EX-10.26






Exhibit 10.26




AMENDED AND RESTATED EMPLOYMENT AGREEMENT




               THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Employment Agreement”) is entered into
as of the 29th day of December, 2008, between Developers Diversified Realty Corporation, an Ohio
corporation (the “Company”), and David M. Jacobstein (the “Executive”).




WITNESSETH:




               WHEREAS, the Company desires to employ the Executive, and the Executive desires to be employed
by the Company, on the terms and subject to the conditions set forth herein; and




               WHEREAS, the Company and the Executive desire for this Employment Agreement to amend and
supersede any prior employment agreements between the Company and the Executive.




               NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties agree as
follows:





	1.	 	Employment.






	 	(a)	 	The Company hereby employs the Executive, and the Executive hereby accepts such
employment, on the terms and subject to the conditions hereinafter set forth.
	 
	 	(b)	 	During the term of this Employment Agreement, the Executive shall be and have
the titles given to him from time to time by the Chief Executive Officer of the Company
and shall devote such part of his business time as may be reasonably necessary to
perform diligently such duties as may be reasonably requested from time to time by the
Chief Executive Officer or the Board of Directors of the Company (the “Board”);
provided, however, that in no event shall the Executive be required to devote more than
20 hours per month to the performance of such duties.






	2.	 	Term and Positions.






	 	(a)	 	The period of employment of the Executive by the Company shall be deemed to
have commenced on May 8, 2007 (the “Effective Date”) and shall, subject to earlier
termination as provided in this Employment Agreement, continue until December 31, 2010.
Notwithstanding the foregoing, this Employment Agreement may be terminated by the
Company with “cause” (as hereinafter defined) at any time and without cause upon not
less than ninety (90) days prior written notice to the Executive.
	 
	 	(b)	 	For service as an employee of the Company, the Executive shall be entitled to
the full protection of the applicable indemnification provisions of the articles of
incorporation and code of regulations of the Company, as the same may be amended from
time to time.
	 
	 	(c)	 	If there occurs a material breach by the Company of any of its obligations
under this Employment Agreement, which breach has not been cured in all material
respects within thirty (30) days after the Executive gives notice thereof to the
Company (such notice to be given within the 90-day period commencing on the date of
such material breach), then




Page 1 









 






	 	 	 	in such event the Executive shall have the right to terminate his employment with
the Company, but such termination shall not be considered a voluntary resignation or
termination of such employment or of this Employment Agreement by the Executive but
rather a discharge of the Executive by the Company without “cause” (as defined in
Paragraph 5(a)(ii)).
	 
	 	(d)	 	Notwithstanding anything in this Agreement to the contrary, if there shall
occur a “Change in Control” (as that term is defined in the Amended and Restated Change
in Control Agreement, dated December 29, 2008, between the Company and the Executive
(the “Change in Control Agreement”), payments to the Executive will be governed by the
Change in Control Agreement and the Executive shall not be entitled to any additional
benefits under this Employment Agreement except as to that portion of any unpaid salary
and other benefits accrued and earned by him hereunder up to and including the
effective date of the Change in Control. It is expressly understood that the foregoing
shall have no effect upon the parties’ respective rights and obligations under
Paragraph 5(e) of this Employment Agreement or the Performance Units Agreement dated
January 2, 2002.






	3.	 	Compensation.
	 
	 	 	During the term of this Employment Agreement, the Company shall pay or provide, as the case
may be, to the Executive the compensation and other benefits and rights set forth in this
Paragraph 3.






	 	(a)	 	The Company shall pay to the Executive a base salary payable in accordance with
the Company’s usual pay practices (and in any event no less frequently than monthly) of
Six Hundred Thousand Dollars ($600,000) per annum.
	 
	 	(b)	 	The Company shall provide to the Executive such life, disability, medical,
hospitalization, vision and dental insurance for himself, his spouse and eligible
family members as may be in effect on the date hereof.
	 
	 	(c)	 	The Executive shall participate in all retirement and other benefit plans of
the Company generally available from time to time to employees of the Company and for
which the Executive qualifies under the terms thereof (and nothing in this Agreement
shall or shall be deemed to in any way affect the Executive’s rights and benefits
thereunder except as expressly provided herein).
	 
	 	(d)	 	The Executive shall be entitled to participate in any equity or other employee
benefit plan that is generally available to senior executive officers, as distinguished
from general management, of the Company. The Executive’s participation in and benefits
under any such plan shall be on the terms and subject to the conditions specified in
the governing documents of the particular plan. It is expressly understood and agreed
that the intent of this Paragraph 3(d) is to permit such equity and other benefits
granted or provided to the Executive prior to the Effective Date to continue to vest
during the term of this Employment Agreement, to permit the Executive to exercise any
vested options at any time during their full term regardless of whether that is during
or after the term of this Employment Agreement and to permit the Executive to continue
participation in the Company’s elective and equity deferred compensation plans during
the term of this Employment Agreement, and that, subject to paragraph 5(e) of this
Agreement, the Executive shall not be granted or provided with any additional equity or
employee equity plan benefits during the term of this Employment Agreement.




Page 2 









 






	 	(e)	 	The Company shall reimburse the Executive or provide him with an expense
allowance during the term of this Employment Agreement for travel, entertainment and
other expenses reasonably and necessarily incurred by the Executive in connection with
the Company’s business. The Executive shall furnish such documentation with respect to
reimbursement to be paid hereunder as the Company shall reasonably request.
	 
	 	(f)	 	The Company shall provide to the Executive a new vehicle of the Executive’s
choice for the exclusive use of the Executive, together with automobile, theft,
casualty and liability insurance, and payment or reimbursement of the Executive for all
maintenance, repair and gasoline.
	 
	 	(g)	 	The Company shall reimburse the Executive or provide him with an expense
account during the term of this Employment Agreement of up to $5,000 per annum for
financial planning, tax return and financial statement preparation services and shall
reimburse the Executive for legal and related consulting fees (up to $5,000) related to
the review of this Agreement.






	4.	 	Payment in the Event of Death or Disability.






	 	(a)	 	Except as otherwise provided in Paragraph 4(a)(i), in the event of the
Executive’s death or if the Company terminates the Executive’s employment by reason of
the Executive becoming “disabled” (as hereinafter defined) during the term of this
Employment Agreement, the Company shall pay to the Executive (or his successors and
assigns in the event of his death) an amount equal to the balance of the base salary
payable to the Executive during the remaining term of this Agreement and shall continue
the benefits described in Paragraph 3(b) for the Executive (except in the case of
death) and the Executive’s family for a period of one (1) year.






	 	(i)	 	The Company will not be obligated to pay or provide any of the
amounts or benefits specified in Paragraph 4(a) unless either (A) the Company
is deemed to have waived the obligation to provide a Release as provided in
Paragraph 6(b) or (B) the Executive or the Executive’s personal representative
has timely executed a Release as contemplated by Paragraph 6(c) and has not
revoked such Release during any applicable revocation period.
	 
	 	(ii)	 	The Company will pay the balance of the base salary specified
in Paragraph 4(a) during the seven-day period that follows whichever of the
following is applicable: (A) the end of the 21-day period described in
Paragraph 6(a) if the Company fails to present a Release and covering message
to the Executive (or the Executive’s personal representative) within such
21-day period; or (B) the end of any revocation period applicable to the
Release executed by the Executive as described in Paragraph 6 (provided that
the Executive has not revoked the Release during such revocation period).






	 	(b)	 	For purposes of this Employment Agreement, the Executive shall become
“disabled” only in the event of a permanent disability, Executive’s “disability” shall
be deemed to have occurred after one hundred twenty (120) days in the aggregate during
any consecutive twelve (12) month period, or after ninety (90) consecutive days, during
which one hundred twenty (120) or ninety (90) days, as the case may be, the Executive,
by reason of his physical or mental disability or illness, shall have been unable to
discharge his duties under this Employment Agreement. The date of disability shall be
such one hundred twentieth (120th) or ninetieth (90th) day, as the case may be. In the




Page 3 









 






	 	 	 	event either the Company or the Executive, after receipt of notice of the
Executive’s disability from the other, dispute that the Executive’s permanent
disability shall have occurred, the Executive shall promptly submit to a physical
examination by the chief of medicine of any major accredited hospital in the
Cleveland, Ohio, area and, unless such physician shall issue his written statement
to the effect that in his opinion, based on his diagnosis, the Executive is capable
of resuming his employment and devoting his full time and energy to discharging his
duties within thirty (30) days after the date of such statement, such permanent
disability shall be deemed to have occurred.






	5.	 	Termination.






	 	(a)	 	The employment of the Executive under this Employment Agreement, and the terms
hereof, may be terminated by the Company:






	 	(i)	 	on the death of the Executive or if the Executive becomes
disabled (as previously defined);
	 
	 	(ii)	 	for cause at any time by action of the Board. For purposes
hereof, the term “cause” shall mean:






	 	(A)	 	The Executive’s fraud, commission of a felony
or of an act or series of acts which result in material injury to the
business reputation of the Company, commission of an act or series of
repeated acts of dishonesty which are materially inimical to the best
interests of the Company, or the Executive’s willful and repeated
failure to perform his duties under this Employment Agreement, which
failure has not been cured within fifteen (15) days after the Company
gives notice thereof to the Executive; or
	 
	 	(B)	 	The Executive’s material breach of any material
provision of this Employment Agreement, which breach has not been cured
in all substantial respects within ten (10) days after the Company
gives notice thereof to the Executive; or






	 	(iii)	 	without cause pursuant to written notice provided to the
Executive not less than ninety (90) days in advance of the Termination Date.






	 	 	 	The exercise by the Company of its rights of termination under this Paragraph 5
shall be the Company’s sole remedy if such right to terminate arises. Upon any
termination of this Employment Agreement, the Executive shall be deemed to have
resigned from all offices and directorships held by the Executive in the Company.
	 
	 	(b)	 	In the event of a termination claim by the Company to be for “cause” pursuant
to Paragraph 5(a)(ii), the Executive shall have the right to have the justification for
said termination determined by arbitration in Cleveland, Ohio. In order to exercise
such right, the Executive shall serve on the Company within thirty (30) days after
termination a written request for arbitration. The Company immediately shall request
the appointment of an arbitrator by the American Arbitration Association and thereafter
the question of “cause” shall be determined under the rules of the American Arbitration
Association, and the decision of the arbitrator shall be final and binding upon both
parties. The parties shall use all reasonable efforts to facilitate and expedite the
arbitration and shall act to cause the arbitration to be completed as promptly as
possible. During the pendency of the arbitration, the Executive shall continue to
receive all compensation and benefits to




Page 4 









 






	 	 	 	which he is entitled hereunder, and if at any time during the pendency of such
arbitration the Company fails to pay and provide all compensation and benefits to
the Executive in a timely manner the Company shall be deemed to have automatically
waived whatever rights it then may have had to terminate the Executive’s employment
for cause. Expenses of the arbitration shall be borne equally by the parties except
as otherwise determined by the arbitrator.
	 
	 	(c)	 	In the event of termination for any of the reasons set forth in
subparagraph (a) of this Paragraph 5, except as otherwise provided in Paragraphs 3(d),
4(a) and 5(d), the Executive shall be entitled to no further compensation or other
benefits under this Employment Agreement, except as to that portion of any unpaid
salary and other benefits accrued and earned by him hereunder up to and including the
effective date of such termination.
	 
	 	(d)	 	Except as provided in Paragraph 5(d)(i), in the event of the termination by the
Company of the Executive without “cause” (other than as described in Paragraph 2(d), or
in the event of a termination by the Executive for reasons set forth in Paragraph 2(c),
the Company shall pay to the Executive an amount equal to the balance of the base
salary payable to the Executive during the remaining term of this Agreement and shall
continue the benefits described in Paragraph 3(b) during the remaining term of this
Agreement.






	 	(i)	 	The Company will not be obligated to pay or provide any of the
amounts or benefits specified in Paragraph 5(d) unless either (A) the Company
is deemed to have waived the obligation to provide a Release as provided in
Paragraph 6(b) or (B) the Executive has timely executed a Release as
contemplated by Paragraph 6(c) and has not revoked such Release during any
applicable revocation period.
	 
	 	(ii)	 	The Company will pay the balance of the base salary specified
in Paragraph 5(d) during the seven-day period that follows whichever of the
following is applicable: (A) the end of the 21-day period described in
Paragraph 6(a) if the Company fails to present a Release and covering message
to the Executive (or the Executive’s personal representative) within such
21-day period; or (B) the end of any revocation period applicable to the
Release executed by the Executive as described in Paragraph 6 (provided that
the Executive has not revoked the Release during such revocation period).






	 	(e)	 	Notwithstanding any provision to the contrary contained in this Employment
Agreement, the Change in Control Agreement or any other agreement to which the
Executive is a party or by which he is bound, concurrently with the termination of this
Agreement for any reason other than “cause,” including, without limitation, natural
termination on the date the term of this Agreement expires, all of the Executive’s
restricted shares, options, performance units and other equity-based awards which by
their respective terms are not vested at the time of such termination shall fully and
immediately vest at such time.
	 
	 	(f)	 	For all purposes of this Employment Agreement, the term “Termination Date”
means the date on which the Executive’s employment with the Company terminates.






	6.	 	Release. This Paragraph 6 will apply only upon termination of the Executive’s
employment (x) by reason of death or disability (as contemplated by Paragraph 4) or (y) by the
Company without “cause” or by the Executive for reasons set forth in Paragraph 2(c) (as
contemplated by Paragraph 5(d)).




Page 5 









 












	 	(a)	 	Presentation of Release by the Company. If this Paragraph 6 applies, the
Company may present to the Executive (or in the case of the Executive’s death or legal
incapacity, to the Executive’s personal representative), not later than 21 days after
the Termination Date, a form of release (a “Release”) of all current and future claims,
known or unknown, arising on or before the date on which the Release is to be executed,
that the Executive or the Executive’s assigns have or may have against the Company or
any subsidiary, and the directors, officers, and affiliates of any of them, in such
form as may reasonably be presented by the Company together with a covering message in
which the Company advises the Executive (or the Executive’s personal representative)
that the Release is being presented in accordance with this Paragraph 6 and that a
failure by the Executive (or the Executive’s personal representative) to execute and
return the Release as contemplated by Paragraph 6(c) would relieve the Company of the
obligation to make payments otherwise due to the Executive (or to the Executive’s
personal representative) under one or more portions of either of Paragraph 4(a) or
Paragraph 5(d), as the case may be.
	 
	 	(b)	 	Effect of Failure by the Company to Present Release. If the Company
fails to present a Release and covering message to the Executive (or the Executive’s
personal representative) as contemplated by Paragraph 6(a) within 21 days of the
Termination Date, the Company will be deemed to have waived the requirement that the
Executive (or the Executive’s personal representative) execute a Release as a condition
to receiving payments under any portion of either of Paragraph 4(a) or Paragraph 5(d),
as the case may be.
	 
	 	(c)	 	Execution of Release by the Executive or the Executive’s Personal
Representative. If the Company does present a Release and covering message to the
Executive (or the Executive’s personal representative) as contemplated by Paragraph
6(a) within 21 days of the Termination Date, the Executive (or the Executive’s personal
representative) will have until 50 days after the Termination Date (i.e., at least 29
days after presentation of the Release to the Executive (or the Executive’s personal
representative)) within which to deliver an executed copy of the Release to the Company
and thereby satisfy the condition to receiving payments under any portion of either of
Paragraph 4(a) or Paragraph 5(d), as the case may be, provided that the Executive (or
the Executive’s personal representative) does not revoke the execution of the Release
during any applicable revocation period.
	 
	 	(d)	 	Effect of Failure to Execute Release or of Revocation of Release. If
the Executive (or the Executive’s personal representative) fails to deliver an executed
copy of the Release to the Company within 50 days after the Termination Date or revokes
the execution of the Release during any applicable revocation period, the Executive (or
the Executive’s personal representative) will be deemed to have waived the right to
receive all payments under either of Paragraph 4(a) or Paragraph 5(d), as the case may
be, that were conditioned on the Release.






	7.	 	Covenants and Confidential Information.






	 	(a)	 	The Executive acknowledges the Company’s reliance and expectation of the
Executive’s continued commitment to performance of his duties and responsibilities
during the term of this Employment Agreement. In light of such reliance and
expectation on the part of the Company, the Executive shall not, directly or
indirectly:






	 	(i)	 	during the term of this Employment Agreement and for a period
of two (2) years after the termination of the Executive’s employment for any
reason, own,




Page 6 









 






	 	 	 	manage, control or participate in the ownership, management or control of,
or be employed or engaged by or otherwise affiliated or associated as a
consultant, independent contractor or otherwise with, any other corporation,
partnership, proprietorship, firm, association or other business entity
engaged in the business of, or otherwise engage in the business of,
acquiring, owning, developing or managing commercial shopping centers;
provided, however, that the ownership of not more than one percent (1 %) of
any class of publicly traded securities of any entity shall not be deemed a
violation of this covenant; or
	 
	 	(ii)	 	at any time during or after the term of this Employment
Agreement, disclose, divulge, discuss, copy or otherwise use or suffer to be
used in any manner, in competition with, or contrary to the interests of, the
Company, any confidential information relating to the Company’s operations,
properties or otherwise to its particular business or other trade secrets of
the Company, it being acknowledged by the Executive that all such information
regarding the business of the Company compiled or obtained by, or furnished to,
the Executive while the Executive shall have been employed by or associated
with the Company is confidential information and the Company’s exclusive
property; provided, however, that the foregoing restrictions shall not apply to
the extent that such information (A) is clearly obtainable in the public
domain, (B) becomes obtainable in the public domain, except by reason of the
breach by the Executive of the terms hereof, (C) was not acquired by the
Executive in connection with his employment or affiliation with the Company,
(D) was not acquired by the Executive from the Company or its representatives
or (E) is required to be disclosed by rule of law or by order of a court or
governmental body or agency.






	 	(b)	 	The Executive will not directly or indirectly during the term of this
Employment Agreement or for a period of two (2) years after the expiration of this
Employment Agreement or Executive’s termination pursuant to this Employment Agreement,
solicit or induce or attempt to solicit or induce any employee(s) of the Company and/or
any subsidiary, affiliated or related companies to terminate their employment with the
Company and/or any subsidiary, affiliated or related companies.
	 
	 	(c)	 	The Executive agrees and understands that the remedy at law for any breach by
him of this Paragraph 7 will be inadequate and that the damages following from such
breach are not readily susceptible to being measured in monetary terms. Accordingly,
it is acknowledged that, upon adequate proof of the Executive’s violation of any
legally enforceable provision of this Paragraph 7, the Company shall be entitled to
immediate injunctive relief and may obtain a temporary order restraining any threatened
or further breach. Nothing in this Paragraph 7 shall be deemed to limit the Company’s
remedies at law or in equity for any breach by the Executive of any of the provisions
of this Paragraph 7 which may be pursued or availed of by the Company.
	 
	 	(d)	 	The Executive has carefully considered the nature and extent of the
restrictions upon him and the rights and remedies conferred upon the Company under this
Paragraph 7, and hereby acknowledges and agrees that the same are reasonable in time
and territory, are designed to eliminate competition which otherwise would be unfair to
the Company, do not stifle the inherent skill and experience of the Executive, would
not operate as a bar to the Executive’s sole means of support, are fully required to
protect the legitimate interests of the Company and do not confer a benefit upon the
Company disproportionate to the detriment to the Executive.




Page 7 









 












	8.	 	Tax Provision Exhibit.
	 
	 	 	All of the terms of the Tax Provision Exhibit attached to this Employment Agreement as
Exhibit A are hereby incorporated in this Employment Agreement as fully as if those terms
were included in the main text of this Employment Agreement.
	 
	9.	 	Miscellaneous.






	 	(a)	 	The Executive represents and warrants that he is not a party to any agreement,
contract or understanding, whether employment or otherwise, which would restrict or
prohibit him from undertaking or performing employment in accordance with the terms and
conditions of this Employment Agreement.
	 
	 	(b)	 	During the term of this Employment Agreement and thereafter, the Executive will
provide reasonable assistance to the Company in litigation and regulatory matters that
relate to events that occurred during the Executive’s period of employment with the
Company and its predecessors, and will provide reasonable assistance to the Company
with matters relating to its corporate history from the period of the Executive’s
employment with it or its predecessors. The Executive will be entitled to
reimbursement of reasonable out-of-pocket travel or related costs and expenses relating
to any such cooperation or assistance that occurs following the term of employment.
	 
	 	(c)	 	The provisions of this Employment Agreement are severable and if any one or
more provision may be determined to be illegal or otherwise unenforceable, in whole or
in part, the remaining provision and any partially unenforceable provision to the
extent enforceable in any jurisdiction nevertheless shall be binding and enforceable.
	 
	 	(d)	 	The rights and obligations of the Company under this Employment Agreement shall
inure to the benefit of, and shall be binding on, the Company and its successors and
assigns, and the rights and obligations (other than obligations to perform services) of
the Executive under this Employment Agreement shall inure to the benefit of and shall
be binding upon, the Executive and his heirs, personal representatives and assigns.
	 
	 	(e)	 	Any controversy or claim arising out of or relating to this Employment
Agreement, or the breach thereof, shall be settled by arbitration in accordance with
the Rules of the American Arbitration Association then pertaining in the City of
Cleveland, Ohio, and judgment upon the award rendered by the arbitrator or arbitrators
may be entered in any court having jurisdiction thereof. The arbitrator or arbitrators
shall be deemed to possess the powers to issue mandatory orders and restraining orders
in connection with such arbitration; provided, however, that nothing in this Paragraph
9(e) shall be construed so as to deny the Company the right and power to seek and
obtain injunctive relief in a court of equity for any breach or threatened breach by
the Executive of any of his covenants contained in Paragraph 7 hereof.
	 
	 	(f)	 	Any notice to be given under this Employment Agreement shall be personally
delivered in writing or shall have been deemed duly given when received after it is
posted in the United States mail, postage prepaid, registered or certified, return
receipt requested, and if mailed to the Company, shall be addressed to its principal
place of business, attention: President, and if mailed to the Executive, shall be
addressed to him at his home address last known on the records of the Company, or at
such other address or addresses as either the Company or the Executive may hereafter
designate in writing to the other.




Page 8 









 






	 	(g)	 	The failure of either party to enforce any provision or provisions of this
Employment Agreement shall not in any way be construed as a waiver of any such
provision or provisions as to any future violations thereof, nor prevent that party
thereafter from enforcing each and every other provision of this Employment Agreement.
The rights granted the parties herein are cumulative and the waiver of any single
remedy shall not constitute a waiver of such party’s right to assert all other legal
remedies available to it under the circumstances.
	 
	 	(h)	 	As of the date hereof, this Employment Agreement shall supersede all prior
agreements and understandings between the parties with respect to the subject matter
hereof and may not be modified or terminated orally. No modification, termination or
attempted waiver shall be valid unless in writing and signed by the party against whom
the same is sought to be enforced.
	 
	 	(i)	 	This Employment Agreement shall be governed by and construed according to the
laws of the State of Ohio.
	 
	 	(j)	 	Captions and paragraph headings used herein are for convenience and are not a
part of this Employment Agreement and shall not be used in construing it.
	 
	 	(k)	 	Where necessary or appropriate to the meaning hereof, the singular and plural
shall be deemed to include each other, and the masculine, feminine and neuter shall be
deemed to include each other.





[Signatures on the following page.]




Page 9 









 








               IN WITNESS WHEREOF, the parties have executed this Amended and Restated Employment Agreement
on the day and year first set forth herein.




	 	 	 	 	 	 	 
	 	 	DEVELOPERS DIVERSIFIED REALTY CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Daniel B. Hurwitz
 

Daniel B. Hurwitz, President and
	 	     
	 

	 	 	 	Chief Operating Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ David M. Jacobstein	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	DAVID M. JACOBSTEIN	 	 






Page 10 









 






EXHIBIT A




Tax Provision Exhibit




280G Gross-Up and Compliance with Section 409A





	A.	 	Gross-Up of Payments Deemed to be Excess Parachute Payments.






	 	A.1	 	 Acknowledgement; Determination by Accounting Firm. The Company and the
Executive acknowledge that, following a Change in Ownership or Control, one or more
payments or distributions to be made by the Company or an affiliated entity to or for the
benefit of the Executive under this Employment Agreement or the Change in Control
Agreement (including, without limitation, the issuance of common shares of the Company;
the granting or vesting of restricted shares; and the granting, vesting, exercise or
termination of options) (a “Payment”) may be determined to be an “excess parachute
payment” that is not deductible by the Company or its affiliated entity for Federal
income tax purposes and with respect to which the Executive will be subject to an excise
tax because of Sections 280G and 4999, respectively, of the Internal Revenue Code. If a
Change in Ownership or Control occurs, either the Executive or the Company may direct the
Accounting Firm, which, subject to any inconsistent position asserted by the Internal
Revenue Service, will make all determinations required to be made under this Section A.1,
to determine whether any Payment will be an excess parachute payment and to communicate
its determination, together with detailed supporting calculations, to the Company and to
the Executive within 30 days after its receipt of the direction from the Executive or the
Company, as the case may be. The Company and the Executive will cooperate with each
other and the Accounting Firm and will provide necessary information so that the
Accounting Firm may make all such determinations.
	 
	 	A.2 	 	Gross-Up Payments. If the Accounting Firm determines that any Payment
gives rise, directly or indirectly, to liability on the part of the Executive for excise
tax under Section 4999 (and/or any penalties and/or interest with respect to any such
excise tax), the Company will make additional cash payments (each, a “Gross-Up Payment”)
to the Executive, from time to time in such amounts as are necessary to put the Executive
in the same position, after payment of all federal, state, and local taxes (whether
income taxes, excise taxes under Section 4999 or otherwise, or other taxes) and any and
all penalties and interest with respect to any such excise tax, as the Executive would
have been in after payment of all federal, state, and local income taxes if the Payments
(other than in respect of or regarding any units or awards granted or vested pursuant to
any Performance Unit Agreement between the Executive and the Company, or any equity
awards granted or issued pursuant to any outperformance award plans (including the
Outperformance Long-Term Incentive Plan) or supplemental equity award plans (including
the 2007 Supplemental Equity Plan) of the Company) had not given rise to an excise tax
under Section 4999 and no such penalties or interest had been imposed. The Company’s
obligation to make Gross-Up Payments under this Section A is not contingent on
termination of the Executive’s employment with the Company. The Company will make each
Gross-Up Payment to the Executive within 30 days of the time that the related Payment
constituting an excess parachute payment is paid or provided to the Executive.
	 
	 	A.3 	 	Further Gross-Up Payments as Determined by the IRS. If the Internal
Revenue Service determines that any Payment gives rise, directly or indirectly, to
liability on the part of the Executive for excise tax under Section 4999 (and/or any
penalties and/or interest with respect to any such excise tax) in excess of the amount,
if any, previously determined by the




Page 11 









 






	 	 	 	Accounting Firm, the Company will make further Goss-Up Payments to the Executive in cash
and in such amounts as are necessary to put the Executive in the same position, after
payment of all federal, state, and local taxes (whether income taxes, excise taxes under
Section 4999 or otherwise, or other taxes) and any and all penalties and interest with
respect to any such excise tax, as the Executive would have been in after payment of all
federal, state, and local income taxes if the Payments (other than in respect of or
regarding any units or awards granted or vested pursuant to any Performance Unit
Agreement between the Executive and the Company, or any equity awards granted or issued
pursuant to any outperformance award plans (including the Outperformance Long-Term
Incentive Plan) or supplemental equity award plans (including the 2007 Supplemental
Equity Plan) of the Company) had not given rise to an excise tax under Section 4999 and
no such penalties or interest had been imposed. The Company will make any additional
Gross-Up Payments required by this Section A.3 not later than the due date of any
payment indicated by the Internal Revenue Service with respect to the underlying matters
to which the additional Gross-Up relates.
	 
	 	A.4 	 	Contest of IRS Determination by the Company. If the Company desires to
contest any determination by the Internal Revenue Service with respect to the amount of
excise tax under Section 4999, the Executive will, upon receipt from the Company of an
unconditional written undertaking to indemnify and hold the Executive harmless (on an
after tax basis) from any and all adverse consequences that might arise from the
contesting of that determination, cooperate with the Company in that contest at the
Company’s sole expense. Nothing in this Section A will require the Executive to incur
any expense other than expenses with respect to which the Company has paid to the
Executive sufficient sums so that after the payment of the expense by the Executive and
taking into account the payment by the Company with respect to that expense and any and
all taxes that may be imposed upon the Executive as a result of the Executive’s receipt
of that payment, the net effect is no cost to the Executive. Nothing in this Section A
will require the Executive to extend the statute of limitations with respect to any item
or issue in the Executive’s tax returns other than, exclusively, the excise tax under
Section 4999. If, as the result of the contest of any assertion by the Internal Revenue
Service with respect to excise tax under Section 4999, the Executive receives a refund of
a Section 4999 excise tax previously paid and/or any interest with respect thereto, the
Executive will promptly pay to the Company such amount as will leave the Executive, net
of the repayment and all tax effects, in the same position, after all taxes and interest,
that the Executive would have been in if the refunded excise tax had never been paid. To
assure compliance with Section 409A, the Company will make payments to the Executive with
respect to expenses as contemplated in this Section A.4 subject to and as provided in
Sections B.1 and B.3.
	 
	 	A.5 	 	Accounting Firm Fees and Expenses. The Company will bear and pay all fees
and expenses of the Accounting Firm for services performed pursuant to this Section A
(“Applicable Fees and Expenses”). To assure compliance with Section 409A, the Company
will pay any Applicable Fees and Expenses subject to and as provided in Sections B.1 and
B.3.






	B.	 	Compliance with Section 409A.






	 	B.1 	 	Six Month Delay on Certain Payments, Benefits, and Reimbursements. If the
Executive is a “specified employee” for purposes of Section 409A, as determined under the
Company’s policy for determining specified employees on the Termination Date, each
payment, benefit, or reimbursement paid or provided under this Employment Agreement that
constitutes a “deferral of compensation” within the meaning of Section 409A, that is to
be paid or




Page 12 









 






	 	 	 	provided as a result of a “separation from service” within the meaning of Section 409A,
and that would otherwise be paid or provided at any time (a “Scheduled Time”) that is on
or before the date (the “Six Month Date”) that is exactly six months after the
Termination Date (other than payments, benefits, or reimbursements that are treated as
separation pay under Section 1.409A-1(b)(9)(v) of the Treasury Regulations) will not be
paid or provided at the Scheduled Time but will be accumulated (together with interest
at the applicable federal rate under Section 7872(f)(2)(A) of the Internal Revenue Code
in effect on the Termination Date) through the Six Month Date and paid or provided
during the period of 30 consecutive days beginning on the first business day after the
Six Month Date (that period of 30 consecutive days, the “Seventh Month after the
Termination Date”), except that if the Executive dies before the Six Month Date, the
payments, benefits, or reimbursements will be accumulated only through the date of the
Executive’s death and thereafter paid or provided not later than 30 days after the date
of death.
	 
	 	B.2	 	 [Reserved].
	 
	 	B.3 	 	Additional Limitations on Reimbursements and In-Kind Benefits. The
reimbursement of expenses or in-kind benefits described in Paragraph 3(c) pursuant to
either of Paragraph 4(a) or 5(d) or pursuant to any other section of this Employment
Agreement that are taxable benefits (and that are not disability pay or death benefit
plans within the meaning of Section 409A) are intended to comply, to the maximum extent
possible, with the exception to Section 409A set forth in Section 1.409A-1(b)(9)(v) of
the Treasury Regulations. To the extent that any reimbursement of expenses or in-kind
benefits described in Paragraph 3(c) pursuant to either of Paragraph 4(a) or 5(d) or
pursuant to any other section of this Employment Agreement either do not qualify for that
exception, or are provided beyond the applicable time periods set forth in Section
1.409A-1(b)(9)(v) of the Treasury Regulations, then they will be subject to the following
additional rules: (a) any reimbursement of eligible expenses will be paid within 30 days
following the Executive’s written request for reimbursement; provided that the Executive
provides written notice no later than 60 days before the last day of the calendar year
following the calendar year in which the expense was incurred so that the Company can
make the reimbursement within the time periods required by Section 409A; (b) the amount
of expenses eligible for reimbursement, or in-kind benefits provided, during any calendar
year will not affect the amount of expenses eligible for reimbursement, or in-kind
benefits to be provided, during any other calendar year; and (c) the right to
reimbursement or in-kind benefits will not be subject to liquidation or exchange for any
other benefit.
	 
	 	B.4 	 	Compliance Generally. Each payment or reimbursement and the provision of
each benefit under this Employment Agreement shall be considered a separate payment and
not one of a series of payments for purposes of Section 409A. The Company and the
Executive intend that the payments and benefits provided under this Employment Agreement
will either be exempt from the application of, or comply with, the requirements of
Section 409A. This Employment Agreement is to be construed, administered, and governed
in a manner that effects that intent and the Company will not take any action that is
inconsistent with that intent. Without limiting the foregoing, the payments and benefits
provided under this Employment Agreement may not be deferred, accelerated, extended, paid
out, or modified in a manner that would result in the imposition of an additional tax
under Section 409A upon the Executive.
	 
	 	B.5  	 	Termination of Employment to Constitute a Separation from Service. The
parties intend that the phrase “termination of employment” and words and phrases of
similar import mean a “separation from service” with the Company within the meaning of
Section 409A. The




Page 13 









 






	 	 	 	Executive and the Company will take all steps necessary (including taking into account
this Section B.5 when considering any further agreement regarding provision of services
by the Executive to the Company after the Termination Date) to ensure that (a) any
termination of employment under this Employment Agreement constitutes a “separation from
service” within the meaning of Section 409A, and (b) the Termination Date is the date on
which the Executive experiences a “separation from service” within the meaning of
Section 409A.






	C.	 	Definitions.






	 	C.1 	 	Accounting Firm.  The term “Accounting Firm” means the independent auditors
of the Company for the fiscal year immediately preceding the earlier of (a) the year in
which the Termination Date occurred, or (b) the year, if any, in which occurred the first
Change of Control occurring after the date of this Employment Agreement, and that firm’s
successor or successors; unless that firm is unable or unwilling to serve and perform in
the capacity contemplated by this Employment Agreement, in which case the Company must
select another accounting firm that (x) is of recognized regional or national standing
and (y) is not then the independent auditors for the Company or any affiliated
corporation.
	 
	 	C.2 	 	Change in Ownership or Control. The term “Change in Ownership or Control”
has the meaning given to that term (without initial caps) in the Treasury Regulations
published under Section 280G.
	 
	 	C.3 	 	Sections 280G, 409A, and 4999. Each of the terms “Section 280G,” “Section
409A,” and “Section 4999,” respectively, means that numbered section of the Internal
Revenue Code. References in this Employment Agreement to any of these sections are
intended to include any proposed, temporary, or final regulations, or any other guidance,
promulgated with respect to that specific section by the U.S. Department of Treasury or
the Internal Revenue Service.






Page 14