EXHIBIT 10.20

 

ALLOS THERAPEUTICS, INC.

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made
and entered into as of December 13, 2007, by and among Allos Therapeutics, Inc.,
a Delaware corporation (the “Company”), and Paul L. Berns (“Employee”).

 

W I T N E S S E T H:

 

WHEREAS, the Company wishes to continue to employ Employee and to assure itself
of the continued services of Employee on the terms set forth herein;

 

WHEREAS, Employee wishes to be so employed under the terms set forth herein;

 

WHEREAS, Employee and the Company entered into the original Employment Agreement
dated March 9, 2006 (the “Original Agreement”);

 

WHEREAS, Employee and the Company are parties to the Amended and Restated
Employment Agreement dated December 12, 2006 (the “First Amended Agreement”),
pursuant to which the Company and Employee amended and restated the Original
Agreement to reflect their final agreement with respect to reimbursement of
commuting and temporary living expenses;

 

WHEREAS, the Company and Employee now desire to amend and restate the First
Amended Agreement to, among other things, reflect certain changes such that the
Employee will not be subject to adverse tax consequences under Section 409A of
the Code (as defined below); and

 

WHEREAS, the Company and Employee intend that this Agreement shall supersede and
replace the First Amended Agreement.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are mutually acknowledged, the Company and Employee hereby
agree as follows:

 

SECTION 1.               DEFINITIONS.

 

(A)           “ACCRUED OBLIGATIONS” SHALL MEAN (I) ANY BASE SALARY AND ANNUAL
BONUS EARNED BUT UNPAID PRIOR TO THE DATE OF A TERMINATION OF EMPLOYEE’S
EMPLOYMENT WITH THE COMPANY PURSUANT TO SECTION 8 BELOW, (II) ALL ACCRUED BUT
UNUSED PERSONAL TIME, (III) ANY UNREIMBURSED BUSINESS EXPENSES PURSUANT TO
SECTION 7 BELOW AND (IV) OTHER EMPLOYEE BENEFITS TO WHICH EMPLOYEE IS ENTITLED
UPON TERMINATION OF EMPLOYMENT IN ACCORDANCE WITH THE TERMS OF THE PLANS AND
PROGRAMS OF THE COMPANY.

 

(B)           “AFFILIATE” SHALL MEAN, AS TO ANY PERSON, ANY OTHER PERSON THAT
CONTROLS, IS CONTROLLED BY, OR IS UNDER COMMON CONTROL WITH, SUCH PERSON.

 

(C)           “ANNUAL BONUS” SHALL HAVE THE MEANING SET FORTH IN
SECTION 4(B) BELOW.

 

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(D)           “BASE SALARY” SHALL MEAN THE SALARY, AND ANY INCREASE THEREOF,
PROVIDED FOR IN SECTION 4(A) BELOW.

 

(E)           “BOARD” SHALL MEAN THE BOARD OF DIRECTORS OF THE COMPANY.

 

(F)            “CAUSE” SHALL MEAN THE OCCURRENCE OF ONE OR MORE OF THE
FOLLOWING: (I) EMPLOYEE’S CONVICTION OF A FELONY INVOLVING MORAL TURPITUDE OR
DISHONESTY; (II) EMPLOYEE’S KNOWING AND ACTIVE PARTICIPATION IN A FRAUD OR
SIGNIFICANT ACT OF DISHONESTY AGAINST THE COMPANY; (III) EMPLOYEE’S INTENTIONAL
AND MATERIAL DAMAGE TO THE COMPANY’S PROPERTY OR (IV) EMPLOYEE’S MATERIAL BREACH
OF THIS AGREEMENT, THE COMPANY’S WRITTEN POLICIES, OR THE PROPRIETARY
INFORMATION AGREEMENT THAT IS DEMONSTRABLY WILLFUL AND DELIBERATE ON EMPLOYEE’S
PART IS COMMITTED IN BAD FAITH OR WITHOUT REASONABLE BELIEF THAT SUCH BREACH IS
IN THE BEST INTEREST OF THE COMPANY, AND IS NOT REMEDIED BY EMPLOYEE WITHIN
THIRTY (30) DAYS OF WRITTEN NOTICE OF SUCH BREACH FROM THE BOARD, WHICH WRITTEN
NOTICE, TO BE EFFECTIVE, MUST BE PROVIDED TO EMPLOYEE WITHIN SIXTY (60) DAYS
AFTER THE DATE ON WHICH THE COMPANY FIRST BECOMES AWARE OF THE OCCURRENCE OF
SUCH EVENT.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, EMPLOYEE’S
PHYSICAL OR MENTAL DISABILITY OR DEATH SHALL NOT CONSTITUTE CAUSE.

 

(G)           “CHANGE IN CONTROL” MEANS

 

(I)              A SALE, LEASE, EXCHANGE OR OTHER TRANSFER IN ONE TRANSACTION OR
A SERIES OF RELATED TRANSACTIONS OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF
THE COMPANY (OTHER THAN THE TRANSFER OF THE COMPANY’S ASSETS TO A MAJORITY-OWNED
SUBSIDIARY CORPORATION);

 

(II)             A MERGER OR CONSOLIDATION IN WHICH THE COMPANY IS NOT THE
SURVIVING CORPORATION (UNLESS THE HOLDERS OF THE COMPANY’S OUTSTANDING VOTING
STOCK IMMEDIATELY PRIOR TO SUCH TRANSACTION OWN, IMMEDIATELY AFTER SUCH
TRANSACTION, SECURITIES REPRESENTING AT LEAST FIFTY PERCENT (50%) OF THE VOTING
POWER OF THE CORPORATION OR OTHER ENTITY SURVIVING SUCH TRANSACTION);

 

(III)            A REVERSE MERGER IN WHICH THE COMPANY IS THE SURVIVING
CORPORATION BUT THE SHARES OF THE COMPANY’S COMMON STOCK OUTSTANDING IMMEDIATELY
PRECEDING THE MERGER ARE CONVERTED BY VIRTUE OF THE MERGER INTO OTHER PROPERTY,
WHETHER IN THE FORM OF SECURITIES, CASH OR OTHERWISE (UNLESS THE HOLDERS OF THE
COMPANY’S OUTSTANDING VOTING STOCK IMMEDIATELY PRIOR TO SUCH TRANSACTION OWN,
IMMEDIATELY AFTER SUCH TRANSACTION, SECURITIES REPRESENTING AT LEAST FIFTY
PERCENT (50%) OF THE VOTING POWER OF THE COMPANY);

 

(IV)            THE ACQUISITION BY ANY INDIVIDUAL, ENTITY OR GROUP (A “PERSON”),
INCLUDING ANY “PERSON” WITHIN THE MEANING OF SECTION 13(D) (3) OR 14(D) (2) OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE ACT”), OF
BENEFICIAL OWNERSHIP WITHIN THE MEANING OF RULE 13D-3 PROMULGATED UNDER THE
EXCHANGE ACT, OF 50% OR MORE OF EITHER (1) THE THEN OUTSTANDING SHARES OF COMMON
STOCK OF THE COMPANY (THE “OUTSTANDING COMMON STOCK”) OR (2) THE COMBINED VOTING
POWER OF THE THEN OUTSTANDING SECURITIES OF THE COMPANY ENTITLED TO VOTE
GENERALLY IN THE ELECTION OF DIRECTORS (THE “OUTSTANDING VOTING SECURITIES”);
EXCLUDING, HOWEVER, THE FOLLOWING: (A) ANY ACQUISITION DIRECTLY FROM THE COMPANY
(EXCLUDING ANY ACQUISITION RESULTING FROM THE

 

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EXERCISE OF AN EXERCISE, CONVERSION OR EXCHANGE PRIVILEGE UNLESS THE SECURITY
BEING SO EXERCISED, CONVERTED OR EXCHANGED WAS ACQUIRED DIRECTLY FROM THE
COMPANY), (B) ANY ACQUISITION BY THE COMPANY, (C) ANY ACQUISITION BY AN EMPLOYEE
BENEFIT PLAN (OR RELATED TRUST) SPONSORED OR MAINTAINED BY THE COMPANY OR ANY
CORPORATION CONTROLLED BY THE COMPANY OR (D) ANY ACQUISITION BY ANY CORPORATION
IF THE HOLDERS OF THE COMPANY’S OUTSTANDING VOTING STOCK IMMEDIATELY PRIOR TO
SUCH TRANSACTION OWN, IMMEDIATELY AFTER SUCH TRANSACTION, SECURITIES
REPRESENTING AT LEAST FIFTY PERCENT (50%) OF THE VOTING POWER OF THE CORPORATION
OR OTHER ENTITY SURVIVING SUCH TRANSACTION; PROVIDED FURTHER THAT, FOR PURPOSES
OF CLAUSE (B), IF ANY PERSON (OTHER THAN THE COMPANY OR ANY EMPLOYEE BENEFIT
PLAN (OR RELATED TRUST) SPONSORED OR MAINTAINED BY THE COMPANY OR ANY
CORPORATION CONTROLLED BY THE COMPANY) SHALL BECOME THE BENEFICIAL OWNER OF 50%
OR MORE OF THE OUTSTANDING COMMON STOCK OR 50% OR MORE OF THE OUTSTANDING VOTING
SECURITIES BY REASON OF AN ACQUISITION BY THE COMPANY AND SUCH PERSON SHALL,
AFTER SUCH ACQUISITION BY THE COMPANY, BECOME THE BENEFICIAL OWNER OF ANY
ADDITIONAL SHARES OF THE OUTSTANDING COMMON STOCK OR ANY ADDITIONAL OUTSTANDING
VOTING SECURITIES AND SUCH BENEFICIAL OWNERSHIP IS PUBLICLY ANNOUNCED, SUCH
ADDITIONAL BENEFICIAL OWNERSHIP SHALL CONSTITUTE A CHANGE IN CONTROL; OR

 

(V)             INDIVIDUALS WHO, AS OF THE DATE HEREOF, CONSTITUTE THE BOARD
(THE “INCUMBENT BOARD”) CEASE FOR ANY REASON TO CONSTITUTE AT LEAST A MAJORITY
OF SUCH BOARD; PROVIDED, THAT ANY INDIVIDUAL WHO BECOMES A DIRECTOR OF THE
COMPANY SUBSEQUENT TO THE DATE HEREOF WHOSE ELECTION, OR NOMINATION FOR ELECTION
BY THE COMPANY’S STOCKHOLDERS, WAS APPROVED BY THE VOTE OF AT LEAST A MAJORITY
OF THE DIRECTORS THEN COMPRISING THE INCUMBENT BOARD SHALL BE DEEMED TO HAVE
BEEN A MEMBER OF THE INCUMBENT BOARD; AND PROVIDED FURTHER, THAT ANY INDIVIDUAL
WHO WAS INITIALLY ELECTED AS A DIRECTOR OF THE COMPANY AS A RESULT OF AN ACTUAL
OR THREATENED SOLICITATION BY A PERSON OTHER THAN THE COMPANY FOR THE PURPOSE OF
OPPOSING A SOLICITATION BY ANY OTHER PERSON WITH RESPECT TO THE ELECTION OR
REMOVAL OF DIRECTORS, OR ANY OTHER ACTUAL OR THREATENED SOLICITATION OF PROXIES
OR CONSENTS BY OR ON BEHALF OF ANY PERSON OTHER THAN THE BOARD SHALL NOT BE
DEEMED A MEMBER OF THE INCUMBENT BOARD.

 

(H)           “CODE” SHALL MEAN THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

 

(I)            “COMMENCEMENT DATE” SHALL MEAN 5:00 P.M. MOUNTAIN STANDARD TIME
ON  MARCH 9, 2006.

 

(J)            “COMPANY” EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, SHALL
HAVE THE MEANING SET FORTH IN THE PREAMBLE HERETO.

 

(K)           “COMPETITIVE ACTIVITIES” SHALL MEAN THE RESEARCH, DEVELOPMENT,
MARKETING OR SALE OF DRUG AND NONDRUG PRODUCTS WHICH ARE COMPETITIVE WITH
(I) THOSE PRODUCTS BEING MARKETED BY THE COMPANY AT THE TIME OF EMPLOYEE’S
TERMINATION OF EMPLOYMENT WITH THE COMPANY OR (II) THOSE PRODUCTS THAT EMPLOYEE
WAS AWARE WERE UNDER DEVELOPMENT BY THE COMPANY AND CONSUMING MATERIAL RESOURCES
OF THE COMPANY.

 

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(L)            “CONFIDENTIAL INFORMATION” SHALL MEAN CONFIDENTIAL OR PROPRIETARY
TRADE SECRETS, CLIENT LISTS, CLIENT IDENTITIES AND INFORMATION, INFORMATION
REGARDING SERVICE PROVIDERS, INVESTMENT METHODOLOGIES, MARKETING DATA OR PLANS,
SALES PLANS, MANAGEMENT ORGANIZATION INFORMATION, OPERATING POLICIES OR MANUALS,
BUSINESS PLANS OR OPERATIONS OR TECHNIQUES, FINANCIAL RECORDS OR DATA, OR OTHER
FINANCIAL, COMMERCIAL, BUSINESS OR TECHNICAL INFORMATION (I) RELATING TO THE
COMPANY OR ANY OF ITS SUBSIDIARIES, OR (II) THAT THE COMPANY OR ANY OF ITS
SUBSIDIARIES MAY RECEIVE BELONGING TO SUPPLIERS, CUSTOMERS OR OTHERS WHO DO
BUSINESS WITH THE COMPANY, BUT SHALL EXCLUDE ANY INFORMATION THAT IS IN THE
PUBLIC DOMAIN OR HEREAFTER ENTERS THE PUBLIC DOMAIN, IN EACH CASE WITHOUT THE
BREACH BY EMPLOYEE OF SECTION 10(A) BELOW.

 

(M)          “DISABILITY” SHALL MEAN ANY PHYSICAL OR MENTAL DISABILITY OR
INFIRMITY THAT PREVENTS THE PERFORMANCE OF EMPLOYEE’S DUTIES FOR A PERIOD OF
(I) NINETY (90) CONSECUTIVE DAYS OR (II) ONE HUNDRED TWENTY (120)
NON-CONSECUTIVE DAYS DURING ANY TWELVE (12) MONTH PERIOD AND WHICH ENTITLES
EMPLOYEE TO BENEFITS UNDER THE LONG-TERM DISABILITY PLAN MAINTAINED BY THE
COMPANY FOR ITS SENIOR EXECUTIVES.  ANY QUESTION AS TO THE EXISTENCE, EXTENT OR
POTENTIALITY OF EMPLOYEE’S DISABILITY UPON WHICH EMPLOYEE AND THE COMPANY CANNOT
AGREE SHALL BE DETERMINED BY A QUALIFIED, INDEPENDENT PHYSICIAN SELECTED BY THE
COMPANY AND APPROVED BY EMPLOYEE (WHICH APPROVAL SHALL NOT BE UNREASONABLY
WITHHELD).  THE DETERMINATION OF ANY SUCH PHYSICIAN SHALL BE FINAL AND
CONCLUSIVE FOR ALL PURPOSES OF THIS AGREEMENT.

 

(N)           “EMPLOYEE” SHALL HAVE THE MEANING SET FORTH IN THE PREAMBLE
HERETO.

 

(O)           “GOOD REASON” SHALL MEAN ANY ONE OF THE FOLLOWING EVENTS WHICH
OCCURS WITHOUT EMPLOYEE’S WRITTEN CONSENT ON OR AFTER THE COMMENCEMENT OF
EMPLOYEE’S EMPLOYMENT:  (I) A REDUCTION OF EMPLOYEE’S THEN EXISTING BASE SALARY
OR TARGET BONUS BY MORE THAN TEN PERCENT (10%), UNLESS THE EMPLOYEE ACCEPTS SUCH
REDUCTION OR SUCH REDUCTION IS DONE IN CONJUNCTION WITH SIMILAR REDUCTIONS FOR
SIMILARLY SITUATED EMPLOYEES OF THE COMPANY (IT BEING UNDERSTOOD THAT, SOLELY
FOR PURPOSES OF THIS PARAGRAPH 1(O), SUCH A REDUCTION IN THE TARGET BONUS NOT
ACCEPTED BY EMPLOYEE IS CONSIDERED A MATERIAL BREACH OF THIS AGREEMENT);
(II) ANY REQUEST BY THE COMPANY (OR ANY SURVIVING OR ACQUIRING CORPORATION) THAT
THE EMPLOYEE RELOCATE TO A NEW PRINCIPAL BASE OF OPERATIONS THAT WOULD INCREASE
EMPLOYEE’S ONE-WAY COMMUTE DISTANCE BY MORE THAN THIRTY-FIVE (35) MILES FROM HIS
THEN-PRINCIPAL RESIDENCE, UNLESS EMPLOYEE ACCEPTS SUCH RELOCATION OPPORTUNITY;
(III) A MATERIAL DIMINUTION IN EMPLOYEE’S AUTHORITY, DUTIES OR RESPONSIBILITIES
WITH THE COMPANY, OR ANY REMOVAL OR INVOLUNTARY TERMINATION OF EMPLOYEE FROM THE
COMPANY OTHERWISE THAN AS EXPRESSLY PERMITTED BY THIS AGREEMENT; (IV) THE
FAILURE OF THE COMPANY TO OBTAIN THE ASSUMPTION AGREEMENT FROM ANY SUCCESSOR AS
CONTEMPLATED IN SECTION 17(A) (IT BEING UNDERSTOOD THAT, SOLELY FOR PURPOSES OF
THIS PARAGRAPH 1(O), THE COMPANY’S FAILURE TO OBTAIN SUCH ASSUMPTION AGREEMENT
SHALL BE CONSIDERED A MATERIAL BREACH OF THIS AGREEMENT); (V) FOR PURPOSES OF
SECTION 8(G) ONLY, IF, FOLLOWING A CHANGE IN CONTROL, EMPLOYEE’S BENEFITS AND
RESPONSIBILITIES ARE MATERIALLY REDUCED, OR EMPLOYEE’S BASE SALARY OR TARGET
BONUS ARE REDUCED BY MORE THAN 10%, IN EACH CASE, BY COMPARISON TO THE BENEFITS,
RESPONSIBILITIES, BASE SALARY OR TARGET BONUS IN EFFECT IMMEDIATELY PRIOR TO
SUCH REDUCTION (IT BEING UNDERSTOOD THAT, SOLELY FOR PURPOSES OF THIS PARAGRAPH
1(O), THE AFOREMENTIONED REDUCTIONS IN THE TARGET BONUS OR BENEFITS ARE
CONSIDERED A MATERIAL BREACH OF THIS AGREEMENT); OR (VI) A MATERIAL BREACH OF
THIS AGREEMENT BY THE COMPANY.

 

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(P)           “INTERFERING ACTIVITIES” SHALL MEAN (I) ENCOURAGING, SOLICITING,
OR INDUCING, OR IN ANY MANNER ATTEMPTING TO ENCOURAGE, SOLICIT, OR INDUCE, ANY
PERSON EMPLOYED BY THE COMPANY OR ANY SUBSIDIARY THEREOF TO TERMINATE SUCH
PERSON’S EMPLOYMENT WITH THE COMPANY OR SUCH SUBSIDIARY; (II) HIRING ANY PERSON
WHO WAS EMPLOYED BY THE COMPANY OR ANY SUBSIDIARY THEREOF WITHIN THE SIX
(6) MONTH PERIOD PRIOR TO THE DATE OF SUCH HIRING; OR (III) ENCOURAGING,
SOLICITING OR INDUCING, OR IN ANY MANNER ATTEMPTING TO ENCOURAGE, SOLICIT OR
INDUCE ANY CLIENT, ACCOUNT, CUSTOMER, LICENSEE OR OTHER BUSINESS RELATION OF THE
COMPANY OR ANY SUBSIDIARY THEREOF TO CEASE DOING BUSINESS WITH OR REDUCE THE
AMOUNT OF BUSINESS CONDUCTED WITH (INCLUDING BY PROVIDING SIMILAR SERVICES OR
PRODUCTS TO ANY SUCH PERSON) THE COMPANY OR SUCH SUBSIDIARY, OR IN ANY WAY
INTERFERE WITH THE RELATIONSHIP BETWEEN ANY SUCH CLIENT, ACCOUNT, CUSTOMER,
LICENSEE OR BUSINESS RELATION AND THE COMPANY OR SUCH SUBSIDIARY.

 

(Q)           “PERSON” SHALL MEAN ANY INDIVIDUAL, CORPORATION, PARTNERSHIP,
LIMITED LIABILITY COMPANY, JOINT VENTURE, ASSOCIATION, JOINT-STOCK COMPANY,
TRUST (CHARITABLE OR NON-CHARITABLE), UNINCORPORATED ORGANIZATION OR OTHER FORM
OF BUSINESS ENTITY.

 

(R)            “PLAN” SHALL MEAN THE COMPANY’S 2000 STOCK INCENTIVE COMPENSATION
PLAN.

 

(S)           “PROPRIETARY INFORMATION AGREEMENT” SHALL MEAN THE COMPANY’S
STANDARD FORM OF EMPLOYEE CONFIDENTIALITY AND INVENTIONS ASSIGNMENT AGREEMENT.

 

(T)            “RESTRICTED AREA” MEANS, DURING EMPLOYEE’S EMPLOYMENT HEREUNDER,
ANY STATE OF THE UNITED STATES OF AMERICA OR ANY OTHER JURISDICTION IN WHICH THE
COMPANY OR ITS SUBSIDIARIES ENGAGE (OR HAVE COMMITTED PLANS TO ENGAGE) IN
BUSINESS OR, FOLLOWING TERMINATION OF EMPLOYEE’S EMPLOYMENT, ANY JURISDICTION IN
WHICH THE COMPANY OR ITS SUBSIDIARIES WERE ENGAGED IN BUSINESS AT THE TIME OF
SUCH TERMINATION OR IN WHICH THEY HAVE COMMITTED AT THE TIME OF SUCH TERMINATION
TO BE ACTIVELY ENGAGED WITHIN FOUR YEARS OF SUCH TERMINATION.

 

(U)           “RESTRICTED PERIOD” SHALL MEAN THE PERIOD COMMENCING ON THE
COMMENCEMENT DATE AND ENDING ON THE TWELVE (12) MONTH ANNIVERSARY OF EMPLOYEE’S
TERMINATION OF EMPLOYMENT HEREUNDER FOR ANY REASON.

 

(V)           “TARGET BONUS” SHALL HAVE THE MEANING SET FORTH IN
SECTION 4(B) BELOW.

 

SECTION 2.               ACCEPTANCE AND TERM OF EMPLOYMENT.

 

The Company agrees to employ Employee and Employee agrees to serve the Company
on the terms and conditions set forth herein.  It is understood and agreed by
the Company and Employee that this Agreement does not contain any promise or
representation concerning the duration of Employee’s employment with the
Company.  Employee specifically acknowledges that his employment with the
Company is “at-will” and may be terminated by Employee or the Company at any
time pursuant to Section 8 below.

 

SECTION 3.               POSITION, DUTIES AND RESPONSIBILITIES; PLACE OF
PERFORMANCE.

 

(A)           EMPLOYEE SHALL BE EMPLOYED AND SERVE AS THE PRESIDENT AND CHIEF
EXECUTIVE OFFICER OF THE COMPANY (TOGETHER WITH SUCH OTHER POSITION OR POSITIONS
CONSISTENT WITH

 

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EMPLOYEE’S TITLE AS THE BOARD SHALL SPECIFY FROM TIME TO TIME) AND SHALL HAVE
SUCH DUTIES TYPICALLY ASSOCIATED WITH SUCH TITLE.  SUBJECT TO THE FOREGOING,
EMPLOYEE ALSO AGREES TO SERVE AS AN OFFICER AND/OR DIRECTOR OF THE COMPANY OR
ANY PARENT OR SUBSIDIARY OF THE COMPANY, AS SPECIFIED BY THE BOARD, IN EACH CASE
WITHOUT ADDITIONAL COMPENSATION.  EMPLOYEE SHALL REPORT DIRECTLY AND EXCLUSIVELY
TO THE BOARD.  IN ADDITION, THE COMPANY SHALL PROMPTLY APPOINT EMPLOYEE TO THE
BOARD AND THEREAFTER NOMINATE EMPLOYEE AS A NOMINEE FOR ELECTION TO THE BOARD
AND SOLICIT PROXIES FOR HIS ELECTION FOR SO LONG AS HE CONTINUES TO SERVE AS
PRESIDENT AND CHIEF EXECUTIVE OFFICER.

 

(B)           SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT,
EMPLOYEE SHALL DEVOTE HIS FULL BUSINESS TIME, ATTENTION, AND EFFORTS TO THE
PERFORMANCE OF HIS DUTIES UNDER THIS AGREEMENT AND SHALL NOT ENGAGE IN ANY OTHER
BUSINESS OR OCCUPATION DURING HIS EMPLOYMENT WITH THE COMPANY PURSUANT TO THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY ACTIVITY THAT (X) CONFLICTS WITH
THE INTERESTS OF THE COMPANY OR ITS SUBSIDIARIES, (Y) INTERFERES WITH THE PROPER
AND EFFICIENT PERFORMANCE OF HIS DUTIES FOR THE COMPANY, OR (Z) INTERFERES WITH
THE EXERCISE OF HIS JUDGMENT IN THE COMPANY’S BEST INTERESTS.  NOTWITHSTANDING
THE FOREGOING, NOTHING HEREIN SHALL PRECLUDE EMPLOYEE FROM (I) SERVING, WITH THE
PRIOR WRITTEN CONSENT OF THE BOARD, AS A MEMBER OF THE BOARD OF DIRECTORS OR
ADVISORY BOARDS (OR THEIR EQUIVALENTS IN THE CASE OF A NON-CORPORATE ENTITY) OF
NON-COMPETING BUSINESSES AND CHARITABLE ORGANIZATIONS, (II) ENGAGING IN
CHARITABLE ACTIVITIES AND COMMUNITY AFFAIRS, AND (III) SUBJECT TO THE TERMS AND
CONDITIONS SET FORTH IN SECTION 10 HEREOF, MANAGING HIS PERSONAL INVESTMENTS AND
AFFAIRS; PROVIDED, HOWEVER, THAT THE ACTIVITIES SET OUT IN CLAUSES (I), (II) AND
(III) SHALL BE LIMITED BY EMPLOYEE SO AS NOT TO MATERIALLY INTERFERE,
INDIVIDUALLY OR IN THE AGGREGATE, WITH THE PERFORMANCE OF HIS DUTIES AND
RESPONSIBILITIES HEREUNDER.

 

SECTION 4.               COMPENSATION.  EMPLOYEE SHALL BE ENTITLED TO THE
FOLLOWING COMPENSATION:

 

(A)           BASE SALARY.  EMPLOYEE SHALL BE PAID AN ANNUALIZED BASE SALARY,
PAYABLE IN ACCORDANCE WITH THE REGULAR PAYROLL PRACTICES OF THE COMPANY, OF NOT
LESS THAN $477,000.  SUCH BASE SALARY SHALL BE REVIEWED ANNUALLY, AND SHALL BE
SUBJECT TO SUCH ANNUAL INCREASES, IF ANY, AS SHALL BE DETERMINED BY THE BOARD.

 

(B)           ANNUAL BONUS.  EMPLOYEE WILL BE ELIGIBLE TO PARTICIPATE IN THE
COMPANY’S CORPORATE BONUS PLAN, PURSUANT TO WHICH EMPLOYEE WILL BE ELIGIBLE FOR
AN ANNUAL BONUS AWARD TO BE DETERMINED IN ACCORDANCE WITH THE TERMS OF THE PLAN
(THE “ANNUAL BONUS”).  THE TARGET ANNUAL BONUS FOR EACH FISCAL YEAR SHALL BE NOT
LESS THAN 50% OF BASE SALARY (THE “TARGET BONUS”).  FOR 2007, EMPLOYEE’S TARGET
BONUS SHALL EQUAL 50% OF EMPLOYEE’S ACTUAL BASE SALARY EARNED IN 2007, WEIGHTED
100% TO THE ACHIEVEMENT OF THE COMPANY’S CORPORATE OBJECTIVES.  A COPY OF THE
CORPORATE BONUS PLAN HAS BEEN PROVIDED TO EMPLOYEE.

 

(C)           RELOCATION.  SUBJECT TO THE SUBMISSION OF PROPERLY DOCUMENTED
RECEIPTS AND THE TERMS OF COMPANY’S RELOCATION PROGRAM, TO THE EXTENT NOT
PREVIOUSLY REIMBURSED PRIOR TO THE DATE HEREOF, THE COMPANY SHALL REIMBURSE
EMPLOYEE FOR:  (I) CUSTOMARY CLOSING COSTS INCURRED BY EMPLOYEE IN CONNECTION
WITH THE SALE OF HIS RESIDENCE IN WISCONSIN (INCLUDING BROKERAGE COMMISSIONS)
AND HIS PURCHASE OF A NEW RESIDENCE IN COLORADO, IN EACH CASE INCLUDING
REASONABLE ATTORNEYS’ FEES, (II) CUSTOMARY AND REASONABLE COSTS OF MOVING
EMPLOYEE AND HIS

 

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FAMILY, INCLUDING THEIR PERSONAL EFFECTS, TO THEIR NEW RESIDENCE IN COLORADO,
AND (III) CUSTOMARY AND REASONABLE COMMUTING AND TEMPORARY LIVING EXPENSES FOR
EMPLOYEE AND HIS FAMILY DURING THE PERIOD BEGINNING ON THE COMMENCEMENT DATE AND
ENDING ON JUNE 30, 2007.  ALSO, TO THE EXTENT THAT ANY PAYMENTS OR
REIMBURSEMENTS DESCRIBED IN CLAUSES (I), (II) OR (III) OF THIS
SECTION 4(C) CAUSE EMPLOYEE TO INCUR ADDITIONAL TAXES (“ADDITIONAL TAXES”), UPON
SUBSTANTIATION OF THE AMOUNT OF SUCH ADDITIONAL TAXES, THE COMPANY SHALL PAY
EMPLOYEE AN ADDITIONAL “GROSS-UP” PAYMENT IN AN AMOUNT SUCH THAT, AFTER
REDUCTION BY ALL TAXES IMPOSED ON SUCH GROSS-UP PAYMENT, EMPLOYEE RETAINS AN
AMOUNT EQUAL TO THE ADDITIONAL TAXES.

 

SECTION 5.               EMPLOYEE BENEFITS.

 

During Employee’s employment with the Company, Employee shall be entitled to
participate in health, insurance, retirement and other perquisites and benefits
generally provided to other senior executives of the Company that are made
available from time to time.  Employee shall also be entitled to the same number
of holidays and sick days as are generally allowed to senior executives of the
Company and to the maximum amount of vacation allowed to executive officers of
the Company, in accordance with Company policies in effect from time to time. 
Employee shall also be eligible to receive disability insurance at the expense
of the Company.

 

SECTION 6.               “KEY-MAN” INSURANCE.

 

At any time during Employee’s employment with the Company, the Company shall
have the right to insure the life of Employee for the sole benefit of the
Company, in such amounts, and with such terms, as it may determine.  All
premiums payable thereon shall be the obligation of the Company.  Employee shall
have no interest in any such policy, but agrees to reasonably cooperate with the
Company in taking out such insurance by submitting to reasonable physical
examinations, supplying all information reasonably required by the insurance
company, and executing all necessary documents, provided that no financial
obligation or liability is imposed on Employee by any such documents.

 

SECTION 7.               REIMBURSEMENT OF BUSINESS EXPENSES.

 

EMPLOYEE IS AUTHORIZED TO INCUR REASONABLE BUSINESS EXPENSES IN CARRYING OUT HIS
DUTIES AND RESPONSIBILITIES UNDER THIS AGREEMENT AND THE COMPANY SHALL PROMPTLY
REIMBURSE HIM FOR ALL SUCH REASONABLE BUSINESS EXPENSES INCURRED IN CONNECTION
WITH CARRYING OUT THE BUSINESS OF THE COMPANY, SUBJECT TO DOCUMENTATION IN
ACCORDANCE WITH THE COMPANY’S POLICY, AS IN EFFECT FROM TIME TO TIME.

 

SECTION 8.               TERMINATION OF EMPLOYMENT.

 

(A)           GENERAL.  EMPLOYEE’S EMPLOYMENT WITH THE COMPANY SHALL TERMINATE
UPON THE EARLIEST TO OCCUR OF (I) EMPLOYEE’S DEATH, (II) A TERMINATION BY REASON
OF A DISABILITY, (III) A TERMINATION BY THE COMPANY WITH OR WITHOUT CAUSE, OR
(IV) A TERMINATION BY EMPLOYEE WITH OR WITHOUT GOOD REASON.  UPON ANY
TERMINATION OF EMPLOYEE’S EMPLOYMENT FOR ANY REASON, EXCEPT AS MAY OTHERWISE BE
REQUESTED BY THE COMPANY IN WRITING AND AGREED UPON IN WRITING BY EMPLOYEE,
EMPLOYEE SHALL RESIGN FROM ANY AND ALL DIRECTORSHIPS, COMMITTEE MEMBERSHIPS OR
ANY OTHER POSITIONS EMPLOYEE HOLDS WITH THE COMPANY OR ANY OF ITS SUBSIDIARIES
OR AFFILIATES.

 

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(B)           TERMINATION DUE TO DEATH OR DISABILITY.  EMPLOYEE’S EMPLOYMENT
SHALL TERMINATE AUTOMATICALLY UPON HIS DEATH.  THE COMPANY MAY TERMINATE
EMPLOYEE’S EMPLOYMENT IMMEDIATELY UPON THE OCCURRENCE OF A DISABILITY, SUCH
TERMINATION TO BE EFFECTIVE UPON EMPLOYEE’S RECEIPT OF WRITTEN NOTICE OF SUCH
TERMINATION.  IN THE EVENT EMPLOYEE’S EMPLOYMENT IS TERMINATED DUE TO HIS DEATH
OR DISABILITY, EMPLOYEE OR HIS ESTATE OR HIS BENEFICIARIES, AS THE CASE MAY BE,
SHALL BE ENTITLED TO THE ACCRUED OBLIGATIONS, WHICH SHALL BE PAID WITHIN THIRTY
(30) DAYS AFTER THE DATE OF SUCH TERMINATION.  EXCEPT AS SET FORTH IN THIS
SECTION 8(B), FOLLOWING EMPLOYEE’S TERMINATION BY REASON OF HIS DEATH OR
DISABILITY, EMPLOYEE SHALL HAVE NO FURTHER RIGHTS TO ANY COMPENSATION OR ANY
OTHER BENEFITS UNDER THIS AGREEMENT; PROVIDED, THAT EMPLOYEE’S THEN OUTSTANDING
STOCK OPTIONS AND RESTRICTED STOCK SHALL REMAIN SUBJECT TO THE TERMS AND
CONDITIONS OF THE PLAN AND THE APPLICABLE STOCK OPTION AGREEMENT OR RESTRICTED
STOCK AGREEMENT.

 

(C)           TERMINATION BY THE COMPANY FOR CAUSE.  IN THE EVENT THE COMPANY
TERMINATES EMPLOYEE’S EMPLOYMENT FOR CAUSE, HE SHALL BE ENTITLED ONLY TO THE
ACCRUED OBLIGATIONS, WHICH SHALL BE PAID WITHIN THIRTY (30) DAYS AFTER THE DATE
OF SUCH TERMINATION.  FOLLOWING SUCH TERMINATION OF EMPLOYEE’S EMPLOYMENT FOR
CAUSE, EXCEPT AS SET FORTH IN THIS SECTION 8(C), EMPLOYEE SHALL HAVE NO FURTHER
RIGHTS TO ANY COMPENSATION OR ANY OTHER BENEFITS UNDER THIS AGREEMENT; PROVIDED,
THAT EMPLOYEE’S THEN OUTSTANDING STOCK OPTIONS AND RESTRICTED STOCK SHALL REMAIN
SUBJECT TO THE TERMS AND CONDITIONS OF THE PLAN AND THE APPLICABLE STOCK OPTION
AGREEMENT OR RESTRICTED STOCK AGREEMENT.

 

(D)           TERMINATION BY THE COMPANY WITHOUT CAUSE.  THE COMPANY MAY
TERMINATE EMPLOYEE’S EMPLOYMENT AT ANY TIME WITHOUT CAUSE, EFFECTIVE UPON
EMPLOYEE’S RECEIPT OF WRITTEN NOTICE OF SUCH TERMINATION.  IN THE EVENT
EMPLOYEE’S EMPLOYMENT IS TERMINATED BY THE COMPANY WITHOUT CAUSE (OTHER THAN DUE
TO DEATH OR DISABILITY), EMPLOYEE SHALL BE ENTITLED TO:

 

(I)              THE ACCRUED OBLIGATIONS, WHICH SHALL BE PAID WITHIN THIRTY (30)
DAYS AFTER THE DATE OF EMPLOYEE’S TERMINATION OF EMPLOYMENT;

 

(II)             EMPLOYEE’S TARGET BONUS FOR THE YEAR IN WHICH EMPLOYEE’S
EMPLOYMENT TERMINATES, PRORATED THROUGH THE DATE ON WHICH EMPLOYEE’S EMPLOYMENT
TERMINATES;

 

(III)            AN AMOUNT EQUAL TO 1.5 TIMES EMPLOYEE’S ANNUAL BASE SALARY THEN
IN EFFECT, WHICH, SUBJECT TO SECTION 16, SHALL BE PAYABLE IN MONTHLY
INSTALLMENTS OVER THE 18-MONTH PERIOD FOLLOWING THE DATE OF EMPLOYEE’S
TERMINATION OF EMPLOYMENT;

 

(IV)            AN AMOUNT EQUAL TO 1.5 TIMES EMPLOYEE’S ANNUAL BONUS, INCLUDING
ANY PORTION OF SUCH BONUS DEFERRED, FOR THE YEAR PRECEDING THE YEAR IN WHICH THE
TERMINATION OF EMPLOYEE’S EMPLOYMENT OCCURS, WHICH SHALL BE PAYABLE IN A LUMP
SUM WITHIN THIRTY (30) DAYS AFTER THE DATE OF EMPLOYEE’S TERMINATION OF
EMPLOYMENT (OR SUCH LATER TIME AS SHALL BE REQUIRED UNDER SECTION 16);

 

(V)             ALL THEN OUTSTANDING STOCK OPTIONS AND RESTRICTED STOCK SHALL BE
TREATED IN ACCORDANCE WITH THE TERMS OF THE PLAN AND THE APPLICABLE STOCK OPTION
AGREEMENT OR RESTRICTED STOCK AGREEMENT;

 

8

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(VI)            THE COMPANY SHALL PAY THE PREMIUMS FOR EMPLOYEE AND HIS
DEPENDENTS OF EMPLOYEE’S GROUP HEALTH INSURANCE COBRA CONTINUATION COVERAGE FOR
TWELVE MONTHS FOLLOWING THE DATE OF EMPLOYEE’S TERMINATION OF EMPLOYMENT, OR, IF
EARLIER, UNTIL THE DATE ON WHICH EMPLOYEE BECOMES ELIGIBLE TO RECEIVE COMPARABLE
BENEFITS FROM ANOTHER EMPLOYER; AND

 

(VII)           FOR A PERIOD OF TWELVE MONTHS COMMENCING ON THE DATE OF
TERMINATION OF EMPLOYEE’S EMPLOYMENT, EMPLOYEE SHALL RECEIVE OUTPLACEMENT
ASSISTANCE SERVICES FROM AN OUTPLACEMENT AGENCY SELECTED BY EMPLOYEE AND THE
COMPANY SHALL PAY ALL COSTS OF SUCH SERVICES; PROVIDED THAT SUCH COSTS SHALL NOT
EXCEED $15,000 IN THE AGGREGATE.

 

Notwithstanding the foregoing, the payments and benefits described in
subsections (ii) through (vii) above shall immediately cease, and the Company
shall have no further obligations to Employee with respect thereto, in the event
that Employee breaches any provision of Section 10 or the Proprietary
Information Agreement.

 

Following such termination of Employee’s employment by the Company without
Cause, except as set forth in this Section 8(d), Employee shall have no further
rights to any compensation or any other benefits under this Agreement.

 

(E)           TERMINATION BY EMPLOYEE WITH GOOD REASON.  EMPLOYEE MAY TERMINATE
HIS EMPLOYMENT WITH GOOD REASON BY PROVIDING THE COMPANY THIRTY (30) DAYS’
WRITTEN NOTICE SETTING FORTH WITH REASONABLE SPECIFICITY THE EVENT THAT
CONSTITUTES GOOD REASON, WHICH WRITTEN NOTICE, TO BE EFFECTIVE, MUST BE PROVIDED
TO THE COMPANY WITHIN SIXTY (60) DAYS AFTER THE DATE ON WHICH EMPLOYEE FIRST
BECOMES AWARE OF THE OCCURRENCE OF SUCH EVENT.  DURING SUCH THIRTY (30) DAY
NOTICE PERIOD, THE COMPANY SHALL HAVE A CURE RIGHT (IF CURABLE), AND IF NOT
CURED WITHIN SUCH PERIOD, EMPLOYEE’S TERMINATION WILL BE EFFECTIVE UPON THE DATE
IMMEDIATELY FOLLOWING THE EXPIRATION OF THE THIRTY (30) DAY NOTICE PERIOD, AND
EMPLOYEE SHALL BE ENTITLED TO THE SAME PAYMENTS AND BENEFITS AS PROVIDED IN
SECTION 8(D) ABOVE FOR A TERMINATION WITHOUT CAUSE, IT BEING AGREED THAT
EMPLOYEE’S RIGHT TO ANY SUCH PAYMENTS AND BENEFITS SHALL BE SUBJECT TO THE SAME
TERMS AND CONDITIONS AS DESCRIBED IN SECTION 8(D) ABOVE.  FOLLOWING SUCH
TERMINATION OF EMPLOYEE’S EMPLOYMENT BY EMPLOYEE WITH GOOD REASON, EXCEPT AS SET
FORTH IN THIS SECTION 8(E), EMPLOYEE SHALL HAVE NO FURTHER RIGHTS TO ANY
COMPENSATION OR ANY OTHER BENEFITS UNDER THIS AGREEMENT.

 

(F)            TERMINATION BY EMPLOYEE WITHOUT GOOD REASON.  EMPLOYEE MAY
TERMINATE HIS EMPLOYMENT WITHOUT GOOD REASON BY PROVIDING THE COMPANY THIRTY
(30) DAYS’ WRITTEN NOTICE OF SUCH TERMINATION.  IN THE EVENT OF A TERMINATION OF
EMPLOYMENT BY EMPLOYEE UNDER THIS SECTION 8(F), EMPLOYEE SHALL BE ENTITLED ONLY
TO THE ACCRUED OBLIGATIONS; PROVIDED, THAT EMPLOYEE’S THEN OUTSTANDING STOCK
OPTIONS AND RESTRICTED STOCK SHALL REMAIN SUBJECT TO THE TERMS AND CONDITIONS OF
THE PLAN AND THE APPLICABLE STOCK OPTION AGREEMENT OR RESTRICTED STOCK
AGREEMENT.  IN THE EVENT OF TERMINATION OF EMPLOYEE’S EMPLOYMENT UNDER THIS
SECTION 8(F), THE COMPANY MAY, IN ITS SOLE AND ABSOLUTE DISCRETION, BY WRITTEN
NOTICE ACCELERATE SUCH DATE OF TERMINATION AND STILL HAVE IT TREATED AS A
TERMINATION WITHOUT GOOD REASON.  FOLLOWING SUCH TERMINATION OF EMPLOYEE’S
EMPLOYMENT BY EMPLOYEE WITHOUT GOOD REASON, EXCEPT AS SET FORTH

 

9

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IN THIS SECTION 8(F), EMPLOYEE SHALL HAVE NO FURTHER RIGHTS TO ANY COMPENSATION
OR ANY OTHER BENEFITS UNDER THIS AGREEMENT.

 

(G)           CHANGE IN CONTROL.  NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IF THE COMPANY TERMINATES EMPLOYEE’S EMPLOYMENT WITHOUT CAUSE OR
EMPLOYEE RESIGNS FOR GOOD REASON WITHIN ONE (1) MONTH PRIOR TO OR TWO (2) YEARS
FOLLOWING A CHANGE IN CONTROL, IN LIEU OF ANY PAYMENTS THAT EMPLOYEE WOULD HAVE
BEEN ENTITLED TO RECEIVE PURSUANT TO SECTION 8(D) OR SECTION 8(E) HEREIN,
EMPLOYEE SHALL BE ENTITLED TO RECEIVE:

 

(I)            THE ACCRUED OBLIGATIONS, WHICH SHALL BE PAID WITHIN THIRTY (30)
DAYS AFTER THE DATE OF EMPLOYEE’S TERMINATION OF EMPLOYMENT;

 

(II)             EMPLOYEE’S TARGET BONUS FOR THE YEAR IN WHICH EMPLOYEE’S
EMPLOYMENT TERMINATES, PRORATED THROUGH THE DATE ON WHICH EMPLOYEE’S EMPLOYMENT
TERMINATES;

 

(III)            A LUMP-SUM CASH PAYMENT IN AN AMOUNT EQUAL TO (A) TWO (2) TIMES
EMPLOYEE’S HIGHEST ANNUAL BASE SALARY IN EFFECT DURING THE 12-MONTH PERIOD PRIOR
TO THE DATE OF TERMINATION, PLUS (B) TWO (2) TIMES EMPLOYEE’S HIGHEST ANNUALIZED
(FOR ANY FISCAL YEAR CONSISTING OF LESS THAN 12 FULL MONTHS OR WITH RESPECT TO
WHICH EMPLOYEE HAS BEEN EMPLOYED BY THE COMPANY FOR LESS THAN 12 FULL MONTHS)
ANNUAL BONUS, PAID OR PAYABLE, INCLUDING BY REASON OF ANY DEFERRAL, TO EMPLOYEE
IN RESPECT OF THE FIVE FISCAL YEARS OF THE COMPANY (OR SUCH PORTION THEREOF
DURING WHICH EMPLOYEE PERFORMED SERVICES FOR THE COMPANY IF EMPLOYEE SHALL HAVE
BEEN EMPLOYED BY THE COMPANY FOR LESS THAN SUCH FIVE FISCAL YEAR PERIOD)
IMMEDIATELY PRECEDING THE FISCAL YEAR IN WHICH THE CHANGE IN CONTROL OCCURS;

 

(IV)          IMMEDIATE VESTING OF ALL OUTSTANDING STOCK OPTIONS AND RESTRICTED
STOCK, AND THE EXTENSION OF THE OPTION EXERCISE PERIOD FOR TWENTY-FOUR (24)
MONTHS;

 

(V)           FOR A PERIOD OF EIGHTEEN (18) MONTHS, COMMENCING ON THE DATE OF
EMPLOYEE’S TERMINATION OF EMPLOYMENT, THE COMPANY SHALL CONTINUE TO KEEP IN FULL
FORCE AND EFFECT ALL POLICIES OF MEDICAL, ACCIDENT, DISABILITY AND LIFE
INSURANCE WITH RESPECT TO EMPLOYEE AND HIS DEPENDENTS WITH THE SAME LEVEL OF
COVERAGE, UPON THE SAME TERMS AND OTHERWISE TO THE SAME EXTENT AS SUCH POLICIES
SHALL HAVE BEEN IN EFFECT IMMEDIATELY PRIOR TO THE DATE OF SUCH TERMINATION AND
THE COMPANY SHALL PAY ALL COSTS OF THE CONTINUATION OF SUCH INSURANCE COVERAGE;
AND

 

(VI)            FOR A PERIOD OF TWELVE MONTHS COMMENCING ON THE DATE OF
TERMINATION OF EMPLOYEE’S EMPLOYMENT, EMPLOYEE SHALL RECEIVE OUTPLACEMENT
ASSISTANCE SERVICES FROM AN OUTPLACEMENT AGENCY SELECTED BY EMPLOYEE AND THE
COMPANY SHALL PAY ALL COSTS OF SUCH SERVICES; PROVIDED THAT SUCH COSTS SHALL NOT
EXCEED $15,000 IN THE AGGREGATE.

 

Following such termination of Employee’s employment by the Company without Cause
or by Employee for Good Reason within one (1) month prior to or two years
following a Change in Control, except as set forth in this Section 8(g),
Employee shall have no further rights to any compensation or any other benefits
under this Agreement.

 

10

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(H)           RELEASE.  NOTWITHSTANDING ANY PROVISION HEREIN TO THE CONTRARY,
THE COMPANY MAY REQUIRE THAT, PRIOR TO PAYMENT OF ANY AMOUNT OR PROVISION OF ANY
BENEFIT PURSUANT TO SUBSECTIONS (D), (E) OR (G) OF THIS SECTION 8 (OTHER THAN
THE ACCRUED OBLIGATIONS), EMPLOYEE SHALL HAVE EXECUTED A GENERAL RELEASE IN
FAVOR OF THE COMPANY AND ITS SUBSIDIARIES AND RELATED PARTIES IN THE FORM
ATTACHED HERETO AS EXHIBIT B, AND ANY WAITING PERIODS CONTAINED IN SUCH RELEASE
SHALL HAVE EXPIRED.

 

SECTION 9.               CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

 

(A)           ANYTHING IN THIS AGREEMENT TO THE CONTRARY NOTWITHSTANDING, IN THE
EVENT IT SHALL BE DETERMINED THAT ANY PAYMENT OR DISTRIBUTION BY THE COMPANY TO
OR FOR THE BENEFIT OF EMPLOYEE (WHETHER PAID OR PAYABLE OR DISTRIBUTED OR
DISTRIBUTABLE PURSUANT TO THE TERMS OF THIS AGREEMENT OR OTHERWISE, BUT
DETERMINED WITHOUT REGARD TO ANY ADDITIONAL PAYMENTS REQUIRED UNDER THIS
SECTION 9) (A “PAYMENT”) WOULD BE SUBJECT TO THE EXCISE TAX IMPOSED BY
SECTION 4999 OF THE CODE, OR ANY 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 EMPLOYEE SHALL BE ENTITLED TO RECEIVE AN ADDITIONAL PAYMENT (A
“GROSS-UP PAYMENT”) IN AN AMOUNT SUCH THAT AFTER PAYMENT BY EMPLOYEE OF ALL
TAXES (INCLUDING 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,
EMPLOYEE RETAINS AN AMOUNT OF THE GROSS-UP PAYMENT EQUAL TO THE EXCISE TAX
IMPOSED UPON THE PAYMENTS.  NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS
SECTION 9(A), IF IT SHALL BE DETERMINED THAT EMPLOYEE IS ENTITLED TO A GROSS-UP
PAYMENT, BUT THAT EMPLOYEE, AFTER TAKING INTO ACCOUNT THE PAYMENTS AND THE
GROSS-UP PAYMENT, WOULD NOT RECEIVE A NET AFTER-TAX BENEFIT (TAKING INTO ACCOUNT
BOTH INCOME TAXES AND ANY EXCISE TAX) WHICH IS AT LEAST TEN PERCENT (10%)
GREATER THAN THE NET AFTER-TAX PROCEEDS TO EMPLOYEE RESULTING FROM AN
ELIMINATION OF THE GROSS-UP PAYMENT AND A REDUCTION OF THE PAYMENTS, IN THE
AGGREGATE, TO AN AMOUNT (THE “REDUCED AMOUNT”) THAT IS ONE DOLLAR LESS THAN THE
SMALLEST AMOUNT THAT WOULD GIVE RISE TO ANY EXCISE TAX, THEN NO GROSS-UP PAYMENT
SHALL BE MADE TO EMPLOYEE AND THE PAYMENTS, IN THE AGGREGATE, SHALL BE REDUCED
TO THE REDUCED AMOUNT.

 

(B)           SUBJECT TO THE PROVISIONS OF SECTION 9(C), ALL DETERMINATIONS
REQUIRED TO BE MADE UNDER THIS SECTION 9, INCLUDING WHETHER AND WHEN A GROSS-UP
PAYMENT IS REQUIRED AND THE AMOUNT OF SUCH GROSS-UP PAYMENT AND THE ASSUMPTIONS
TO BE UTILIZED IN ARRIVING AT SUCH DETERMINATION, SHALL BE MADE BY THE COMPANY’S
PUBLIC ACCOUNTING FIRM (THE “ACCOUNTING FIRM”) WHICH SHALL PROVIDE DETAILED
SUPPORTING CALCULATIONS BOTH TO THE COMPANY AND EMPLOYEE WITHIN 15 BUSINESS DAYS
OF THE RECEIPT OF NOTICE FROM EMPLOYEE THAT THERE HAS BEEN A PAYMENT, OR SUCH
EARLIER TIME AS IS REQUESTED BY THE COMPANY.  IN THE EVENT THAT THE ACCOUNTING
FIRM IS SERVING AS ACCOUNTANT OR AUDITOR FOR THE INDIVIDUAL, ENTITY OR GROUP
EFFECTING THE CHANGE IN CONTROL, THE COMPANY AND EMPLOYEE SHALL JOINTLY 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.  ANY GROSS-UP PAYMENT, AS DETERMINED PURSUANT TO
THIS SECTION 9, SHALL BE PAID BY THE COMPANY TO EMPLOYEE WITHIN FIVE DAYS OF THE
RECEIPT OF THE ACCOUNTING FIRM’S DETERMINATION, BUT IN ALL EVENTS NO LATER THAN
THE END OF THE CALENDAR YEAR AFTER THE YEAR IN WHICH EMPLOYEE INCURS THE RELATED
EXCISE TAX.  IF THE ACCOUNTING FIRM DETERMINES THAT NO EXCISE TAX IS PAYABLE BY
EMPLOYEE, IT SHALL FURNISH EMPLOYEE WITH A WRITTEN OPINION THAT

 

11

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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 THE COMPANY 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 WHICH WILL NOT HAVE BEEN MADE
BY THE COMPANY SHOULD HAVE BEEN MADE (“UNDERPAYMENT”), CONSISTENT WITH THE
CALCULATIONS REQUIRED TO BE MADE HEREUNDER.  IN THE EVENT THAT THE COMPANY
EXHAUSTS ITS REMEDIES PURSUANT TO SECTION 9(C) 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 THE COMPANY TO OR FOR THE BENEFIT OF
EMPLOYEE.

 

(C)           EMPLOYEE SHALL NOTIFY THE COMPANY IN WRITING OF ANY CLAIM BY THE
INTERNAL REVENUE SERVICE THAT, IF SUCCESSFUL, WOULD REQUIRE THE PAYMENT BY THE
COMPANY OF THE GROSS-UP PAYMENT.  SUCH NOTIFICATION SHALL BE GIVEN AS SOON AS
PRACTICABLE BUT NO LATER THAN 10 BUSINESS DAYS AFTER EMPLOYEE IS INFORMED IN
WRITING OF SUCH CLAIM AND SHALL APPRISE THE COMPANY 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 30-DAY PERIOD FOLLOWING THE DATE
ON WHICH EMPLOYEE GIVES SUCH NOTICE TO THE COMPANY (OR SUCH SHORTER PERIOD
ENDING ON THE DATE THAT ANY PAYMENT OF TAXES WITH RESPECT TO SUCH CLAIM IS
DUE).  IF THE COMPANY NOTIFIES EMPLOYEE IN WRITING PRIOR TO THE EXPIRATION OF
SUCH PERIOD THAT IT DESIRES TO CONTEST SUCH CLAIM, EMPLOYEE SHALL:

 

(I)              GIVE THE COMPANY ANY INFORMATION REASONABLY REQUESTED BY THE
COMPANY RELATING TO SUCH CLAIM,

 

(II)             TAKE SUCH ACTION IN CONNECTION WITH CONTESTING SUCH CLAIM AS
THE COMPANY 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 THE COMPANY,

 

(III)            COOPERATE WITH THE COMPANY IN GOOD FAITH IN ORDER EFFECTIVELY
TO CONTEST SUCH CLAIM, AND

 

(IV)            PERMIT THE COMPANY TO PARTICIPATE IN ANY PROCEEDINGS RELATING TO
SUCH CLAIM;

 

provided, however, that the Company 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 representation and
payment of costs and expenses.  Without limitation on the foregoing provisions
of this Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo 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

 

12

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more appellate courts, as the Company shall determine; provided further, that if
the Company directs Employee to pay such claim and sue for a refund, the Company
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 provided further, 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, the Company’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.

 

(D)           IF, AFTER THE RECEIPT BY EMPLOYEE OF AN AMOUNT ADVANCED BY THE
COMPANY PURSUANT TO SECTION 9(C), EMPLOYEE BECOMES ENTITLED TO RECEIVE, AND
RECEIVES, ANY REFUND WITH RESPECT TO SUCH CLAIM, EMPLOYEE SHALL (SUBJECT TO THE
COMPANY’S COMPLYING WITH THE REQUIREMENTS OF SECTION 9(C)) PROMPTLY PAY TO THE
COMPANY THE AMOUNT OF SUCH REFUND (TOGETHER WITH ANY INTEREST PAID OR CREDITED
THEREON AFTER TAXES APPLICABLE THERETO).  IF, AFTER THE RECEIPT BY EMPLOYEE OF
AN AMOUNT ADVANCED BY THE COMPANY PURSUANT TO SECTION 9(C), A DETERMINATION IS
MADE THAT EMPLOYEE SHALL NOT BE ENTITLED TO ANY REFUND WITH RESPECT TO SUCH
CLAIM AND THE COMPANY DOES NOT NOTIFY EMPLOYEE IN WRITING OF ITS INTENT TO
CONTEST SUCH DENIAL OF REFUND PRIOR TO THE EXPIRATION OF 30 DAYS AFTER SUCH
DETERMINATION, THEN SUCH ADVANCE SHALL BE FORGIVEN AND SHALL NOT BE REQUIRED TO
BE REPAID AND THE AMOUNT OF SUCH ADVANCE SHALL OFFSET, TO THE EXTENT THEREOF,
THE AMOUNT OF GROSS-UP PAYMENT REQUIRED TO BE PAID.

 

(E)           IF THE EXCISE TAX IS ULTIMATELY DETERMINED BY THE INTERNAL REVENUE
SERVICE OR THE ACCOUNTING FIRM TO BE LESS THAN THE AMOUNT TAKEN INTO ACCOUNT IN
DETERMINING THE GROSS-UP PAYMENT PAID PURSUANT TO SECTION 9(A), EMPLOYEE SHALL
REPAY TO THE COMPANY, WITHIN THIRTY (30) DAYS AFTER THE TIME THAT THE AMOUNT OF
THE REDUCTION IN EXCISE TAX IS SO DETERMINED, THE PORTION OF THE GROSS-UP
PAYMENT ATTRIBUTABLE TO SUCH REDUCTION.

 

SECTION 10.             RESTRICTIVE COVENANTS.

 

                                EMPLOYEE ACKNOWLEDGES AND AGREES THAT (A) THE
AGREEMENTS AND COVENANTS CONTAINED IN THIS SECTION 10 ARE (I) REASONABLE AND
VALID IN GEOGRAPHICAL AND TEMPORAL SCOPE AND IN ALL OTHER RESPECTS, AND
(II) ESSENTIAL TO PROTECT THE VALUE OF THE COMPANY’S BUSINESS AND ASSETS, AND
(B) BY HIS EMPLOYMENT WITH THE COMPANY, EMPLOYEE WILL OBTAIN KNOWLEDGE,
CONTACTS, KNOW-HOW, TRAINING AND EXPERIENCE AND THERE IS A SUBSTANTIAL
PROBABILITY THAT SUCH KNOWLEDGE, KNOW-HOW, CONTACTS, TRAINING AND EXPERIENCE
COULD BE USED TO THE SUBSTANTIAL ADVANTAGE OF A COMPETITOR OF THE COMPANY AND TO
THE COMPANY’S SUBSTANTIAL DETRIMENT.  FOR PURPOSES OF THIS SECTION 10,
REFERENCES TO THE COMPANY SHALL BE DEEMED TO INCLUDE ITS SUBSIDIARIES.

 

(A)           CONFIDENTIAL INFORMATION.  AT ANY TIME DURING AND AFTER THE END OF
EMPLOYEE’S EMPLOYMENT WITH THE COMPANY, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
BOARD, EXCEPT TO THE EXTENT REQUIRED BY AN ORDER OF A COURT HAVING JURISDICTION
OR UNDER SUBPOENA FROM AN APPROPRIATE GOVERNMENT AGENCY, IN WHICH EVENT,
EMPLOYEE SHALL, TO THE EXTENT LEGALLY PERMITTED, CONSULT WITH THE BOARD PRIOR TO
RESPONDING TO ANY SUCH ORDER OR SUBPOENA, AND EXCEPT

 

13

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AS HE IN GOOD FAITH BELIEVES NECESSARY OR DESIRABLE IN THE PERFORMANCE OF HIS
DUTIES HEREUNDER, EMPLOYEE SHALL NOT DISCLOSE TO OR USE FOR THE BENEFIT OF ANY
THIRD PARTY ANY CONFIDENTIAL INFORMATION.

 

(B)           NON-COMPETITION.  EMPLOYEE COVENANTS AND AGREES THAT DURING THE
RESTRICTED PERIOD, EMPLOYEE SHALL NOT, DIRECTLY OR INDIRECTLY, INDIVIDUALLY OR
JOINTLY, OWN ANY INTEREST IN, OPERATE, JOIN, CONTROL OR PARTICIPATE AS A
PARTNER, DIRECTOR, PRINCIPAL, OFFICER, OR AGENT OF, ENTER INTO THE EMPLOYMENT
OF, ACT AS A CONSULTANT TO, OR PERFORM ANY SERVICES FOR ANY PERSON (OTHER THAN
THE COMPANY), THAT ENGAGES IN ANY COMPETITIVE ACTIVITIES WITHIN THE RESTRICTED
AREA.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THIS SECTION 10(B) SHALL
NOT PREVENT EMPLOYEE FROM ACQUIRING AS AN INVESTMENT SECURITIES REPRESENTING NOT
MORE THAN THREE PERCENT (3%) OF THE OUTSTANDING VOTING SECURITIES OF ANY
PUBLICLY-HELD CORPORATION OR FROM BEING A PASSIVE INVESTOR IN ANY MUTUAL FUND,
HEDGE FUND, PRIVATE EQUITY FUND OR SIMILAR POOLED ACCOUNT SO LONG AS EMPLOYEE’S
INTEREST THEREIN IS LESS THAN THREE PERCENT (3%) AND HE HAS NO ROLE IN SELECTING
OR MANAGING INVESTMENTS THEREOF.

 

(C)           NON-INTERFERENCE.  DURING THE RESTRICTED PERIOD, EMPLOYEE SHALL
NOT, DIRECTLY OR INDIRECTLY, FOR HIS OWN ACCOUNT OR FOR THE ACCOUNT OF ANY OTHER
PERSON, ENGAGE IN INTERFERING ACTIVITIES.

 

(D)           RETURN OF DOCUMENTS.  IN THE EVENT OF THE TERMINATION OF
EMPLOYEE’S EMPLOYMENT FOR ANY REASON, EMPLOYEE SHALL DELIVER TO THE COMPANY ALL
OF (I) THE PROPERTY OF THE COMPANY, AND (II) THE DOCUMENTS AND DATA OF ANY
NATURE AND IN WHATEVER MEDIUM OF THE COMPANY, AND HE SHALL NOT TAKE WITH HIM ANY
SUCH PROPERTY, DOCUMENTS OR DATA OR ANY REPRODUCTION THEREOF, OR ANY DOCUMENTS
CONTAINING OR PERTAINING TO ANY CONFIDENTIAL INFORMATION.

 

(E)           PROPRIETARY INFORMATION AGREEMENT.  EMPLOYEE HAS SIGNED AND AGREES
TO COMPLY WITH THE PROPRIETARY INFORMATION AGREEMENT.

 

(F)            BLUE PENCIL.  IF ANY COURT OF COMPETENT JURISDICTION SHALL AT ANY
TIME DEEM THE DURATION OR THE GEOGRAPHIC SCOPE OF ANY OF THE PROVISIONS OF THIS
SECTION 10 UNENFORCEABLE, THE OTHER PROVISIONS OF THIS SECTION 10 SHALL
NEVERTHELESS STAND AND THE DURATION AND/OR GEOGRAPHIC SCOPE SET FORTH HEREIN
SHALL BE DEEMED TO BE THE LONGEST PERIOD AND/OR GREATEST SIZE PERMISSIBLE BY LAW
UNDER THE CIRCUMSTANCES, AND THE PARTIES HERETO AGREE THAT SUCH COURT SHALL
REDUCE THE TIME PERIOD AND/OR GEOGRAPHIC SCOPE TO PERMISSIBLE DURATION OR SIZE.

 

(G)           TERMINATION OF NON-COMPETITION COVENANT.  SECTION 10(B) OF THIS
AGREEMENT SHALL TERMINATE UPON A CHANGE IN CONTROL.

 

SECTION 11.             BREACH OF RESTRICTIVE COVENANTS.

 

WITHOUT LIMITING THE REMEDIES AVAILABLE TO THE COMPANY, EMPLOYEE ACKNOWLEDGES
THAT A BREACH OF ANY OF THE COVENANTS CONTAINED IN SECTION 10 HEREOF MAY RESULT
IN MATERIAL IRREPARABLE INJURY TO THE COMPANY OR ITS SUBSIDIARIES FOR WHICH
THERE IS NO ADEQUATE REMEDY AT LAW, THAT IT WILL NOT BE POSSIBLE TO MEASURE
DAMAGES FOR SUCH INJURIES PRECISELY AND THAT, IN THE EVENT OF SUCH A BREACH OR
THREAT THEREOF, THE COMPANY (OR ANY SUBSIDIARY THEREOF, AS APPLICABLE) SHALL BE
ENTITLED TO OBTAIN A TEMPORARY RESTRAINING ORDER AND/OR A PRELIMINARY OR
PERMANENT INJUNCTION, WITHOUT THE NECESSITY OF PROVING IRREPARABLE HARM OR
INJURY AS A RESULT OF SUCH BREACH

 

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OR THREATENED BREACH OF SECTION 10 HEREOF, RESTRAINING EMPLOYEE FROM ENGAGING IN
ACTIVITIES PROHIBITED BY SECTION 10 HEREOF OR SUCH OTHER RELIEF AS MAY BE
REQUIRED SPECIFICALLY TO ENFORCE ANY OF THE COVENANTS IN SECTION 10 HEREOF. 
NOTWITHSTANDING ANY OTHER PROVISION TO THE CONTRARY, THE RESTRICTED PERIOD SHALL
BE TOLLED DURING ANY PERIOD OF VIOLATION OF ANY OF THE COVENANTS IN
SECTION 10(B) OR 10(C) HEREOF AND DURING ANY OTHER PERIOD REQUIRED FOR
LITIGATION DURING WHICH THE COMPANY SEEKS TO ENFORCE SUCH COVENANTS AGAINST
EMPLOYEE OR ANOTHER PERSON WITH WHOM EMPLOYEE IS AFFILIATED IF IT IS ULTIMATELY
DETERMINED THAT EMPLOYEE WAS IN BREACH OF SUCH COVENANTS.

 

SECTION 12.             REPRESENTATIONS AND WARRANTIES OF EMPLOYEE.

 

Employee represents and warrants to the Company that:

 

(A)           EMPLOYEE’S EMPLOYMENT WILL NOT CONFLICT WITH OR RESULT IN HIS
BREACH OF ANY AGREEMENT TO WHICH HE IS A PARTY OR OTHERWISE MAY BE BOUND;

 

(B)           EMPLOYEE HAS NOT VIOLATED, AND IN CONNECTION WITH HIS EMPLOYMENT
WITH THE COMPANY WILL NOT VIOLATE, ANY NON-SOLICITATION, NON-COMPETITION OR
OTHER SIMILAR COVENANT OR AGREEMENT OF A PRIOR EMPLOYER BY WHICH HE IS OR MAY BE
BOUND; AND

 

(C)           IN CONNECTION WITH EMPLOYEE’S EMPLOYMENT WITH THE COMPANY, HE WILL
NOT USE ANY CONFIDENTIAL OR PROPRIETARY INFORMATION THAT HE MAY HAVE OBTAINED IN
CONNECTION WITH EMPLOYMENT WITH ANY PRIOR EMPLOYER.

 

SECTION 13.             TAXES.

 

The Company may withhold from any payments made under this Agreement all
applicable taxes, including but not limited to income, employment and social
insurance taxes, as shall be required by law.  Employee acknowledges and
represents that the Company has not provided any tax advice to him in connection
with this Agreement and that he has been advised by the Company to seek tax
advice from his own tax advisors regarding this Agreement and payments that may
be made to him pursuant to this Agreement, including specifically, the
application of the provisions of Section 409A of the Code to such payments.

 

SECTION 14.             INDEMNIFICATION.

 

The Company covenants and agrees that, to the fullest extent permitted by
Delaware law, or the Company’s Certificate of Incorporation or By-laws, it will
indemnify and hold Employee harmless from any and all liability, loss, damage,
cost and expense (including reasonable attorneys’ fees) which Employee may
incur, suffer or be required to pay.

 

SECTION 15.             MITIGATION; SET OFF.

 

The Company’s obligation to pay Employee the amounts provided and to make the
arrangements provided hereunder shall not be subject to set-off, counterclaim or
recoupment of amounts owed by Employee to the Company or its Affiliates. 
Employee shall not be required to mitigate the amount of any payment provided
for pursuant to this Agreement by seeking other employment or otherwise and the
amount of any payment provided for pursuant to this

 

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Agreement shall not be reduced by any compensation earned as a result of
Employee’s other employment or otherwise.

 

SECTION 16.             CODE SECTION 409A COMPLIANCE.

 

To the extent any payments or benefits made as a result of the termination of
Employee’s employment (a) are paid from the date of termination of Employee’s
employment through March 15 of the calendar year following such termination,
such severance benefits are intended to constitute separate payments for
purposes of Section 1.409A-2(b)(2) of the Treasury Regulations and thus payable
pursuant to the “short-term deferral” rule set forth in
Section 1.409A-1(b)(4) of the Treasury Regulations; (b) are paid following said
March 15, such Severance Benefits are intended to constitute separate payments
for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations made upon an
involuntary separation from service and payable pursuant to
Section 1.409A-1(b)(9)(iii) of the Treasury Regulations, to the maximum extent
permitted by said provision, (c) represent the reimbursement or payment of costs
for outplacement services, such payments are intended to constitute separate
payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations and
to qualify for the exception from deferred compensation pursuant to
Section 1.409A-1(b)(9)(v)(A); and (d) are in excess of the amounts specified in
clauses (a), (b) and (c) of this paragraph, shall (unless otherwise exempt under
Treasury Regulations) be considered separate payments subject to the
distribution requirements of Section 409A(a)(2)(A) of the Code, including,
without limitation, the requirement of Section 409A(a)(2)(B)(i) of the Code that
payments or benefits be delayed until 6 months after Employee’s separation from
service if Employee is a “specified employee” within the meaning of the
aforesaid section of the Code at the time of such separation from service. In
the event that a six month delay of any such separation payments or benefits is
required, on the first regularly scheduled pay date following the conclusion of
the delay period Employee shall receive a lump sum payment or benefit in an
amount equal to the separation payments and benefits that were so delayed, and
any remaining separation payments or benefits shall be paid on the same basis
and at the same time as otherwise specified pursuant to this Agreement (subject
to applicable tax withholdings and deductions).

 

SECTION 17.             SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES.

 

(A)           THE COMPANY. THIS AGREEMENT SHALL INURE TO THE BENEFIT OF AND BE
ENFORCEABLE BY, AND MAY BE ASSIGNED BY THE COMPANY TO, ANY PURCHASER OF ALL OR
SUBSTANTIALLY ALL OF THE COMPANY’S BUSINESS OR ASSETS OR ANY SUCCESSOR TO THE
COMPANY (WHETHER DIRECT OR INDIRECT, BY PURCHASE, MERGER, CONSOLIDATION OR
OTHERWISE).  THE COMPANY WILL REQUIRE IN A WRITING DELIVERED TO EMPLOYEE ANY
SUCH PURCHASER, SUCCESSOR OR ASSIGNEE TO EXPRESSLY ASSUME AND AGREE TO PERFORM
THIS AGREEMENT IN THE SAME MANNER AND TO THE SAME EXTENT THAT THE COMPANY WOULD
BE REQUIRED TO PERFORM IT IF NO SUCH PURCHASE, SUCCESSION OR ASSIGNMENT HAD
TAKEN PLACE.  THE COMPANY MAY MAKE NO OTHER ASSIGNMENT OF THIS AGREEMENT OR ITS
OBLIGATIONS HEREUNDER.

 

(B)           EMPLOYEE.  EMPLOYEE’S RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT
SHALL NOT BE TRANSFERABLE BY EMPLOYEE BY ASSIGNMENT OR OTHERWISE, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMPANY; PROVIDED, HOWEVER, THAT IF EMPLOYEE SHALL
DIE, ALL AMOUNTS THEN PAYABLE TO EMPLOYEE HEREUNDER SHALL BE PAID IN ACCORDANCE
WITH THE TERMS OF THIS AGREEMENT TO EMPLOYEE’S DEVISEE, LEGATEE OR OTHER
DESIGNEE OR, IF THERE BE NO SUCH DESIGNEE, TO EMPLOYEE’S ESTATE.

 

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(C)           NO THIRD-PARTY BENEFICIARIES.  EXCEPT AS OTHERWISE SET FORTH IN
SECTION 8(B) OR SECTION 17(B) HEREOF, NOTHING EXPRESSED OR REFERRED TO IN THIS
AGREEMENT WILL BE CONSTRUED TO GIVE ANY PERSON OTHER THAN THE COMPANY AND
EMPLOYEE ANY LEGAL OR EQUITABLE RIGHT, REMEDY OR CLAIM UNDER OR WITH RESPECT TO
THIS AGREEMENT OR ANY PROVISION OF THIS AGREEMENT.

 

SECTION 18.             WAIVER AND AMENDMENTS.

 

Any waiver, alteration, amendment or modification of any of the terms of this
Agreement shall be valid only if made in writing and signed by each of the
parties hereto; provided, however, that any such waiver, alteration, amendment
or modification is consented to on the Company’s behalf by the Board.  No waiver
by either of the parties hereto of their rights hereunder shall be deemed to
constitute a waiver with respect to any subsequent occurrences or transactions
hereunder unless such waiver specifically states that it is to be construed as a
continuing waiver.

 

SECTION 19.             SEVERABILITY.

 

If any covenants or other provisions of this Agreement are found to be invalid
or unenforceable by a final determination of a court of competent jurisdiction:
(a) the remaining terms and provisions hereof shall be unimpaired, and (b) the
invalid or unenforceable term or provision hereof shall be deemed replaced by a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision
hereof.

 

SECTION 20.             GOVERNING LAW, PERSONAL JURISDICTION AND VENUE

 

THIS AGREEMENT AND ALL DISPUTES RELATING TO THIS AGREEMENT SHALL BE GOVERNED IN
ALL RESPECTS BY THE LAWS OF THE STATE OF COLORADO AS SUCH LAWS ARE APPLIED TO
AGREEMENTS BETWEEN COLORADO RESIDENTS ENTERED INTO AND PERFORMED ENTIRELY IN
COLORADO.  THE COMPANY AND EMPLOYEE AGREE THAT THIS AGREEMENT CONSTITUTES THE
MINIMUM CONTACTS TO ESTABLISH PERSONAL JURISDICTION IN COLORADO AND AGREE TO
COLORADO COURT’S EXERCISE OF PERSONAL JURISDICTION.  THE COMPANY AND EMPLOYEE
FURTHER AGREE THAT ANY DISPUTES RELATING TO THIS AGREEMENT SHALL BE BROUGHT IN
THE COURTS LOCATED IN THE STATE OF COLORADO.

 

SECTION 21.             INTENTIONALLY OMITTED.

 

SECTION 22.             COSTS OF ENFORCEMENT.  IF ANY CONTEST OR DISPUTE SHALL
ARISE UNDER THIS AGREEMENT, EACH PARTY HERETO SHALL BEAR ITS OWN LEGAL FEES AND
EXPENSES, PROVIDED, HOWEVER, THAT IN THE EVENT THE EMPLOYEE PREVAILS WITH
RESPECT TO A SUBSTANTIAL ASPECT  OF SUCH CONTEST OR DISPUTE, THE COMPANY SHALL
BE REQUIRED TO REIMBURSE THE EMPLOYEE FOR REASONABLE LEGAL FEES AND EXPENSES
INCURRED BY HIM IN CONNECTION THEREWITH.

 

SECTION 23.             NOTICES.

 

(A)           EVERY NOTICE OR OTHER COMMUNICATION RELATING TO THIS AGREEMENT
SHALL BE

 

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IN WRITING, AND SHALL BE MAILED TO OR DELIVERED TO THE PARTY FOR WHOM IT IS
INTENDED AT SUCH ADDRESS AS MAY FROM TIME TO TIME BE DESIGNATED BY IT IN A
NOTICE MAILED OR DELIVERED TO THE OTHER PARTY AS HEREIN PROVIDED, PROVIDED THAT,
UNLESS AND UNTIL SOME OTHER ADDRESS BE SO DESIGNATED, ALL NOTICES OR
COMMUNICATIONS BY EMPLOYEE TO THE COMPANY SHALL BE MAILED OR DELIVERED TO THE
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, AND ALL NOTICES OR COMMUNICATIONS BY
THE COMPANY TO EMPLOYEE MAY BE GIVEN TO EMPLOYEE PERSONALLY OR MAY BE MAILED TO
EMPLOYEE AT EMPLOYEE’S LAST KNOWN ADDRESS, AS REFLECTED IN THE COMPANY’S
RECORDS.

 

(B)           ANY NOTICE SO ADDRESSED SHALL BE DEEMED TO BE GIVEN:  (I) IF
DELIVERED BY HAND, ON THE DATE OF SUCH DELIVERY; (II) IF MAILED BY COURIER OR BY
OVERNIGHT MAIL, ON THE FIRST BUSINESS DAY FOLLOWING THE DATE OF SUCH MAILING;
AND (III) IF MAILED BY REGISTERED OR CERTIFIED MAIL, ON THE THIRD BUSINESS DAY
AFTER THE DATE OF SUCH MAILING.

 

SECTION 24.             SECTION HEADINGS.

 

The headings of the sections and subsections of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part thereof, affect
the meaning or interpretation of this Agreement or of any term or provision
hereof.

 

SECTION 25.             ENTIRE AGREEMENT.

 

This Agreement constitutes the entire understanding and agreement of the parties
hereto regarding the employment of Employee.  This Agreement supersedes all
prior negotiations, discussions, correspondence, communications, understandings
and agreements between the parties relating to the subject matter of this
Agreement, including, without limitation, the First Amended Agreement.

 

SECTION 26.             SURVIVAL OF OPERATIVE SECTIONS.

 

Upon any termination of Employee’s employment, the provisions of Section 8
through Section 27 of this Agreement (together with any related definitions set
forth in Section 1 hereof) shall survive to the extent necessary to give effect
to the provisions thereof.

 

SECTION 27.             COUNTERPARTS.

 

This Agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original but all of which together shall constitute one and
the same instrument.  The execution of this Agreement may be by actual or
facsimile signature.

 

*              *              *

 

[Signatures appear on the following page.]

 

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IN WITNESS WHEREOF, the undersigned have executed this Second Amended and
Restated Employment Agreement as of the date first above written.

 

ALLOS THERAPEUTICS, INC.

 

 

/s/ Marc H. Graboyes

By:

Marc H. Graboyes

Title:

Vice President, General Counsel

 

 

PAUL L. BERNS

 

 

/s/ Paul L. Berns

 

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