termination of employment or the Change in Control Event shall be the “TerminationDate” for purposes of this Agreement. (a) Severance Benefits. The Corporation shall pay Executive a lump sum amount,in cash, equal to the sum of:(1) two (2) times the sum of: (A) Executive’s Base Salary, and  (B) Executive’s Target Bonus; and (2) Executive’s Target Bonus multiplied by a fraction, thenumerator of which shall equal the number of days Executive was employed bythe Corporation in the Calendar Year in which the Executive’s employmentterminated and the denominator of which shall equal 365.    To the extent the Severance Benefits are subject to Section 409A of the Codeand if the Executive is a “specified employee” as defined in a resolution ofthe Board of Directors setting forth the definition used by the Corporationto identify such employees in accordance with Section 409A of the Code, theamount of such Severance Benefits that qualify for the exception describedin Treas. Reg. § 1.409A-1(b)(9)(iii) (for certain separation pay benefitspayable upon an involuntary termination), shall be paid within ten (10) daysafter the Termination Date and the portion of the Severance Benefits that donot qualify for the foregoing exception (or any other exception to Section409A of the Code) shall be accumulated and paid on the first day of theseventh month following the Termination Date. (b) Payment of Accrued But Unpaid Amounts. Within ten (10) days afterTermination Date, the Corporation shall pay Executive any unpaid portion ofExecutive’s bonus accrued with respect to the Calendar Year ended prior toExecutive’s termination of employment.  (c) Additional Benefit Plan Service and Age. For purposes of eligibility forretirement, for early commencement or actuarial subsidies under any pension plan sponsored by theCorporation or any subsidiary thereof and for the purposes of any additional accruals of benefitsthereunder, Executive will be credited with an additional one year of service and age beyond thataccrued as of Executive’s termination of employment, as if Executive had remained employed andcovered by these plans (as in effect immediately prior to the Change in Control Event) for suchone-year period at the Executive’s current Base Salary and Target Bonus rate; provided that if anybenefits arising from the grant of additional service and age cannot be provided under a qualifiedpension plan of the Corporation or a subsidiary thereof due to the qualification provisions of theCode, the benefit, or its equivalent in value, shall be provided under a nonqualified pension planof the Corporation, which shall comply in all respects with Section 409A of the Code.
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 (d) Continued Welfare Benefits. Until the date which istwo years after the Termination Date or, if earlier, the date on whichExecutive commences full-time employment after the termination of employment,the Corporation shall, at its expense, provide Executive with medical anddental benefits, life insurance, disability and accidental death anddismemberment benefits at the highest level provided prior to the Change inControl Event and ending on the date of the termination of employment; providedhowever, that if Executive becomes employed by a new employer which maintains amedical plan (or its equivalent) that either (i) does not cover Executive withrespect to a pre-existing condition which was covered under the Corporations’medical plan, or (ii) does not cover Executive for a designated waiting period,Executive’s coverage under the Corporation’s medical plan shall continue (butshall be limited in the event of non-coverage due to a pre-existing condition,to the pre-existing condition itself) until the earlier of the end of theapplicable period of non-coverage under the new employer’s plan or the datewhich is two years after the Termination Date.  (e) Effect on Existing Plans. All provisions relating to aChange in Control Event applicable to Executive and contained in any plan,program, agreement or arrangement maintained on the Termination Date (orthereafter) by the Corporation, including, but not limited to, any stockoption, restricted stock or retirement plan, shall remain in effect through thedate of the Change in Control Event, and for such period thereafter as isnecessary to carry out such provisions and provide the benefits payablethereunder, and may not be altered in a manner which adversely affectsExecutive without Executive’s express prior written approval.4. Acceleration of Equity Rights.Effective as of the date of a Change in Control Event, the Corporation shall causeExecutive’s outstanding stock options which are not immediately exercisable to vestand become immediately exercisable and the restrictions on any equity and equityrights held by Executive which are scheduled to lapse solely through the passage oftime to lapse.5. Excise Tax Gross-Up.If Executive becomes entitled to one or more payments (with a “payment” including,without limitation, the vesting of an option or other non-cash benefit or property)pursuant to any plan, agreement or arrangement of the Corporation (together,“Severance Payments”) which are or would be subject to the tax imposed by Section4999 of the Code (or any similar tax that may be imposed) (the “Excise Taxes”), theCorporation shall pay to Executive an additional amount (“Gross-Up Payment”) suchthat, after the payment by Executive of all taxes (including without limitation allincome and employment tax and Excise Tax and treating as a tax the lost tax benefitresulting from the disallowance of any deduction of Executive by virtue of theinclusion of the Gross-Up Payment in Executive’s adjusted gross income), andinterest and penalties with respect to
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such taxes, imposed upon the Gross-Up Payment, Executive retains an amount of theGross-Up Payment equal to the Excise Taxes imposed upon the Severance Payments.For purposes of determining whether any of the Severance Payments will be subject tothe Excise Tax and the amount of such Excise Tax: (i) The Severance Payments shall be treated as “parachutepayments” within the meaning of Section 280G(b)(2) of the Code, and all“excess parachute payments” within the meaning of Section 280G(b)(1) of theCode shall be treated as subject to the Excise Tax, unless, and except tothe extent that, in the written opinion of independent compensationconsultants, counsel or auditors of nationally recognized standing(“Independent Advisors”) selected by the Corporation and reasonablyacceptable to Executive, the Severance Payments (in whole or in part) donot constitute parachute payments, or such excess parachute payments (inwhole or in part) represent reasonable compensation for services actuallyrendered within the meaning of Section 280G(b)(4) of the Code in excess ofthe base amount within the meaning of Section 280G(b)(3) of the Code or areotherwise not subject to the Excise Tax;  (ii) The amount of the Severance Payments which shall betreated as subject to the Excise Tax shall be equal to the lesser of (A)the total amount of the Severance Payments or (B) the total amount ofexcess parachute payments within the meaning of Section 280G(b)(1) of theCode (after applying clause (i) above); and  (iii) The value of any non-cash benefits or any deferredpayment or benefit shall be determined by the Independent Advisors inaccordance with the principles of Sections 280G(d)(3) and (4) of the Code.For purposes of determining the amount of the Gross-Up Payment, Executive shall bedeemed (A) to pay federal income taxes at the highest marginal rate of federalincome taxation for the calendar year in which the Gross-Up Payment is to be made;(B) to pay any applicable state and local income taxes at the highest marginal rateof taxation for the calendar year in which the Gross-Up Payment is to be made, netof the maximum reduction in federal income taxes which could be obtained fromdeduction of such state and local taxes if paid in such year (determined withoutregard to limitations on deductions based upon the amount of Executive’s adjustedgross income); and (C) to have otherwise allowable deductions for federal, state,and local income tax purposes at least equal to those disallowed because of theinclusion of the Gross-Up Payment in Executive’s adjusted gross income. In theevent that the Excise Tax is subsequently determined to be less than the amounttaken into account hereunder at the time the Gross-Up Payment is made, Executiveshall repay to the Corporation at the time that the amount of such reduction inExcise Tax is finally determined (but, if previously paid to the taxing authorities,not prior to the time the amount of such reduction is refunded to Executive orotherwise realized as a benefit by
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Executive) the portion of the Gross-Up Payment that would not have been paid if suchExcise Tax had been applied in initially calculating the Gross-Up Payment, plusinterest on the amount of such repayment at the rate provided in Section1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceedthe amount taken into account hereunder at the time the Gross-Up Payment is made(including by reason of any payment the existence or amount of which cannot bedetermined at the time of the Gross-Up Payment), the Corporation shall make anadditional Gross-Up Payment in respect of such excess (plus any interest andpenalties payable with respect to such excess) at the time that the amount of suchexcess is finally determined.The Gross-Up Payment provided for above shall be paid on the 30th day (or suchearlier date as the Excise Tax becomes due and payable to the taxing authorities)after it has been determined that the Severance Payments (or any portion thereof)are subject to the Excise Tax; provided, however, that if the amount of suchGross-Up Payment or portion thereof cannot be finally determined on or before suchday, the Corporation shall pay to Executive on such day an estimate, as determinedby the Independent Advisors, of the minimum amount of such payments and shall paythe remainder of such payments (together with interest at the rate provided inSection 1274(b)(2)(B) of the Code), as soon as the amount thereof can be determined.In the event that the amount of the estimated payments exceeds the amountsubsequently determined to have been due, such excess shall constitute a loan by theCorporation to Executive, payable on the fifth day after demand by the Corporation(together with interest at the rate provided in Section 1274(b)(2)(B) of the Code).If more than one Gross-Up Payment is made, the amount of each Gross-Up Payment shallbe computed so as not to duplicate any prior Gross-Up Payment.Notwithstanding the foregoing, no Gross-Up Payment(s) provided for under thisprovision shall be paid to the Executive later than the end of the Executive’staxable year next following the taxable year in which the Executive remits theExcise Taxes. If any Gross-Up Payment(s) provided under this provision are not paidto the Executive by the end of the Executive’s taxable year next following thetaxable year in which the Executive remits the Excise Taxes, such Gross-UpPayment(s) shall be forfeited.The Corporation shall have the right to control all proceedings with the InternalRevenue Service that may arise in connection with the determination and assessmentof any Excise Tax and, at its sole option, the Corporation may pursue or forego anyand all administrative appeals, proceedings, hearings, and conferences with anytaxing authority in respect of such Excise Tax (including any interest or penaltiesthereon); provided, however, that the Corporation’s control over any suchproceedings shall be limited to issues with respect to which a Gross-Up Paymentwould be payable hereunder, and Executive shall be entitled to settle or contest anyother issue raised by the Internal Revenue Service or any other taxing authority.Executive shall cooperate with the Corporation in any proceedings relating to thedetermination and assessment of any Excise Tax and shall not take any position oraction that would materially increase the amount of any Gross-Up Payment hereunder.
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6. Mitigation.Executive shall not be required to mitigate damages or the amount of any paymentprovided for under this Agreement by seeking other employment or otherwise, andcompensation earned from such employment or otherwise shall not reduce the amountspayable under this Agreement. No amounts payable under this Agreement shall besubject to reduction or offset in respect of any claims which the Corporation (orany other person or entity) may have against Executive.7. Indemnification; Directors’ and Officers’ Liability Insurance.Executive shall, after the Termination Date, retain all rights to indemnificationunder applicable law or under the Corporation’s Certificate of Incorporation orBy-Laws, as they may be amended or restated from time to time. In addition, thecorporation shall maintain Directors’ and Officers’ liability insurance on behalf ofExecutive, at the level in effect immediately prior to the Termination Date, for twoyears following the Termination Date, and throughout the period of any applicablestatute of limitations.8. Termination for Cause.Nothing in this Agreement shall be construed to prevent the Corporation fromterminating Executive’s employment for Cause. If Executive is terminated for Cause,the Corporation shall have no obligation to make any payments under this Agreement,except for payments that may otherwise be payable under then existing employeebenefit plans, programs and arrangements of the Corporation.9. Disputes.Any dispute or controversy arising under or in connection with this Agreement shallbe settled exclusively by arbitration in New York, New York, or, at the option ofExecutive, in the county and state where Executive then resides, in accordance withthe Rules of the American Arbitration Association then in effect, except that ifExecutive institutes an action relating to this Agreement, Executive may, atExecutive’s option, bring that action in a court of competent jurisdiction.Judgment may be entered on an arbitrator’s award relating to this Agreement in anycourt having jurisdiction.10. Costs of Proceedings.The Corporation shall pay all costs and expenses, including attorneys’ fees anddisbursements, on a monthly basis and in accordance with the requirements of Section409A of the Code, of Executive in connection with any legal proceeding (includingarbitration) instituted by the Executive for breach of any provision of thisAgreement by the Corporation in which the Executive is the prevailing party. IfExecutive does not prevail on such claim for breach, Executive shall pay all costsand expenses, including attorney’s fees and disbursements, of Executive, includingrepayment to the Corporation of any amounts paid to or on behalf of Executivepursuant to the preceding sentence. The Corporation shall pay pre-
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judgment interest on any money judgment obtained by Executive as a result of such aproceeding, calculated at the prime rate of such major bank as is determined by theBoard of Directors from time to time, from the date that payment should have beenmade to Executive under this Agreement.11. Notice.Any notice required or permitted to be given by this Agreement shall be effectiveonly if in writing, delivered personally against receipt therefor or mailed bycertified or registered mail, return receipt requested, to the parties at theaddress herein after set forth, or at such other places that either party maydesignate by notice to the other.Notice to the Corporation shall be addressed to:Bowne & Co., Inc.