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EXHIBIT 10.17

EMPLOYMENT AGREEMENT
 
 
This Agreement, dated October 1, 2007 is between JDS Uniphase Corporation (the
"Company") and Kevin J. Kennedy ("Employee").
 
PREMISES
 
WHEREFORE,
 
        1.  Employee serves as President and Chief Executive Officer of Company;
and
 
2.  Employee and Company are parties to an Employment Agreement dated August 20,
2003 (the “2003 Agreement”); and
 
3.  Company and Employee wish to revise and memorialize the terms of Employee’s
employment relationship in a new agreement intended to supersede all other
written and oral representations regarding Employee’s employment with Company;
 
AGREEMENT
 
NOW, THEREFORE, based on the foregoing premises and in consideration of the
commitments set forth below, Employee and Company agree as follows:
 
1.  Definitions.
 
As used herein, the following terms are defined as follows:
 
a.  “Cause” means:
 
(i) willful malfeasance by Employee, which has a material adverse effect on the
Company;
 
(ii) substantial and continuing willful refusal by Employee to perform duties
ordinarily performed by an employee in the same position and having similar
duties as Employee;
 
(iii) conviction of Employee for a felony or misdemeanor which would have a
material adverse effect on the Company’s goodwill if Employee is retained as an
employee of the Company;
 
(iv) willful failure by Employee to comply with material policies and procedures
of the Company including but not limited to the JDS Uniphase Corporation Code of
Business Conduct and Policy Regarding Inside Information and Securities
Transactions.
 
b.  “Good Reason” means the occurrence of any of the events or conditions
described in subsections (i) through (iv) below, provided however, that with
respect to subsections (i) through (iii) below only, Employee provides the
Company with thirty (30) days notice of termination for “Good Reason” pursuant
to the provisions of Section 7 below, during which time the Company shall have
an opportunity to cure the occurrence or condition claimed to constitute “Good
Reason”; and provided further, that such notice of resignation is submitted by
Employee no later than sixty (60) days after the occurrence of the event or
condition that Employee claims as the basis for termination for “Good Reason”:
 
(i)  a material reduction in Employee’s base salary or target bonus without
Employee’s prior written consent; or
 
(ii) a material adverse change in Employee’s position, duties or
responsibilities without Employee’s prior written consent; or
 
(iii) an actual change in Employee’s principal work location by more than 50
kilometers without Employee’s prior written consent; or
 
(iv) failure by the Company to obtain from any successor company the assumption
of the Company’s obligations under this Agreement.
 
c.  "Change of Control" means: (i) a change in the ownership of the corporation,
(ii) a change in effective control of the corporation, or (iii) a change in the
ownership of a substantial portion of the assets of the corporation, as those
terms are used and defined in Section 409A(a)(2)(A)(v) of the Internal Revenue
Code of 1986, as amended (the “Code”), and the regulations thereunder, and where
the word “corporation” used above and in such provisions is taken to refer to
the Company. This provision is intended to incorporate the definition of those
terms in such section and such regulations, and shall be interpreted
accordingly.
 
d.  “Disabled” shall mean “disabled” as defined in section 409A(a)(2)(C) of the
Code and any regulations thereunder, and “Disability has a corresponding
meaning.
 
e.  “Effective Date” means:
 
(i) in the event the Company terminates the employment of Employee, the date
designated by the Company as the last day of Employee’s employment;
 
(ii) in the event Employee resigns his or her employment with the Company, the
date designated by the Company as the effective date of resignation;
 
(iii) in the event Employee dies, the date of death;
 
(iv) in the event Employee becomes Disabled, the date designated by the Company
as the last day of Employee’s employment.

 
2.  Position, Duties, Responsibilities
 
a.  Position: Employee is and will continue to be employed by Company to render
services to the Company in the position of President and Chief Executive
Officer, subject to the provisions of Section 3 below. Employee shall perform
such duties as are customarily required by such position and such other
responsibilities as may be assigned by the Company’s Board of Directors from
time to time. Additionally, Employee shall continue to serve as a member of the
Company’s Board of Directors during the Term of this Agreement.
 
b.  Other Activities: Except upon the prior written consent of the Company,
Employee will not (i) accept any other employment, or (ii) engage, directly or
indirectly, in any other business activity (whether or not pursued for pecuniary
advantage) that is or may be in conflict with, or that might place Employee in a
conflicting position to that of, the Company.
 

3.  
Compensation

In consideration of the services to be rendered under this Agreement, and
subject to the approval of the Compensation Committee of the Company’s Board of
Directors:

a.   The Company shall pay Employee a base annual salary of $800,000,
retroactive to September 1, 2007 and payable in accordance with the Company’s
standard payroll practices.
 
b.   Employee shall be entitled to participate in the Company’s established
incentive plan(s) for senior executives with a target bonus of 100% of
Employee’s base salary and a maximum bonus of up to 125% of Employee’s base
salary. Notwithstanding the preceding sentence, employee also shall be entitled
to participate in an individual performance-based bonus program (the “CEO
Incentive Plan”) with performance targets as shall be established by the
Company’s Board of Directors and reasonably agreed upon by Employee (the “CEO
Bonus Targets”). Subject to Employee’s achievement of such minimum threshold
performance targets as shall be established within the CEO Performance Targets,
Employee shall be entitled to a minimum bonus of 50% of Employee’s base salary,
and upon exceeding the CEO Performance Targets Employee shall be entitled to a
bonus of up to 125% of base salary, the actual bonus to be determined by the
Board of Directors based upon results achieved against such CEO Performance
Targets. Any bonus paid to Employee under the Company’s established incentive
plan(s) for senior executives referred to in the first sentence of this Section
3.b. shall be a credit against and shall be deducted from any obligation of the
Company to Employee under the CEO Incentive Plan. In addition, Employee shall be
eligible to participate in the Company’s benefit plans and to receive
perquisites of employment as established by Company for all regular, full-time
employees in the United States, as may be amended from time to time in Company’s
sole discretion;
 
c.   No later than thirty (30) days from the date of this Agreement, Employee
shall be awarded a grant of 175,000 Deferred Stock Units under the Company’s
then effective equity incentive plan(s) and award agreement as such plans and
agreements may be approved from time to time by the Company’s shareholders and
Board of Directors (the “Deferred Stock Units Award”). The Deferred Stock Units
Award be fully vested upon the date of grant and shall be settled in shares but
such shares shall be delivered to Employee and transferred in the records of the
Company only upon the sooner to occur of: (i) the date upon which Employee’s
service to the Company terminates for any reason; (ii) upon a Change of Control,
or (iii) on the second anniversary of the date of the grant of the Deferred
Stock Units Award;
 
d.   No later than thirty (30) days from the date of this Agreement, Employee
shall be awarded a grant of 200,000 Restricted Stock Units (“RSUs”) under the
Company’s then effective equity incentive plan(s) as such plans may be approved
from time to time by the Company’s shareholders and Board of Directors (the “New
Contract RSU Award”). The New Contract RSU Award shall vest in equal
installments on each of the first and second anniversaries of the date of grant.
 
e.  No later than the last business day of the first fiscal quarter of the
Company’s 2009 fiscal year, Employee shall be awarded a grant of a minimum of
375,000 RSUs under the Company’s then effective equity incentive plan(s) as such
plans may be approved from time to time by the Company’s shareholders and Board
of Directors (the “Minimum RSU Award”). The Minimum RSU Award shall be subject
to the following conditions of vesting:

(i)  60% of the Minimum RSU Award (the “Minimum RSU Award Time-Based Units”)
shall vest in three equal annual installments on the first, second and third
anniversaries of the grant date; and

  (ii)   40% of the Minimum RSU Award (the “Minimum RSU Award Performance
Units”) shall vest at the rate of 1/4th of the Minimum RSU Award Performance
Units per half fiscal year (for clarity, 37,500 RSUs per half fiscal year),
which such vesting shall occur upon the date of the Company’s public release on
Form 8-K of its fiscal results every other fiscal quarter, commencing with
release of quarterly financial results for the second fiscal quarter of the
Company’s 2009 fiscal year, and subject to the achievement of performance
criteria (the “Minimum RSU Award Performance Criteria”) to be established by the
Board of Directors in its sole discretion from time to time.
 
f.  As soon as reasonably practicable following the execution of this Agreement,
Company shall procure at Company expense a policy of insurance which at a
minimum shall provide that in the event Employee’s employment is terminated
during the term of this Agreement as the result of the Death or Disability of
Employee, a benefit equivalent to three years’ salary, at Employee’s annual
salary in effect on the Effective Date, plus three years’ bonus (calculated
based upon Employee’s “at target” bonus under the CEO Incentive Plan), shall be
paid to Employee and/or Employee’s estate or heirs as may be designated by
Employee in Employee’s sole discretion from time to time. For clarity, such
policy of insurance shall be in addition to, and not in place of, any policies
of insurance as may be made available by the Company to Company employees as
part of the Company’s standard package of employee benefits.
 
Nothing in this Section 3 shall be interpreted as precluding the Board of
Directors, in its sole discretion, subject only to compliance with applicable
law and exchange listing requirements, from awarding Employee additional equity
incentives, cash bonuses and/or other compensation.
 

4.  
Term 

 
The term (the “Term”) of this Agreement shall commence on September 1, 2007 and
shall expire on August 31, 2009 unless sooner terminated as provided herein (the
date of termination of this Agreement, the “Expiration Date”). Notwithstanding
the foregoing, on the second anniversary of the date of this Agreement, and on
the anniversary date of each one year period thereafter (a “Renewal Date”) the
Term will be automatically extended for an additional one-year period unless,
not later than 60 days prior to such a Renewal Date, the Company provides
written notice to Employee that it has elected not to extend the Term of this
Agreement.
 

5.  
Termination.

a.  Termination Benefits Under Certain Circumstances. If Employee’s employment
is terminated, prior to the expiration of the Term, by Employee for Good Reason,
or by the Company for reasons other than for Cause, the Death or the Disability
of the Employee, and conditioned upon Employee executing and delivering to the
Company a release of claims, reasonably acceptable to the Company, Employee will
be entitled as of the effective date of such release of claims, to the following
benefits in full satisfaction of any statutory, contractual or common law
entitlements which Employee has or could have as a result of the termination of
the Term:
 
(i)  three years’ salary, at Employee’s annual salary in effect on the Effective
Date, plus three years’ bonus (calculated based upon Employee’s “at target”
bonus under the CEO Incentive Plan). All amounts paid to Employee pursuant to
the terms of this Section 5.a.(i) shall be reduced by any amounts to which
Employee is otherwise entitled under any statutory or Company long or short term
disability plan and any required withholdings or deductions;
 
(ii)  Employee’s right, title and entitlement to any unvested options,
restricted stock units, or any other securities or similar incentives which have
been granted or issued to Employee as of the Effective Date, which would have
otherwise vested in the three year period immediately following the Effective
Date, shall immediately vest, free from any restrictions other than those
imposed by applicable state and federal securities laws, provided that all such
securities shall continue to be exercisable (if applicable) for one (1) year
from the Effective Date or until the term such options, restricted stock units
or other securities would have otherwise expired (if applicable), whichever is
earlier; and
 
(iii)  should Employee elect COBRA benefits continuation following termination
of employment the Company shall pay the full cost to Employee for the full 18
month COBRA period and the Company shall thereafter provide Employee, in one
lump sum, an amount equal to the cost of reasonably comparable health insurance
benefits for Employee and Employee dependents for a period of six (6) months.
All amounts payable pursuant to this Section 5.a.(iii) shall be grossed-up to
the extent such amounts are determined to be a taxable benefit.

b.  Termination For Cause: This Agreement shall terminate immediately upon the
termination of Employee for Cause. Thereafter, all obligations of the Company
under this Agreement shall cease.
 
c.  By Death: Employee's employment shall terminate automatically upon the death
of Employee. Conditioned upon Employee’s beneficiaries or estate executing and
delivering to the Company a release of claims, reasonably acceptable to the
Company, Employee’s beneficiaries or estate, as applicable, will be entitled as
of the effective date of such release of claims to the compensation set forth in
Sections 5.a.(ii) and 5.a.(iii) above in full satisfaction of any statutory,
contractual or common law entitlements which Employee and Employee’s
beneficiaries or estate has or could have as a result of the termination of the
Term. Thereafter, all obligations of Company under this Agreement shall cease.
Nothing in this Section 5.c. shall affect any entitlement of Employee's heirs to
the benefits of any life insurance plan or other applicable benefits, including
benefits available pursuant to Section 3.f. above.
 
d.  By Disability: If Employee suffers from a Disability, then, to the extent
permitted by law, Company may terminate Employee's employment. Conditioned upon
Employee’s, or as applicable Employee’s beneficiaries or estate, executing and
delivering to the Company a release of claims, reasonably acceptable to the
Company, Employee, or as applicable Employee’s beneficiaries or estate, will be
entitled as of the effective date of such release of claims to the to the
compensation set forth in Sections 5.a.(ii) and 5.a.(iii) above in full
satisfaction of any statutory, contractual or common law entitlements which
Employee has or could have as a result of the termination of the Term.
Thereafter, all of Company's obligations under this Agreement shall cease.
Nothing in this Section 5.d. shall affect Employee's rights under any disability
plan in which he is a participant, including benefits available pursuant to
Section 3.f. above.
 
e.   Benefits in the Event of Nonrenewal of the Term: In the event that the
Company provides notice in accordance with the provisions of Section 4 above of
its intent not to renew the Term for an additional one year period, and
conditioned upon the Employee’s executing and delivering to the Company a
release of claims, reasonably acceptable to the Company, Employee will be
entitled to the following benefits as of the Effective Date in full satisfaction
of any statutory, contractual or common law entitlements which Employee has or
could have as a result of the termination of the Term:
 
 (i) the Company shall pay to the Employee, in one lump sum, an amount equal to
(A) one year’s salary, at the Employee’s annual salary in effect on the
Effective Date, plus (B) one year’s bonus (calculated based upon Employee’s “at
target” bonus under the CEO Incentive Plan), minus any required withholdings or
deductions;

   

(ii) Employee’s right, title and entitlement to any unvested options or any
other securities or similar incentives which have been granted or issued to
Employee as of the Effective Date and which would otherwise have vested
according to their terms within one (1) year of the Effective Date shall
immediately vest, free from any restrictions (other than those imposed by
applicable state and federal securities laws), and all such securities shall
continue to be exercisable (if applicable) until the earlier of (1) as provided
in the applicable plan or grant agreements (but in no event less than one year)
following the Effective Date; or (2) until such term of such options or other
such securities would have otherwise expired (if applicable); and
 
(iii) should Employee elect COBRA benefits continuation following termination of
employment the Company shall pay the full cost to Employee for the full 18 month
COBRA period and the Company shall thereafter provide Employee, in one lump sum,
an amount equal to the cost of reasonably comparable health insurance benefits
for Employee and Employee dependents for a period of six (6) months.  All
amounts payable pursuant to this Section 5(e)(iii) shall be grossed-up to the
extent such amounts are determined to be a taxable benefit.
 
f.   Certain Additional Payments by Company: Notwithstanding anything in this
Agreement to the contrary, in the event that Employee becomes entitled to any of
the payments or benefits provided under this Section 5 as a result of Employee’s
resignation for (i) Good Reason or (ii) Employee’s termination without cause, in
each case following a Change of Control, and such payments or benefits result in
Employee being subject to the golden parachute excise tax imposed by Section
4999 of the Internal Revenue Code, the Company shall make such additional
payment as will make executive whole for such tax obligation, as set forth in
Appendix A, which is incorporated herein by reference.

g.   Payment Date: All payments required by Section 5.a., c., d., or e.,
(including as a consequence of the exercise of an option or vesting of a
restricted stock unit or other security referred to in Section 5.a.(ii) or
5.e.(ii)) shall be made by the fifteenth (15th) day of the third (3rd) month
following the Effective Date of the Employee’s termination of employment which
occasioned such payment. All Gross-up Payments required by Section 5.f. shall be
made by the fifteenth (15th) day of the third (3rd) month following the
determination of the amount of such Gross-up Payment pursuant to Appendix A
hereto, and, in any event, by the end of the Employee’s taxable year next
following the Employee’s taxable year in which the Employee remitted the Excise
Taxes to which the Gross-up Payment relates. Employee shall not be permitted,
directly or indirectly, to designate the taxable year of any payment.

h.   No Other Obligations: The Company shall have no obligations with respect to
any termination of the Term for any reasons other than as specified in this
Section 5.
 

     6.
  Employee Termination Obligations

 
a.  Return of Company's Property: Employee hereby acknowledges and agrees that
all personal property, including, without limitation, all books, manuals,
records, reports, notes, contracts, lists, blueprints, and other documents, or
materials, or copies thereof, and equipment furnished to or prepared by Employee
in the course of or incident to Employee’s employment, belong to Company and
shall be promptly returned to Company upon termination of Employee’s employment.
 
b.  Cooperation in Pending Work: Following any termination of Employee’s
employment, Employee shall fully cooperate with Company in all matters relating
to the winding up of pending work on behalf of Company and the orderly transfer
of work to other employees of Company. Employee shall also cooperate in the
defense of any action brought by any third party against Company that relates in
any way to Employee’s acts or omissions while employed by Company.
 
7.  Notices
 
All notices or other communications required or permitted hereunder shall be
made in writing and shall be deemed to have been duly given if delivered by hand
or mailed, postage prepaid, by certified or registered mail, return receipt
requested, and addressed to Company:
 
JDS Uniphase Corporation
430 North McCarthy Blvd
Milpitas, California 95035
Attention: Chief Legal Officer

and to Employee at Employee’s home address as reflected in the Company’s Oracle
database as of the date of such notice or other communication. Employee and the
Company shall provide written notice to the other (which, notwithstanding any
other provision within this section, may be provided by hand delivery, first
class mail or electronic mail) of any changes to the addresses above.
 
8.  Entire Agreement
 
Subject to the last sentence of this paragraph, the terms of this Agreement are
intended by the parties to be the final and exclusive expression of their
agreement with respect to the employment of Employee by Company, superseding all
prior such agreements, and may not be contradicted by evidence of any prior or
contemporaneous statements or agreements. Subject to the last sentence of this
paragraph, the parties further intend that this Agreement shall constitute the
complete and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any judicial, administrative, or other legal
proceeding involving this Agreement. To the extent that the practices, policies,
or procedures of Company, now or in the future, apply to Employee and are
inconsistent with the terms of this Agreement, the provisions of this Agreement
shall control. Notwithstanding the foregoing, nothing in this agreement shall
limit or modify, in any manner, any existing or future agreement between the
Employee and the Company relating to indemnification against third party claims,
proprietary information, inventions, treatment of confidential information,
non-competition or employee benefits or incentive plans.
 
9.  Amendments, Waivers
 
This Agreement may not be modified, amended, or terminated except by an
instrument in writing, signed by Employee and by a duly authorized
representative of Company other than Employee. No failure to exercise and no
delay in exercising any right, remedy, or power under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, or power under this Agreement preclude any other or further
exercise thereof, or the exercise of any other right, remedy, or power provided
herein.
 
Employee and the Company each specifically agree and acknowledge that they each
waive recourse to any remedies in tort, and further agree and acknowledge their
intent that all rights and liabilities pertaining to the cessation of the
employment relationship between them, where such cessation occurs on or before
the Expiration Date, be as set out in this Agreement (or in any subsequent
modification of this Agreement, provided that the modification is in writing and
signed by both parties).
 
10.  Assignment; Successors and Assigns
 
Employee agrees that Employee will not assign, sell, transfer, delegate or
otherwise dispose of, whether voluntarily or involuntarily, or by operation of
law, any rights or obligations under this Agreement, nor shall Employee’s rights
be subject to encumbrance or the claims of creditors. Any purported assignment,
transfer, or delegation shall be null and void. Nothing in this Agreement shall
prevent the consolidation of the Company with, or its merger into, any other
corporation, or the sale by the Company of all or substantially all of its
properties or assets, or the assignment by the Company of this Agreement and the
performance of its obligations hereunder to any successor in interest. Subject
to the foregoing, this Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective heirs, legal representatives,
successors, and permitted assigns, and shall not benefit any person or entity
other than those enumerated above.
 
11.  Severability; Enforcement
 
If any provision of this Agreement, or the application thereof to any person,
place, or circumstance, shall be held by a court of competent jurisdiction to be
invalid, unenforceable, or void, the remainder of this Agreement and such
provisions as applied to other persons, places, and circumstances shall remain
in full force and effect.
 
12.  Governing Law
 
The validity, interpretation, enforceability, and performance of this Agreement
shall be governed by and construed in accordance with the law of the State of
California.
 
13.  Employee Acknowledgment
 
The parties acknowledge (a) that they have consulted with or have had the
opportunity to consult with independent counsel of their own choice concerning
this Agreement, and (b) that they have read and understand the Agreement, are
fully aware of its legal effect, and have entered into it freely based on their
own judgment and not on any representations or promises other than those
contained in this Agreement.
 
14. Compliance with Code Section 409A
 
The parties to this Agreement acknowledge and agree that, notwithstanding
anything herein to the contrary, this Agreement is intended to comply with the
provisions of Code section 409A, as in effect from time to time. The intent of
this Section 14 is that Employee not be subject to any tax liability or penalty
by reason of the application of Code section 409A(a)(1) with respect to any
amount payable under this Agreement. In consideration of the fact that any
payments under Employee’s Prior Employment Agreement would not have been subject
to the provisions of Code section 409A, if the Employee is subject to any
liability under Code section 409A within twelve (12) months after the Effective
Date, or with respect to any payment made to the Employee on account of his
termination of employment within such twelve-month period, the Company shall
indemnify the Employee on an after-tax basis for all such liability. To the
extent necessary to comply with the requirements of Code section
409A(a)(2)(B)(i) (prohibiting certain payments to a “specified employee” within
six (6) months of such employee’s separation from service), any payment
hereunder that may be made to the Employee on account of his termination of
employment with the Company shall be delayed only to the extent necessary to
comply with the requirements of Code section 409A(a)(2)(B)(i).
 
15. Date of Agreement
 
The parties have duly executed this Agreement as of the date first written
above.

        JDS UNIPHASE CORPORATION      
 
 

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Name:  Christopher S. Dewees
Its:    Senior Vice President and
     Chief Legal Officer
    Kevin J. Kennedy

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APPENDIX A

Certain Additional Payments by the Company
 
(a)  Subject to and as provided by Section 5(f) of this Agreement, in the event
it shall be determined that any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by the Company (or
any of its affiliated entities) or any entity which effectuates a Change of
Control (or any of its affiliated entities) to or for the benefit of Employee
(whether pursuant to the terms of this Agreement or otherwise, but determined
without regard to any additional payments required under this Appendix A) (the
“Payments”) would be subject to the 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 such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then the Company shall pay to Employee an
additional payment (a “Gross-Up Payment”) in an amount such that after payment
by Employee from the Gross-Up Payment of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment, Employee retains 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, the 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, (ii) pay applicable state and local
income taxes in the state and locality in which Employee is subject to taxation
at the highest marginal rate of taxation in each state and locality 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 and (iii) have otherwise allowable deductions for federal
income tax purposes at least equal to those which could be disallowed because of
the inclusion of the Gross-Up Payment in the Employee’s adjusted gross income.
Notwithstanding the foregoing provisions of this Appendix A, if it shall be
determined that Employee is entitled to a Gross-Up Payment, but that the
Payments would not be subject to the Excise Tax if the Payments were reduced by
an amount that is less than 10% of the portion of the Payments that would be
treated as “parachute payments” under Section 280G of the Code, then the amounts
payable to Employee under this Agreement shall be reduced (but not below zero)
to the maximum amount that could be paid to Employee without giving rise to the
Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to
Employee. The reduction of the amounts payable hereunder, if applicable, shall
be made by reducing any cash payments, unless an alternative method of reduction
is elected by Employee. For purposes of reducing the Payments to the Safe Harbor
Cap, only amounts payable under this Agreement (and no other Payments) shall be
reduced. If the reduction of the amounts payable hereunder would not result in a
reduction of the Payments to the Safe Harbor Cap, no amounts payable under this
Agreement shall be reduced pursuant to this provision.
 
(b)  Subject to the provisions of this Appendix A (a), all determinations
required to be made under this Appendix A, including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment, the reduction of the
Payments to the Safe Harbor Cap and the assumptions to be utilized in arriving
at such determinations, shall be made by the public accounting firm that is
retained by the Company as of the date immediately prior to the Change of
Control (the “Accounting Firm”) which shall provide detailed supporting
calculations both to the Company and Employee within thirty (30) days of the
receipt of notice from the Company or the Employee that there has been a
Payment, or such earlier time as is requested by the Company (collectively, the
“Determination”). In the event that the Accounting Firm is serving as accountant
or auditor for the individual, entity or group effecting the Change of Control,
Employee may appoint another nationally recognized public accounting firm to
make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company and the Company shall enter
into any reasonable agreement requested by the Accounting Firm in connection
with the performance of the services hereunder. If the Accounting Firm
determines that no Excise Tax is payable by Employee, it shall furnish Employee
with a written opinion to such effect, and to the effect that failure to report
the Excise Tax, if any, on Employee’s applicable federal income tax return will
not result in the imposition of a negligence or similar penalty. In the event
the Accounting Firm determines that the Payments shall be reduced to the Safe
Harbor Cap, it shall furnish Employee with a written opinion to such effect. The
Determination by the Accounting Firm shall be binding upon the Company and
Employee. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the Determination, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made
(“Underpayment”) or Gross-Up Payments are made by the Company which should not
have been made (“Overpayment”), consistent with the calculations required to be
made hereunder. In the event that the Employee thereafter is required to make
payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment (together with interest, to the extent not already within the
Excise Tax, at the rate provided in Section 1274(b)(2)(B) of the Code) shall be
promptly paid by the Company to or for the benefit of Employee. In the event the
amount of the Gross-Up Payment exceeds the amount necessary to reimburse the
Employee for his Excise Tax, the Accounting Firm shall determine the amount of
the Overpayment that has been made and any such Overpayment (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be
promptly paid by Employee (to the extent he has received a refund if the
applicable Excise Tax has been paid to the Internal Revenue Service) to or for
the benefit of the Company. Employee shall cooperate, with any reasonable
requests by the Company in connection with any contests or disputes with the
Internal Revenue Service in connection with the Excise Tax.