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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into by and between PEDIATRIX MEDICAL GROUP, INC. , a
Florida corporation ("Employer"), and THOMAS W. HAWKINS
("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 currently serves as Senior Vice
President, General Counsel and Secretary 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 one
(1) year, unless sooner terminated in accordance with the
provisions of Section 4. Thereafter, the employment of
Employee hereunder shall automatically renew for successive one
(1) year periods until terminated in accordance with the
provisions of Section 4 of this Agreement. 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 any renewal terms, 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 of
this Agreement.
1.2. Duties of Employee . During the
Employment Period, Employee shall serve as Senior Vice President,
General Counsel and Secretary 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 Chief Executive Officer or President
("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. During the Employment Period, it shall not be
a violation of this Agreement to (i) serve on 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 Four Hundred Twenty-Five Thousand Dollars ($425,000.00)
(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 Percent
(100%) 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.
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
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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.
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
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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;
(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;
(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 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.
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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 date of
this Agreement (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.
If Employee desires to terminate Employee’s employment
under this Agreement pursuant to this Section, 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 5.7 hereof, but shall
not be entitled to compensation under any other subsection of
Section 5 hereof.
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 5.9 below, Employer
shall have no further obligation to Employee under this
Agreement.
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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 5.9 and 5.10 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 (i) 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 5.9 hereof; and
(ii) Employer shall (a) continue to pay Employee’s
monthly Base Salary for a period of twenty-four (24) months
after the termination date, and (b) on the first (1
st ) and
second (2 nd ) anniversaries of the termination date, pay Employee an
amount equal to the greater of Employee’s Average Annual
Performance Bonus (as defined below) or Employee’s bonus for
the year immediately preceding Employee’s termination, and
(c) pay Employee a bonus calculated in accordance with
Section 5.10 hereof. The twenty-four (24) month period
after the termination date during which Employee may continue to
receive Base Salary payments pursuant to this Section 5.4
shall be referred to as the "Severance Period" for purposes of this
Agreement. For purposes of this Agreement, "Average Annual
Performance Bonus" shall be equal to Employee’s then
applicable Base Salary multiplied by a percentage obtained by
averaging the quotients of the Performance Bonus paid to Employee
for the three (3) full calendar years prior to the termination
date divided by Employee’s Base Salary in effect for the
calendar year for which the Performance Bonus relates.
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 5.9 hereof. Employer shall also pay
Employee a bonus calculated in accordance with Section 5.10
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 5.9 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.
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In addition, if Employee gives Employer
sufficient notice in accordance with Section 4.6 and executes
a general release of Employer that is satisfactory to Employer,
Employer shall pay Employee a bonus calculated in accordance with
Section 5.10 hereof.
5.7. Termination by Employee for Good Reason or Due to Change
in Control. If Employee’s employment under this Agreement
is terminated in accordance with Section 4.7 or 4.8, then
(i) Employer shall pay Employee’s Base Salary through
the termination date specified pursuant to Section 4.7 or 4.8
at the rate in effect at such termination date, plus any amounts as
may be due under Section 5.9 hereof; and (ii) Employer
shall (a) continue to pay Employee’s monthly Base Salary
for a period of twenty-four (24) months after the termination
date; (b) on the first (1 st
) and second (2 nd ) anniversaries of the
termination date, pay Employee an amount equal to the greater of
Employee’s Average Annual Performance Bonus or
Employee’s bonus for the year immediately preceding
Employee’s termination; provided, however, that if
Employee’s employment is terminated in accordance with
Section 4.8 of this Agreement, then Employer shall make such
Performance Bonus payments due to Employee under this Agreement in
a lump sum within ninety (90) days after the termination date
determined under Section 4.8; and (c) pay Employee a
bonus calculated in accordance with Section 5.10 hereof. The
twenty-four (24) month period after the termination date
during which Employee continues to receive Base Salary payments
pursuant to this Section 5.7 shall be referred to as the
"Severance Period" for purposes of this Agreement. Notwithstanding
the foregoing, if Employee’s employment under this Agreement
is terminated in connection with a Change in Control of Employer,
the payments to Employee under this Section shall be subject to the
provisions of Section 5.8 below.
5.8. 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 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.
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(a) Subject to the provisions of paragraph
(b) of this Section, all determinations required to be made
under this Section 5.8, 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 5.8, 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 5.8 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;
(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;
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(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 5.8(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 5.8(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 5.8(b)) promptly pay to Employer the amount of such
refund (together with any interest paid or credited thereon after
taxes applicab
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