Exhibit 10.(a)

 

2/9/09

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (the “Agreement”) is entered into effective
October 30, 2008, by and between Bemis Company, Inc., a Missouri corporation
(the “Company”) and (INSERT EXECUTIVE NAME), (the “Executive”).

 

WHEREAS, the Executive is a key member of the management of the Company and has
devoted substantial skill and effort to the affairs of the Company; and

 

WHEREAS, the Company and its shareholders wish to continue to obtain the
benefits of the Executive’s services and attention to the affairs of the
Company; and

 

WHEREAS, the Company recognizes that, as a publicly-held corporation, it is
subject to the ongoing risk of a change of control, and that the adverse
personal consequences of a change of control may distract Executive or encourage
Executive’s premature termination of employment to the detriment of the Company
and its shareholders; and

 

WHEREAS, it is desirable and in the best interests of the Company and its
shareholders to take steps that will allow the Executive to make judgments and
advise the Company with respect to proposed changes of control without regard to
the possible adverse personal consequences of such events, and to provide an
inducement for the Executive to remain in the service of the Company prior to
any proposed or anticipated change of control, and to remain in the service of
the Company after any change of control to the extent necessary to facilitate an
orderly transition; and

 

WHEREAS, the Executive desires to obtain appropriate protection in the event of
an actual or anticipated change of control; and

 

WHEREAS, the Company recognizes that it is important to Executive to receive
prompt and certain payment of any amounts which become due under this Agreement;

 

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, the Company and the Executive hereby agree as
follows:

 

1.             Defined Terms.  Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in Appendix A.

 

2.             Duration.  This Agreement establishes certain rights and
obligations in the event Executive has a Qualifying Event (as defined in
Section 5 below).  Unless earlier terminated or modified, which in either case
can be done only by mutual written consent of the parties, this Agreement shall
continue in effect until either (i) the benefits due and payable under this
Agreement have been paid in full or (ii) the Executive’s employment with the
Company terminates under circumstances that do not entitle Executive to any
benefits under this Agreement.

 

3.             Prior Agreements.  Any prior agreement entered into by and
between Executive and the Company that was titled “Management Agreement” and
that, among other things, provided compensation upon the occurrence of a “Change
in Control Event,” is hereby terminated.  Except as otherwise provided herein,
this Agreement supersedes any such “Management Agreement” and the portion or
portions of any and all other agreements entered into prior to the effective
date of

 

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this Agreement relating to severance pay and post-employment welfare benefits
due to Executive in the event Executive has a Qualifying Event.  Nothing in this
Agreement shall adversely affect any rights Executive may have to equity-based
compensation (including but not limited to stock options, equity units, and
restricted stock), long-term incentive compensation, supplemental retirement
benefits, deferred compensation that is not severance pay, and benefits under
any employee benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended), all of which shall be
administered after a Qualifying Event in accordance with the terms of the
applicable plan documents and agreements and without regard to this Agreement.

 

4.             No Employment Contract.  This Agreement shall not be construed as
creating an express or implied contract of employment.  Except as otherwise
agreed in writing between the Executive and the Company, the Executive’s
employment shall be “at will” and Executive shall not have any right to be
retained in the employ of the Company and its affiliates.

 

5.             Qualifying Event.  The Executive shall be deemed to have had a
“Qualifying Event” if prior to attaining age 65:

 

(a)           the Executive has an Involuntary Termination or Constructive
Involuntary Termination on, or within 36 months after, the date of a Change of
Control Event;

 

(b)           the Executive has an Involuntary Termination or Constructive
Involuntary Termination within three months prior to the date of a Change of
Control Event; or

 

(c)           the Executive has an Involuntary Termination or Constructive
Involuntary Termination (i) less than twelve months prior to the date of a
Change of Control Event or (ii) while a Change of Control Event is under serious
consideration (whether or not it actually occurs), unless (in either case) the
Company can establish that the Executive’s Involuntary Termination or
Constructive Involuntary Termination was for reasons unrelated to such Change of
Control Event.

 

Whether a Qualifying Event has occurred shall be determined separately with
respect to each Change of Control Event and each event constituting a
Constructive Involuntary Termination or Involuntary Termination.  If the event
constituting a Constructive Involuntary Termination is a failure by the Company
to obtain assumption of this Agreement by any successor as contemplated by
Section 12 of this Agreement, the date on which the succession became effective
shall be deemed the date of the Qualifying Event.  Amounts shall not be paid
under Sections 6 and 7 of this Agreement for more than one Qualifying Event.

 

For purposes of subsection (c) above, a Change of Control Event shall be deemed
to be “under serious consideration” at any time after negotiations with respect
to the possible Change of Control Event have commenced (including, but not
limited to, negotiations prior to the execution of a non-binding letter of
intent) and at any time after the Company receives direct or indirect notice of
a Person’s intent to cause an event that would, if it occurred, result in a
Change of Control Event.  Serious consideration as described in the preceding
sentence shall be deemed to end on the earliest of the date on which such
negotiations are abandoned, the Company receives direct or indirect notice that
such Person has abandoned efforts to cause the event that would be a Change of
Control Event, or the relevant Change of Control Event actually occurs.

 

6.             Compensation and Benefits through Date of Termination.  If the
Executive has a Qualifying Event, Company shall immediately pay Executive
(a) the full amount of Executive’s

 

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salary through the date of Executive’s Qualifying Event to the extent not
previously paid, and (b) the product of (i) an amount equal to Executive’s
target annual bonus for the fiscal year of the Company in which the Qualifying
Event occurs and (ii) a fraction, the numerator of which is the number of days
in the current fiscal year through and including the date of the Executive’s
Qualifying Event and the denominator of which is 365.  In addition, in the event
of Executive’s Qualifying Event, Company shall also, to the extent not
previously paid or provided, pay or provide Executive with all other amounts and
benefits that Executive has accrued or is eligible to receive through the date
of such Qualifying Event under any plan, program, policy, practice or
arrangement of the Company and/or its affiliates (including, but not limited to,
welfare benefits and perquisites).

 

7.             Change of Control Severance Payments.  If the Executive has a
Qualifying Event, the Executive also shall be entitled:

 

(a)           to immediately receive from the Company a cash payment in an
amount equal to two times the sum of (i) the Executive’s salary for the calendar
year last preceding the date of Executive’s Qualifying Event or, if higher, the
Executive’s annual salary rate in effect immediately prior to such Qualifying
Event, (ii) the Executive’s target annual bonus for the fiscal year of the
Company in which the Qualifying Event occurs or, if higher, the Executive’s
highest annual bonus for the five-year period ending with the full calendar year
(or if such bonuses are determined on the basis of a fiscal year, the full
fiscal year) last preceding the date of Executive’s Qualifying Event, and
(iii) 30 percent of the annual salary used in (i) above, which amount is
intended to serve as an estimate of the annual value of the fringe benefits and
other perquisites to which Executive was entitled immediately prior to the
Qualifying Event; and

 

(b)           for twenty-four months after the Qualifying Event, to participate
in any health, disability and life insurance plan or program in which Executive
was entitled to participate immediately prior to the Qualifying Event as if he
were an employee of the Company during such twenty-four month period; provided,
however, that in the event that Executive cannot participate in any such health,
disability or life insurance plan or program, the Company, at its sole cost and
expense, shall arrange to provide the Executive with benefits no less favorable
to Executive than those which Executive would have been entitled to receive if
Executive had continued to participate in such plan or program.

 

The compensation and benefits described above in this Section 7 shall be subject
to the following:

 

(1)           For purposes of subsection (a) above, the Executive’s salary,
annual salary rate, target annual bonus and highest annual bonus shall be the
gross amounts of such compensation determined without regard to any deductions,
deferrals or withholding.

 

(2)           If Executive’s Qualifying Event occurs after the month in which
the Executive    attains age 63, the amount in subsection (a) above shall be
determined by substituting for “two” a    fraction, the numerator of which is
the number of whole and partial calendar months in the period beginning with the
month in which the Executive’s Qualifying Event occurs and ending with the month
in which the Executive attains age 65, and the denominator of which is 12.

 

(3)           If Executive’s Qualifying Event occurs after the month in which
the Executive    attains age 63, the number of months referred to in subsection
(c) above shall be determined by substituting for “twenty-four” the number of
whole and partial calendar months in

 

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the period beginning with the month in which the Executive’s Qualifying Event
occurs and ending with the month in which the Executive attains age 65.

 

(4)           The sum of the amounts payable under subsections (a) and (b) above
shall be reduced by any severance pay which the Executive receives from the
Company under any other policy or agreement of the Company on account of
Executive’s Qualifying Event.

 

(5)           For purposes of subsection (b) above, a health plan or program
shall include any separate dental, vision, prescription drug, or other
health-related benefit.

 

(6)           If immediate payment of any amounts payable pursuant to subsection
(a) above would violate Section 409A of the Code or Treas. Reg. 1.409A-3(i)(2),
payment of those amounts shall be delayed until the earliest time at which
payment of those amounts can be made without such violation.

 

8.             Excise Tax Adjustment.  If it shall be determined that a Payment
would make the Executive liable for any Excise Tax, the Executive shall be
entitled to receive a Gross-Up Payment.  Notwithstanding the preceding sentence,
if it shall be determined that the total “parachute payments” (within the
meaning of Section 280G of the Code) made to Executive in connection with
Executive’s Qualifying Event, including those made pursuant to this Agreement,
exceed by 10% or less the maximum amount of the total parachute payments that
could be paid to the Executive without incurring any Excise Tax, then no
Gross-Up Payment shall be made to the Executive and the Payments in the
aggregate shall be reduced by the amount of such excess.  Executive shall have
at least 10 calendar days after receiving notice from the Accounting Firm that
such a reduction is necessary to specify what components of the Payment shall
not be paid in order to achieve the required reduction.  If Executive fails to
give timely instructions regarding such reduction, reductions shall be taken
first from Executive’s cash compensation under this Agreement.

 

9.             Late Payment.  Any amount payable under this Agreement that is
not paid within ten calendar days after it becomes due shall bear interest from
the date it became due through the date of payment at the “prime rate” (the base
annual lending rate used by a plurality of the nation’s largest banks) as
reported in the Wall St. Journal for the date on which the payment was due (or
if that is not a date on which the prime rate is so reported, the then current
prime rate as most recently reported) plus 5%, compounded monthly.

 

10.           Legal Fees.  The Company shall pay all legal fees and expenses
(including but not limited to attorneys’ fees and court costs) reasonably
incurred by the Executive in connection with efforts by or on behalf of the
Executive to obtain or enforce any right or benefit provided by or claimed under
this Agreement, regardless of the ultimate outcome or resolution of such
claims.  Such legal fees and expenses shall be paid within ten calendar days
after Executive’s written request for payment.  Payments made after such tenth
day shall incur interest at the rate set forth in Section 9 above.  Company’s
payment of Executive’s legal fees and expenses shall not give Company any right
to select or to approve counsel retained by Executive.  No dispute regarding the
reasonableness of such fees and expenses shall authorize or excuse their late
payment.

 

11.           Mitigation Not Required.  Executive shall not be required to
mitigate the amount of any payment or other benefit provided for in this
Agreement by seeking other employment or otherwise, nor shall the amount of any
payment or other benefit provided for in this Agreement be reduced by any
compensation earned by the Executive as the result of employment by another
employer after termination, or otherwise.

 

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12.           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the successors, legal representatives and assigns of the
parties hereto; provided, however, that the Executive shall not have any right
to assign, pledge or otherwise dispose of or transfer any interest in this
Agreement or any payments hereunder, whether directly or indirectly or in whole
or in part, without the written consent of the Company.  The Company will
require any successor (whether direct or indirect, by purchase of a majority of
the outstanding voting stock of the Company or all or substantially all of the
assets of the Company, or by merger, consolidation or otherwise), by agreement
in form and substance satisfactory to the Executive, to assume expressly 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 succession had taken
place.  Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement, shall
constitute a Constructive Involuntary Termination, and shall be treated as a
Qualifying Event entitling the Executive to the compensation and benefits
described in Sections 6 and 7 of this Agreement, unless such failure is remedied
within 10 calendar days after Company receives written notice thereof.  As used
in this Agreement, Company shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which is required to
execute and deliver the Agreement provided for in this Section 12, or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.

 

13.           Governing Law.  This Agreement shall be construed in accordance
with the laws of the State of Minnesota, applied without giving effect to any
choice of law provisions thereof.

 

14.           Notices.  All notices, requests and demands given to or made
pursuant hereto shall be in writing and shall be delivered or mailed to any such
party at its address which:

 

(a)                                 In the case of the Company shall be:
Bemis Company, Inc.
One Neenah Center, 4th Floor
PO Box 669
Neenah, WI 54957
Attn: General Counsel

 

(b)                                In the case of Executive shall be:
(INSERT EXECUTIVE NAME)
(INSERT STREET ADDRESS)
(INSERT CITY, STATE, ZIP)

 

Either party may, by notice hereunder, designate a changed address.  Any notice,
if mailed properly addressed, postage prepaid, registered or certified mail,
shall be deemed to have been given on the registered date or that date stamped
on the certified mail receipt.

 

15.           Severability.  In the event that any portion of this Agreement is
held to be invalid or unenforceable for any reason, it is hereby agreed that
such invalidity or unenforceability shall not affect the other portions of this
Agreement and that the remaining covenants, terms and conditions or portions
hereof shall remain in full force and effect, and any court of competent
jurisdiction may so modify the objectionable provision as to make it valid,
reasonable and enforceable.  In the event that any benefits to the Executive
provided in this Agreement are held to be unavailable to the Executive as a
matter of law, the Executive shall be entitled after a Qualifying Event to the
remaining benefits available under this Agreement, or if better, severance
benefits at least as

 

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favorable to Executive (when aggregated with the benefits under this Agreement
that are actually received by the Executive), as the most advantageous severance
benefits made available by the Company to employees of comparable position and
seniority to the Executive during the five-year period prior to Executive’s
Qualifying Event or the Change of Control Event, whichever happens first.

 

16.           Effect of Code §409A.  This Agreement shall be construed in
accordance with any applicable requirements of Code §409A.

 

IN WITNESS WHEREOF, the parties hereto have executed the Agreement as of the day
and year first above written.

 

 

EXECUTIVE

 

BEMIS COMPANY, INC.

 

 

 

 

 

 

 

 

 

 

 

By: Henry J. Theisen

 

 

Its: President and Chief Executive Officer

 

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APPENDIX A

TO MANAGEMENT AGREEMENT

 

DEFINITIONS

 

As used in this Agreement the capitalized terms not otherwise defined shall have
the meanings ascribed to them below.

 

Accounting Firm

 

The term “Accounting Firm” shall mean a nationally recognized certified public
accounting firm designated by the Executive.

 

Cause

 

“Cause” shall mean, and be limited to, (i) willful and gross neglect of duties
by the Executive that has not been substantially corrected within 30 days after
Executive’s receipt from Company of written notice describing the neglect and
the steps necessary to substantially correct it, or (ii) an act or acts
committed by the Executive constituting a felony and substantially detrimental
to the Company or its reputation.

 

Change of Control Event

 

A “Change of Control Event” shall be deemed to have occurred if any of the
following occur:

 

(1)  Any “Person” (as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended, or any successor statute thereto (the Exchange Act) acquires
or becomes a beneficial owner (as defined in Rule 13d-3 or any successor
rule under the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company’s
then outstanding securities entitled to vote generally in the election of
directors (“Voting Securities”) or 20% or more of the outstanding shares of
common stock of the Company (“Common Stock”), provided, however, that the
following shall not constitute a “Change of Control Event.”

 

(a)           any acquisition or beneficial ownership by the Company or a
subsidiary of the Company;

 

(b)           any acquisition or beneficial ownership by any employee benefit
plan (or related trust) sponsored or maintained by the Company or one or more of
its subsidiaries;

 

(c)           any transaction with respect to which, immediately following such
acquisition, more than 80% respectively, of (i) the combined voting power of the
Company’s then outstanding Securities and (ii) the Common Stock is then
beneficially owned, directly or indirectly, by all or substantially all of the
persons who beneficially owned Voting Securities and Common Stock respectively,
of the Company immediately prior to such transaction in substantially the same
proportions as their ownership prior to such acquisition;

 

(2)           Continuing Directors shall not constitute a majority of the
members of the Board of Directors of the Company.  Continuing Directors shall
mean: (a) individuals who, on the date

 

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hereof, are directors of the Company, (b) individuals elected as directors of
the Company subsequent to the date hereof for whose election proxies shall have
been solicited by the Board of Directors of the Company, or (c) any individual
elected or appointed by the Board of Directors of the Company to fill vacancies
on the Board of Directors of the Company caused by death or resignation (but not
by removal) or to fill newly-created directorships, provided that a Continuing
Director shall not include an individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to
the threatened election or removal of directors (or other actual or threatened
solicitation of proxies or consents) by or on behalf of any person other than
the Board of Directors of the Company;

 

(3)           Consummation of a reorganization, merger or consolidation of the
Company (other than a merger or consolidation with a subsidiary of the Company),
unless immediately following such reorganization, merger or consolidation, all
or substantially all of the persons who were the beneficial owners,
respectively, of Voting Securities and Common Stock immediately prior to such
reorganization, merger or consolidation beneficially own, directly or
indirectly, more than 80% respectively of (i) the combined voting power of the
then outstanding Voting Securities entitled to vote generally in the election of
directors, and (ii) the then outstanding shares of Common Stock of the
corporation resulting from such reorganization, merger or consolidation in
substantially the same proportions as their ownership of the Voting Securities
and Common Stock, as the case may be, immediately prior to such reorganization,
merger or consolidation;

 

(4)           Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company (in one or a series of
transactions), other than to a corporation with respect to which, immediately
following such a sale or other disposition, more than 80% respectively, of
(i) the combined voting power of the then outstanding Voting Securities of such
corporation entitled to vote generally in the election of directors, and
(ii) the then outstanding shares of Common Stock of such corporation is then
beneficially owned, directly or indirectly, by all or substantially all of the
persons who were the beneficial owners respectively of the Voting Securities and
Common Stock immediately prior to such sale or other disposition in
substantially the same proportions as their ownership of the Voting Securities
and Common Stock, as the case may be, immediately prior to such sale or other
disposition;

 

(5)           The Company enters into a letter of intent, an agreement in
principle or a definitive agreement relating to a “Change of Control Event”
described in Subparagraphs (1), (2), (3) or (4) hereof that ultimately results
in such a “Change of Control Event”, or a tender or exchange offer or proxy
contest is commenced which ultimately results in such a “Change of Control of
Event”.

 

Notwithstanding anything stated above, a “Change of Control Event” shall not be
deemed to occur with respect to the Executive if the acquisition or beneficial
ownership of the 20% or greater interest referred to in Subparagraph (1) is by
the Executive or by a group, acting in concert, that includes the Executive.

 

Code

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

Constructive Involuntary Termination

 

Any of the six occurrences below shall constitute a “Constructive Involuntary
Termination”:

 

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(1)           Reduction of the Executive’s title, duties, responsibilities or
authority, other than for “Cause” or on account of “Disability”;

 

(2)           Reduction of the Executive’s annual base salary;

 

(3)           Reduction of the aggregate benefits under the Company’s pension,
profit sharing, retirement, life insurance, medical, health and accident,
disability, bonus and incentive plans and other employee benefit plans and
arrangements or reduction of the number of paid vacation days to which the
Executive is entitled;

 

(4)           Company fails to obtain assumption of this Agreement by any
successor as contemplated by Section 12 of the Agreement;

 

(5)           Company requires Executive to perform his primary duties at a
location that is more than 25 miles further from Executive’s primary residence
than the location at which the Executive performs his primary duties on the
effective date of this Agreement (or, if Executive changes his primary
residence, that is more than 25 miles further from Executive’s primary residence
after such change than the location at which the Executive performed his primary
duties at the time of such change); or

 

(6)           A termination of employment with the Company by the Executive
after any of the occurrences in Subparagraphs (1) through (5) above.

 

The foregoing definition of Constructive Involuntary Termination shall be
subject to the following:

 

(i)            Notwithstanding the above, “Constructive Involuntary Termination”
shall not include an inadvertent failure to obtain assumption of this Agreement
that is remedied by the Company within 10 calendar days after its receipt of
notice thereof.

 

(ii)           If the Executive’s duties, responsibilities or authority prior to
a Change in Control Event relate to the Company as a whole, rather than to a
specific business or operating unit (e.g., as in the case of the Company’s Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, General
Counsel or a Vice President with authority for an aspect of the Company’s
business that is not limited to any particular business or operational unit,
such as the Vice President of Human Resources), then a reduction described in
subparagraph (1) above shall be deemed to occur if such duties, responsibilities
or authority do not extend after the Change in Control Event to the entire
successor organization.  If the Executive’s duties, responsibilities or
authority prior to a Change in Control Event relate exclusively to a specific
business or operating unit of the Company, then a reduction described in
subparagraph (1) shall be deemed to occur if such duties, responsibilities or
authority after the Change in Control Event do not extend after the Change in
Control Event to all or substantially all of the same business or operating
unit.

 

(iii)          Notwithstanding the above, if Executive believes there are
grounds for a “Constructive Involuntary Discharge” under (1), (2), (3), (5) or
(6), Executive must notify the Company within 30 days after Executive becomes
aware of such circumstances.  “Constructive Involuntary Discharge” shall not
occur without such notice and shall not include any circumstances that are
remedied by the Company within 30 days after receiving such notice.

 

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Disability

 

“Disability” shall be a condition entitling the Executive to benefits under
Bemis’ Long Term Disability Plan.

 

Equity Unit

 

“Equity Unit” shall mean a unit awarded under a long-term incentive compensation
plan maintained by the Company, such as the Bemis Company, Inc. 2007 Stock
Incentive Plan, that is, or entitles the award recipient to receive, a share of
common stock of the Company (regardless of whether such unit is subject to a
risk of forfeiture).

 

Excise Tax

 

“Excise Tax” shall mean the excise tax imposed on Executive by Section 4999 of
the Code or any successor provision thereto, and any interest and penalties
incurred by the Executive with respect to such excise tax.

 

Fair Market Value

 

“Fair Market Value” of a share of the Company’s common stock as of a particular
day shall mean the closing price of a share of the Company’s common stock on the
New York Stock Exchange on such day, or if no sale has been made on such
exchange on such day, on the last preceding day on which any such sale was made.

 

Gross-Up Payment

 

(1)           “Gross-Up Payment” shall mean an amount sufficient to enable the
Executive to pay all of the following amounts: (i) any income or employment
taxes payable by the Executive on the Gross-Up Payment, (ii) any excise taxes
imposed by Section 4999 of the Code on any Payments to the Executive (including
any imposed on the Gross-Up Payment), (iii) any interest and penalties on the
taxes in (i) and (ii).

 

(2)           Subject to the provisions of Subparagraph (3) below, all
determinations required to be made under Section 8 of the Agreement, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment, the assumptions to be utilized in arriving at such determination, and
the determination regarding whether Payments need to be reduced, shall be made
by the Accounting Firm, which shall provide detailed supporting calculations
both to the Company and the Executive within 15 business days after the receipt
of notice from the Executive that there has been a Payment, or such earlier time
as is requested by the Company.  All fees and expenses of the Accounting Firm
shall be borne solely by the Company.  Any Gross-Up Payment, as determined
pursuant to this Agreement, shall be paid by the Company to the Executive within
five days after the receipt of the Accounting firm’s determination.  If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion that failure to report the
Excise Tax on the Executive’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 the Executive.  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

 

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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 this Agreement and the Executive 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 (plus any additional interest and penalties attributable to the
Underpayment) shall be promptly paid by the Company to or for the benefit of the
Executive.

 

(3)           The Executive 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 a Gross-Up Payment.  Such notification shall be given as soon as
practicable but not later than ten business days after the Executive is informed
in writing of such claim (provided that any delay in so informing the Company
within such ten business day period shall not affect the obligations of the
Company under this Agreement, except to the extent that such delay materially
and adversely affects the Company) and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid.  The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it 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 the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:

 

(a)                                  give the Company any information reasonably
requested by the Company relating to such claim,

 

(b)                                 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.

 

(c)                                  cooperate with the Company in good faith in
order to effectively contest such claim, and

 

(d)                                 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 attorneys fees, additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or other 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 Paragraph, 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 the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or other tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested

 

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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 the
Executive 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.

 

(4)           If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Subparagraph (3) above, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company’s complying with the requirements of this Subparagraph (4),
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 the Executive of an amount advanced by the Company pursuant to
Subparagraph (3) above, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive 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.

 

Involuntary Termination

 

“Involuntary Termination” shall mean a termination by the Company of the
Executive’s employment that is not a termination for “Cause” and that is not on
account of the death or “Disability” of the Executive.

 

Payment(s)

 

A “Payment” is any payment or distribution by the Company to or for the benefit
of the Executive whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement, any stock option, equity unit,
restricted stock agreement or otherwise, but determined without regard to any
Gross-Up Payments.

 

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