(AS DEFINED IN SECTION 2) ON WHICH A CHANGE IN CONTROL
OCCURS. ANYTHING IN THIS AGREEMENT TO THE CONTRARY NOTWITHSTANDING, IF (A) A
CHANGE IN CONTROL OCCURS, (B) THE EMPLOYEE'S EMPLOYMENT WITH THE
2
COMPANY IS TERMINATED PRIOR TO THE DATE ON WHICH THE CHANGE IN CONTROL OCCURS,
AND (C) IT IS REASONABLY DEMONSTRATED BY THE EMPLOYEE THAT SUCH TERMINATION OF
EMPLOYMENT (I) WAS AT THE REQUEST OF A THIRD PARTY WHO HAS TAKEN STEPS
REASONABLY CALCULATED TO EFFECT A CHANGE IN CONTROL OR (II) OTHERWISE AROSE IN
CONNECTION WITH OR IN ANTICIPATION OF A CHANGE IN CONTROL, THEN FOR ALL PURPOSES
OF THIS AGREEMENT THE "CHANGE IN CONTROL DATE" SHALL MEAN THE DATE IMMEDIATELY
PRIOR TO THE DATE OF SUCH TERMINATION OF EMPLOYMENT.
1.3
"CAUSE" MEANS:
(A)
THE EMPLOYEE'S CONTINUED FAILURE TO
SUBSTANTIALLY PERFORM HIS REASONABLE ASSIGNED DUTIES (OTHER THAN ANY SUCH
FAILURE RESULTING FROM INCAPACITY DUE TO PHYSICAL OR MENTAL ILLNESS OR ANY
FAILURE AFTER THE EMPLOYEE GIVES WRITTEN NOTICE OF TERMINATION FOR GOOD REASON),
WHICH FAILURE IS NOT CURED WITHIN 30 DAYS AFTER A WRITTEN DEMAND FOR SUBSTANTIAL
PERFORMANCE IS RECEIVED BY THE EMPLOYEE FROM THE CHIEF EXECUTIVE OFFICER OF THE
COMPANY WHICH SPECIFICALLY IDENTIFIES THE MANNER IN WHICH THE CHIEF EXECUTIVE
OFFICER BELIEVES THE EMPLOYEE HAS NOT SUBSTANTIALLY PERFORMED THE EMPLOYEE'S
DUTIES; OR
(B)
THE EMPLOYEE'S WILLFUL ENGAGEMENT IN ILLEGAL
CONDUCT OR GROSS MISCONDUCT WHICH IS MATERIALLY INJURIOUS TO THE COMPANY.
1.4
"GOOD REASON" MEANS THE OCCURRENCE, WITHOUT
THE EMPLOYEE'S WRITTEN CONSENT, OF ANY OF THE EVENTS OR CIRCUMSTANCES SET FORTH
IN CLAUSES (A) THROUGH (F) BELOW. NOTWITHSTANDING THE OCCURRENCE OF ANY SUCH
EVENT OR CIRCUMSTANCE, SUCH OCCURRENCE SHALL NOT BE DEEMED TO CONSTITUTE GOOD
REASON IF, PRIOR TO THE DATE OF TERMINATION SPECIFIED IN THE NOTICE OF
TERMINATION (EACH AS DEFINED IN SECTION 3.2(A)) GIVEN BY THE EMPLOYEE IN RESPECT
THEREOF, SUCH EVENT OR CIRCUMSTANCE HAS BEEN FULLY CORRECTED AND THE EMPLOYEE
HAS BEEN REASONABLY COMPENSATED FOR ANY LOSSES OR DAMAGES RESULTING THEREFROM
(PROVIDED THAT SUCH RIGHT OF CORRECTION BY THE COMPANY SHALL ONLY APPLY TO THE
FIRST NOTICE OF TERMINATION FOR GOOD REASON GIVEN BY THE EMPLOYEE).
(A)
THE ASSIGNMENT TO THE EMPLOYEE OF DUTIES
WHICH RESULT IN A MATERIAL DIMINUTION OF THE EMPLOYEE'S POSITION (INCLUDING
STATUS, OFFICES, TITLES AND REPORTING REQUIREMENTS), AUTHORITY OR
RESPONSIBILITIES IN EFFECT IMMEDIATELY PRIOR TO THE EARLIEST TO OCCUR OF (I) THE
CHANGE IN CONTROL DATE, (II) THE DATE OF THE EXECUTION BY THE COMPANY OF THE
INITIAL WRITTEN AGREEMENT OR INSTRUMENT PROVIDING FOR THE CHANGE IN CONTROL OR
(III) THE DATE OF THE ADOPTION BY THE BOARD OF DIRECTORS OF A RESOLUTION
PROVIDING FOR THE CHANGE IN CONTROL (WITH THE EARLIEST TO OCCUR OF SUCH DATES
REFERRED TO HEREIN AS THE "MEASUREMENT DATE");
(B)
A MATERIAL REDUCTION IN THE EMPLOYEE'S
ANNUAL BASE SALARY AS IN EFFECT ON THE MEASUREMENT DATE OR AS THE SAME WAS OR
MAY BE INCREASED THEREAFTER FROM TIME TO TIME;
(C)
THE FAILURE BY THE COMPANY TO (I) CONTINUE
IN EFFECT ANY MATERIAL