(v) failure of the Executive to give 90 days prior written notice of avoluntary resignation (other than for Good Reason or Disability), unlesssuch failure is waived in writing by an authorized officer of the Company orthe Company shortens the notice period in accordance with Section 5(c)hereof.     For purposes of this Cause definition, no act or failure to act, on the part of the Executive,shall be considered willful unless it is done, or omitted to be done, by him in bad faith andwithout reasonable belief that his action was in the best interests of the Company. Thedetermination to terminate the Executive’s employment for Cause shall be made by the full Board byno less than majority vote and prior to such determination the Executive and his legalrepresentatives shall have the right to appear before the Board or a committee designated by theBoard.          (d) “Change in Control” shall mean any of the following:(i) any “person” (as such term is used in Sections 3(a)(9) and 13(d) of theSecurities Exchange Act of 1934, as amended) or group of persons actingjointly or in concert, but excluding a person who owns more than 5% of theoutstanding shares of the Company as of the Effective Date, becomes a“beneficial owner” (as such term is used in Rule 13d-3 promulgated underthat Act), of 50% or more of the Voting Stock of the Company;(ii) all or substantially all of the assets of the Company are disposed ofpursuant to a merger, consolidation or other transaction (unless theshareholders of the Company immediately prior to such merger, consolidationor other transaction beneficially own, directly or indirectly, insubstantially the same proportion as they owned the Voting Stock of theCompany, all of the Voting Stock or other ownership interests of the entityor entities, if any, that succeed to the business of the Company); or(iii) approval by the shareholders of the Company of a complete liquidationor dissolution of all or substantially all of the assets of the Company.     For purposes of this Change in Control definition, “Voting Stock” shall mean the capital stockof any class or classes having general voting power, in the absence of specified contingencies, toelect the directors of the Company.          (e) “Date of Termination” shall mean:(i) if the Executive’s employment is terminated by the Company, the datespecified in the notice by the Company to the Executive that the Executive’semployment is so terminated; provided that for a termination for Cause such notice is delivered after the Board determination as setforth in Section 1(c) hereof;
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(ii) if the Executive voluntarily resigns the Executive’s employment, 90days after receipt by the Company of written notice that the Executive isterminating the Executive’s employment or if the Company shortens therequired notice period in accordance with Section 5(c), the date oftermination specified in such notice;(iii) if the Executive’s employment is terminated by reason of death, thedate of death;(iv) if the Executive’s employment is terminated for Disability, 30 daysafter written notice is given as specified in Section 1(f) below; or(v) if the Executive resigns the Executive’s employment for Good Reason, 30days after receipt by the Company of timely written notice from theExecutive in accordance with Section 1(g) below unless the Company cures theevent or events giving rise to Good Reason within 30 days after receipt ofsuch written notice.          (f) “Disability” shall mean the Executive’s inability, due to physical or mental incapacity,to substantially perform the Executive’s duties and responsibilities for a period of 120consecutive days as determined by a medical doctor selected by the Company and reasonablyacceptable to the Executive. In no event shall any termination of the Executive’s employment forDisability occur until the Party terminating the Executive’s employment gives written notice to theother Party in accordance with Section 14 below.          (g) “Good Reason” shall mean the occurrence of any of the following without the Executive’sprior written consent:(i) a material diminution by the Company in the Executive’s authority,duties or responsibilities as Senior Vice President, General Counsel andCorporate Secretary or the assignment to the Executive by the Company of anyduties materially inconsistent with such positions;(ii) reduction in (A) Base Salary or (B) Target Bonus opportunity as apercentage of Base Salary;(iii) a change in reporting structure so that the Executive reports tosomeone other than the Chief Executive Officer of the Company;(iv) the removal by the Company of the Executive as Senior Vice President,General Counsel or as Corporate Secretary of the Company or the failure bythe Board to elect or reelect the Executive as an executive officer of theCompany;(v) requiring the Executive to be principally based at any office orlocation more than 50 miles from his current place of employment; or
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(vi) the failure of a successor to all or substantially all of the assets ofthe Company to assume the Company’s obligations under this Agreement eitherin writing or as a matter of law within 15 days after a merger,consolidation, sale or similar transaction.     Anything herein to the contrary notwithstanding, the Executive shall not be entitled to resignfor Good Reason (i) if the occurrence of the event otherwise constituting Good Reason is the resultof Disability, a termination by the Company for which proper notification has been given or avoluntary resignation by the Executive other than for Good Reason and (ii) unless the Executivegives the Company written notice of the event constituting “Good Reason” within 90 days of theoccurrence of such event and the Company fails to cure such event within 30 days after receipt ofsuch notice.          (h) “Separation From Service” shall mean a termination of the Executive’s employment in amanner consistent with Treasury Regulation Section 1.409A-1(h).     2. Position; Term.     During the Term, the Executive shall be employed by the Company as Senior Vice President,General Counsel and Corporate Secretary, reporting directly to the Company’s Chief ExecutiveOfficer, and shall perform such duties and responsibilities as determined by the Company’s ChiefExecutive Officer consistent with such positions. The Executive shall devote the Executive’s fullbusiness time and attention to the satisfactory performance of such duties. Anything herein to thecontrary notwithstanding, nothing shall preclude the Executive from (i) subject to reasonableapproval of the Board, serving on the boards of directors of trade associations and/or charitableorganizations or other business corporations (provided such service is not prohibited under Section7(a)(i) below), (ii) engaging in charitable activities and community affairs and (iii) managing hispersonal investments and affairs, provided that the activities described in the preceding clauses(i) through (iii) do not materially interfere with the proper performance of his duties andresponsibilities hereunder. The Executive agrees to commence employment with the Company no laterthan September 2, 2008 (the “Commencement Date”). The term of the Executive’s employmenthereunder shall begin on the Commencement Date and end at the close of business on the secondanniversary of such date; provided, however, that the Term shall thereafter beautomatically extended for additional one-year periods, unless either the Company or the Executivegives the other written notice at least 120 days prior to the then-scheduled expiration of the Termthat such Party is electing not to so extend the Term (the initial term plus any extension thereofin accordance herewith being referred to herein as the “Term”). Notwithstanding the foregoing, theTerm shall end on the date on which the Executive’s employment is terminated by either Party inaccordance with the provisions herein.     3. Compensation.          (a) Base Salary. During the Term, the Executive shall be paid an annualized BaseSalary of $450,000 (“Base Salary”), payable in accordance with the regular payroll practices of theCompany, subject to annual review by the Board (or the Compensation Committee of the Board) in itssole discretion. During the Term, the Base Salary may not be
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decreased without the Executive’sprior written consent. After any increase in base salary approved by the Board (or theCompensation Committee of the Board), the term “Base Salary” as used in this Agreement shallthereafter refer to the increased amount. The Executive shall not be entitled to any compensationfor service as an officer or member of the board of directors of any Affiliate of the Company.          (b) Annual Incentive Awards. During the Term, the Executive shall be eligible toreceive an annual incentive award (provided the Executive was employed continuously during theapplicable fiscal year) pursuant to the Company’s Incentive Compensation Plan, as amended (or suchother annual incentive plan as may be approved by its shareholders), in effect for the applicablefiscal year (“Bonus Plan”). The Executive’s annual incentive award for fiscal year 2008 andthereafter shall have a target of 70% of Base Salary (“Target Bonus”), with a potential maximumaward as set forth in the Bonus Plan; provided that the actual bonus for fiscal year 2008 shall bepro-rated from the Commencement Date, but in all events, subject to the Executive’s continuedemployment with the Company through the payment date, shall be no less than an amount equal to$315,000 multiplied by a fraction, the numerator of which shall be the number of days the Executiveworked for the Company in fiscal year 2008 and the denominator is 365. Except for the guaranteedbonus for fiscal year 2008, any Bonus shall in all events be based on the Executive’s achievementof annual performance and other targets approved by the committee administering the Bonus Plan.The amount and payment of any annual incentive award shall be determined in accordance with theBonus Plan and shall be payable to the Executive when bonuses for the applicable performance periodare paid to other senior executives of the Company, but in all events no later than the70th day following the end of the fiscal year for which the annual incentive award hasbeen earned. After any increase in the Executive’s target annual bonus opportunity as a percentageof Base Salary as approved by the Board (or the Compensation Committee of the Board), the term“Target Bonus” as used in this Agreement shall thereafter refer to the increased targetopportunity.          (c) Long-Term Incentive Awards. On the Commencement Date, the Executive will begranted the following equity awards: (i) an award of restricted stock (“Restricted Stock”), thenumber of shares of which shall be equal to 218,025 divided by the closing price of a share of theCompany’s common stock on the Commencement Date and rounded up to the nearest 100 shares, and (ii)an option to purchase shares of the Company’s common stock (the “Option”) in accordance with theapplicable equity plan, the number of shares of which shall be equal to 218,025 divided by 0.4038and then divided by the closing price of a share of the Company’s common stock on the CommencementDate and rounded up to the nearest 100 shares. Except as otherwise provided in this Section 3(c)or Section 5 hereof, the Restricted Stock will cliff vest on the third anniversary of theCommencement Date and the Option shall vest (and become exercisable) in three equal annualinstallments on the first, second and third anniversaries of the Commencement Date, provided inboth cases that the Executive isemployed by the Company through such applicable vesting date and has not given notice to theCompany that the Executive is voluntarily resigning without Good Reason prior to such applicablevesting date. Thereafter, commencing in fiscal year 2009 and provided the Term is in effect andthe Executive continues to be employed by the Company, the Executive shall be eligible toparticipate in the Company’s equity incentive plans, including, without limitation, the 2003 and2005 Stock Incentive Plans, as amended from time to time, and such other long-term
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incentiveplan(s) as may be approved by its shareholders from time to time (“Stock Incentive Plans”). Exceptas otherwise provided herein, all equity grants shall be governed by the applicable equity planand/or award agreement. The Executive shall be subject to the equity ownership, retention andother requirements applicable to senior executives of the Company.          (d) Supplemental Award. During the Term beginning with fiscal year 2008, provided theExecutive is employed by the Company on the applicable grant date, the Executive shall be entitledto an annual award with an aggregate grant date value equal to 6% of the sum of Base Salary plusAnnual Bonus as defined in this paragraph 3(d) if the Executive will be less than age 40 by the endof the applicable fiscal year, 8% of such amount if the Executive will be age 40 and over and lessthan 50 by the end of the applicable fiscal year, 10% of such amount if the Executive will be age50 and over and less than age 60 at the end of the applicable fiscal year and 13% of such amount ifthe Executive will be age 60 or older by the end of the applicable fiscal year (“SupplementalAward”), with the first such award pro-rated to reflect the number of full months of service by theExecutive in fiscal year 2008. For this purpose, Base Salary shall be the Base Salary paid to theExecutive for the fiscal year prior to the award year and Annual Bonus shall be the annual bonusawarded to the Executive by the Board for such fiscal year. The Supplemental Award shall not beawarded to the Executive until after the determination by the Board of the Executive’s annual bonusfor the prior fiscal year and 50% of the value of the Supplemental Award shall be awarded in theform of restricted shares pursuant to the applicable Stock Incentive Plan (“Career Shares”) and 50%shall be awarded in the form of a credit to a bookkeeping account maintained by the Company for theExecutive’s account (the “Notional Account”). Any Career Shares awarded hereunder shall begoverned by the applicable Stock Incentive Plan and, if applicable, any award agreement. Forpurposes of this Section 3(d), each Career Share shall be valued at the closing price of a share ofthe Company’s common stock (“Share”) on the date that the Supplemental Award is made. For theNotional Account, the Company shall select the investment alternatives available to the Executiveunder the Company’s 401(k) plan. The balance in the Notional Account shall periodically becredited (or debited) with the deemed positive (or negative) return based on returns of thepermissible investment alternative or alternatives under the Company’s 401(k) plan as selected inadvance by the Executive (and in accordance with the applicable rules of such plan or investmentalternative) to apply to such Notional Account, with such deemed returns calculated in the samemanner and at the same times as the return on such investment alternative(s). The Company’sobligation to pay the amount credited to the Notional Account, including any return thereonprovided for in this Section 3(d), shall be an unfunded obligation to be satisfied from the generalfunds of the Company. Except as otherwise provided in Section 5 below or the applicable StockIncentive Plan and provided that the Executive is employed by the Company on such vesting date, anySupplemental Award granted in the form of Career Shares will vest as follows: 50% of the CareerShares will vest on the earlier of the Executive’s 62nd birthday or upon the Executive’sobtaining 15 years of “Vesting Service” and 100% of the Career Shares will vest on theearliest of (i) the Executive’s 65th birthday, (ii) upon the Executive obtaining 20 years of“Vesting Service” or (iii) 10th anniversary of the date of grant. Except as otherwise provided inSection 5 below, and provided that the Executive is employed by the Company on such vesting date,any Supplemental Award granted as a credit to the Notional Account (as adjusted for any returnsthereon) (“Adjusted Notional Account”)) shall vest as follows: 50% on the earlier of theExecutive’s 62nd birthday or upon the Executive obtaining 5 years of “Vesting Service” and
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100% onthe earlier of the Executive’s 65th birthday and upon the Executive obtaining 10 years of “VestingService”. In addition, any unvested Adjusted Notional Account shall vest upon a Change in Controlas defined in Section 1(d)(i) or (ii) hereof. For purposes of this Section 3(d), “Vesting Service”shall mean the period of time that the Executive is employed by the Company as an executiveofficer. Subject to Section 15(b) hereof, upon vesting the Career Shares will be delivered to theExecutive in the form of Shares. The vested balance in the Adjusted Notional Account, if any,shall not be distributed to the Executive until there has been a Separation From Service or, ifearlier, there has been a Change in Control as defined in Section 1(d)(i) or (ii) hereof and, atsuch time, shall only be distributed at the earliest time that satisfies the requirements of thisSection 3(d). Upon a Change in Control as defined in Section 1(d)(i) or (ii), the vested AdjustedNotional Account, subject to Section 15(b) hereof, shall be paid to the Executive in a lump-sumcash payment. In addition, if the Executive’s employment is terminated for any reason, aftertaking into account Section 5 hereof, any unvested Supplemental Awards (whether in the form ofCareer Shares or the Adjusted Notional Account) shall be forfeited and any vested balance in theAdjusted Notional Account, subject to Section 15(b) hereof, shall be paid to the Executive in acash lump-sum payment immediately following the Executive’s Separation From Service; provided,however, that if the Executive is a “specified employee” as determined pursuant to Section 409A ofthe Internal Revenue Code of 1986, as amended from time to time (the “Code”), and the regulationspromulgated thereunder (“Section 409A”) as of the date of the Executive’s Separation From Service,such distribution shall not be made until the first business day of the seventh calendar monthfollowing the month in which the Executive’s Separation From Service occurs. The Executive canelect to delay the time and/or form of payment of the Adjusted Notional Account under this Section3(d), provided such election is delivered to the Company in writing at least 12 months before thescheduled payment date for such payment and the new payment date for such payment is not earlierthan (i) the Executive’s death, (ii) the Executive’s “disability” which satisfies the requirementsof Section 409A(a)(2)(C) of the Code and its implementing regulations, or (iii) five (5) years fromthe originally scheduled payment date. Upon the expiration or termination of the Term, the vestingand payment dates in this Section 3(d) (without regard to Section 5, except as otherwise expresslyprovided in Section 5(d) of this Agreement) and the election right in this Section 3(d) shallcontinue to apply to any outstanding Supplemental Award.          (e) Review of Arrangements. If during the Term the employment agreements orcompensation arrangements of the Company’s executive officers are reviewed generally for materialimprovements, this Agreement and the Executive’s compensation arrangements, as applicable, will besubject to the same review.     4. Employee Benefits.          (a) Employee Benefit Programs. During the Term, subject to the Company’s right toamend, modify or terminate any benefit plan or program, the Executive shall be entitled toparticipate in all employee savings and welfare benefit plans and programs generally made availableto the Company’s senior-level executives as such plans or programs may be in effect from time totime. During the Term, the Executive shall also be entitled to a paid annual physical medical examas approved by the Company and Company-paid term life insurance with a benefit equal to $1 million,provided the Company can obtain such insurance at commercially
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reasonable premium levels. Duringthe Term, the Executive shall be entitled to four weeks paid vacation per calendar year.          (b) Business Expenses. During the Term, the Company shall reimburse the Executive forall reasonable business expenses incurred by him in performance of his duties hereunder inaccordance with Company policy, including, but not limited to, the proper documentation of suchexpenses. The Company’s business travel policy shall apply to the Executive.          (c) Perquisites. During the Term, the Executive shall be entitled to perquisitesprovided to other senior-level executives, including a monthly car allowance of up to a maximum of$1,000.          (d) General Limitation. Notwithstanding anything elsewhere to the contrary, except tothe extent any reimbursement, payment or entitlement pursuant to this Section 4 does not constitutea “deferral of compensation” within the meaning of Section 409A, (i) the amount of expenseseligible for reimbursement or the provision of any in-kind benefit (as defined in Section 409A) tothe Executive during any calendar year will not affect the amount of expenses eligible forreimbursement or provided as in-kind benefits to the Executive in any other calendar year, (ii) thepayments or reimbursements for expenses for which the Executive is entitled shall be made on orbefore the last day of the calendar year following the calendar year in which the applicableexpense is incurred and (iii) the right to payment or reimbursement or in-kind benefits may not beliquidated or exchanged for any other benefit.     5. Termination of Employment. The Term of this Agreement and the Executive’semployment hereunder shall terminate as of the Date of Termination in the following circumstances:          (a) Termination Without Cause by the Company or Resignation for Good Reason by theExecutive. In the event that during the Term the Executive’s employment is terminated withoutCause by the Company (other than due to Disability) or the Executive resigns for Good Reason andSection 5(d) below does not apply, subject to Section 15(b) hereof, the Executive shall be entitledto:(i) payment of an amount equal to the Base Salary that would have beenpayable to the Executive for the remainder of the Term (without regard toits earlier termination hereunder), but in no event less than 12months, payable in a cash lump sum to the Executive as soon as practicablefollowing the Date of Termination (but in no event later than 60 daysfollowing such date);(ii) immediate vesting as of the Date of Termination of the Restricted Stockas follows: 50% if the Date of Termination occurs prior to the firstanniversary of the Commencement Date; 66% if the Date of Termination occurson or after the first anniversary of the Commencement Date but before thesecond anniversary of the
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Commencement Date; and 83% if the Date ofTermination occurs on or after the second anniversary of the CommencementDate but prior to the third anniversary of the Commencement Date;(iii) immediate vesting as of the Date of Termination of 50% of anyrestricted stock (other than the Career Shares and the Restricted Stock)that remains unvested as of the Date of Termination and, with respect to anystock options which are vested and outstanding as of the Date ofTermination, continued exercisability for 12 months following the Date ofTermination or the remainder of the option term, if shorter;(iv) if the Date of Termination occurs after Joseph Gromek is no longerChief Executive Officer of the Company, a pro-rata annual bonus determinedby multiplying the amount of the annual bonus the Executive would havereceived had his employment continued through the end of the fiscal year inwhich the Date of Termination occurs by a fraction, the numerator of whichis the number of days during such fiscal year that the Executive wasemployed by the Company and the denominator of which is 365, payable whenbonuses for such fiscal year are paid to other Company executives (whichpayment date shall be no earlier than January 1st and no laterthan March 15th of the year following the year in which the Dateof Termination occurs);(v) outplacement counseling for up to 6 months following the Date ofTermination; and(vi) continued participation on the same terms as immediately prior to theDate of Termination for the Executive and his eligible dependents in theCompany’s medical and dental plans in which the Executive and his eligibledependents were participating immediately prior to the Date of Terminationuntil the earlier of (a) the end of the applicable Term (without regard toits earlier termination hereunder), but in no event less than 12 monthsfollowing the Date of Termination, and (b) the date, or dates, the Executivereceives coverage under the plans or programs of a subsequent employer;provided that in no event shall there be any gross up provided by theCompany for any income tax liabilities or otherwise.     If the Company provides written notice to the Executive in accordance with Section 2 abovethat the Term shall not renew and upon or at any time after such expiration of the Term the Companyterminates the Executive’s employment under circumstances that during the Term would constitute atermination of the Executive’s employment without Cause, the Executive shall, subject to Section15(b) hereof, be entitled to the same payments, benefits and entitlements as a termination withoutCause pursuant to this Section 5(a); provided if such notice of non-renewal of the Term andtermination occurs within one year following a Change in Control, the Executive shall be entitledto the same payments, benefits and entitlements as a termination without Cause pursuant to Section5(d) hereof.
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          (b) Termination upon Death or due to Disability. In the event that during the Termthe Executive’s employment is terminated upon death or due to Disability, subject to Section 15(b)hereof, the Executive (or the Executive’s estate or legal representative, as the case may be) shallbe entitled to:(i) a pro-rata annual bonus determined by multiplying the amount of theannual bonus the Executive would have received had his employment continuedthrough the end of the fiscal year in which the Date of Termination occursby a fraction, the numerator of which is the number of days during suchfiscal year that the Executive was employed by the Company and thedenominator of which is 365, payable when bonuses for such fiscal year arepaid to other Company executives (which payment date shall be no earlierthan January 1st and no later than March 15th of theyear following the year in which the Date of Termination occurs);(ii) immediate vesting as of the Date of Termination of the Restricted Stockas follows: 50% if the Date of Termination occurs prior to the firstanniversary of the Commencement Date; 66% if the Date of Termination occurson or after the first anniversary of the Commencement Date but before thesecond anniversary of the Commencement Date; and 83% if the Date ofTermination occurs on or after the second anniversary of the CommencementDate but prior to the third anniversary of the Commencement Date;(iii) immediate vesting as of the Date of Termination of 50% of anyrestricted stock (other than Career Shares and the Restricted Stock) thatremains unvested as of the Date of Termination; and(iv) immediate vesting as of the Date of Termination of 50% of anypreviously granted Supplemental Award that remains unvested as of the Dateof Termination, payable in accordance with Section 3(d) above.     (c) Termination by the Company for Cause or a Voluntary Resignation by the Executive.In the event that during the Term the Company terminates the Executive’s employment for Cause orthe Executive voluntarily resigns, the Executive shall be entitled to the Executive’s Base Salaryand employee benefits through the Date of Termination. A voluntaryresignation by the Executive of the Executive’s employment shall be effective upon 90 daysprior written notice by the Executive to the Company (“Notice Period”), subject to earliertermination by the Company in accordance herewith. During the Notice Period, the Executive shallcontinue to be an employee of the Company and the Executive’s fiduciary duties and otherobligations as an employee of the Company shall continue. The Executive shall cooperate in thetransition of the Executive’s responsibilities; provided that the Company shall have the right todirect the Executive to no longer come to work or not to perform any work for the Company duringthe Notice Period. If and to the extent the Company so directs in writing, in addition to theExecutive’s fiduciary duties and other obligations as an employee and the Executive’s commitmentspursuant to Sections 6 and 7 hereof, the Executive agrees to refrain during the Notice Period fromcontacting any customers, clients, advertisers, suppliers, agents, professional
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advisors oremployees of the Company or any of its Affiliates regarding the Company or any of its Affiliates orthe Executive’s employment status in regard to the Company or any of its Affiliates. The Companyshall also have the right to shorten the Notice Period by providing written notice to theExecutive, in which event the Executive’s employment shall terminate on the date stated in suchnotice.          (d) Termination without Cause by the Company or Resignation for Good Reason by theExecutive Upon or Following a Change in Control. In the event that the Executive’s employmentis terminated without Cause by the Company (other than due to Disability) or the Executive resignsfor Good Reason, in both cases upon or within one year following a Change in Control (provided theTerm is still in effect or has expired during this one-year period), subject to Section 15(b)hereof, the Executive shall be entitled to:(i) an amount equal to 2 times the sum of (a) Base Salary plus (b) TargetBonus, payable in a cash lump sum as soon as practicable following the Dateof Termination (but in no event later than 60 days following such date);(ii) a pro-rata Target Bonus for the year of termination, determined bymultiplying the Target Bonus by a fraction, the numerator of which is thenumber of days the Executive was employed by the Company during the year inwhich the Date of Termination occurs and the denominator of which is 365,payable in a cash lump sum as soon as practicable following the Date ofTermination (but in no event later than 60 days following such date);(iii) immediate vesting as of the Date of Termination of all outstandingequity awards (other than Career Shares), with any vested and outstandingstock options remaining exercisable for 24 months following the Date ofTermination or the remainder of the option term, if shorter;(iv) immediate vesting as of the Date of Termination of any previouslygranted Supplemental Award, payable in accordance with Section 3(d) above;(v) outplacement counseling for up to 6 months following the Date ofTermination; and(vi) continued participation on the same terms as immediately prior to theDate of Termination for the Executive and his eligible dependents in theCompany’s welfare benefit plans in which the Executive and his eligibledependents were participating immediately prior to the Date of Terminationuntil the earlier of (a) 24 months following the Date of Termination, and(b) the date, or dates, the Executive receives substantially equivalentcoverage under the plans or programs of a subsequent employer; provided thatin no event shall there be any gross up provided by the Company for anyincome tax liabilities or otherwise.
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          (e) Other Entitlements Upon Termination of Employment. In the event of anytermination of the Executive’s employment, the Executive (or his estate or legal representative, asthe case may be) shall be entitled to:(i) Base Salary through the Date of Termination, payable on the firstregularly scheduled payroll date following the Date of Termination;(ii) except for a termination of employment pursuant to Section 5(c) above,payment of any unpaid Annual Bonus for any fiscal year preceding the Date ofTermination, payable when bonuses for such fiscal year are paid to otherCompany executives;(iii) any amounts earned or owing to the Executive but not yet paid underSection 5 above, payable in accordance with such section; and(iv) except as otherwise provided in Section 5(f) below, additionalentitlements, if any, in accordance with applicable plans and programs ofthe Company (provided that in no event shall the Executive be entitled toduplication of any payments or benefits).          (f) Exclusivity of Benefits; Releases of Claims. Any payments provided pursuant toSection 5(a) or Section 5(d) above shall be in lieu of any salary continuation arrangements underany other severance program of the Company or any Affiliate and, in all events, the Executive shallnot be entitled to duplication of any benefit or entitlement (whether pursuant to this Agreement,any other plan, policy, arrangement of, or other agreement with, the Company or any Affiliate orpursuant to law). In order to be entitled to any payments, rights and other entitlements pursuantto this Agreement or otherwise, the Executive must comply with the covenants and/oracknowledgements contained in Sections 6, 7, 8 and 9 of this Agreement. As a condition ofreceiving the severance and benefits pursuant to Section 5(a) or Section 5(d) (except for thosepayments or benefits required to be paid or provided by applicable law), the Executive shall berequired to execute and deliver to the Company a general release of claims in the form attachedhereto as Exhibit A no later than 45 days following the Date of Termination and not revoke suchrelease within the applicable revocation period. In the event the Executive revokesthe Release, the Executive shall not be entitled to the payments, rights or other entitlementshereunder other than as required by applicable law.          (g) Nature of Payments; No Mitigation. Any amounts due under this Section 5 are inthe nature of severance payments considered to be reasonable by the Company and are not in thenature of a penalty. In the event of termination of the Executive’s employment for any reason incompliance with this Agreement, the Executive shall be under no obligation to seek other employmentand, except as specifically provided for in this Section 5 (including, without limitation, Section5(f) hereof), there shall be no offset against amounts due to the Executive on account of anyremuneration or benefits provided by any subsequent employment the Executive may obtain.          (h) Resignation. Notwithstanding any other provision of this Agreement, upon thetermination of the Executive’s employment for any reason or, if earlier, upon
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commencement of theNotice Period, unless otherwise requested by the Company, the Executive shall immediately resign,if applicable, from all boards of directors of the Company or any Affiliate and as a trustee of, orfiduciary to, any employee benefit plans of the Company or any Affiliate. The Executive herebyagrees to execute any and all documentation of such resignations upon request by the Company, butthe Executive shall be treated for all purposes as having so resigned upon termination of theExecutive’s employment or commencement of the Notice Period, as the case may be, regardless of whenor whether the Executive executes any such documentation.          (i) Section 409A. Notwithstanding anything to the contrary in this Agreement orelsewhere (except for Section 3(d) of this Agreement), if the Executive is a “specified employee”as determined pursuant to Section 409A as of the date of the Separation From Service and if anypayment, benefit or entitlement provided for in this Agreement or otherwise both (x) constitutes a“deferral of compensation” within the meaning of Section 409A and (y) cannot be paid or provided ina manner otherwise provided herein or otherwise without subjecting the Executive to additional tax,interest or penalties under Section 409A, then any such payment, benefit or entitlement that ispayable during the first six months following the Executive’s Separation From Service shall be paidor provided to the Executive in a cash lump-sum on the earlier of the Executive’s death or thefirst business day of the seventh calendar month following the month in which the Executive’sSeparation From Service occurs. In addition, any payment, benefit or entitlement due upon atermination of the Executive’s employment that represents a “deferral of compensation” within themeaning of Section 409A (other than any payment due pursuant to Section 3(d) of this Agreement)shall only be paid or provided to Executive upon a Separation From Service, in which case anyreference to “Date of Termination” in connection with such payment, benefit or entitlement shall bedeemed to be a reference to “Separation From Service” and the actual payment date within the timespecified in the applicable provision of Section 5 shall be within the Company’s sole discretion.Notwithstanding anything to the contrary in this Section 5 or otherwise, any payment or benefitunder this Section 5 or otherwise which is exempt from Section 409A pursuant to Treasury RegulationSection 1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Executive only to the extentthe expenses are not incurred or the benefits are not provided beyond the last day of the secondtaxable year of the Executive following the taxable year of the Executive in which theSeparation From Service occurs; and provided further that the Company reimburses such expensesno later than the last day of the third taxable year following the taxable year of the Executive inwhich the Separation From Service occurs. Finally, to the extent that the provision of any benefitpursuant to Section 5(a)(vi) or Section 5(d)(vi) hereof is taxable to the Executive, any suchreimbursement shall be paid to the Executive on or before the last day of the Executive’s taxableyear following the taxable year in which the expense is incurred and such reimbursement shall notbe subject to liquidation or exchange for any other benefit.     6. Protection of Confidential Information and Company Property.          (a) During the Term and thereafter, other than in the ordinary course of performing theExecutive’s duties for the Company or as required in connection with providing any cooperation tothe Company pursuant to Section 9 below, the Executive agrees that the Executive shall not discloseto anyone or make use of any trade secret or proprietary or confidential information of the Companyor any Affiliate of the Company, including such trade secret or proprietary or
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confidentialinformation of any customer or other entity to which the Company owes an obligation not to disclosesuch information, which the Executive acquires during the course of the Executive’s employment(“Confidential Information”), including, but not limited to, records kept in the ordinary course ofbusiness, except when required to do so by a court of law, by any governmental agency havingsupervisory authority over the business of the Company or by any administrative or legislative body(including a committee thereof) with apparent or actual jurisdiction to order the Executive todivulge, disclose or make accessible such information. “Confidential Information” shall notinclude information that (i) was known to the public prior to its disclosure by the Executive; or(ii) becomes known to the public through no wrongful disclosure by or act of the Executive or anyrepresentative of the Executive. In the event the Executive is requested by subpoena, court order,investigative demand, search warrant or other legal process to disclose any ConfidentialInformation, the Executive agrees, unless prohibited by law or Securities and Exchange Commissionregulation, to give the Company’s Chief Executive Officer and, if applicable, the Chairman of theBoard prompt written notice of any request for disclosure in advance of the Executive’s making suchdisclosure and the Executive agrees not to disclose such information unless and until the Companyhas expressly authorized the Executive to do so in writing or the Company has had a reasonableopportunity to object to such request or to litigate the matter (of which the Company agrees tokeep the Executive reasonably informed) and has failed to do so.          (b) The Executive hereby sells, assigns and transfers to the Company all of the Executive’sright, title and interest in and to all inventions, discoveries, improvements and copyrightablesubject matter (the “Rights”) which during the period of the Executive’s employment are made orconceived by the Executive, alone or with others, and which are within or arise out of any generalfield of the Company’s business or arise out of any work the Executive performs, or information theExecutive receives regarding the business of the Company, while employed by the Company. TheExecutive shall fully disclose to the Company as promptly as available all information known orpossessed by the Executive concerning any Rights, and upon request by the Company and without anyfurther remuneration in any form to the Executive by the Company, but at the expense of theCompany, execute all applications for patents and for copyright registration, assignments thereofand other instruments and do all things which theCompany may deem necessary to vest and maintain in it the entire right, title and interest inand to all such Rights.          (c) The Executive agrees upon termination of employment (whether during or after theexpiration of the Term and whether such termination is at the instance of the Executive or theCompany), and regardless of the reasons therefor, or at any time as the Company may request, theExecutive will promptly deliver to the Company’s Chief Executive Officer, and not keep or deliverto anyone else, any and all of the following which is in the Executive’s possession or control: (i)Company property (including, without limitation, credit cards, computers, communication devices,home office equipment and other Company tangible property) and (ii) notes, files, memoranda, papersand, in general, any and all physical matter and computer files containing confidential orproprietary information of the Company or any of its Affiliates, including any and all documentsrelating to the conduct of the business of the Company or any of its Affiliates and any and alldocuments containing confidential or
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proprietary information of the customers of the Company or anyof its Affiliates, except for (x) any documents for which the Company’s Chief Executive Officer hasgiven written consent to removal at the time of termination of the Executive’s employment and (y)any information necessary for the Executive to retain for the Executive’s tax purposes (providedthe Executive maintains the confidentiality of such information in accordance with Section 6above).     7. Additional Covenants.          (a) The Executive acknowledges that in the Executive’s capacity in management the Executivewill have a great deal of exposure and access to the trade secrets of the Company or its Affiliatesand other Confidential Information. Therefore, to protect such trade secrets and otherConfidential Information, the Executive agrees as follows:(i) during the Executive’s employment with the Company or any Affiliate andfor 12 months following termination of such employment (whether during theTerm or thereafter), the Executive shall not, other than in the ordinarycourse of performing the Executive’s duties hereunder or as agreed by theCompany in writing, engage in a “Competitive Business,” directly orindirectly, as an individual, partner, shareholder, director, officer,principal, agent, employee, trustee, consultant, or in any relationship orcapacity, in any geographic location in which the Company or any of itsAffiliates is engaged in business; provided, however, that followingtermination of the Executive’s employment this prohibition shall not bedeemed to prohibit the Executive from the practice of law for any client orin respect of any industry or business so long as the Executive does notbreach any of the terms of Section 6 hereof. The Executive shall not bedeemed to be in violation of this Section 7(a) by reason of the fact thatthe Executive owns or acquires, solely as an investment, up to two percent(2%) of the outstanding equity securities (measured by value) of any entity.“Competitive Business” shall mean a business engaged in (x) apparel designand/or apparel wholesaling or (y) retailing in competitionwith any business that the Company or any of its Affiliates is conducting atthe time of the alleged violation; and(ii) during the Executive’s employment with the Company or any Affiliate andfor 18 months following termination of such employment for any reason(whether during the Term or thereafter), the Executive shall not, other thanin the ordinary course of the Company’s business or with the Company’s priorwritten consent, directly or indirectly, solicit or encourage any customerof the Company or any of its Affiliates to reduce or cease its business withthe Company or any such Affiliate or otherwise interfere with therelationship of the Company or any Affiliate with its customers.          (b) The Executive agrees that during the Executive’s employment with the Company or anyAffiliate and for 18 months following termination of such employment for any reason (whether duringthe Term or thereafter), the Executive shall not, other than in the
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ordinary course of theCompany’s business or with the Company’s prior written consent, directly or indirectly, hire anyemployee of the Company or any of its Affiliates, or solicit or encourage any such employee toleave the employ of the Company or its Affiliates, as the case may be.          (c) Upon commencement of the Notice Period and following the termination of the Executive’semployment for any reason (whether during the Term or thereafter), the Executive agrees to refrainfrom making any statements or comments, whether oral or written, of a defamatory or disparagingnature to third parties regarding the Company or any of its Affiliates and any of their officers,directors, personnel and products. Nothing herein shall prevent the Executive from respondingtruthfully and accurately to statements about him made publicly by the Company, provided that suchresponse is consistent with the Executive’s obligations not to make any statements or comments of adefamatory or disparaging nature as set forth herein.     8. Injunctive and Other Relief.          (a) The Executive acknowledges that the restrictions and commitments set forth in Sections 6,7 and 9 of this Agreement are necessary to prevent the improper use and disclosure of ConfidentialInformation and to otherwise protect the legitimate business interests of the Company and any ofits Affiliates. The Executive further acknowledges that the restrictions set forth in Sections 6,7 and 9 of this Agreement are reasonable in all respects, including, without limitation, duration,territory and scope of activity. The Executive expressly agrees and acknowledges that any breachor threatened breach by the Executive or any third party of any obligation by the Executive underthis Agreement, including, without limitation, any breach or threatened breach of Section 6, 7 or 9of this Agreement, will cause the Company immediate, immeasurable and irreparable harm for whichthere is no adequate remedy at law, and as a result of this, in addition to its other remedies, theCompany shall be entitled to the issuance by a court of competent jurisdiction of an injunction,restraining order, specific performance or other equitable relief in favor of itself, without thenecessity of posting a bond, restraining the Executive or any third party from committing orcontinuing to commit any such violation.          (b) If any restriction set forth in Section 6, 7 or 9 of this Agreement is found by anyarbitrator or court of competent jurisdiction to be unenforceable because it extends for too long aperiod of time or over too great a range of activities or in too broad a geographic area, it willbe interpreted to extend over the maximum period of time, range of activities or geographic area asto which it may be enforceable. If any provision of Section 6, 7 or 9 of this Agreement isdeclared to be invalid or unenforceable, in whole or in part, for any reason, such invalidity willnot affect the remaining provisions of such Section which will remain in full force and effect.     9. Cooperation.     Following the Executive’s termination of employment for any reason (whether during or afterthe expiration of the Term), upon reasonable request by the Company, the Executive shall cooperatewith the Company or any of its Affiliates with respect to any legal or investigatory proceeding,including any government or regulatory investigation, or any litigation or other dispute relatingto any matter in which the Executive was involved or had knowledge during the
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Executive’semployment with the Company, subject to the Executive’s reasonable personal and business schedules.The Company shall reimburse the Executive for all reasonable out-of-pocket costs, such as travel,hotel and meal expenses and reasonable attorneys’ fees, incurred by the Executive in providing anycooperation pursuant to this Section 9; provided such expenses shall be paid to the Executive assoon as practicable but in no event later than the end of the calendar year following the calendaryear in which the expenses are incurred, subject in all cases to the Executive providingappropriate documentation to the Company. The Company shall also pay the Executive a reasonableper diem amount for the Executive’s time (other than for time spent preparing for or providingtestimony) which shall be based upon the Executive’s Base Salary at the Date of Termination, withsuch per diem paid to the Executive in the calendar month following the month in which he providessuch assistance. Any reimbursement or payment under this Section 9 shall not affect the amount ofthe reimbursement or payment to the Executive in any other taxable year. The right to payment orreimbursement pursuant to this Section 9 shall not be liquidated or exchanged for any otherbenefit.     10. Tax Matters.          (a) If any amount, entitlement, or benefit paid or payable to the Executive or provided forthe Executive’s benefit under this Agreement and under any other agreement, plan or program of theCompany or any Affiliate (such payments, entitlements and benefits referred to as a “Payment”) issubject to the excise tax imposed under Code Section 4999, or any similar federal or state law (an“Excise Tax”), then notwithstanding anything contained in this Agreement to the contrary, to theextent that any or all Payments would be subject to the imposition of an Excise Tax, the Paymentsshall be reduced (but not below zero) if and to the extent that such reduction would result in theExecutive retaining a larger amount, on an after-tax basis (taking into account federal, state andlocal income taxes and the imposition of the Excise Tax), than if the Executive received all of thePayments (such reduced amount is hereinafter referred to as the “Limited Payment Amount”). TheCompany shall reduce or eliminate the Payments by first reducing or eliminating the payments orbenefits payable in cash and then by reducing or eliminating the non-cash payments, in each case inreverse order beginning with payments or benefits which are to be paid the farthest in time fromthe Determination (as defined below).          (b) All calculations under this Section 10 shall be made by a nationally recognized accountingfirm designated by the Company and reasonably acceptable to the Executive (other than theaccounting firm that is regularly engaged by any party who has effectuated a Change in Control)(the “Accounting Firm”). The Company shall pay all fees and expenses of such Accounting Firm. TheAccounting Firm shall provide its calculations, together with detailed supporting documentation,both to the Company and the Executive within 45 days after the Change in Control or the Date ofTermination, whichever is later (or such earlier time as is requested by the Company) and, withrespect to the Limited Payment Amount, shall deliver its opinion to the Executive that theExecutive is not required to report any Excise Tax on the Executive’s federal income tax returnwith respect to the Limited Payment Amount (collectively, the “Determination”). Within 5 days ofthe Executive’s receipt of the Determination, the Executive shall have the right to dispute theDetermination (the “Dispute”). The existence of the Dispute shall not in any way affect the rightof the Executive to receive the Payments in
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accordance with the Determination. If there is noDispute, the Determination by the Accounting Firm shall be final binding and conclusive upon theCompany and the Executive (except as provided in Section 10(c) below).          (c) If, after the Payments have been made to the Executive, it is established that thePayments made to, or provided for the benefit of, the Executive exceed the limitations provided inSection 10(a) above (an “Excess Payment”) or are less than such limitations (an “Underpayment”), asthe case may be, then the provisions of this Section 10(c) shall apply. If it is establishedpursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceedingwhich has been finally and conclusively resolved, that an Excess Payment has been made, theExecutive shall repay the Excess Payment to the Company within 20 days following the determinationof such Excess Payment. In the event that it is determined by (i) the Accounting Firm, the Company(which shall include the position taken by the Company, or together with its consolidated group, onits federal income tax return) or the IRS, (ii) pursuant to a determination by a court, or (iii)upon the resolution to the satisfaction of the Executive of theDispute, that an Underpayment has occurred, the Company shall pay an amount equal to theUnderpayment to the Executive within 10 days of such determination or resolution together withinterest on such amount at the applicable federal short-term rate, as defined under Code Section1274(d) and as in effect on the first date that such amount should have been paid to the Executiveunder this Agreement, from such date until the date that such Underpayment is made to theExecutive.     11. Representations.     As of the date he executes this Agreement, the Executive represents and warrants that he hasthe free and unfettered right to enter into this Agreement and perform the Executive’s obligationsunder it and that the Executive knows of no agreement between the Executive and any other person,firm or organization, or any law or regulation, that would be violated by the performance of theExecutive’s obligations under this Agreement. The Executive agrees that the Executive will not useor disclose any confidential or proprietary information of any prior employer in the course ofperforming the Executive’s duties for the Company or any of its Affiliates.     12. Indemnification and Liability Insurance.     The Company hereby agrees during, and after termination of, his employment to indemnify theExecutive and hold him harmless, both during the Term and thereafter, to the fullest extentpermitted by law and under the certificate of incorporation and by-laws of the Company against andin respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses(including reasonable attorneys’ fees), losses, amounts paid in settlement to the extent approvedby the Company, and damages resulting from the Executive’s good faith performance of his duties asan officer or director of the Company or any Affiliate of the Company. The Company shall reimbursethe Executive for expenses incurred by him in connection with any proceeding hereunder upon writtenrequest from the Executive for such reimbursement and the submission by the Executive of theappropriate documentation associated with these expenses. Such request shall include anundertaking by the Executive to repay the amount of such advance or reimbursement if it shallultimately be determined that he is not
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entitled to be indemnified hereunder against such costs andexpenses. The Company shall use commercially reasonable efforts to obtain and maintain directors’and officers’ liability insurance covering the Executive to the same extent as the Company coversits other officers and directors.     13. Resolution of Disputes.     Except as otherwise provided in Section 8 above, any controversy, dispute or claim arisingunder or relating to this Agreement, the Executive’s employment with the Company or any Affiliateor the termination thereof shall, at the election of the Executive or the Company (unless otherwiseprovided in an applicable Company plan, program or agreement), be resolved by confidential, bindingand final arbitration, to be held in the borough of Manhattan in New York City in accordance withthe rules and procedures of the Commercial Arbitration Rules of the American ArbitrationAssociation. Judgment upon the award rendered by the arbitrator may be entered in any court havingjurisdiction thereof and shall be binding upon the Parties. TheExecutive consents to the personal and exclusive jurisdiction of the courts of the State ofNew York (including the United States District Court for the Southern District of New York) in anyproceedings hereunder, including, without limitation, any proceeding for equitable relief. TheExecutive further agrees not to interpose any objection for improper venue in any such proceeding.Each Party shall be responsible for its own costs and expenses, including attorneys’ fees, andneither Party shall be liable for punitive or exemplary damages, provided that if the Executivesubstantially prevails with respect to all claims that are the subject matter of the dispute, hiscosts, including attorneys’ fees, shall be borne by the Company and if such costs are notreimbursed by the Company in a dispute exempt pursuant to Treasury Regulation 1.409A-1(b)(11) thensuch payment shall be made by the Company to the Executive in the year following the year in whichthe dispute is resolved.     14. Notices.     Any notice given to a Party shall be in writing and shall be deemed to have been given (i)when delivered personally, (ii) three days after being sent by certified or registered mail,postage prepaid, return receipt requested or (iii) two days after being sent by overnight courier(provided that a written acknowledgement of receipt is obtained by the overnight courier), with anysuch notice duly addressed to the Party concerned at the address indicated below or to such otheraddress as such Party may subsequently designate by written notice in accordance with this Section14:   If to the Company: The Warnaco Group, Inc.