Exhibit 10.J
Severance
Agreement
August 10, 2008
Dear
:
On
, you entered into a letter agreement with Mentor Graphics
Corporation (the “Corporation”) regarding compensation
and benefits arrangements in connection with a Change in Control
(as defined herein), and you and the Corporation amended and
restated such letter agreement on
(as amended, the “Prior Agreement”). You and the
Corporation now desire to make certain changes to the Agreement in
order to modify the benefits provided thereunder as well as to
reflect recent changes affecting the taxation of deferred
compensation arrangements under Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”).
Accordingly, you and the Corporation have agreed to amend and
restate the Prior Agreement as set forth below (the
“Agreement”) as of August 10, 2008 (the
“Effective Date”).
The Board of Directors (the
“Board”) of the Corporation has determined that it is
in the best interests of the Corporation and its shareholders to
assure that the Corporation will continue to have your dedication
and services notwithstanding the possibility, threat or occurrence
of a Change in Control. The Board believes it is imperative to
diminish the distraction that you would face by virtue of the
personal uncertainties created by a pending or threatened Change in
Control and to encourage your full attention and dedication to the
Corporation currently and in the event of any threatened or pending
Change in Control. Further, the Board desires to provide you with
compensation and benefits arrangements upon a Change in Control
which ensure that your compensation and benefits expectations will
be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives,
the Board has caused the Corporation to enter into this
Agreement.
1. Term of Agreement. The
terms of this Agreement shall become effective upon the execution
hereof by the Corporation and shall continue, unless terminated by
written agreement between you and the Corporation, until the later
to occur of (a) twenty-four (24) months following the
Effective Date, or (b) the date occurring twelve
(12) months after the date on which a Change in Control occurs
(the date of such Change in Control, the “Change in Control
Date”) provided such Change in Control occurs within the
twenty-four month period following the Effective Date. No benefits
shall be payable hereunder unless there has been a Change in
Control.
2. Change in Control. A
Change in Control shall be deemed to occur upon the earliest to
occur after the date of this Agreement of any of the following
events:
2.1 Acquisition of Stock by Third
Party. The acquisition by any Person of Beneficial Ownership of
40% or more of either the then-outstanding shares of common stock
of the Corporation or the Outstanding Voting Securities; provided,
however, that, for purposes of this Section 2.1, the following
acquisitions shall not constitute a Change in Control: (a) any
acquisition directly from the Corporation, (b) any acquisition
by the Corporation, or (c) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Corporation or any Subsidiary of the Corporation;
2.2 Change in Board of
Directors. Individuals who, as of the Effective Date,
constitute the Board, and any new director whose election by the
Board or nomination for election by the Corporation’s
shareholders was approved by a vote of at least two thirds of the
directors then still in office who were directors on the Effective
Date or whose election or nomination for election was previously so
approved (collectively, the “Continuing Directors”),
cease for any reason to constitute at least a majority of the
members of the Board;
2.3 Corporate Transactions.
The effective date of a reorganization, merger or consolidation of
the Corporation (a “Business Combination”), in each
case, unless immediately following such Business Combination:
(a) all or substantially all of the Persons who were
Beneficial Owners of Outstanding Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 51% of the combined voting power of the then
outstanding securities entitled to vote generally in the election
of directors of the corporation resulting from such
Business
Combination (including, without limitation, a
corporation which as a result of such transaction either owns the
Corporation or all or substantially all of the Corporation’s
assets either directly or through one or more Subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Business Combination, of the Outstanding Voting
Securities; (b) no Person (excluding any corporation resulting
from such Business Combination) is the Beneficial Owner, directly
or indirectly, of 40% or more of the combined voting power of the
then outstanding securities entitled to vote generally in the
election of directors of such corporation except to the extent that
such ownership existed prior to such Business Combination; and
(c) at least a majority of the board of directors of the
corporation resulting from such Business Combination were
Continuing Directors at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination;
2.4 Liquidation. The approval
by the shareholders of the Corporation of a complete liquidation of
the Corporation or an agreement or series of agreements for the
sale or disposition by the Corporation of all or substantially all
of the Corporation’s assets, other than factoring the
Corporation’s current receivables or escrows due (or, if such
approval is not required, the decision by the Board to proceed with
such a liquidation, sale or disposition in one transaction or a
series of related transactions); or
2.5 Other Events. There
occurs any other event of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or a response to any similar or successor item on
any similar or successor schedule or form) promulgated under the
Exchange Act (as defined below), whether or not the Corporation is
then subject to such reporting requirement.
2.6 Certain Definitions. For
purposes of this Section 2, the following terms shall have the
following meanings:
“Beneficial Owner” and
“Beneficial Ownership” shall have the meanings set
forth in Rule 13d-3 promulgated under the Exchange Act.
“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.
“Outstanding Voting
Securities” shall mean the combined voting power of the
then-outstanding voting securities of the Corporation entitled to
vote generally in the election of directors.
“Person” shall have the
meaning as set forth in Sections 13(d) and 14(d) of the Exchange
Act; provided, however, that Person shall exclude (i) the
Corporation, (ii) any Subsidiary of the Corporation,
(iii) any employment benefit plan of the Corporation or
Subsidiary of the Corporation or of any corporation owned, directly
or indirectly, by the shareholders of the Corporation in
substantially the same proportions as their ownership of stock of
the Corporation, and (iv) any trustee or other fiduciary
holding securities under an employee benefit plan of the
Corporation or Subsidiary of the Corporation or of a corporation
owned, directly or indirectly, by the shareholders of the
Corporation in substantially the same proportions as their
ownership of stock of the Corporation.
“Subsidiary” shall mean,
with respect to any Person, any business organization or legal
entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by
that Person.
3. Termination Related to a
Change in Control.
3.1 General. You shall be
entitled to the benefits provided in Section 4 upon
(a) the termination of your
employment if your employment is terminated after the Change in
Control Date or
(b) with respect to the benefits
described in Section 4.2 (other than the amounts described in
Section 4.2(a)), the Change in Control Date if your employment
is terminated after the date on which the shareholders of the
Corporation approve a transaction, the consummation of which would
result in the occurrence of a Change in Control (the
“Approval Date”), provided that, to the extent that
such benefits constitute a deferral of compensation which is
subject to Section 409A of the Code, the Change in Control
constitutes a change in the ownership or effective control of the
Corporation or a change in the ownership of a substantial portion
of the assets of the Corporation, as described in Treasury
Regulation Section 1.409A-3(i)(5).
Notwithstanding the foregoing, to
the extent that the benefits provided in Section 4 constitute
a deferral of compensation which is subject to Section 409A of
the Code, you shall be entitled to such benefits only if the
termination of your employment constitutes a “separation from
service” within the meaning of Treasury Regulation
Section 1.409A-1(h) (a “Separation from
Service”).
3.2 Definition of Disability.
If, as a result of your incapacity due to physical or mental
illness, you shall have been absent from the full-time performance
of your duties with the Corporation for six (6) consecutive
months, and within thirty (30) days after written notice of
termination is given you shall not have returned to the full-time
performance of your duties, your employment may be terminated for
“Disability.”
3.3 Definition of Cause.
Termination by the Corporation of your employment for
“Cause” shall mean termination (a) upon your
willful and continued failure to perform substantially your duties
with the Corporation (other than any such failure resulting from
your incapacity due to physical or mental illness or any such
actual or anticipated failure after your issuance of a Notice of
Termination (as defined in Section 3.5) for Good Reason),
after a written demand for substantial performance is delivered to
you by the Board which demand specifically identifies the manner in
which the Board believes that you have not substantially performed
your duties, (b) upon your willful and continued failure to
follow and comply substantially with the specific and lawful
directives of the Board, as reasonably determined by the Board
(other than any such failure resulting from your incapacity due to
physical or mental illness or any such actual or anticipated
failure after your issuance of a Notice of Termination for Good
Reason), after a written demand for substantial performance is
delivered to you by the Board, which demand specifically identifies
the manner in which the Board believes that you have not
substantially followed or complied with the directives of the
Board, (c) upon your willful commission of an act of fraud or
dishonesty resulting in material economic or financial injury to
the Corporation, or (d) upon your willful engagement in
illegal conduct which is materially and demonstrably injurious to
the Corporation. For purposes of this Section 3.3, no act, or
failure to act, on your part shall be deemed “willful”
unless done, or omitted to be done, by you not in good faith.
Notwithstanding the foregoing, you shall not be deemed terminated
for Cause pursuant to Sections 3.3(a), (b), (c) or
(d) hereof unless and until there shall have been delivered to
you a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the Board
at a meeting of the Board (after reasonable notice to you, an
opportunity for you, together with your counsel, to be heard before
the Board and a reasonable opportunity to cure), finding that in
the Board’s good faith opinion you were guilty of conduct set
forth above in Section 3.3(a), (b), (c) or (d) and
specifying the particulars thereof in reasonable detail. In the
event of a Change in Control under Section 2.3 pursuant to
which the Corporation is not the surviving entity, then on and
after the Change in Control Date all determinations and actions
required to be taken by the Board under this Section 3.3 shall
be made or taken by the board of directors of the surviving entity,
or if the surviving entity is a subsidiary, then by the board of
directors of the ultimate parent corporation of the surviving
entity.
3.4 Good Reason. You shall be
entitled to terminate your employment for Good Reason. For purposes
of this Agreement, “Good Reason” shall mean, without
your express written consent, the occurrence after the Approval
Date of any of the following circumstances unless, in the case of
Sections 3.4(a), (f), (g), or (h), such circumstances are fully
corrected (provided such circumstances are capable of correction)
prior to the Date of Termination (as defined in Section 3.6)
specified in the Notice of Termination given in respect
thereof:
(a) the assignment to you of any
duties inconsistent with the position in the Corporation that you
held immediately prior to the Approval Date, if applicable, or the
Change in Control Date, a significant adverse alteration in the
nature or status of your responsibilities or the conditions of your
employment from those in effect immediately prior to the Approval
Date, if applicable, or the Change in Control Date, or any other
action by the Corporation that results in a material diminution in
your position, authority, title, duties or
responsibilities;
(b) the Corporation’s
reduction of your annual base salary as in effect on the Approval
Date, if applicable, or the Change in Control Date or as the same
may be increased from time to time;
(c) the relocation of the
Corporation’s offices at which you are principally employed
immediately prior to the Approval Date, if applicable, or the
Change in Control Date (your “Principal Location”) to a
location more than twenty-five (25) miles from such location
or the Corporation’s requiring you, without your written
consent, to be based anywhere other than your Principal Location,
except for required travel on the Corporation’s business to
an extent substantially consistent with your present business
travel obligations;
(d) the Corporation’s failure
to pay to you any portion of your current compensation or to pay to
you any portion of an installment of deferred compensation under
any deferred compensation program of the Corporation within seven
(7) days of the date such compensation is due;
(e) the Corporation’s failure
to continue in effect any material compensation or benefit plan or
practice in which you are eligible to participate in on the
Approval Date, if applicable, or the Change in Control Date (other
than any equity based plan), unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the
Corporation’s failure to continue your participation therein
(or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of your participation relative to other
participants, as existed at the time of the Approval Date, if
applicable, or the Change in Control Date;
(f) the Corporation’s failure
to continue to provide you with benefits substantially similar in
the aggregate to those enjoyed by you under any of the
Corporation’s life insurance, medical, health and accident,
disability, pension, retirement, or other benefit plans or
practices in which you and your eligible family members were
eligible to participate in on the Approval Date, if applicable, or
the Change in Control Date (other than any equity based plans), the
taking of any action by the Corporation which would directly or
indirectly materially reduce any of such benefits, or the failure
by the Corporation to provide you with the number of paid vacation
days to which you are entitled on the basis of years of service
with the Corporation in accordance with the Corporation’s
normal vacation policy in effect on the Approval Date, if
applicable, or the Change in Control Date;
(g) the Corporation’s failure
to obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section 6
hereof; or
(h) any purported termination of
your employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 3.6 hereof
(and, if applicable, the requirements of Section 3.3 hereof),
which purported termination shall not be effective for purposes of
this Agreement.
Your right to terminate your
employment pursuant to this Section 3.4 shall not be affected
by your incapacity due to physical or mental illness. Your
continued employment shall not constitute consent to, or a waiver
of rights with respect to, any circumstance constituting Good
Reason hereunder.
3.5 Notice of Termination.
Any purported termination of your employment by the Corporation or
by you (other than termination due to death which shall terminate
your employment automatically) shall be communicated by written
Notice of Termination to the other party hereto in accordance with
Section 7. “Notice of Termination” shall mean a
notice that shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so
indicated.
3.6 Date of Termination, Etc.
“Date of Termination” shall mean (a) if your
employment is terminated due to your death, the date of your death;
(b) if your employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that
you shall not have returned to the full-time performance of your
duties during such thirty (30) day period), and (c) if
your employment is terminated pursuant to Section 3.3 or
Section 3.4 or for any other reason (other than death or
Disability), the date specified in the Notice of Termination (which
in the case of a termination for Cause or Good Reason shall be the
date thirty (30) days after the date on which Notice of
Termination is given). Notwithstanding anything to the contrary
contained in this Section 3.6, if within fifteen
(15) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that
a dispute exists concerning the termination, then the Date of
Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, or
otherwise; provided, however, that (i) the Date of Termination
shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence; and
(ii) in the event of your death pending a dispute, and the
resolution of such dispute is ultimately in your favor, then the
Date of Termination shall be the date specified in the Notice of
Termination.
4. Compensation Upon
Termination. The benefits to which you are entitled upon
termination of your employment, subject to Section 3 and the
other terms and conditions of this Agreement, are:
4.1 Cause or Voluntary
Termination. If your employment shall be terminated by the
Corporation for Cause or voluntarily terminated by you other than
for Good Reason, the Corporation shall pay you your full base
salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation plan or practice of
the Corporation, and the Corporation shall have no further
obligations to you under this Agreement.
4.2 Good Reason; Termination By
Corporation Without Cause; Death or Disability. If your
employment by the Corporation shall be terminated by you for Good
Reason, by the Corporation other than for Cause, or due to your
Disability or death, then you shall be entitled to the benefits
provided below:
(a) the Corporation shall pay to you
your full base salary, when due, through the Date of Termination at
the rate in effect at the time Notice of Termination is given, at
the time specified in Section 4.3, plus (i) that portion
of your full targeted annual bonus prorated through the Date of
Termination, (ii) all accrued but unused vacation time through
the Date of Termination and (iii) all other amounts to which
you are entitled under any compensation plan or practice of the
Corporation at the time such payments are due;
(b) in lieu of any further salary
payments to you for periods subsequent to the Date of Termination,
the Corporation shall pay as severance pay to you, at the time
specified in Section 4.3, a lump sum payment equal to the sum
of the following:
(1) three (3) times your annual
base salary as in effect at the time the Notice of Termination is
given or immediately prior to the Change in Control Date (or the
Approval Date if the Date of Termination is prior to the Change in
Control Date), whichever is greater; and
(2) three (3) times your full
targeted annual bonus as in effect at the time the Notice of
Termination is given or immediately prior to the Change in Control
Date (or the Approval Date if the Date of Termination is prior to
the Change in Control Date), whichever is greater; and
(c) for a period of two
(2) years following the Date of Termination, the Corporation
shall, at its sole expense as incurred, provide you with
outplacement services, the scope and provider of which shall be
consistent with your status at the Corporation on the Date of
Termination;
(d) for a thirty-six (36) month
period after the Date of Termination, the Corporation shall
continue to provide you and your eligible family members, based on
the cost sharing arrangement between you and the Corporation at the
time the Notice of Termination is given, with medical and dental
health benefits and life and disability benefits at least equal to
those which would have been provided to you and them if your
employment had not been terminated or, if more favorable to you, as
in effect generally at any time thereafter; provided, however, that
if you become re-employed with another employer and are eligible to
receive such benefits under another employer’s plans, the
Corporation’s obligations under this Section 4.2(d)
shall be reduced to the extent comparable benefits are actually
received by you during the thirty-six (36) month period
following your termination, and any such benefits actually received
by you shall be reported to the Corporation. In the event you are
ineligible under the terms of such benefit plans or programs to
continue to be so covered, the Corporation shall provide you with
substantially equivalent coverage through other sources. At the
termination of the medical and dental benefits coverage under the
second preceding sentence, you, your spouse and your dependents
shall be entitled to continuation coverage pursuant to section
4980B of the Code, sections 601-608 of the Employee Retirement
Income Security Act of 1974, as amended, and under any other
applicable law, to the extent required by such laws, as if you had
terminated employment with the Corporation on the date such
benefits coverage terminates;
(e) the Corporation shall furnish
you for six (6) years following the Date of Termination
(without reference to whether the term of this Agreement continues
in effect) with directors’ and officers’ liability
insurance insuring you against insurable events which occur or have
occurred while you were a director or officer of the Corporation,
such insurance to have policy limits aggregating not less than the
amount in effect immediately prior to the Change in Control or the
Approval Date (whichever is more favorable to you), and otherwise
to be in substantially the same form and to contain substantially
the same terms, conditions and exceptions as the liability issuance
policies provided for officers and directors of the Corporation in
force from time to time, provided, however, that (i) such
terms, conditions and exceptions shall not be, in the aggregate,
materially less favorable to you than those in effect on the date
hereof and (ii) if the aggregate annual premiums for such
insurance at any time during such period exceed two hundred percent
(200%) of the per annum rate of premium currently paid by the
Corporation for such insurance, then the Corporation shall provide
the maximum coverage that will then be available at an annual
premium equal to two hundred percent (200%) of such
rate;
(f) you shall be fully vested in
your accrued benefits under all qualified or nonqualified pension,
profit sharing, deferred compensation or supplemental plans
maintained by the Corporation for your benefit, and the Corporation
shall provide you with additional fully vested benefits under all
defined benefit and cash balance plans in an amount equal to the
benefits which you would have accrued had you continued your
employment with the Corporation until the second anniversary of
your Date of Termination; provided, however, that to the extent
that the acceleration of vesting or enhanced accrual of such
benefits would violate any applicable law or require the
Corporation to accelerate the vesting of the accrued benefits of
all participants in such plan or plans or to provide additional
benefit accruals to such participants, the Corporation shall pay
you a lump-sum payment at the time specified in Section 4.3 in
an amount equal to the value of such benefits;
(g) in the event you relocate during
the period of twenty-four (24) months following the Date of
Termination, your costs (grossed up for taxes) of such relocation
shall be provided by the Corporation as if the Corporation had
(i) hired you as of the date of this Agreement and provided
you with its “Tier 4” relocation package (as described
in the policy attached hereto as Exhibit A ) or
(ii) hired you on the Date of Termination, whichever is
greater; and
(h) all unvested stock options held
by you on the Date of Termination shall immediately vest and become
exercisable in full and all stock options held by you on the Date
of Termination shall remain exercisable until the earlier of
(i) the date occurring one year after the Date of Termination,
or (ii) the date on which the right to exercise the option
would have expired had you continued to be employed by the
Corporation for the full term of such option, notwithstanding any
vesting schedule or other provisions to the contrary in the
agreements or plans evidencing such options (the “Option
Arrangements”). You acknowledge and agree that in exchange
for the benefits provided pursuant to this Agreement, you will not
receive any acceleration of vesting of any stock options solely as
a result of an acquisition of the Corporation (including a Change
in Control, i.e. “single trigger acceleration”)
pursuant any Option Arrangement, except if such acceleration
results from the failure of the acquirer to assume or substitute
for the stock option.
4.3 Timing of Payments under
Sections 4.1 and 4.2. The payments provided for in
(a) Section 4.1 and (b) Sections 4.2(a),
(b) and (f) shall be made on the fifth day following the
Date of Termination (or, if the Date of Termination occurs after
the Approval Date but before the Change in Control Date, the fifth
day following the Change in Control Date); provided, however, that
if the amounts of such payments cannot be finally determined on or
before such day, the Corporation shall pay to you on such day an
estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in section
1274(d) of the Code, compounded quarterly) from the Date of
Termination as soon as the amount thereof can be determined but in
no event later than the thirtieth day after the Date of Termination
or the Change in Control Date, as applicable. In the event that the
amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by
the Corporation to you, payable on the fifth day after demand by
the Corporation (together with interest at the rate provided in
section 1274(d) of the Code, compounded quarterly) from the date
such payment was made by the Corporation.
4.4 No Mitigation. You shall
not be required to mitigate the amount of any payment provided for
in this Section 4 by seeking other employment or otherwise
nor, except as provided in Section 4.2(d), shall the amount of
any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of
employment by another employer or self-employment, by retirement
benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
4.5 Code Section 409A.
Notwithstanding any provision to the contrary in the Agreement, if
you are deemed by the Corporation at the time of your Separation
from Service to be a “specified employee” for purposes
of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed
commencement of any portion of the termination benefits to which
you are entitled under this Agreement is required in order to avoid
a prohibited distribution under Section 409A(a)(2)(B)(i) of
the Code, such portion of your termination benefits shall not be
provided to you prior to the earlier of (a) the expiration of
the six-month period measured from the date of your Separation from
Service with the Corporation or (b) the date of your death.
Upon first business day following the expiration of the applicable
Code Section 409A(a)(2)(B)(i) deferral period, all payments
deferred pursuant to this Section 4.5 shall be paid in a lump
sum to you, and any remaining payments due under the Agreement
shall be paid as otherwise provided herein. For purposes of
Section 409A of the Code (including, without limitation, for
purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)),
your right to receive the payments payable pursuant to this
Agreement shall be treated as a right to receive a series of
separate payments and, accordingly, each payment shall at all times
be considered separate and distinct. To the extent that any
reimbursements payable pursuant to this Agreement are subject to
the provisions of Section 409A of the Code, any such
reimbursements shall be paid to you no later than December 31
of the year following the year in which the cost was incurred, the
amount of expenses reimbursed in one year shall not affect the
amount eligible for reimbursement in any subsequent year, and your
right to reimbursement under the Agreement will not be subject to
liquidation or exchange for another benefit.
5. Taxes; Gross-Up Payment.
You shall bear all expense of, and be solely responsible for, all
federal, state, local or foreign taxes due with respect to any
payment received hereunder; provided, however, that if any payment
or benefit received or to be received by you in connection with a
Change in Control or the termination of your employment (whether
payable pursuant to the terms of this Agreement or any other plan,
arrangements or agreement with the Corporation or an affiliate
(collectively, the “Payments”) would be subject to the
excise tax imposed by Section 4999 of the Code (the
“Excise Tax”), you shall be entitled to receive an
additional payment from the Corporation (the “Gross-Up
Payment”) in an amount such that, after your payment of all
taxes (and any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, you retain an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
With respect to each Payment that is subject to the Excise Tax, the
related Gross-Up Payment shall be paid to you on, or as soon as
practicable following, the payment date (and in any event, such
Gross-Up Payment shall be paid to you by the end of the calendar
year next following the calendar year in which you remit the
related Excise Tax). The foregoing determination will be made by
the Corporation’s independent certified public accountants
serving immediately prior to the Change in Control (the
“Accountants”). In the event that the Accountants are
also serving as accountant or auditor for the
individual, group or entity effecting the Change
in Control you may appoint another nationally recognized public
accounting firm to make the determination required hereunder (which
firm shall then be referred to as the Accountants hereunder). All
fees and expenses of the Accountants shall be borne by the
Corporation. You will direct the Accountants to submit their
determination and detailed supporting calculations to both you and
the Corporation within fifteen (15) days of receipt from you
or the Corporation that you have received or will receive a Payment
or such earlier time as requested by the Corporation. You and the
Corporation will each provide the Accountants access to and copies
of any books, records, and documents in the possession of you or
the Corporation, as the case may be, reasonably requested by the
Accountants, and otherwise cooperate with the Accountants in
connection with the preparation and issuance of the determinations
and calculations contemplated by this Section 5.
6. Successors; Binding
Agreement.
6.1 Successor to Assume
Agreement. The Corporation shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Corporation to expressly assume and agree to perform
this Agreement. Failure of the Corporation to obtain such
assumption and agreement prior to the Change in Control Date shall
be a breach of this Agreement and shall entitle you to terminate
your employment and receive compensation from the Corporation in
the same amount and on the same terms to which you would be
entitled hereunder if you terminate your employment for Good Reason
following the Approval Date or, if inapplicable, the Change in
Control Date, except that for purposes of implementing the
foregoing, the Change in Control Date shall be deemed the Date of
Termination. Unless expressly provided otherwise,
“Corporation” as used herein shall mean the Corporation
as defined in this Agreement and any successor to its business
and/or assets as aforesaid.
6.2 Binding Agreement. This
Agreement shall inure to the benefit of and be enforceable by you
and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable
to you hereunder had you continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to your devisee, legatee or other
designee or, if there is no such designee, to your
estate.
7. Notice. All notices,
requests, demands and other communications which are required or
may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when received if personally
delivered; when transmitted if transmitted by telecopy; the day
after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (e.g., FedEx); and
upon receipt, if sent by certified or registered mail, return
receipt requested. All notices, requests, demands and other
communications shall be addressed to the respective addresses set
forth on the first page of this Agreement, provided that all
notices to the Corporation shall be directed to the attention of
the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
8. Miscellaneous. No
provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in
writing and signed by you and such off
