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to vote generally on matters submitted to a vote of the stockholders of such corporation and(ii) in the case of a partnership or other business entity not organized as a corporation, any suchbusiness entity of which the Company directly or indirectly owns 50% or more of the voting, capitalor profits interests (whether in the form of partnership interests, membership interests orotherwise).     2. **Change of Control**. For the purpose of this Agreement, a “***Change of Control***” shall mean achange of control of a nature that would be required to be reported in response to Item 6(e) ofSchedule 14A or Item 5.01 of Form 8-K promulgated under the Exchange Act, as in effect on the dateof this Agreement, or if neither item remains in effect, any regulations issued by the Securitiesand Exchange Commission pursuant to the Exchange Act that serve similar purposes, in each casewhether or not the Company is then subject to such reporting requirement; provided, that, withoutlimitation, such a change of control shall be deemed to have occurred if:     (i) any “person” (as defined in Sections 13(d) and 14(d) of the Exchange Act) is or becomesthe “**beneficial owner**” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,of securities of the Company (not including in the amount of the securities beneficially owned bysuch person any such securities acquired directly from the Company or its Affiliates) representing20% or more of the combined voting power of the Company’s then outstanding voting securities;provided, however, that for purposes of this Agreement the term “**person**” shall not include (A) theCompany or any of its Subsidiaries, (B) a trustee or other fiduciary holding securities under anemployee benefit plan of the Company or any of its Subsidiaries, (C) an underwriter temporarilyholding securities pursuant to an offering of such securities, or (D) an entity owned, directly orindirectly, by the stockholders of the Company in substantially the same proportions as theirownership of stock of the Company; and provided, further, however, that for purposes of thisparagraph (i), there shall be excluded any person who becomes such a beneficial owner in connectionwith an Excluded Transaction (as defined in paragraph (iii) below);     (ii) the following individuals cease for any reason to constitute a majority of the number ofdirectors of the Company then serving: individuals who, on the date hereof, constitute the Boardand any new director (other than a director whose initial assumption of office is in connectionwith an actual or threatened election contest including but not limited to a consent solicitation,relating to the election of directors of the Company) whose appointment or election by the Board ornomination for election by the Company’s stockholders was approved or recommended by a vote of atleast two-thirds (2/3) of the directors then still in office and voting on the matter who wereeither directors on the date hereof or whose appointment, election or nomination for election waspreviously so approved;     (iii) there is consummated a merger or consolidation of the Company with any other entity,other than a merger or consolidation which would result in the holders of the voting securities ofthe Company outstanding immediately prior thereto continuing to hold voting securities representing(either by remaining outstanding or by being converted into voting securities of the survivingcorporation or any parent thereof) at least 50% of the combined voting power of the votingsecurities of the entity surviving the merger or consolidation (or the parent of such survivingentity) immediately after such merger or consolidation (an “**Excluded Transaction**”); or
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     (iv) the stockholders of the Company approve a plan of complete liquidation of the Company, orthere is consummated the sale or other disposition of all or substantially all of the assets of theCompany and its Subsidiaries taken as a whole (other than to the Company or one or moreSubsidiaries of the Company).     3. **Employment Agreement**. The Company hereby agrees to continue the Executive in its employ,and Executive agrees to remain in the employ of the Company in accordance with the terms andconditions of this Agreement, for the Employment Period.     4. **Terms of Employment.**     (a) Position and Duties.     (i) During the Employment Period, the Executive’s position (including status, offices, titlesand reporting requirements), authority, duties and responsibilities shall be (A) prior to a Changeof Control, at least commensurate in all material respects with the most significant of those held,exercised and assigned at any time during the 90-day period immediately preceding the ApplicableDate, and (B) upon and within 24 months after a Change of Control, the Executive’s position shallbe at least commensurate in all material respects (disregarding any change or changes that are inthe aggregate *de minimis*) with the most significant of those held, exercised and assigned as of thedate immediately preceding the Applicable Date. During the Employment Period, the Executive’sservices shall be performed at the location where the Executive’s services were performedimmediately preceding the Applicable Date or any office which is the headquarters of the Companyand is less than 50 miles from such location. For purposes of this Agreement, “***Applicable Date***”shall mean, at any time of determination, the latest to have occurred of the Effective Date or,during the 24 months following a Change of Control, any date on which a Change of Control hasoccurred.     (ii) During the Employment Period, and excluding any periods of vacation and sick leave towhich the Executive is entitled, the Executive agrees to devote his full attention and time duringnormal business hours to the business and affairs of the Company. During the Employment Period itshall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic orcharitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach ateducational institutions or (C) manage personal investments, in each such case, so long as suchactivities do not significantly interfere with the performance of the Executive’s responsibilitiesas an employee of the Company in accordance with this Agreement; provided, however, the Executivemay not serve on the board of a publicly traded for profit corporation or similar body of apublicly traded for profit business organized in other than corporate form without the consent ofthe Compensation Committee. It is expressly understood and agreed that to the extent that any suchactivities have been conducted by the Executive prior to the Applicable Date, the continued conductof such activities (or the conduct of activities similar in nature and scope thereto) subsequent tothe Applicable Date shall not thereafter be deemed to interfere with the performance of theExecutive’s responsibilities to the Company.
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     (b) Compensation.     (i) *Base Salary*. During the Employment Period, the Executive shall receive an annual basesalary (“***Annual Base Salary***”), which shall be paid on a monthly basis, at least equal to twelvetimes the highest monthly base salary paid or payable to the Executive by the Company and itsAffiliates in respect of the twelve-month period immediately preceding the month in which theApplicable Date occurs; provided, further, that, after the Effective Date, in no event shall theAnnual Base Salary be less than $215,000. During the Employment Period, the Annual Base Salaryshall be reviewed at least once in each fiscal year of the Company and may be increased at any timeand from time to time as shall be substantially consistent with increases in base salary generallyawarded in the ordinary course of business to other executives of the Company and its Affiliates.     (ii) *Annual Bonus*. In addition to Annual Base Salary, the Executive shall be awarded for eachfiscal year ending during the Employment Period, a bonus of up to 80% of Annual Base Salary (targetof 40%) depending upon meeting goals agreed upon with the Board. Such Annual Bonus amount may bepro-rated in respect of partial years. During the Employment Period, the annual target bonus as apercentage of Annual Base Salary may be increased, but not decreased, from time to time by theBoard.     (iii) *Incentive, Savings and Retirement Plans*. During the Employment Period, the Executiveshall be entitled to participate in all incentive, savings and retirement plans, practices,policies and programs applicable generally to other executives of the Company and its Affiliates.Such plans, practices, policies and programs shall provide the Executive with incentiveopportunities (measured with respect to both regular and special incentive opportunities, to theextent, if any, that such distinction is applicable), savings opportunities and retirement benefitopportunities, in each case, equal to such plans, practices, policies and programs provided by theCompany and its Affiliates for similarly situated senior executives of the Company and itsAffiliates.     (iv) *Welfare Benefit Plans*. During the Employment Period, the Executive and/or the Executive’sdependents, as the case may be, shall be eligible for participation in and shall receive allbenefits under welfare benefit plans, practices, policies and programs provided by the Company andits Affiliates (including, without limitation, medical, prescription, dental, disability, salarycontinuance, employee life, group life, accidental death and travel accident insurance plans andprograms) to the extent applicable generally to similarly situated senior executives of the Companyand its Affiliates. Such plans, practices, policies and programs shall provide the Executive withbenefits which are equal, in the aggregate, to such plans, practices, policies and programsprovided by the Company and its Affiliates for similarly situated senior executives of the Companyand its Affiliates.     (v) *Expenses.*During the Employment Period, the Executive shall be entitled to receive promptreimbursement for all reasonable and documented expenses incurred by the Executive in accordancewith the policies, practices and procedures of the Company and its Affiliates in effect forsimilarly situated senior executives of the Company and its Affiliates. All reimbursable expensesshall be appropriately documented in reasonable detail by the Executive upon submission of anyrequest for reimbursement and in a format and manner consistent with the Company’s expensereporting policy.
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     (vi) *Fringe Benefits*. During the Employment Period, the Executive shall be entitled to fringebenefits in accordance with the plans, practices, programs and policies of the Company and itsAffiliates in effect for similarly situated senior executives of the Company and its Affiliates.     (vii) *Vacation*. During the Employment Period, the Executive shall be entitled to four (4)weeks paid vacation per year, or such greater amount as is afforded to similarly situated seniorexecutives of the Company and its Affiliates.     (viii) *Equity Awards*. In addition to Annual Base Salary and annual bonus, the Executive may beawarded an equity award at the discretion of the Company for any fiscal year ending during theEmployment Period.     5. **Termination of Employment.**     (a) Death or Disability. The Executive’s employment shall terminate automaticallyupon the Executive’s death during the Employment Period. If the Company determines in good faiththat the Disability of the Executive has occurred during the Employment Period (pursuant to thedefinition of Disability set forth below), it may give to the Executive written notice inaccordance with Section 16(c) of this Agreement of its intention to terminate the Executive’semployment. In such event, the Executive’s employment with the Company shall terminate effective onthe 30th day after receipt of such notice by the Executive (the “***Disability Effective Date***”),provided that, within the 30 days after such receipt, the Executive shall not have returned tofull-time performance of the Executive’s duties. For purposes of this Agreement, “***Disability***” shallmean the absence of the Executive from the Executive’s duties with the Company on a full-time basisfor 120 consecutive calendar days by reason of any medically determinable physical or mentalimpairment or the Executive is “totally disabled” within the meaning of the Company’s long-termdisability plan applicable to the Executive. All determinations to be made with respect to clauses(i) and (ii) above shall be made by a physician selected by the Company or its insurers andacceptable to the Executive or the Executive’s legal representative (such agreement as toacceptability not to be withheld unreasonably).     (b) Cause. The Company may terminate the Executive’s employment during the EmploymentPeriod for Cause. For purposes of this Agreement, “***Cause***” shall mean (i) a material violation bythe Executive of the Executive’s obligations under Sections 4(a), 10 or 11 of this Agreement (otherthan as a result of incapacity due to physical or mental illness) which is either willful anddeliberate on the Executive’s part or is committed in bad faith or without reasonable belief thatsuch violation is in the best interests of the Company, (ii) the Executive’s gross negligence inperformance, or intentional non-performance (continuing for 10 days after receipt of written noticeof need to cure from the Company), of any of the Executive’s duties and responsibilities under thisAgreement, or reasonable instructions of the Board or the officer(s) of the Company to whom theExecutive reports within the scope of the Executive’s employment by the Company, (iii) theExecutive’s dishonesty, fraud or misconduct with respect to the business or affairs of the Company,(iv) the Executive’s violation of the Company’s ethics policy which is willful or deliberate on theExecutive’s part or is committed in bad faith or (vi) the final and non-appealable conviction by acourt of competent jurisdiction of the Executive of a felony involving
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moral turpitude or the entering of a guilty plea or a plea of nolo contendere to such crime bythe Executive.     (c) Good Reason; Other Terminations. The Executive’s employment may be terminated bythe Executive (i) during the Employment Period for Good Reason, or (ii) during the EmploymentPeriod, other than for Good Reason.     For purposes of this Agreement, “**Good Reason**” shall mean:     (i) A material diminution in the Executive’s base salary.     (ii) A material diminution in the Executive’s authority, duties, or responsibilities.     (iii) A material diminution in the authority, duties, or responsibilities of the supervisor towhom the Executive is required to report.     (iv) The Company’s requiring the Executive to be based at any office or location other thanthat described in Section 4(a)(i)(B).     (v) Any other action or inaction that constitutes a material breach by the Company of thisAgreement.     (vi) Notwithstanding anything to the contrary above, the Executive’s termination of employmentshall not constitute Good Reason unless (i) the Executive notifies the Company of the condition orevent constituting Good Reason within 90 days of the condition’s occurrence and the Company failsto cure the condition, to the extent curable, specified in the notice within 30 days following suchnotification and (ii) the Executive terminates employment within 10 days following the expirationof the cure period set forth above.     (vii) Notwithstanding anything herein to the contrary, the interim assignment of theExecutive’s position, authority, duties, or responsibilities to any Person while the Executive isabsent from his duties during any of the 120 business days set forth under the definition ofDisability in Section 5(a) shall not constitute a Good Reason for Executive to terminate hisemployment with the Company.     (d) Notice of Termination. Any termination by the Company for Cause, or by theExecutive for any reason (including without limitation Good Reason), shall be communicated byNotice of Termination to the other party hereto given in accordance with Section 16(c) of thisAgreement. For purposes of this Agreement, a “***Notice of Termination***” means a written notice which(i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extentapplicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basisfor termination of the Executive’s employment under the provision so indicated and (iii) if theDate of Termination (as defined below) is other than the date of receipt of such notice, specifiesthe termination date (which date shall be not more than thirty days after the giving of suchnotice). The failure by the Executive or the Company to set forth in the Notice of Termination anyfact or circumstance which contributes to a showing of Good Reason or Cause shall not waive anyright of the Executive or the Company hereunder or preclude the Executive
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or the Company from asserting such fact or circumstance in enforcing the Executive’s or theCompany’s right hereunder.(e) Date of Termination. “***Date of Termination***” means (i) if the Executive’semployment is terminated by the Company for Cause, or by the Executive for Good Reason, the date ofreceipt of the Notice of Termination or any later date specified therein, as the case may be, (ii)if the Executive’s employment is terminated by the Company other than for Cause, the Date ofTermination shall be the date on which the Company notifies the Executive of such termination,(iii) if the Executive’s employment is terminated by reason of death or Disability, the Date ofTermination shall be the date of death of the Executive or the Disability Effective Date, as thecase may be, or (iv) if the Executive’s employment is terminated by the Executive other than forGood Reason, the date of the receipt of the Notice of Termination or any later date specifiedtherein.(f) Deemed Resignation. Any termination of the Executive’s employment shallconstitute an automatic resignation of the Executive as an officer of the Company and eachAffiliate and from the board of directors or similar governing body of the Company and anyAffiliate and from the board of managers or similar governing body of any corporation, limitedliability company, or other entity in which the Company or any Affiliate holds an equity interestand with respect to which board or similar governing body the Executive serves as the Company’s orAffiliate’s designee or other representative.6. **Obligations of the Company upon Termination and Upon Change of Control.**Upon thetermination of Executive’s employment hereunder, Executive shall receive from the Company asseverance those payments and benefits set forth in the applicable provisions of this Section 6.(a) Prior to a Change of Control: Good Reason or Other than for Cause. If, during theEmployment Period and prior to a Change of Control, the Company shall terminate the Executive’semployment other than for Cause, or the Executive shall terminate employment for Good Reason:(i) The Company shall pay to the Executive, in a lump-sum in cash on the date 60 days afterthe Date of Termination (unless other payment terms are specified in this Section 6 or in Section16(h)), the aggregate of the following amounts:     A. the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to theextent not theretofore paid, (2) any compensation previously deferred by the Executive, to theextent permitted by the plan under which such deferral was made (together with any accrued interestor earnings thereon), and any accrued vacation pay, in each case to the extent not theretoforepaid, and (3) a separate sum equal to the amount of any earned but unpaid bonus awarded to theExecutive for any previously completed taxable year (the sum of the amounts described in clauses(1), (2) and (3) shall be hereinafter referred to as the “***Accrued Obligations***”); and     B. the amount (such amount shall be hereinafter referred to as the “***Severance Amount***”) equalto the sum of:
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     (1) 1.5 times the amount of the Executive’s Annual Base Salary; and     (2) 1.5 times the bonus (as a percentage of Annual Base Salary) described in Section 4(b)(ii)paid or payable in respect of the most recently completed fiscal year of the Company or, if no suchbonus has been paid or is payable in respect of such year, any bonus described in Section 4(b)(ii)paid or payable in respect of the next preceding fiscal year; and     C. a lump sum amount equal to the then current cost of the employer-provided welfare benefits(other than group health plans) provided to the Executive and his dependents, as of the Date ofTermination, calculated for the period from the Date of Termination until the later of theexpiration of the remaining Employment Period or the date 18 months following the Date ofTermination (the “***Welfare Cash Payment***”).     (ii) Until the later of the expiration of the remaining Employment Period or the date 18months from the Date of Termination, the Company shall continue group health benefits to theExecutive and/or the Executive’s dependents at least equal to those which would have been providedto them in accordance with the group health plans provided to active employees if the Executive’semployment had not been terminated in accordance with the most favorable plans, practices, programsor policies of the Company and its Affiliates as in effect and applicable generally to otherexecutives and their dependents during the 90-day period immediately preceding the Applicable Date,provided, however, that if the Executive becomes reemployed with another employer and is eligibleto receive group health benefits under another employer provided plan, the group health benefitsdescribed herein shall be secondary to those provided under such other plan during such applicableperiod of eligibility; and provided further, however, that with respect to health and medicalbenefits, to the extent such coverage cannot be extended or provided, the Company will pay duringthe period described above the applicable premium under the Consolidated Omnibus BudgetReconciliation Act of 1985, as amended, associated with such benefits (such continuation of suchbenefits for the applicable period herein set forth shall be hereinafter referred to as “***WelfareBenefit Continuation***”).     (b) Following a Change of Control: Good Reason or Other than for Cause. If, duringthe Employment Period, the Company shall terminate the Executive’s employment other than for Causewithin 24 months following a Change of Control, or the Executive shall terminate employment forGood Reason within 24 months following a Change of Control, then the Company shall pay or provideto the Executive all the amounts and benefits set forth in Section 6(a) above at such times asprovided therein; provided however, that:     (i) instead of the Severance Amount calculated pursuant to Section 6(a)(i)(B) above, aSeverance Amount equal to 2.0 times the sum of (x) the Executive’s Annual Base Salary, and (y) thetarget bonus (as a percentage of Annual Base Salary) described in Section 4(b)(ii) payable for yearin which the termination occurs. The Severance Amount calculated under this Section shall bereduced (if applicable) and paid as set forth in Section 6(a)(i)(B); and     (ii) if the Date of Termination occurs within 24 months following a Change of Control, theneffective as of the Date of Termination, each and every stock option, restricted stock award,restricted stock unit award and other equity-based award and performance award that is outstandingas of the Date of Termination shall immediately vest and/or become
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exercisable and any contractual restrictions on sale or transfer of any such award (other thanany such restriction arising by operation of law) shall immediately terminate.     (c) Death. If the Executive’s employment is terminated by reason of the Executive’sdeath during the Employment Period, this Agreement shall terminate without further obligations tothe Executive’s legal representatives under this Agreement, other than for (i) payment of AccruedObligations (which shall be paid to the Executive’s estate or beneficiary, as applicable, in alump-sum in cash on the date 60 days following the Date of Termination) and (ii) payment to theExecutive’s estate or beneficiary, as applicable, in a lump-sum in cash on the date 60 daysfollowing the Date of Termination of an amount equal to the Severance Amount payable under Section6(a)(i)(B).     (d) Disability. If the Executive’s employment is terminated by reason of theExecutive’s Disability during the Employment Period, this Agreement shall terminate without furtherobligations to the Executive, other than for (i) payment of Accrued Obligations (which shall bepaid to the Executive in a lump-sum in cash on the date 60 days following the Date of Termination)and (ii) payment to the Executive in a lump-sum in cash on the date 60 days following the Date ofTermination of an amount equal to the Severance Amount payable under Section 6(a)(1)(B).     (e) Cause; By the Executive Other than for Good Reason. If the Executive’s employmentshall be terminated for Cause during the Employment Period or if the Executive terminatesemployment during the Employment Period, excluding a termination for Good Reason, this Agreementshall terminate without further obligations to the Executive other than the obligation to pay theAccrued Obligations.     (f) Release Required. Notwithstanding any other provision to the contrary, as acondition to the payment of any Severance Amount or any other payments or benefits under thisSection 6 (other than Accrued Obligations), the Executive must execute and deliver (withoutrevoking during any applicable statutory revocation period) a waiver and release of claims relatedto his employment and termination of employment in favor of the Company and its Affiliates, as wellas their employees, officers and directors, substantially in the form attached as Exhibit Ahereto.     7. **Non-Exclusivity of Rights.**Except as provided in Section 6(a)(ii), 6(c) and 6(d) of thisAgreement, nothing in this Agreement shall prevent or limit the Executive’s continuing or futureparticipation in any plan, program, policy or practice provided by the Company or any of itsAffiliates and for which the Executive may qualify, nor shall anything herein limit or otherwiseaffect such rights as the Executive may have under any contract or agreement with the Company orany of its Affiliates. Amounts which are vested benefits or which the Executive is otherwiseentitled to receive under any plan, policy, practice or program of or any contract or agreementwith the Company or any of its Affiliates at or subsequent to the Date of Termination shall bepayable in accordance with such plan, policy, practice or program or contract or agreement exceptas explicitly modified by this Agreement.
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     8. **Full Settlement; Resolution of Disputes.**     (a) Mitigation; Expenses. Except where the Executive’s employment is terminated bythe Company for Cause or is terminated by the Executive other than for Good Reason, the Company’sobligation to make payments provided for in this Agreement and otherwise to perform its obligationshereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim,right or action which the Company may have against the Executive or others. In no event shall theExecutive be obligated to seek other employment or take any other action by way of mitigation ofthe amounts payable to the Executive under any of the provisions of this Agreement and, except asprovided in Section 6(a)(ii), 6(c) and 6(d) of this Agreement, such amounts shall not be reducedwhether or not the Executive obtains other employment.     (b) Disputed Amounts. If there shall be any dispute between the Company and theExecutive (i) in the event of any termination of the Executive’s employment by the Company, whethersuch termination was for Cause, or (ii) in the event of any termination of employment by theExecutive, whether Good Reason existed, then, unless and until there is (A) a final, non-appealablejudgment by a court of competent jurisdiction declaring that such termination was for Cause or thatGood Reason did not exist, or (B) an affidavit from an officer of the Company stating his goodfaith belief that grounds for termination for Cause exists under Section 5(b)(iii), (iv), (v) or(vi), the Company shall pay all amounts, and provide all benefits, to the Executive and/or theExecutive’s family or other beneficiaries, as the case may be, that the Company would be requiredto pay or provide pursuant to Section 6(a) or 6(b) hereof as though such termination were by theCompany without Cause or by the Executive with Good Reason; provided, however, that the Companyshall not be required to pay any disputed amounts pursuant to this paragraph except upon receipt ofan undertaking (which need not be secured) by or on behalf of the Executive to repay all suchamounts to which the Executive is ultimately adjudged by such court not to be entitled.     (c) Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLESTEXTENT PERMITTED BY APPLICABLE REQUIREMENTS OF LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANYLEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT.     9. **Certain Additional Payments by the Company.**     (a) Gross-Up Payment. Anything in this Agreement to the contrary notwithstanding, inthe event it shall be determined that any payment or distribution by the Company to or for thebenefit of the Executive (whether paid or payable or distributed or distributable pursuant to theterms of this Agreement or otherwise (including, without limitation, payments or distributions madepursuant to any deferred compensation or supplemental retirement plan), but determined withoutregard to any additional payments required under this Section 9) (a “***Payment***”) would be subject tothe excise tax imposed by Section 4999 of the Code (or any successor provision thereto), by reasonof being considered “**contingent on a change in ownership or control**” of the Company, within themeaning of Section 280G of the Code (or any successor provision thereto), or any interest orpenalties are incurred by the Executive with respect to such excise tax (such tax, together withany such interest and penalties, are hereinafter collectively referred to as
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the “***Excise Tax***”), then the Executive shall be entitled to receive an additional payment (a“***Gross-Up Payment***”) in an amount such that after payment by the Executive of all taxes (includingany interest or penalties imposed with respect to such taxes), including, without limitation, anyincome taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposedupon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to theExcise Tax imposed upon the Payments, it being understood and agreed, anything in this Agreement tothe contrary notwithstanding, that in no event shall the Executive be entitled to any paymentpursuant to this Section 9 other than in respect of payments made pursuant to Section 6(b).Notwithstanding the foregoing, Executive shall not be entitled to receive a Gross-Up Payment unlessthe after-tax benefit that Executive is to receive will be reduced by greater than twenty percent(20%) as a result of the excise tax. In all events, any payment pursuant to this Section 9 will bemade no later than 2-1/2 months following the end of the year in which a Participant’s terminationof employment occurs.     (b) Determinations. Subject to the provisions of Section 9(c), all determinationsrequired to be made under this Section 9, including whether and when any Gross-Up Payment isrequired and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving atsuch determination, shall be made by the Company’s then current independent public accountants (the“***Accounting Firm***”) which shall provide detailed supporting calculations both to the Company and theExecutive within 15 business days of the receipt of notice from the Executive that there has been aPayment, or such earlier time as is requested by the Company. In the event that the Accounting Firmis serving as accountant or auditor for the individual, entity or group effecting the Change ofControl, the Executive shall appoint another nationally recognized accounting firm to make thedeterminations required hereunder (which accounting firm shall then be referred to as theAccounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely bythe Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by theCompany to the Executive within five days of the receipt of the Accounting Firm’s determination;provided, however, in no event shall the Gross-Up Payment be paid later than the end of the taxableyear following the taxable year in which the Excise Tax is remitted to the Internal RevenueService. The Accounting Firm shall furnish the Executive with a written opinion that reporting theExcise Tax, or the failure to report the Excise Tax, as applicable, on the Executive’s applicablefederal income tax return in accordance with the determination made by the Accounting Firm pursuantto this Section 9(b) should not result in the imposition of a negligence or similar penalty. Anydetermination by the Accounting Firm shall be binding upon the Company and the Executive. As aresult of the uncertainty in the application of Section 4999 of the Code at the time of the initialdetermination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which willnot have been made by the Company should have been made (“***Underpayment***”), consistent with thecalculations required to be made hereunder. In the event that the Company exhausts its remediespursuant to Section 9(c) and the Executive thereafter is required to make a payment of any ExciseTax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and anysuch Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.     (c) Notice. The Executive shall notify the Company in writing of any claims by theInternal Revenue Service that, if successful, would require the payment by the Company of theGross-Up Payment. Such notification shall be given as soon as practicable but no later than ten
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business days after the Executive is informed in writing of such claim and shall apprise theCompany of the nature of such claim and the date on which such claim is requested to be paid. TheExecutive shall not pay such claim prior to the expiration of the 30-day period following the dateon which it gives such notice to the Company (or such shorter period ending on the date that anypayment of taxes with respect to such claim is due). If the Company notifies the Executive inwriting prior to the expiration of such period that it desires to contest such claim, the Executiveshall:     (i) give the Company any information reasonably requested by the Company relating to suchclaim,     (ii) take such action in connection with contesting such claim as the Company shall reasonablyrequest in writing from time to time, including, without limitation, accepting legal representationwith respect to such claim by an attorney reasonably selected by the Company and reasonablyacceptable to the Executive,     (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 (includingadditional interest and penalties) incurred in connection with such contest and shall indemnify andhold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (includinginterest and penalties with respect thereto) imposed as a result of such representation and paymentof costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), theCompany shall control all proceedings taken in connection with such contest and, at its soleoption, may pursue or forego any and all administrative appeals, proceedings, hearings andconferences with the taxing authority in respect of such claim and may, at its sole option, eitherdirect the Executive to pay the tax claimed and sue for a refund or contest the claim in anypermissible manner, and the Executive agrees to prosecute such contest to a determination beforeany administrative tribunal, in a court of initial jurisdiction and in one or more appellatecourts, as the Company shall determine; provided, however, that if the Company directs theExecutive to pay such claim and sue for a refund, the Company shall provide the amount of suchpayment to the Executive (subject to possible repayment as provided in Section 9(d) below) andshall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax orincome tax (including interest or penalties with respect thereto) imposed with respect to suchpayment or with respect to any imputed income with respect to such payment; and further providedthat any extension of the statute of limitations relating to payment of taxes for the taxable yearof the Executive with respect to which such contested amount is claimed to be due is limited solelyto such contested amount. Furthermore, the Company’s control of the contest shall be limited toissues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shallbe entitled to settle or contest, as the case may be, any other issue raised by the InternalRevenue Service or any other taxing authority.
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     (d) Refunds. If, after the receipt by the Executive of an amount provided by theCompany pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respectto such claim, the Executive shall (subject to the Company’s complying with the requirements ofSection 9(c)) promptly pay to the Company the amount of such refund (together with any interestpaid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive ofan amount provided by the Company pursuant to Section 9(c), a determination is made that theExecutive shall not be entitled to any refund with respect to such claim and the Company does notnotify the Executive in writing of its intent to contest such denial of refund prior to theexpiration of 30 days after such determination, then such amount shall not be required to be repaidand the amount of such advance shall be offset, to the extent thereof, the amount of Gross-UpPayment required to be paid.     10. **Confidential Information.**The Executive shall hold in a fiduciary capacity for the benefitof the Company all secret or confidential information, knowledge or data relating to the Company orany of its Affiliates, and their respective businesses, which shall have been obtained by theExecutive during the Executive’s employment by the Company or any of its Affiliates and which shallnot be or become public knowledge (other than by acts by the Executive or representatives of theExecutive in violation of this Agreement). After termination of the Executive’s employment with theCompany, the Executive shall not, without the prior written consent of the Company or as mayotherwise be required by law or legal process, communicate or divulge any such information,knowledge or data to anyone other than the Company and those designated by it. In no event shall anasserted violation of the provisions of this Section 10 constitute a basis for deferring orwithholding any amounts otherwise payable to the Executive under this Agreement.     11. **Additional Agreements.**     (a) Confidential Information; Non-Competition. The Executive recognizes that theCompany’s willingness to enter into this Agreement is based in material part on the Executive’sagreement to the provisions of this Section 11, and that the Executive’s breach of the provisionsof this Section could materially damage the Company. The Company shall provide confidential andtrade secret information to the Executive immediately upon execution of this Agreement andthereafter, and the Executive agrees not to disclose or use such information for any reason otherthan the Executive’s employment with Company without the express, prior, written consent ofCompany. Therefore, in consideration of the Company’s promise to provide the Executive with itsconfidential information and trade secrets, the Executive agrees that he will not, during theperiod of the Executive’s employment by or with the Company, and for a period of one yearimmediately following the termination of the Executive’s employment with the Company under thisAgreement (the “***Non-Compete Period***”), for any reason whatsoever, directly or indirectly, forhimself or on behalf of or in conjunction with any other person, persons, company, partnership,corporation, limited liability company or business of whatever nature accept employment with, serveas an officer, director, member, manager, agent or joint venturer of, be an owner, controllingstockholder or partner of, act as a consultant to or contractor for, or otherwise activelyparticipate or assist any person, or compete against the Company or any of its Affiliates, directlyor indirectly, with or without compensation, in the offshore drilling or liftboat businesses (orany other business in which the Company or any of its Affiliates is then engaged) in those statesof the United States (including the state or federal waters offshore such states), or
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in those countries in the world (and the territorial waters thereof), where the business ofthe Company is engaged.     (b) Non-Solicitation. The Executive agrees that he shall not during the Non-CompetePeriod, for any reason whatsoever, directly or indirectly, for himself or on behalf of or inconjunction with any other person, persons, company, partnership, corporation, limited liabilitycompany or business of whatever nature induce or encourage any employee of the Company to terminateemployment with the Company or hire or offer employment to, or procure the making of an offer ofemployment to, any employee of the Company or any of its Affiliates who was so employed at any timeduring the 12 months prior to the date of termination of the Executive’s employment with theCompany.     (c) Non-Inducement. The Executive agrees that he shall not during the Non-CompetePeriod, for any reason whatsoever, directly or indirectly, (i) team or join with other employees ofthe Company who were employees of the Company or any of its subsidiaries or affiliates during the12 months prior to the date of termination of the Executive’s employment with the Company in anybusiness like or related to the offshore drilling business or liftboat business (or any otherbusiness in which the Company or any of its Affiliates is then engaged) or (ii) cause, induce orencourage any customer of the Company or any of its Affiliates to terminate or change adversely anybusiness relationship with the Company or any of its subsidiaries or affiliates.     (d) Non-Disparagement. The Executive covenants that during and following theEmployment Period, the Executive will not disparage or encourage or induce others to disparage theCompany or its Affiliates, together with all of their respective past and present directors andofficers, as well as their respective past and present managers, officers, shareholders, partners,employees, agents, attorneys, servants and customers and each of their predecessors, successors andassigns (collectively, the “Company Entities and Persons”); provided that such limitation shallextend to past and present managers, officers, shareholders, partners, employees, agents,attorneys, servants and customers only in their capacities as such or in respect of theirrelationship with the Company and its Affiliates. The term “disparage” includes, withoutlimitation, comments or statements adversely affecting in any manner (i) the conduct of thebusiness of any of the Company Entities and Persons, or (ii) the business reputation of any of theCompany Entities and Persons. Nothing in this Agreement is intended to or shall prevent theExecutive from providing testimony in response to a valid subpoena, court order, regulatory requestor other judicial, administrative or legal process or otherwise as required by law.     (e) Remedies. Because of the difficulty of measuring economic losses to the Companyas a result of a breach of the foregoing covenants, and because of the immediate and irreparabledamage that could be caused to the Company for which it would have no other adequate remedy, theExecutive agrees that the foregoing covenants may be enforced by the Company by injunctions,restraining orders and other equitable actions, without showing any actual damage or that monetarydamages would not provide an adequate remedy and without any bond or other security being required.     (f) Reasonableness. Executive agrees that the limitations set forth in this Section11 on his rights to compete with the Company and its Affiliates are reasonable and necessary inorder to protect the goodwill, confidential information and trade secrets, and other legitimate
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interests of the Company and Affiliates during the Non-Compete Period. Executive specificallyagrees that, in view of the nature of the current and proposed business of the Company, thelimitations as to period of time and geographic area, as well as all other restrictions on hisactivities specified in Section 11, are reasonable and necessary for the protection of the Companyand its Affiliates.     (g) Reformation. The covenants in this Section 11 are severable and separate, and theunenforceability of any specific covenant shall not affect the provisions of any other covenant.Moreover, in the event any court of competent jurisdiction shall determine that the scope, time orterritorial restrictions set forth in this Section 11 are unreasonable and therefore unenforceable,then it is the intention of the parties that such restrictions be enforced to the fullest extentwhich the court deems reasonable, and this Agreement shall thereby be reformed.     (h) Period of Applicability. The Executive hereby agrees that the period during whichthe agreements and covenants of the Executive made in this Section 11 shall be effective shall becomputed by excluding from such computation any time during which the Executive is in violation ofany provision of this Section 11.     12. **Return of Company Property.**All records, designs, patents, business plans, financialstatements, manuals, memoranda, lists and other property delivered to or compiled by the Executiveby or on behalf of the Company, or any of its Affiliates or the representatives, vendors orcustomers thereof that pertain to the business of the Company or any of its Affiliates shall be andremain the property of the Company or any such affiliated company, as the case may be, and besubject at all times to the discretion and control thereof. Likewise, all correspondence, reports,records, charts, advertising materials and other similar data pertaining to the business,activities or future plans of the Company or its Affiliates that are collected or held by theExecutive shall be delivered promptly to the Company or its Affiliates, as the case may be, withoutrequest by such party, upon termination of the Executive’s employment, without regard to the causeor reasons for such termination.     13. **Inventions.**The Executive shall disclose promptly to the Company any and all significantconceptions and ideas for inventions, improvements and valuable discoveries, whether patentable ornot, which are (a) conceived or made by the Executive, solely or jointly with another, during theperiod of employment or within one year thereafter, (b) directly related to the business oractivities of the Company or its Affiliates, and (c) conceived by the Executive as a result of theExecutive’s employment by the Company. Executive hereby assigns and agrees to assign all theExecutive’s interests in any such invention, improvement or valuable discovery to the Company orits nominee. Whenever requested to do so by the Company, the Executive shall execute any and allapplications, assignments or other instruments that the Company shall deem necessary to apply forand obtain Letters Patent of the United States or any foreign country or to otherwise protect theCompany’ interest in any such invention, improvement or valuable discovery.     14. **Cooperation**. Following the date of termination, upon reasonable request by the Company,the Executive shall cooperate with the Company with respect to any litigation, dispute orinvestigation relating to any matter in which he was involved or had knowledge during hisemployment with the Company. The Company shall reimburse the Executive for all reasonable
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and necessary out-of-pocket costs, such as travel, hotel and meal expenses, incurred by theExecutive in providing any cooperation pursuant to this Section 14.     15. **Successors**.     (a) Assignability. This Agreement is personal to the Executive and without the priorwritten consent of the Company shall not be assignable by the Executive otherwise than by will orthe laws of descent and distribution. This Agreement shall inure to the benefit of and beenforceable by the Executive’s legal representatives.     (b) Binding Agreement. This Agreement shall inure to the benefit of and be bindingupon the Company and its successors and assigns.     (c) Successors. The Company will require any successor (whether direct or indirect,by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/orassets of the Company to assume expressly and agree to perform this Agreement in the same mannerand to the same extent that the Company would be required to perform it if no such succession hadtaken place. As used in this Agreement, “***Company***” shall mean the Company as hereinbefore definedand any successor to its business and/or assets as aforesaid which assumes and agrees to performthis Agreement by operation of law, or otherwise.     16. **Miscellaneous**.     (a) Unfunded Obligation. This Agreement shall be an unfunded obligation of theCompany.     (b) Governing Law; Headings; Amendments. This Agreement shall be governed by andconstrued in accordance with the laws of the State of Texas, without reference to principles ofconflict of laws. The captions of this Agreement are not part of the provisions hereof and shallhave no force or effect. This Agreement may not be amended or modified otherwise than by (i) awritten agreement executed by the parties hereto or their respective successors and legalrepresentatives, or (ii) as otherwise specified in Section 16(h) below.     (c) Notices. All notices and other communications hereunder shall be in writing andshall be given by hand delivery to the other party or by registered or certified mail, returnreceipt requested, postage prepaid, addressed as follows:If to the Executive:Stephen M. Butz