement, the term "Cause" shall mean the occurrence of
any of (i) Employee’s engagement in (A) willful
misconduct resulting in material harm to Employer, or
(B) gross negligence; (ii) Employee’s conviction
of, or pleading nolo contendere to, a felony or any other crime
involving fraud, financial misconduct, or misappropriation of
Employer’s assets; (iii) Employee’s willful and
continual failure, after written notice from Employee’s
Supervisor, to (A) perform substantially his employment duties
consistent with his position and authority, or (B) follow,
consistent with Employee’s position, duties, and authorities,
the reasonable lawful mandates of Employee’s Supervisor; or
(iv) Employee’s breach of Section 8.4 of this
Agreement. No act or omission shall be deemed willful or grossly
negligent for purposes of this definition if taken or omitted to be
taken by Employee in a good faith belief that such act or omission
to act was in the best interests of the Employer or if done at the
express direction of the Employer’s Board . The
termination date for a termination of Employee’s employment
under this Agreement pursuant to this Section 4.1 shall be the
date specified by Employer in a written notice to Employee of
finding of Cause, which may not be retroactive. Upon termination of
Employee’s employment under this Agreement pursuant to
Section 4.1, Employee shall be entitled to compensation in
accordance with and subject to, the provisions of Section 5.1
hereof.
4.2. Disability . Employer may terminate Employee’s
employment under this Agreement upon the Disability (as defined
below) of Employee. Subject to the requirements of applicable law,
Employee shall be deemed to have a "Disability" for purposes of
this Agreement in the event of (i) Employee’s inability
to perform Employee’s duties hereunder, with or without a
reasonable accommodation, as a result of physical or mental illness
or injury, and (ii) a determination by an independent
qualified physician selected by Employer and acceptable to Employee
(which acceptance shall not be unreasonably withheld) that Employee
is currently unable to perform such duties and in all reasonable
likelihood such inability will continue for a period in excess of
an additional ninety (90) or more days in any one hundred
twenty (120) day period. The termination date for a
termination of Employee’s employment under this Agreement
pursuant to this Section 4.2 shall be the date specified by
Employer in a notice to Employee, which date shall not be
retroactive. Upon any termination of Employee’s employment
under this Agreement pursuant to this Section 4.2, Employee
shall be entitled to compensation and/or benefits in accordance
with, and subject to, the provisions of Section 5.2
hereof.
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4.3. Death . Employee’s employment
under this Agreement shall terminate automatically upon the death
of Employee, without any requirement of notice by Employer to
Employee’s estate. The date of Employee’s death shall
be the termination date of Employee’s employment under this
Agreement pursuant to this Section 4.3. Upon any termination
of Employee’s employment under this Agreement pursuant to
this Section 4.3, Employee shall be entitled to the
compensation specified in Section 5.3 hereof.
4.4. Termination by Employer Without Cause . Employer may
terminate Employee’s employment without Cause by giving
Employee written notice of such termination. The termination date
shall be the date specified by Employer in such notice, which shall
not be less than ninety (90) days from the date of written
notice to Employee. Upon any termination of Employee’s
employment under this Agreement pursuant to this Section 4.4,
Employee shall be entitled to compensation and/or benefits in
accordance with, and subject to, the provisions of Section 5.4
hereof.
4.5. Termination by Employee Due to Poor Health .
Employee may terminate Employee’s employment under this
Agreement upon written notice to Employer if Employee’s
health should become impaired to any extent that makes the
continued performance of Employee’s duties under this
Agreement hazardous to Employee’s physical or mental health
or Employee’s life (regardless of whether such condition
would be deemed a Disability under any other Section of this
Agreement), provided that Employee shall have furnished
Employer with a written statement from a qualified doctor to that
effect, and provided further that, at Employer’s
written request and expense, Employee shall submit to a medical
examination by an independent qualified physician selected by
Employer and acceptable to Employee (which acceptance shall not be
unreasonably withheld), which doctor shall substantially concur
with the conclusions of Employee’s doctor. The termination
date shall be ninety (90) days from Employer’s receipt
of such notice. Upon any termination of Employee’s employment
under this Agreement pursuant to this Section 4.5, Employee
shall be entitled to compensation and/or benefits in accordance
with, and subject to, the provisions of Section 5.5
hereof.
4.6. Termination by Employee . Employee may terminate
Employee’s employment under this Agreement for any reason
whatsoever upon not less than ninety (90) days prior written
notice to Employer. Upon receipt of such notice from Employee,
Employer may, at its option, require Employee to terminate
employment at any time in advance of the expiration of such ninety
(90) day period. The termination date under this
Section 4.6 shall be the date specified by Employer, but in no
event more than ninety (90) days after Employer’s
receipt of notice from Employee as contemplated by this
Section 4.6. Upon any termination of Employee’s
employment under this Agreement pursuant to this Section 4.6,
Employee shall be entitled to compensation and/or benefits in
accordance with, and subject to, the provisions of Section 5.6
hereof.
4.7. Termination by Employee for Good Reason. Employee
may terminate Employee’s employment under this Agreement for
Good Reason. For purposes of this Section, "Good Reason" shall mean
the occurrence of any of the following:
(a) a material diminution in the Employee’s Base Salary or
Performance Bonus eligibility;
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(b) a material diminution in the Employee’s
authority, duties, or responsibilities;
(c) a material diminution in the authority, duties or
responsibilities of the supervisor to whom the Employee is required
to report, including a requirement that the Employee report to a
corporate officer or employee instead of reporting directly to the
Board of Directors of the Employer
(d) a material diminution in the budget over which the Employee
retains authority;
(e) a material change in the geographic location at which the
Employee must perform the services under this Agreement; or
(f) any other action or inaction that constitutes a material
breach by the Employer under this Agreement.
For purposes hereof, "Good Reason" shall not be deemed to exist
unless the Employee provides the Employer with written notice of
the existence of such condition within ninety (90) days after
the initial existence of the condition and the Employer fails to
remedy the condition within 30 days after its receipt of such
notice.
Notice of the condition shall include the proposed termination
date of Employee’s employment under this Agreement, which
must be ninety (90) days from the date of the notice. If
Employer fails to remedy the condition, Employer may, at its
option, require Employee to terminate employment at any time in
advance of the expiration of such ninety (90) day period. The
termination date under this Section 4.7 shall be the date
specified by Employer, but in no event more than ninety
(90) days after Employer’s receipt of notice from
Employee as contemplated by this Section 4.7. If Employee
terminates Employee’s employment under this Agreement
pursuant to this Section 4.7, then Employee shall be entitled
to compensation and/or benefits in accordance with, and subject to,
the provisions of Section 5.7 hereof.
4.8 Termination by Employee due to Change in Control of
Employer. Employee may terminate Employee’s employment
under this Agreement due to a Change in Control, of Employer. For
purposes of this Section, a "Change in Control of Employer" shall
mean (i) the acquisition by a person or an entity or a group
of persons and entities, directly or indirectly, of more than fifty
(50%) percent of Employer’s common stock in a single
transaction or a series of transactions (hereinafter referred to as
a "50% Change in Control"); (ii) a merger or other form of
corporate reorganization resulting in an actual or de facto
50% Change in Control; or (iii) the failure of Applicable
Directors (defined below) to constitute a majority of
Employer’s Board of Directors (the "Board") during any two
(2) consecutive year period after the Effective Date (the
"Two-Year Period"). "Applicable Directors" shall mean those
individuals who are members of the Board at the inception of the
Two-Year Period and any new director whose election to the Board or
nomination for election to the Board was approved (prior to any
vote thereon by the shareholders) by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the Two-Year Period at issue or whose
election or nomination for election during such Two-Year Period was
previously approved as provided in this sentence.
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If Employee desires to terminate Employee’s
employment under this Agreement pursuant to this Section 4.8,
Employee must, within one year after the Change in Control of
Employer provide Employer with a written notice of the termination.
Such notice shall include the proposed termination date of
Employee’s employment under this Agreement, which must be
ninety (90) days from the date of the notice. Upon receipt of
such notice from Employee, Employer may, at its option, require
Employee to terminate employment at any time in advance of the
expiration of such ninety (90) day period. The termination
date under this Section 4.8 shall be the date specified by
Employer, but in no event more than ninety (90) days after
Employer’s receipt of notice from Employee as contemplated by
this Section 4.8. If (i) Employee terminates
Employee’s employment under this Agreement pursuant to this
Section 4.8, or (ii) Employer terminates Employee’s
employment under this Agreement for any reason within twenty-four
(24) months after a Change in Control of Employer, then
Employee shall be entitled to compensation and/or benefits in
accordance with, and subject to, the provisions of
Section 5.8.
5. Compensation and Benefits Upon Termination.
5.1. Cause . If Employee’s employment is terminated
for Cause, Employer shall pay Employee’s Base Salary through
the termination date specified in Section 4.1 at the rate in
effect at the termination date. Upon payment of such amount, plus
any amounts as may be due under Section 5.10 below, Employer
shall have no further obligation to Employee under this Agreement,
other than any benefits to which Employee is entitled under
Section 5.13 below.
5.2. Disability . In the event of Employee’s
Disability, Employer shall continue to pay Employee’s monthly
Base Salary for a period of twelve (12) months after the
termination date. The twelve (12) month period after the
termination date during which Employee may continue to receive Base
Salary payments pursuant to this Section 5.2 shall be referred
to as the "Severance Period" for purposes of this Agreement.
Amounts payable under this Section 5.2 are not intended to be
in lieu of benefits under any long-term disability plan Employer
may maintain from time to time, and Employee’s entitlement to
benefits under such plan , if any, shall be determined solely by
the plan’s terms.
5.3. Death . Upon Employee’s death during the
Employment Period, Employer shall pay to the person or entity
designated by Employee in a notice filed with Employer or, if no
person is designated, to Employee’s estate any unpaid amounts
of Base Salary to the date of Employee’s death, plus any
amounts as may be due under Sections 5.10 and 5.11 below. Any
payments Employee’s spouse, beneficiaries or estate may be
entitled to receive pursuant to any pension plan, employee welfare
benefit plan, life insurance policy, or similar plan or policy then
maintained by Employer shall be determined and paid in accordance
with the written instruments governing the respective plans and
policies. In the event of Employee’s death during the
Employment Period, Employer shall notify Employee’s designee
or estate of the stock awards held by Employee and the procedures
pursuant to which all vested stock options may be exercised and
other stock awards may be realized under the terms applicable to
such awards.
5.4. Termination by Employer Without Cause . If Employer
terminates Employee’s employment in accordance with
Section 4.4, then Employer shall pay Employee’s Base
Salary through the termination date specified in Section 4.4
at the rate in effect at such termination date, plus any amount due
under Section 5.10 and 5.11 hereof.
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5.5. Termination by Employee Due to Poor
Health. If Employee terminates employment under this Agreement
pursuant to Section 4.5 hereof, Employer shall pay to Employee
any unpaid amounts of Base Salary to the termination date specified
in Section 4.5, plus any disability payments otherwise payable
by or pursuant to plans provided by Employer, plus any amounts as
may be due under Section 5.10 and 5.11 hereof.
5.6. Termination by Employee . If Employee’s
employment under this Agreement terminates pursuant to
Section 4.6 hereof, Employer shall pay to Employee any unpaid
amounts of Base Salary to the termination date specified in
Section 4.6, plus any amounts as may be due under
Section 5.10 and 5.11 below. In the event that the termination
date specified by Employer is less than ninety (90) days after
the date of Employer’s receipt of notice as contemplated by
Section 4.6, then Employer shall continue Employee’s
Base Salary for a period of days equal to ninety (90) minus
the number of days from Employee’s notice to the termination
date.
In addition, if Employee gives Employer sufficient notice in
accordance with Section 4.6 and executes, and does not revoke,
a general release of claims pursuant to Section 5.18 of this
Agreement, Employer shall pay Employee a bonus calculated in
accordance with Section 5.11 hereof.
5.7. Termination by Employee for Good Reason. If
Employee’s employment under this Agreement is terminated in
accordance with Section 4.7, then (i) Employer shall pay
Employee’s Base Salary through the termination date specified
pursuant to Section 4.7 at the rate in effect at such
termination date, plus any amounts as may be due under
Section 5.10 and 5.11 hereof.
5.8. Termination by Employee due to Change in Control of
Employer. If Employee’s employment under this Agreement
is terminated in accordance with Section 4.8, then Employer
shall pay Employee’s Base Salary through the termination date
specified pursuant to Section 4.7 at the rate in effect at
such termination date, plus any amounts as may be due under
Section 5.10 and 5.11 hereof.
5.9. Payments in the Event of a Change in Control of
Employer. In the event it shall be determined that any payment,
distribution or other action by Employer to or for the benefit of
Employee (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, including any
additional payments required under Section 5.7) (a "Payment")
would be subject to an excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any
interest or penalties are incurred by Employee with respect to any
such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the
"Excise Tax"), Employer shall make a payment to Employee (a
"Gross-Up Payment") in an amount such that after payment by
Employee of all taxes (including any Excise Tax) imposed upon the
Gross-Up Payment, Employee retains (or has had paid to the Internal
Revenue Service on his behalf) an amount of the Gross-Up Payment
equal to the sum of (x) the Excise Tax imposed upon the
Payments and (y) the product of any deductions disallowed
because of the inclusion of the Gross-Up Payment in
Employee’s adjusted gross income and the highest applicable
marginal rate of federal income taxation for the calendar year in
which the Gross-Up
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Payment is to be made. For purposes of
determining the amount of the Gross-Up Payment, Employee shall be
deemed to (i) pay federal income taxes at the highest marginal
rates of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made, and (ii) pay applicable state
and local income taxes at the highest marginal rate of taxation for
the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(a) Subject to the provisions of paragraph (b) of this
Section, all determinations required to be made under this
Section 5.9, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall
be made by a "Big Four" accounting firm (the "Accounting Firm")
selected by the Chief Executive Officer; provided, that if
the Gross-Up Payment relates to the termination of the Chief
Executive Officer’s employment with Employer, then the
Accounting Firm shall be selected by the Chief Financial Officer;
and provided, further that the Accounting Firm shall not
also be Employer’s independent auditor. The Accounting Firm
shall provide detailed supporting calculations both to Employer and
Employee within thirty (30) business days of the receipt of
notice from Employee that there has been a Payment, or such earlier
time as is requested by Employer. All fees and expenses of the
Accounting Firm shall be borne solely by Employer. Any Gross-Up
Payment, as determined pursuant to this Section 5.9, shall be
paid by Employer to Employee within five (5) days of the
receipt of the Accounting Firm’s determination. If the
Accounting Firm determines that no Excise Tax is payable by
Employee, it shall furnish Employee with a written opinion that
failure to report the Excise Tax on Employee’s applicable
federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting
Firm shall be binding upon Employer and Employee. As a result of
the uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments that may not have
been made by Employer should have been made ("Underpayment")
consistent with the calculations required to be made hereunder. In
the event that Employer exhausts its remedies pursuant to
Section 5.9 and Employee thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by Employer to or for the
benefit of Employee.
(b) Employee shall notify Employer in writing of any claim by
the Internal Revenue Service that, if successful, would require the
payment by Employer of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty
(30) business days after Employee is informed in writing of
such claim and shall apprise Employer of the nature of such claim
and the date on which such claim is requested to be paid. Employee
shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which it gives such
notice to Employer (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If
Employer notifies Employee in writing prior to the expiration of
such period that it desires in good faith to contest such claim,
Employee shall:
(i) give Employer any information reasonably requested by
Employer relating to such claim;
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(ii) take such action in connection with
contesting such claim as Employer shall reasonably request in
writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by Employer;
(iii) cooperate with Employer in good faith in order effectively
to contest such claim; and
(iv) permit Employer to participate in any proceedings relating
to such claim;
provided, however, that Employer shall bear and pay
directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold Employee harmless, on an after-tax basis, for
any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such contest and payment of
costs and expenses. Without limitation on the foregoing provisions
of this Section 5.9(b), Employer shall control all proceedings
taken in connection with such contest and, after making a
determination in good faith, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct Employee to pay the tax
claimed and sue for a refund or contest the claim in any
permissible manner, and Employee agrees to prosecute such contest
to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as
Employer shall reasonably determine; provided, however, that
if Employer directs Employee to pay such claim and sue for a
refund, Employer shall advance the amount of such payment to
Employee, on an interest-free basis and shall indemnify and hold
Employee harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided
that any extension of the statute of limitations relating to
payment of taxes for the taxable year of Employee with respect to
which such contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, Employer’s control of
the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Employee shall be
entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing
authority.
(c) If, after the receipt by Employee of an amount advanced by
Employer pursuant to Section 5.9(b), Employee becomes entitled
to receive any refund with respect to such claim, Employee shall
(subject to Employer’s complying with the requirements of
Section 5.9(b)) promptly pay to Employer the amount of such
refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by Employee of an
amount advanced by Employer pursuant to Section 5.9(b), a
determination is made that Employee shall not be entitled to any
refund with respect to
10
such claim and Employer does not notify Employee
in writing of its intent to contest such denial of refund prior to
the expiration of thirty (30) days after such determination,
then such advance shall be forgiven and shall not be required to be
repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be
paid.
5.10. Expense Reimbursement. Employee shall be entitled
to reimbursement for reasonable business expenses incurred prior to
the termination date, subject, however to the provisions of
Section 3.1. Such reimbursement shall be made at the times and
in accordance with Employer’s normal procedures for
reimbursements.
5.11. Performance Bonus . In the situations described in
Sections 5.2, 5.3, 5.4, 5.5, 5.6, 5.7 and 5.8, upon termination of
Employee’s employment under this Agreement, Employee shall be
paid a bonus with respect to Employer’s fiscal year in which
the termination date occurs, equal to the Performance Bonus, if
any, that would have been payable to Employee for the fiscal year
if Employee’s employment had not been terminated, multiplied
by the number of days in the fiscal year prior to and including the
date of termination and divided by three hundred sixty-five (365).
Any amount payable under this Section 5.11 shall be paid to
Employee when Employer pays performance bonuses to its eligible
employees, which shall be in the calendar year following the
termination date of this Agreement.
5.12. Employment Transition and Severance Agreement. If
Employer so requests within five business days following a
termination of Employee’s employment under this Agreement
pursuant to Section&nb
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