ex1017.htm


    
      

    

     

    EXHIBIT
      10.17


    EMPLOYMENT
      AGREEMENT

     

     

    This
      Agreement, dated October 1, 2007 is between JDS Uniphase Corporation (the
      "Company") and Kevin J. Kennedy ("Employee").

     

    PREMISES

     

    WHEREFORE,

     

            1.  Employee
      serves as President and Chief Executive Officer of Company; and 

     

    2.  Employee
      and Company are parties to an Employment Agreement dated August 20, 2003 (the
      “2003 Agreement”); and

     

    3.  Company
      and Employee wish to revise and memorialize the terms of Employee’s employment
      relationship in a new agreement intended to supersede all other written and
      oral
      representations regarding Employee’s employment with Company;

     

    AGREEMENT

     

    NOW,
      THEREFORE, based on the foregoing premises and in consideration of the
      commitments set forth below, Employee and Company agree as follows:

     

    1.  Definitions.

     

    As
      used
      herein, the following terms are defined as follows:

     

    a.  “Cause”
      means:

     

    (i) willful
      malfeasance by Employee, which has a material adverse effect on the
      Company;

     

    (ii) substantial
      and continuing willful refusal by Employee to perform duties ordinarily
      performed by an employee in the same position and having similar duties as
      Employee;

     

    (iii) conviction
      of Employee for a felony or misdemeanor which would have a material adverse
      effect on the Company’s goodwill if Employee is retained as an employee of the
      Company;

     

    (iv) willful
      failure by Employee to comply with material policies and procedures of the
      Company including but not limited to the JDS Uniphase Corporation Code of
      Business Conduct and Policy Regarding Inside Information and Securities
      Transactions. 

     

    b.  “Good
      Reason” means the occurrence of any of the events or conditions described in
      subsections (i) through (iv) below, provided
      however,
      that
      with respect to subsections (i) through (iii) below only, Employee provides
      the
      Company with thirty (30) days notice of termination for “Good Reason” pursuant
      to the provisions of Section 7 below, during which time the Company shall have
      an opportunity to cure the occurrence or condition claimed to constitute “Good
      Reason”; and provided
      further,
      that
      such notice of resignation is submitted by Employee no later than sixty (60)
      days after the occurrence of the event or condition that Employee claims as
      the
      basis for termination for “Good Reason”:

     

    (i)  a
      material reduction in Employee’s base salary or target bonus without Employee’s
      prior written consent; or

     

    (ii) a
      material adverse change in Employee’s position, duties or responsibilities
      without Employee’s prior written consent; or

     

    (iii) an
      actual
      change in Employee’s principal work location by more than 50 kilometers without
      Employee’s prior written consent; or

     

    (iv) failure
      by the Company to obtain from any successor company the assumption of the
      Company’s obligations under this Agreement.

     

    c.  "Change
      of Control" means: (i) a change in the ownership of the corporation, (ii) a
      change in effective control of the corporation, or (iii) a change in the
      ownership of a substantial portion of the assets of the corporation, as those
      terms are used and defined in Section 409A(a)(2)(A)(v) of the Internal Revenue
      Code of 1986, as amended (the “Code”), and the regulations thereunder, and where
      the word “corporation” used above and in such provisions is taken to refer to
      the Company. This provision is intended to incorporate the definition of those
      terms in such section and such regulations, and shall be interpreted
      accordingly.

     

    d.  “Disabled”
      shall mean “disabled” as defined in section 409A(a)(2)(C) of the Code and any
      regulations thereunder, and “Disability has a corresponding
      meaning.

     

    e.  “Effective
      Date” means:

     

    (i) in
      the
      event the Company terminates the employment of Employee, the date designated
      by
      the Company as the last day of Employee’s employment;

     

    (ii) in
      the
      event Employee resigns his or her employment with the Company, the date
      designated by the Company as the effective date of resignation;

     

    (iii) in
      the
      event Employee dies, the date of death;

     

    (iv) in
      the
      event Employee becomes Disabled, the date designated by the Company as the
      last
      day of Employee’s employment.

    


     

    2.  Position,
      Duties, Responsibilities

     

    a.  Position:
      Employee is and will continue to be employed by Company to render services
      to
      the Company in the position of President and Chief Executive Officer, subject
      to
      the provisions of Section 3 below. Employee shall perform such duties as are
      customarily required by such position and such other responsibilities as may
      be
      assigned by the Company’s Board of Directors from time to time. Additionally,
      Employee shall continue to serve as a member of the Company’s Board of Directors
      during the Term of this Agreement.

     

    b.  Other
      Activities:
      Except
      upon the prior written consent of the Company, Employee will not (i) accept
      any other employment, or (ii) engage, directly or indirectly, in any other
      business activity (whether or not pursued for pecuniary advantage) that is
      or
      may be in conflict with, or that might place Employee in a conflicting position
      to that of, the Company.

     

    
      	3.  	
              Compensation

            


    

    


    In
      consideration of the services to be rendered under this Agreement, and subject
      to the approval of the Compensation Committee of the Company’s Board of
      Directors:

    


    a.  
      The
      Company shall pay Employee a base annual salary of $800,000, retroactive to
      September 1, 2007 and payable in accordance with the Company’s standard payroll
      practices. 

     

    b.  
      Employee
      shall be entitled to participate in the Company’s established incentive plan(s)
      for senior executives with a target bonus of 100% of Employee’s base salary and
      a maximum bonus of up to 125% of Employee’s base salary. Notwithstanding the
      preceding sentence, employee also shall be entitled to participate in an
      individual performance-based bonus program (the “CEO Incentive Plan”) with
      performance targets as shall be established by the Company’s Board of Directors
      and reasonably agreed upon by Employee (the “CEO Bonus Targets”). Subject to
      Employee’s achievement of such minimum threshold performance targets as shall be
      established within the CEO Performance Targets, Employee shall be entitled
      to a
      minimum bonus of 50% of Employee’s base salary, and upon exceeding the CEO
      Performance Targets Employee shall be entitled to a bonus of up to 125% of
      base
      salary, the actual bonus to be determined by the Board of Directors based upon
      results achieved against such CEO Performance Targets. Any bonus paid to
      Employee under the Company’s established incentive plan(s) for senior executives
      referred to in the first sentence of this Section 3.b. shall be a credit against
      and shall be deducted from any obligation of the Company to Employee under
      the
      CEO Incentive Plan. In addition, Employee shall be eligible to participate
      in
      the Company’s benefit plans and to receive perquisites of employment as
      established by Company for all regular, full-time employees in the United
      States, as may be amended from time to time in Company’s sole
      discretion;

     

    c.   No
      later
      than thirty (30) days from the date of this Agreement, Employee shall be awarded
      a grant of 175,000 Deferred Stock Units under the Company’s then effective
      equity incentive plan(s) and award agreement as such plans and agreements may
      be
      approved from time to time by the Company’s shareholders and Board of Directors
      (the “Deferred Stock Units Award”). The Deferred Stock Units Award be fully
      vested upon the date of grant and shall be settled in shares but such shares
      shall be delivered to Employee and transferred in the records of the Company
      only upon the sooner to occur of: (i) the date upon which Employee’s service to
      the Company terminates for any reason; (ii) upon a Change of Control, or (iii)
      on the second anniversary of the date of the grant of the Deferred Stock Units
      Award; 

     

    d.   No
      later
      than thirty (30) days from the date of this Agreement, Employee shall be awarded
      a grant of 200,000 Restricted Stock Units (“RSUs”) under the Company’s then
      effective equity incentive plan(s) as such plans may be approved from time
      to
      time by the Company’s shareholders and Board of Directors (the “New Contract RSU
      Award”). The New Contract RSU Award shall vest in equal installments on each of
      the first and second anniversaries of the date of grant.

     

    e.  No
      later
      than the last business day of the first fiscal quarter of the Company’s 2009
      fiscal year, Employee shall be awarded a grant of a minimum of 375,000 RSUs
      under the Company’s then effective equity incentive plan(s) as such plans may be
      approved from time to time by the Company’s shareholders and Board of Directors
      (the “Minimum RSU Award”). The Minimum RSU Award shall be subject to the
      following conditions of vesting: 

    


    (i)  60%
      of
      the Minimum RSU Award (the “Minimum RSU Award Time-Based Units”) shall vest in
      three equal annual installments on the first, second and third anniversaries
      of
      the grant date; and

    


      (ii)   40%
      of
      the Minimum RSU Award (the “Minimum RSU Award Performance Units”) shall vest at
      the rate of 1/4th
      of the
      Minimum RSU Award Performance Units per half fiscal year (for clarity, 37,500
      RSUs per half fiscal year), which such vesting shall occur upon the date of
      the
      Company’s public release on Form 8-K of its fiscal results every other fiscal
      quarter, commencing with release of quarterly financial results for the second
      fiscal quarter of the Company’s 2009 fiscal year, and subject to the achievement
      of performance criteria (the “Minimum RSU Award Performance Criteria”) to be
      established by the Board of Directors in its sole discretion from time to time.
      

     

    f.  As
      soon
      as reasonably practicable following the execution of this Agreement, Company
      shall procure at Company expense a policy of insurance which at a minimum shall
      provide that in the event Employee’s employment is terminated during the term of
      this Agreement as the result of the Death or Disability of Employee, a benefit
      equivalent to three years’ salary, at Employee’s annual salary in effect on the
      Effective Date, plus three years’ bonus (calculated based upon Employee’s “at
      target” bonus under the CEO Incentive Plan), shall be paid to Employee and/or
      Employee’s estate or heirs as may be designated by Employee in Employee’s sole
      discretion from time to time. For clarity, such policy of insurance shall be
      in
      addition to, and not in place of, any policies of insurance as may be made
      available by the Company to Company employees as part of the Company’s standard
      package of employee benefits.

     

    Nothing
      in this Section 3 shall be interpreted as precluding the Board of Directors,
      in
      its sole discretion, subject only to compliance with applicable law and exchange
      listing requirements, from awarding Employee additional equity incentives,
      cash
      bonuses and/or other compensation.

     

    
      	4.  	
              Term 

            


    

     

    The
      term
      (the “Term”) of this Agreement shall commence on September 1, 2007 and shall
      expire on August 31, 2009 unless sooner terminated as provided herein (the
      date
      of termination of this Agreement, the “Expiration Date”). Notwithstanding the
      foregoing, on the second anniversary of the date of this Agreement, and on
      the
      anniversary date of each one year period thereafter (a “Renewal Date”) the Term
      will be automatically extended for an additional one-year period unless, not
      later than 60 days prior to such a Renewal Date, the Company provides written
      notice to Employee that it has elected not to extend the Term of this
      Agreement.

     

    
      	5.  	
              Termination.

            


    

    


    a.  Termination
      Benefits Under Certain Circumstances.
      If
      Employee’s employment is terminated, prior to the expiration of the Term, by
      Employee for Good Reason, or by the Company for reasons other than for Cause,
      the Death or the Disability of the Employee, and conditioned upon Employee
      executing and delivering to the Company a release of claims, reasonably
      acceptable to the Company, Employee will be entitled as of the effective date
      of
      such release of claims, to the following benefits in full satisfaction of any
      statutory, contractual or common law entitlements which Employee has or could
      have as a result of the termination of the Term:

     

    (i)  three
      years’ salary, at Employee’s annual salary in effect on the Effective Date, plus
      three years’ bonus (calculated based upon Employee’s “at target” bonus under the
      CEO Incentive Plan). All amounts paid to Employee pursuant to the terms of
      this
      Section 5.a.(i) shall be reduced by any amounts to which Employee is otherwise
      entitled under any statutory or Company long or short term disability plan
      and
      any required withholdings or deductions; 

     

    (ii)  Employee’s
      right, title and entitlement to any unvested options, restricted stock units,
      or
      any other securities or similar incentives which have been granted or issued
      to
      Employee as of the Effective Date, which would have otherwise vested in the
      three year period immediately following the Effective Date, shall immediately
      vest, free from any restrictions other than those imposed by applicable state
      and federal securities laws, provided that all such securities shall continue
      to
      be exercisable (if applicable) for one (1) year from the Effective Date or
      until
      the term such options, restricted stock units or other securities would have
      otherwise expired (if applicable), whichever is earlier; and 

     

    (iii)  should
      Employee elect COBRA benefits continuation following termination of employment
      the Company shall pay the full cost to Employee for the full 18 month COBRA
      period and the Company shall thereafter provide Employee, in one lump sum,
      an
      amount equal to the cost of reasonably comparable health insurance benefits
      for
      Employee and Employee dependents for a period of six (6) months. All
      amounts payable pursuant to this Section 5.a.(iii) shall be grossed-up
      to the
      extent such amounts are determined to be a taxable benefit.

    


    b.  Termination
      For Cause:
      This
      Agreement shall terminate immediately upon the termination of Employee for
      Cause. Thereafter, all obligations of the Company under this Agreement shall
      cease.

     

    c.  By
      Death:
      Employee's employment shall terminate automatically upon the death of Employee.
      Conditioned upon Employee’s beneficiaries or estate executing and delivering to
      the Company a release of claims, reasonably acceptable to the Company,
      Employee’s beneficiaries or estate, as applicable, will be entitled as of the
      effective date of such release of claims to the compensation set forth in
      Sections 5.a.(ii) and 5.a.(iii) above in full satisfaction of any statutory,
      contractual or common law entitlements which Employee and Employee’s
      beneficiaries or estate has or could have as a result of the termination of
      the
      Term. Thereafter, all obligations of Company under this Agreement shall cease.
      Nothing in this Section 5.c. shall affect any entitlement of Employee's heirs
      to
      the benefits of any life insurance plan or other applicable benefits, including
      benefits available pursuant to Section 3.f. above. 

     

    d.  By
      Disability:
      If
      Employee suffers from a Disability, then, to the extent permitted by law,
      Company may terminate Employee's employment. Conditioned upon Employee’s, or as
      applicable Employee’s beneficiaries or estate, executing and delivering to the
      Company a release of claims, reasonably acceptable to the Company, Employee,
      or
      as applicable Employee’s beneficiaries or estate, will be entitled as of the
      effective date of such release of claims to the to the compensation set forth
      in
      Sections 5.a.(ii) and 5.a.(iii) above in full satisfaction of any statutory,
      contractual or common law entitlements which Employee has or could have as
      a
      result of the termination of the Term. Thereafter, all of Company's obligations
      under this Agreement shall cease. Nothing in this Section 5.d. shall affect
      Employee's rights under any disability plan in which he is a participant,
      including benefits available pursuant to Section 3.f. above.

     

    e.   Benefits
      in the Event of Nonrenewal of the Term:
      In the
      event that the Company provides notice in accordance with the provisions of
      Section 4 above of its intent not to renew the Term for an additional one year
      period, and conditioned upon the Employee’s executing and delivering to the
      Company a release of claims, reasonably acceptable to the Company, Employee
      will
      be entitled to the following benefits as of the Effective Date
      in full
      satisfaction of any statutory, contractual or common law entitlements which
      Employee has or could have as a result of the termination of the
      Term:

     

     (i) the
      Company shall pay to the Employee, in one lump sum, an amount equal to (A)
      one
      year’s salary, at the Employee’s annual salary in effect on the Effective Date,
      plus (B) one year’s bonus (calculated based upon Employee’s “at target”
bonus under the CEO Incentive Plan),
      minus
      any required withholdings or deductions;

    
      	 	 


    

    (ii) Employee’s
      right, title and entitlement to any unvested options or any other securities
      or
      similar incentives which have been granted or issued to Employee as of the
      Effective Date and which would otherwise have vested according to their terms
      within one (1) year of the Effective Date shall immediately vest, free from
      any
      restrictions (other than those imposed by applicable state and federal
      securities laws), and all such securities shall continue to be exercisable
      (if
      applicable) until the earlier
      of (1)
      as provided in the applicable plan or grant agreements (but in no event less
      than one year) following the Effective Date; or (2) until such term of such
      options or other such securities would have otherwise expired (if applicable);
      and

     

    (iii)
      should Employee elect COBRA benefits continuation
      following termination of employment the Company shall pay the full cost to
      Employee for the full 18 month COBRA period and the Company shall thereafter
      provide Employee, in one lump sum, an amount equal to the cost of reasonably
      comparable health insurance benefits for Employee and Employee dependents for
      a
      period of six (6) months.  All amounts payable pursuant to this Section
      5(e)(iii) shall be grossed-up to the extent such amounts are determined to
      be a
      taxable benefit.

     

    f.   Certain
      Additional Payments by Company:
      Notwithstanding anything in this Agreement to the contrary, in the event that
      Employee becomes entitled to any of the payments or benefits provided under
      this
      Section 5 as a result of Employee’s resignation for (i) Good Reason or (ii)
      Employee’s termination without cause, in each case following a Change of
      Control, and such payments or benefits result in Employee being subject to
      the
      golden parachute excise tax imposed by Section 4999 of the Internal Revenue
      Code, the Company shall make such additional payment as will make executive
      whole for such tax obligation, as set forth in Appendix A, which is incorporated
      herein by reference.

    


    g.   Payment
      Date:
      All
      payments required by Section 5.a., c., d., or e., (including as a
      consequence of the exercise of an option or vesting of a restricted stock unit
      or other security referred to in Section 5.a.(ii) or 5.e.(ii)) shall be made
      by
      the fifteenth (15th) day of the third (3rd) month following the Effective Date
      of the Employee’s termination of employment which occasioned such payment. All
      Gross-up Payments required by Section 5.f. shall be made by the fifteenth
      (15th) day of the third (3rd) month following the determination of the amount
      of
      such Gross-up Payment pursuant to Appendix A hereto, and, in any event, by
      the end of the Employee’s taxable year next following the Employee’s taxable
      year in which the Employee remitted the Excise Taxes to which the Gross-up
      Payment relates. Employee shall not be permitted, directly or indirectly, to
      designate the taxable year of any payment.

    


    h.   No
      Other Obligations:
      The
      Company shall have no obligations with respect to any termination of the Term
      for any reasons other than as specified in this Section 5.

     

    
      	     6.	
                Employee
                Termination Obligations

            


    

     

    a.  Return
      of Company's Property:
      Employee hereby acknowledges and agrees that all personal property, including,
      without limitation, all books, manuals, records, reports, notes, contracts,
      lists, blueprints, and other documents, or materials, or copies thereof, and
      equipment furnished to or prepared by Employee in the course of or incident
      to
      Employee’s employment, belong to Company and shall be promptly returned to
      Company upon termination of Employee’s employment. 

     

    b.  Cooperation
      in Pending Work:
      Following any termination of Employee’s employment, Employee shall fully
      cooperate with Company in all matters relating to the winding up of pending
      work
      on behalf of Company and the orderly transfer of work to other employees of
      Company. Employee shall also cooperate in the defense of any action brought
      by
      any third party against Company that relates in any way to Employee’s acts or
      omissions while employed by Company.

     

    7.  Notices

     

    All
      notices or other communications required or permitted hereunder shall be made
      in
      writing and shall be deemed to have been duly given if delivered by hand or
      mailed, postage prepaid, by certified or registered mail, return receipt
      requested, and addressed to Company:

     

    JDS
      Uniphase Corporation

    430
      North
      McCarthy Blvd

    Milpitas,
      California 95035

    Attention:
      Chief Legal Officer

    


    and
      to
      Employee at Employee’s home address as reflected in the Company’s Oracle
      database as of the date of such notice or other communication. Employee and
      the
      Company shall provide written notice to the other (which, notwithstanding any
      other provision within this section, may be provided by hand delivery, first
      class mail or electronic mail) of any changes to the addresses
      above.

     

    8.  Entire
      Agreement

     

    Subject
      to the last sentence of this paragraph, the terms of this Agreement are intended
      by the parties to be the final and exclusive expression of their agreement
      with
      respect to the employment of Employee by Company, superseding all prior such
      agreements, and may not be contradicted by evidence of any prior or
      contemporaneous statements or agreements. Subject to the last sentence of this
      paragraph, the parties further intend that this Agreement shall constitute
      the
      complete and exclusive statement of its terms and that no extrinsic evidence
      whatsoever may be introduced in any judicial, administrative, or other legal
      proceeding involving this Agreement. To the extent that the practices, policies,
      or procedures of Company, now or in the future, apply to Employee and are
      inconsistent with the terms of this Agreement, the provisions of this Agreement
      shall control. Notwithstanding the foregoing, nothing in this agreement shall
      limit or modify, in any manner, any existing or future agreement between the
      Employee and the Company relating to indemnification against third party claims,
      proprietary information, inventions, treatment of confidential information,
      non-competition or employee benefits or incentive plans.

     

    9.  Amendments,
      Waivers

     

    This
      Agreement may not be modified, amended, or terminated except by an instrument
      in
      writing, signed by Employee and by a duly authorized representative of Company
      other than Employee. No failure to exercise and no delay in exercising any
      right, remedy, or power under this Agreement shall operate as a waiver thereof,
      nor shall any single or partial exercise of any right, remedy, or power under
      this Agreement preclude any other or further exercise thereof, or the exercise
      of any other right, remedy, or power provided herein. 

     

    Employee
      and the Company each specifically agree and acknowledge that they each waive
      recourse to any remedies in tort, and further agree and acknowledge their intent
      that all rights and liabilities pertaining to the cessation of the employment
      relationship between them, where such cessation occurs on or before the
      Expiration Date, be as set out in this Agreement (or in any subsequent
      modification of this Agreement, provided that the modification is in writing
      and
      signed by both parties). 

     

    10.  Assignment;
      Successors and Assigns

     

    Employee
      agrees that Employee will not assign, sell, transfer, delegate or otherwise
      dispose of, whether voluntarily or involuntarily, or by operation of law, any
      rights or obligations under this Agreement, nor shall Employee’s rights be
      subject to encumbrance or the claims of creditors. Any purported assignment,
      transfer, or delegation shall be null and void. Nothing in this Agreement shall
      prevent the consolidation of the Company with, or its merger into, any other
      corporation, or the sale by the Company of all or substantially all of its
      properties or assets, or the assignment by the Company of this Agreement and
      the
      performance of its obligations hereunder to any successor in interest. Subject
      to the foregoing, this Agreement shall be binding upon and shall inure to the
      benefit of the parties and their respective heirs, legal representatives,
      successors, and permitted assigns, and shall not benefit any person or entity
      other than those enumerated above.

     

    11.  Severability;
      Enforcement

     

    If
      any
      provision of this Agreement, or the application thereof to any person, place,
      or
      circumstance, shall be held by a court of competent jurisdiction to be invalid,
      unenforceable, or void, the remainder of this Agreement and such provisions
      as
      applied to other persons, places, and circumstances shall remain in full force
      and effect.

     

    12.  Governing
      Law

     

    The
      validity, interpretation, enforceability, and performance of this Agreement
      shall be governed by and construed in accordance with the law of the State
      of
      California.

     

    13.  Employee
      Acknowledgment

     

    The
      parties acknowledge (a) that they have consulted with or have had the
      opportunity to consult with independent counsel of their own choice concerning
      this Agreement, and (b) that they have read and understand the Agreement,
      are fully aware of its legal effect, and have entered into it freely based
      on
      their own judgment and not on any representations or promises other than those
      contained in this Agreement.

     

    14. Compliance
      with Code Section 409A

     

    The
      parties to this Agreement acknowledge and agree that, notwithstanding anything
      herein to the contrary, this Agreement is intended to comply with the provisions
      of Code section 409A, as in effect from time to time. The intent of this Section
      14 is that Employee not be subject to any tax liability or penalty by reason
      of
      the application of Code section 409A(a)(1) with respect to any amount payable
      under this Agreement. In consideration of the fact that any payments under
      Employee’s Prior Employment Agreement would not have been subject to the
      provisions of Code section 409A, if the Employee is subject to any liability
      under Code section 409A within twelve (12) months after the Effective Date,
      or
      with respect to any payment made to the Employee on account of his termination
      of employment within such twelve-month period, the Company shall indemnify
      the
      Employee on an after-tax basis for all such liability. To the extent necessary
      to comply with the requirements of Code section 409A(a)(2)(B)(i) (prohibiting
      certain payments to a “specified employee” within six (6) months of such
      employee’s separation from service), any payment hereunder that may be made to
      the Employee on account of his termination of employment with the Company shall
      be delayed only to the extent necessary to comply with the requirements of
      Code
      section 409A(a)(2)(B)(i).

     

    15. Date
      of Agreement

     

    The
      parties have duly executed this Agreement as of the date first written above.
      

    


    
      	 	 	 	 
	JDS
              UNIPHASE
              CORPORATION	 	 	 
	
               

               

              
                

              

            	 	 	
               

               

              
                

              

            
	
              Name:  Christopher
                S.
                Dewees
Its:    Senior
                Vice
                President and
     Chief
                Legal
                Officer

            	 	 	Kevin
              J.
              Kennedy


    

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      



    APPENDIX
      A

    


    Certain
      Additional Payments by the Company

     

    (a)  Subject
      to and as provided by Section 5(f) of this Agreement, in the event it shall
      be
      determined that any payment, award, benefit or distribution (or any acceleration
      of any payment, award, benefit or distribution) by the Company (or any of its
      affiliated entities) or any entity which effectuates a Change of Control (or
      any
      of its affiliated entities) to or for the benefit of Employee (whether pursuant
      to the terms of this Agreement or otherwise, but determined without regard
      to
      any additional payments required under this Appendix A) (the “Payments”) would
      be subject to the excise tax imposed by Section 4999 of the Internal Revenue
      Code of 1986, as amended (the “Code”), or any interest or penalties are incurred
      by Employee with respect to such excise tax (such excise tax, together with
      any
      such interest and penalties, are hereinafter collectively referred to as the
      “Excise Tax”), then the Company shall pay to Employee an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by Employee from the
      Gross-Up Payment of all taxes (including any Excise Tax) imposed upon the
      Gross-Up Payment, Employee retains an amount of the Gross-Up Payment equal
      to
      the sum of (x) the Excise Tax imposed upon the Payments and (y) the product
      of
      any deductions disallowed because of the inclusion of the Gross-Up Payment
      in
      Employee’s adjusted gross income and the highest applicable marginal rate of
      federal income taxation for the calendar year in which the Gross-Up Payment
      is
      to be made. For purposes of determining the amount of the Gross-Up Payment,
      the
      Employee shall be deemed to (i) pay federal income taxes at the highest marginal
      rates of federal income taxation for the calendar year in which the Gross-Up
      Payment is to be made, (ii) pay applicable state and local income taxes in
      the
      state and locality in which Employee is subject to taxation at the highest
      marginal rate of taxation in each state and locality for the calendar year
      in
      which the Gross-Up Payment is to be made, net of the maximum reduction in
      federal income taxes which could be obtained from deduction of such state and
      local taxes and (iii) have otherwise allowable deductions for federal income
      tax
      purposes at least equal to those which could be disallowed because of the
      inclusion of the Gross-Up Payment in the Employee’s adjusted gross income.
Notwithstanding
      the foregoing provisions of this Appendix A, if it shall be determined that
      Employee is entitled to a Gross-Up Payment, but that the Payments would not
      be
      subject to the Excise Tax if the Payments were reduced by an amount that is
      less
      than 10% of the portion of the Payments that would be treated as “parachute
      payments” under Section 280G of the Code, then the amounts payable to Employee
      under this Agreement shall be reduced (but not below zero) to the maximum amount
      that could be paid to Employee without giving rise to the Excise Tax (the “Safe
      Harbor Cap”), and no Gross-Up Payment shall be made to Employee. The
      reduction of the amounts payable hereunder, if applicable, shall be made by
      reducing any cash payments, unless an alternative method of reduction is elected
      by Employee. For purposes of reducing the Payments to the Safe Harbor Cap,
      only
      amounts payable under this Agreement (and no other Payments) shall be reduced.
      If the reduction of the amounts payable hereunder would not result in a
      reduction of the Payments to the Safe Harbor Cap, no amounts payable under
      this
      Agreement shall be reduced pursuant to this provision.

     

    (b)  Subject
      to the provisions of this Appendix A (a), all determinations required to be
      made
      under this Appendix A, including whether and when a Gross-Up Payment is
      required, the amount of such Gross-Up Payment, the reduction of the Payments
      to
      the Safe Harbor Cap and the assumptions to be utilized in arriving at such
      determinations, shall be made by the public accounting firm that is retained
      by
      the Company as of the date immediately prior to the Change of Control (the
      “Accounting Firm”) which shall provide detailed supporting calculations both to
      the Company and Employee within thirty (30) days of the receipt of notice from
      the Company or the Employee that there has been a Payment, or such earlier
      time
      as is requested by the Company (collectively, the “Determination”). In the event
      that the Accounting Firm is serving as accountant or auditor for the individual,
      entity or group effecting the Change of Control, Employee may appoint another
      nationally recognized public accounting firm to make the determinations required
      hereunder (which accounting firm shall then be referred to as the Accounting
      Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
      solely by the Company and the Company shall enter into any reasonable agreement
      requested by the Accounting Firm in connection with the performance of the
      services hereunder. If the Accounting Firm determines that no Excise Tax is
      payable by Employee, it shall furnish Employee with a written opinion to such
      effect, and to the effect that failure to report the Excise Tax, if any, on
      Employee’s applicable federal income tax return will not result in the
      imposition of a negligence or similar penalty. In the event the Accounting
      Firm
      determines that the Payments shall be reduced to the Safe Harbor Cap, it shall
      furnish Employee with a written opinion to such effect. The Determination by
      the
      Accounting Firm shall be binding upon the Company and Employee. As a result
      of
      the uncertainty in the application of Section 4999 of the Code at the time
      of
      the Determination, it is possible that Gross-Up Payments which will not have
      been made by the Company should have been made (“Underpayment”) or Gross-Up
      Payments are made by the Company which should not have been made
      (“Overpayment”), consistent with the calculations required to be made hereunder.
      In the event that the Employee thereafter is required to make payment of any
      Excise Tax or additional Excise Tax, the Accounting Firm shall determine the
      amount of the Underpayment that has occurred and any such Underpayment (together
      with interest, to the extent not already within the Excise Tax, at the rate
      provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the
      Company to or for the benefit of Employee. In the event the amount of the
      Gross-Up Payment exceeds the amount necessary to reimburse the Employee for
      his
      Excise Tax, the Accounting Firm shall determine the amount of the Overpayment
      that has been made and any such Overpayment (together with interest at the
      rate
      provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by
      Employee (to the extent he has received a refund if the applicable Excise Tax
      has been paid to the Internal Revenue Service) to or for the benefit of the
      Company. Employee shall cooperate, with any reasonable requests by the Company
      in connection with any contests or disputes with the Internal Revenue Service
      in
      connection with the Excise Tax.