Document:

EXHIBIT 10.2

 

ACUSPHERE, INC.

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (the “Agreement”)
is made as of                      
   , 2004, by and between Acusphere, Inc., a Delaware
corporation (the “Company”), and                        
(the “Indemnitee”).

 

WHEREAS,
in order to continue to attract and retain sophisticated and experienced
individuals to serve on its board of directors, the Company desires to provide,
independent from the indemnification to which the Indemnitee is otherwise entitled
by law and under the Company’s Certificate of Incorporation, as amended and in
effect from time to time (the “Charter”), and By-Laws, as amended and in
effect from time to time (the “By-Laws”), indemnification to the
Indemnitee and advances of expenses, all as set forth in this Agreement to the
maximum extent permitted by law;

 

NOW,
THEREFORE, to induce the Indemnitee to
continue to serve the Company and in consideration of these premises and the
mutual agreements set forth in this Agreement, as well as other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Indemnitee hereby agree as follows:

 

1.                                       Indemnification.

 

(a)                                  Third Party
Proceedings.  The Company shall
indemnify Indemnitee if Indemnitee is or was a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company) by reason of the fact that
Indemnitee is or was a director, officer, employee or agent of the Company, or
of any subsidiary of the Company, or by reason of the fact that Indemnitee is
or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys’ fees), judgments, fines and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld or delayed) actually
and reasonably incurred by Indemnitee in connection with such action, suit or
proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe Indemnitee’s conduct was unlawful.  The termination of any action or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo  contendere
or its equivalent, shall not, of itself, create a presumption that Indemnitee
did not act in good faith and in a manner which Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
Indemnitee’s conduct was unlawful.

 

(b)                                 Proceedings by or
in the Right of the Company.  The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Company or of any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee or agent of the Company, or of any subsidiary of
the Company, or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including

 

 

attorneys’ fees) actually
and reasonably incurred by Indemnitee in connection with the defense or
settlement of such action or suit if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, except that no indemnification shall be made in
respect of any claim, issue or matter as to which Indemnitee shall have been
finally adjudged to be liable to the Company unless and only to the extent that
the Delaware Court of Chancery or any other court in which such action or suit
is or was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or other such court shall deem proper.

 

(c)                                        Mandatory
Payment of Expenses.  To the extent
that Indemnitee has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 1(a) or Section 1(b)
or in defense of any claim, issue or matter therein, Indemnitee shall be
indemnified against expenses (including attorneys’ fees) actually and
reasonably incurred by Indemnitee in connection therewith.

 

2.                                       Expenses; Indemnification Procedure.

 

(a)                                  Advancement of
Expenses.  The Company shall advance
all expenses incurred by Indemnitee in connection with the investigation,
defense, settlement or appeal of any civil or criminal action, suit or
proceeding referenced in Section 1(a) or Section 1(b) hereof (but not
amounts actually paid in settlement of any such action or proceeding).  Indemnitee hereby undertakes to repay such
amounts advanced if, and to the extent that, it shall ultimately be determined
that Indemnitee is not entitled to be indemnified by the Company as authorized
hereby.  The advances to be made
hereunder shall be paid by the Company to Indemnitee within twenty (20) days
following receipt by the Company of a written request of the Indemnitee, but
only if the Company has first received an undertaking (the “Undertaking”),
substantially in the form attached hereto as Exhibit 1, by or on
behalf of the Indemnitee to repay the amount of any such advance if and to the
extent that it shall ultimately be determined that the Indemnitee is not
entitled to indemnification for such amount. 
The Undertaking shall be unsecured and shall bear no interest and shall
be accepted without reference to the financial ability of the Indemnitee to make
repayment.

 

(b)                                 Notice/Cooperation
by Indemnitee.  Indemnitee shall, as
a condition precedent to his or her right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
claim made against Indemnitee for which indemnification is or will be sought
under this Agreement.  Notice to the
Company shall be directed to the Chief Executive Officer of the Company at the
address shown on the signature page of this Agreement (or such other address as
the Company shall designate in writing to Indemnitee).  Notice shall be deemed received three (3)
business days after the date postmarked if sent by domestic certified or
registered mail, properly addressed; otherwise notice shall be deemed received
when such notice shall actually be received by the Company.  In addition, Indemnitee shall give the
Company such information and cooperation as it may reasonably require and as
shall be within Indemnitee’s power.

 

(c)                                  Procedure.  Any indemnification and advances provided for
in Section 1 and this Section 2 shall be made promptly, and in any
event within forty-five (45) days following receipt by the Company of a written
request of the Indemnitee (or within twenty (20) days in the case of advances
made pursuant to Section 2(a)), unless with respect to such requests the
Company reasonably determines within such applicable period that the Indemnitee
did not meet the applicable standard of conduct or that indemnification is not
required under Section 7 below, or unless otherwise ordered by a
court.  Such

 

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determination shall be
made in each instance by: (a) the board of directors by a majority vote of
a quorum consisting of directors of the Company who were not parties to such
action, suit or proceeding in question (“disinterested directors”); (b)
if such quorum is not obtainable, or even if obtainable if a quorum of
disinterested directors so directs, by independent legal counsel (who may be
regular counsel to the Company) in a written opinion; or (c) by the
stockholders of the Company.  If a claim
under this Agreement, under any statute, or under any provision of the Company’s
Charter or By-Laws providing for indemnification, is not paid in full by the
Company within the applicable period, Indemnitee may bring an action against
the Company to recover the unpaid amount of the claim and Indemnitee shall also
be entitled to be paid for the expenses (including attorneys’ fees) of bringing
such action, subject to Section 12 of this Agreement, or unless it shall
ultimately be determined that Indemnitee is not entitled to be indemnified by
the Company as authorized hereby or thereby. It shall be a defense to any such
action that Indemnitee has not met the standards of conduct which make it permissible
under applicable law or this Agreement for the Company to indemnify Indemnitee
for the amount claimed, but the burden of proving such defense shall be on the
Company and Indemnitee shall be entitled to receive interim payments of
expenses pursuant to Section 2(a) unless and until such defense may be
finally adjudged.  It is the parties’
intention that if the Indemnitee brings any such action, the question of
Indemnitee’s right to indemnification shall ultimately be for the court to
decide, and neither the failure of the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances because Indemnitee
has met the applicable standard of conduct required by applicable law, nor an
actual determination by the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has or has not met the
applicable standard of conduct.

 

(d)                                 Notice
to Insurers.  If, at the time of the
receipt of a notice of a claim pursuant to Section 2(b) hereof, the
Company has director and officer liability insurance in effect, the Company
shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of the
Indemnitee, all amounts payable as a result of such proceeding in accordance
with the terms of such policies.

 

(e)                                  Assumption of
Defense and Selection of Counsel.  In
the event the Company shall be obligated under Section 2(a) hereof to pay
the expenses of any proceeding against Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding, with counsel
approved by Indemnitee, which approval shall not be unreasonably withheld, upon
the delivery to Indemnitee of written notice of its election so to do.  Notwithstanding the foregoing, the Company
shall not be permitted to settle any action or claim on behalf of Indemnitee in
any manner which would impose any unindemnified liability or penalty on the
Indemnitee or require any acknowledgment of wrongdoing on the part of
Indemnitee without Indemnitee’s written consent, which consent shall not be
unreasonably withheld.  After delivery of
such notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company, and notwithstanding anything to the contrary contained
herein, the Company will not be liable to Indemnitee under this Agreement for
any fees of counsel subsequently incurred by Indemnitee with respect to the
same proceeding, provided that (i) Indemnitee shall have the right to
employ his or her counsel in any such proceeding at Indemnitee’s expense; and
(ii) if (A) the employment of separate counsel by Indemnitee has been
previously authorized by the Company, (B) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall
not, in fact, have employed counsel to assume the defense of such proceeding,
then the fees and expenses of Indemnitee’s counsel shall be at the

 

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expense of the
Company.  The Company shall not be
entitled, without the consent of the Indemnitee, to assume the defense of any
claim brought by or in the right of the Company or as to which counsel for the
Indemnitee shall have reasonably made the conclusion provided for in clause (ii)(B)
above.

 

3.                                       Additional Indemnification Rights; Nonexclusivity.

 

(a)                                  Scope. 
Notwithstanding any other provision of this Agreement, the Company
hereby agrees to indemnify the Indemnitee to the fullest extent permitted by
the General Corporation Law of the State of Delaware (the “DGCL”),
notwithstanding that such indemnification is not specifically authorized by the
other provisions of this Agreement or the Company’s Charter or By-Laws.  In the event of any change, after the date of
this Agreement, under the DGCL which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer, such
changes shall be, ipso facto, within the purview of
Indemnitee’s rights and the Company’s obligations under this Agreement.  In the event of any change under the DGCL
which narrows the right of a Delaware corporation to indemnify a member of its
Board of Directors or an officer, such changes, to the extent not otherwise
required by such Section or any successor section shall have no effect
on this Agreement or the parties’ rights and obligations hereunder.

 

(b)                                 Nonexclusivity. 
The indemnification provided by this Agreement shall not be deemed
exclusive of any rights to which Indemnitee may be entitled under the Company’s
Charter, its By-Laws, any agreement, any vote of stockholders or disinterested
directors, the DGCL, or otherwise, both as to action in Indemnitee’s official
capacity and as to action in another capacity while holding such office.  The indemnification provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though s/he may have ceased to
serve in any such capacity at the time of any action, suit or other covered
proceeding.

 

4.                                       Partial Indemnification.  If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of
the expenses, judgments, fines or penalties actually or reasonably incurred by
him in the investigation, defense, appeal or settlement of any civil or
criminal action or proceeding, but not, however, for the total amount thereof,
the Company shall nevertheless indemnify Indemnitee for the portion of such
expenses, judgments, fines or penalties to which Indemnitee is entitled.

 

5.                                       Severability.  Nothing in this Agreement is intended to
require or shall be construed as requiring the Company to do or fail to do any
act in violation of applicable law.  The
Company’s inability, pursuant to court order, to perform its obligations under
this Agreement shall not constitute a breach of this Agreement.  The provisions of this Agreement shall be
severable as provided in this Section 5. 
If this Agreement or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the fullest extent permitted by any
applicable portion of this Agreement that shall not have been invalidated, and
the balance of this Agreement not so invalidated shall be enforceable in
accordance with its terms.

 

6.                                       Officer And Director Liability Insurance.  The Company shall, from time to time, make
the good faith determination whether or not it is practicable for the Company
to obtain and maintain a policy or policies of insurance with reputable
insurance companies providing the officers and directors of the Company with
coverage for losses from wrongful acts, or to ensure the Company’s performance
of its indemnification obligations under this Agreement.  Among other considerations, the Company will
weigh the costs of obtaining such insurance coverage against the protection
afforded by such coverage.  In all
policies of director and officer liability insurance, Indemnitee shall be named
as an insured in such a

 

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manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company’s directors, if Indemnitee is a director; or of the
Company’s officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company’s key employees, if Indemnitee is not an officer or
director but is a key employee. 
Notwithstanding the foregoing, the Company shall have no obligation to
obtain or maintain such insurance if the Company determines in good faith that
such insurance is not reasonably available, if the premium costs for such
insurance are disproportionate to the amount of coverage provided, if the
coverage provided by such insurance is limited by exclusions so as to provide
an insufficient benefit, or if Indemnitee is covered by similar insurance
maintained by a subsidiary or parent of the Company.

 

7.                                       Exceptions.  Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

 

(a)                                  To
indemnify or advance expenses to Indemnitee with respect to proceedings or
claims initiated or brought voluntarily by Indemnitee and not by way of
defense, except with respect to proceedings brought to establish or enforce a
right to indemnification under this Agreement or any other statute or law or
otherwise as required under Section 145 of the DGCL, but such
indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board of Directors has approved the initiation or
bringing of the suit; or

 

(b)                                 To
indemnify Indemnitee for any expenses incurred by Indemnitee with respect to
any proceeding instituted by Indemnitee to enforce or interpret this Agreement,
if a court of competent jurisdiction determines that each of the material
assertions made by Indemnitee in such proceeding was not made in good faith or
was frivolous; or

 

(c)                                  To
indemnify Indemnitee for expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes or
penalties, and amounts paid in settlement), but such exception shall only apply
to the extent such expenses or liabilities have been paid directly to
Indemnitee by an insurance carrier under a policy of officers’ and directors’
liability insurance; or

 

(d)                                 To
indemnify Indemnitee for expenses or the payment of profits arising from the
purchase and sale by Indemnitee of securities in violation of Section 16(b)
of the Securities Exchange Act of 1934, as amended, or any similar successor
statute; or

 

(e)                                  To
indemnify Indemnitee for any acts, omissions or transactions from which a
director may not be relieved of liability under the Company’s Charter or
By-Laws, or from which a court of competent jurisdiction determines a director
may not be relieved of liability under the DGCL.

 

8.                                       Construction Of  Certain  Phrases

 

(a)                                  For
purposes of this Agreement, references to the “Company” shall include,
in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so
that if Indemnitee is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, Indemnitee
shall stand in the same position under the provisions of this Agreement with
respect to the resulting or surviving corporation as

 

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Indemnitee would have
with respect to such constituent corporation if its separate existence had
continued.

 

(b)                                 For
purposes of this Agreement, references to “other enterprises” shall
include employee benefit plans; references to “fines” shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to “serving at the request of the Company” shall include
any service as a director, officer, employee or agent of the Company which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan, Indemnitee shall be deemed to have acted in a
manner “not opposed to the best interests of the Company” as referred to
in this Agreement.

 

9.                                       Effectiveness of Agreement.  This Agreement shall be effective as of the
date set forth on the first page and may apply to acts or omissions of
Indemnitee which occurred prior to such date if Indemnitee was an officer,
director, employee or other agent of the Company, or was serving at the request
of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, as the time
such act or omission occurred.

 

10.                                 No Rights of Continued Service.  This Agreement shall not impose any
obligation of the Company to continue Indemnitee’s service to the Company
beyond any period otherwise required by law or by other agreements or
commitments of the parties, if any.

 

11.                                 Miscellaneous.

 

(a)                                  Governing
Law.  This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Delaware, without giving effect to principles of conflict of
law.

 

(b)                                 Consent
to Jurisdiction.                 The
Company and the Indemnitee each hereby irrevocably consent to the exclusive jurisdiction
of the Court of Chancery of Delaware for any purpose in connection with any
actions or proceedings which arise out of or relate to this Agreement.

 

(c)                                  Entire
Agreement; Enforcement of Rights. 
This Agreement sets forth the entire agreement and understanding of the
parties relating to the subject matter herein and merges all prior discussions
between them.  No modification of or
amendment to this Agreement, nor any waiver of any rights under this Agreement,
shall be effective unless in writing signed by the parties to this
Agreement.  The failure by either party
to enforce any rights under this Agreement shall not be construed as a waiver
of any rights of such party.

 

(d)                                 Construction.  This Agreement is the result of negotiations
between, and has been reviewed by, each of the parties hereto and their
respective counsel, if any; accordingly, this Agreement shall be deemed to be
the product of all of the parties hereto, and no ambiguity shall be construed
in favor of or against any one of the parties hereto.

 

(e)                                  Notices.  Unless otherwise provided in this Agreement,
any notice, demand or request required or permitted to be given under this
Agreement shall be in writing and shall be deemed sufficient when directed to
the Chief Executive Officer of the Company at the address shown on the
signature page of this Agreement (or such other address as the Company shall
designate in writing) and

 

6

 

when delivered personally
or three business days after being postmarked, as certified or registered mail,
with postage prepaid, and addressed to the party to be notified at such party’s
address as set forth below or as subsequently modified by written notice.

 

(f)                                    Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

 

(g)                                 Successors
And Assigns.  This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to the benefit
of Indemnitee and Indemnitee’s heirs, legal representatives, executives and
administrators.

 

(h)                                 Subrogation.  In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Company to effectively bring suit to enforce such rights.

 

(i)                                     Term.                  All agreements
and obligations of the Company contained herein shall continue during the
period that the Indemnitee is a director, officer or agent of the Company and
shall continue thereafter so long as Indemnitee shall be subject to any
possible claim or threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that Indemnitee was serving in the capacity referred to herein.

 

12.                                 Attorneys’ Fees.  In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms
hereof, and in the event Indemnitee is ultimately successful in such action, Indemnitee shall be entitled to be paid all court costs and
expenses, including reasonable attorneys’ fees, actually and reasonably
incurred by Indemnitee with respect to such action.  In the event of an action instituted by or in
the name of the Company under this Agreement or to enforce or interpret any of
the terms of this Agreement, Indemnitee shall be entitled to be paid all court
costs and expenses, including reasonable attorneys’ fees, actually and
reasonably incurred by Indemnitee in defense of such action (including with
respect to Indemnitee’s counterclaims and cross-claims made in such action),
unless the Company is ultimately successful in such action.

 

[Remainder of this page left intentionally blank]

 

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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.

 

	
  ACUSPHERE,
  INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Indemnitee

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address: 

  	
  Acusphere, Inc.

  	
  Address:

  	
   

  	
   

  
	
   

  	
  500 Arsenal
  Street

  	
   

  	
   

  	
   

  
	
   

  	
  Watertown, MA
  02472

  	
   

  	
   

  	
   

  
	
   

  	
  (617) 648-8800
  (phone)

  	
   

  	
   

  
	
   

  	
  (617) 926-4750
  (fax)

  	
   

  	
   

  
											

 

8

 

Exhibit 1

UNDERTAKING

 

1.                                       This
Undertaking is submitted pursuant to the Indemnification Agreement dated as of                    
between Acusphere, Inc., a Delaware corporation (the “Company”), and the
undersigned (the “Agreement”). 
Capitalized terms used but not defined herein shall have the respective
meanings set forth in the Agreement.

 

2.                                       I
am requesting certain Expense Advances in connection with a Claim.

 

3.                                       I
hereby undertake to repay such Expense Advances if it shall ultimately be
determined that I am not entitled to be indemnified by the Company therefor
under the Agreement or otherwise.

 

4.                                       The
Expense Advances are, in general, all related to:

 

 

	
   

  	
  Signed:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
   

  
					

 

 

SCHEDULE OF INDEMNITEES

 

Sherri C. Oberg

Frank Baldino, Jr., Ph.D

Garen Bohlin

Sandra L. Fenwick

Martyn Greenacre

Derek Lemke-von Ammon

Kate MitchellExhibit
10.1

 

EMPLOYMENT
AGREEMENT

 

AGREEMENT by and between
Beazer Homes USA, Inc., a Delaware corporation (the “Company”) and FRED J.
FRATTO (the “Executive”), dated as of the 1ST day of January, 2005.

 

The Board of Directors of the Company (the “Board”),
has determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued dedication of
the Executive, notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined below) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the Executive by virtue of
the personal uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive’s full attention and dedication to
the Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefits
arrangements upon a Change of Control which ensure that the compensation and
benefits expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order to accomplish
these objectives, the Board has caused the Company to enter into this
Agreement.

 

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1.                                       Certain Definitions.

 

(a)                                  The “Effective Date” shall mean the first
date during the Change of Control Period (as defined in Section 1(b)) on
which a Change of Control (as defined in Section 2) occurs. Anything in
this Agreement to the contrary notwithstanding, if a Change of Control occurs
and if the Executive’s employment with the Company is terminated prior to the
date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (i) was at
the request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with or in
anticipation of a Change of Control, then for all purposes of this Agreement the
“Effective Date” shall mean the date immediately prior to the date of such
termination of employment.

 

(b)                                 The “Change of Control Period” shall mean the
period commencing on the date hereof and ending on the second anniversary of
the date hereof; provided, however, that commencing on the date one year after
the date hereof, and on each annual anniversary of such date (such date and
each annual anniversary thereof shall be hereinafter referred to as the “Renewal
Date”), unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate two years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not be so extended.

 

2.                                       Change of Control. For the purpose of this Agreement, a “Change
of Control” shall mean:

 

(a)                                  The
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of either (i) the then
outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that for purposes of this subsection (a), the following acquisitions shall
not constitute a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c) of this Section 2; or

 

1

 

(b)                                 Individuals who, as of the date hereof,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company’s shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or

 

(c)                                  Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a “Business Combination”), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company’s assets either directly
or through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (ii) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or

 

(d)                                 Approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company.

 

3.                                       Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company, subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending on the second
anniversary of such date (the “Employment Period”).

 

4.                                       Terms of Employment.

 

(a)                                  Position and Duties.

 

(i)  During
the Employment Period, (A) the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities
shall be at least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time during the 120
day period immediately preceding the Effective Date and (B) the Executive’s
services shall be performed at the location where the Executive was employed
immediately preceding the Effective Date or any office or location less than 35
miles from such location.

 

2

 

(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities assigned to the Executive hereunder, to use
the Executive’s reasonable best efforts to perform faithfully such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive’s
responsibilities to the Company.

 

(b)                                 Compensation.

 

(i)                                     Base Salary. During the Employment Period, the Executive shall receive an annual
base salary (“Annual Base Salary”), which shall be paid at a monthly rate, at
least equal to twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred, to the Executive
by the Company and its affiliated companies in respect of the twelve month
period immediately preceding the month in which the Effective Date occurs.
Annual Base Salary shall be payable in accordance with the Company’s normal
payroll practices (but not less frequently than monthly). During the Employment
Period, the Annual Base Salary shall be reviewed (for purposes of increase
only) no more than 12 months after the last salary increase awarded to the
Executive prior to the Effective Date and thereafter at least annually. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term “affiliated companies” shall include any company
controlled by, controlling or under common control with the Company.

 

(ii)                                  Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the “Annual Bonus”) in cash at least equal to the
arithmetic average of the Executive’s bonuses (whether paid or deferred) under
the Company’s or its predecessor’s annual incentive plans during the last three
full fiscal years prior to the Effective Date or for such lesser period as the
Executive has been employed by the Company or its predecessor (annualized in
the event that the Executive was not employed by the Company for the whole of
any such fiscal year), (the “Average Annual Bonus”). Each such Annual Bonus
shall be paid no later than the end of the third month of the fiscal year next
following the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus. Without
limiting the generality of the foregoing definition, the “Average Annual Bonus”
shall include the following components, if any, pursuant to the Company’s
Amended and Restated VCIP Rules (or
any successor incentive plan, for so long as any of same shall exist):

 

(a)          Cash payouts from VC and IVC awards and the “Bank” payout, subject to
the Payout Cap, all at full face value;

 

3

 

(b)         Any excess in the Bank discounted at 75% of face value (which shall,
for purposes hereof, be deemed to be fully vested);

 

(c)          10% of the Bank contributed to the Deferred Compensation Plan, at full
face value (which shall, for purposes hereof, be deemed to be fully vested);
and

 

(d)  Any
deferred bonus under the VCIP which is invested in stock under the Company’s
Corporate Management Stock Purchase Program, at full face value of said bonus
(which shall, for purposes hereof, be deemed to be fully vested).

 

(iii)                               Incentive, Savings and Retirement Plans. During the Employment Period, the Executive
shall be entitled to participate in all incentive, savings and retirement
plans, practices, policies and programs applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with respect
to both regular and special incentive opportunities, to the extent, if any,
that such distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated companies
for the Executive under such plans, practices, policies and programs as in
effect at any time during the 120-day period immediately preceding the
Effective Date or if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company
and its affiliated companies.

 

(iv)                              Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive’s family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental, disability,
employee life, group life, accidental death and travel accident insurance plans
and programs) to the extent applicable generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices, policies and
programs provide the Executive with benefits which are less favorable, in the
aggregate, than the most favorable of such plans, practices, policies and
programs in effect for the Executive at any time during the 120 day period
immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.

 

(v)                                 Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120 day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer executives of the Company and
its affiliated companies.

 

(vi)                              Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and, if applicable, use of
an automobile and payment of related expenses, in accordance with the most
favorable plans,

 

4

 

practices, programs and policies of the Company and
its affiliated companies in effect for the Executive at any time during the 120
day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.

 

(vii)                           Office and Support Staff. During the Employment Period, the Executive shall be entitled to an
office or offices of a size and with furnishings and other appointments, and to
exclusive personal secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive by the Company and its
affiliated companies at any time during the 120 day period immediately
preceding the Effective Date or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.

 

(viii)                        Vacation. During the
Employment Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and practices of
the Company and its affiliated companies as in effect for the Executive at any
time during the 120 day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated companies.

 

5.                                       Termination of Employment.

 

(a)                                  Death or Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment Period. If the
Disability of the Executive occurs during the Employment Period (pursuant to
the definition of Disability set forth below), the Company may give to the
Executive written notice in accordance with Section 12(c) of this
Agreement of its intention to terminate the Executive’s employment. In such
event, the Executive’s employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Executive (the “Disability
Effective Date”), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive’s
duties. For purposes of this Agreement, “Disability” shall mean the absence of
the Executive from the Executive’s duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive’s legal representative.

 

(b)                                 Cause. The Company may terminate the Executive’s employment for Cause. For
purposes of this Agreement, “Cause” shall mean:

 

(i)                                     the willful and continued failure of the
Executive to perform substantially the Executive’s duties with the Company or
one of its affiliates (other than any such failure resulting from incapacity
due to physical or mental illness), for more than 15 days after a written
demand for substantial performance is delivered to the Executive by the Board
or the Chief Executive Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes that the
Executive has not substantially performed the Executive’s duties, or

 

(ii)                                  the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.

 

For
purposes of this provision, 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 the Executive in bad faith or

 

5

 

without reasonable belief that the Executive’s action or omission was in the
best interests of the Company. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or upon the
instructions of the President and Chief Executive Officer of the Company or
based upon the advice of counsel for the Company shall be conclusively presumed
to be done, or omitted to be done, by the Executive in good faith and in the
best interests of the Company. The cessation of employment of the Executive
shall not be deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.

 

(c)                                  Good Reason. The Executive’s employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

 

(i)                                     the assignment to the Executive of any duties
inconsistent in any respect with the Executive’s position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company within 15 days after receipt of notice thereof given by
the Executive;

 

(ii)                                  any failure
by the Company to comply with any of the provisions of Section 4(b) of
this Agreement, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company within 15 days
after receipt of notice thereof given by the Executive;

 

(iii)                               the Company’s requiring the Executive to be based at any office or
location other than as provided in Section 4(a)(i)(B)
hereof or the Company’s requiring the Executive to travel on Company business
to a substantially greater extent than required immediately prior to the
Effective Date, which is not remedied by the Company within 15 days after
receipt of notice thereof given by the Executive;

 

(iv)                              any purported termination by the Company of the Executive’s employment
otherwise than as expressly permitted by this Agreement; or

 

(v)                                 any failure by the Company to comply with and satisfy Section 11(c)
of this Agreement, which is not remedied by the Company within 15 days after
receipt of notice thereof given by the Executive.

 

(d)                                 Notice of Termination.  Any
termination of the Executive’s employment by the Company or by the Executive shall
be communicated by Notice of Termination to the other party hereto given in
accordance with Section 12(c) of this Agreement. For purposes of this
Agreement, a “Notice of Termination” means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment under
the provision so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the

 

6

 

Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive’s or the
Company’s rights hereunder.

 

(e)                                  Date of Termination. “Date of Termination” means (i) if the
Executive’s employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or,
subject to applicable cure periods, any later date specified therein, as the
case may be, (ii) if the Executive’s employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the date
on which the Company notifies the Executive of such termination and (iii) if
the Executive’s employment is terminated by reason of death or Disability, the
Date of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.

 

6.                                       Obligations of the Company upon Termination.

 

(a)                                  Good Reason; Other Than
for Cause. If, during the
Employment Period, the Company shall terminate the Executive’s employment other
than for Cause or the Executive shall terminate employment for Good Reason:

 

(i)                                     the Company shall pay to the Executive in a lump sum in cash within 30
days after the Date of Termination the aggregate of the following amounts:

 

A. the sum of (1) the
Executive’s Annual Base Salary through the Date of Termination to the extent
not theretofore paid, (2)  any accrued
but unpaid Annual Bonus respecting any completed fiscal year ending prior to
the Date of Termination, (3) the product of (x) the Average Annual Bonus and
(y) a fraction, the numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the denominator of which is
365 and (4) any compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon) and any accrued vacation pay, in
each case to the extent not theretofore paid (the sum of the amounts described
in clauses (1), (2), (3) and (4) shall be hereinafter referred to as the “Accrued
Obligations”).  The
timing of payment by the Company of any deferred compensation shall remain
subject to any payment election previously made by the Executive; and

 

B.                                     the amount equal to the product of (1) one
and one-half (1.50), and (2) the sum of (x) the Executive’s Annual Base Salary
and (y) the Average Annual Bonus; and

 

(ii)                                  for eighteen
(18) months after the Executive’s Date of Termination, or such longer period as
may be provided by the terms of the appropriate plan, program, practice or
policy, the Company shall continue benefits to the Executive and/or the
Executive’s family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described
in Section 4(b)(iv) of this Agreement if the Executive’s employment had
not been terminated or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies and their families, provided, however,
that if the Executive becomes reemployed with another employer and is eligible
to receive medical or other welfare benefits under another employer provided
plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable period
of eligibility. For purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive shall be considered
to have remained employed until

 

7

 

eighteen (18) months
after the Date of Termination and to have retired on the last day of such
period;

 

(iii)                               the Company shall, at its sole expense as incurred, provide the
Executive with outplacement services in accordance with the Company’s policies
with regard to outplacement then in effect; and

 

(iv)                              to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required
to be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company and
its affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the “Other Benefits”).

 

(b)                                 Death. If the Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive’s legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive’s estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives
of the Company and such affiliated companies under such plans, programs, practices
and policies relating to death benefits, if any, as in effect with respect to
other peer executives and their beneficiaries at any time during the 120 day
period immediately preceding the Effective Date or, if more favorable to the
Executive’s estate and/or the Executive’s beneficiaries, as in effect on the
date of the Executive’s death with respect to other peer executives of the
Company and its affiliated companies and their beneficiaries.

 

                                                (c)                                  Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive or the Executive’s legal
representative in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(c) shall include, and the Executive shall be
entitled after the Disability Effective Date to receive, disability and other
benefits at least equal to the most favorable of those generally provided by
the Company and its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 120 day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive’s family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its affiliated
companies and their families.

 

(d)                                 Cause; Other than for Good Reason. If the Executive’s employment
shall be terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive (x) his Annual Base Salary through the Date
of Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than for
Accrued Obligations and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination.

 

8

 

7.                                       Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive’s continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor, subject to Section 12(f),
shall anything herein limit or otherwise affect such rights as the Executive
may have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the Executive
is otherwise entitled to receive under any plan, policy, practice or program of
or any contract or agreement with the Company or any of its affiliated
companies at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.

 

8.                                       Full
Settlement. The Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. Each and
every payment made hereunder by the Company shall be final, and the Company
shall not seek to recover all or any part of such payment from the Executive or
from whomsoever may be entitled thereto, for any reasons whatsoever. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to
pay as incurred, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest by
(i) the Company, provided that the Executive prevails in at least one material
issue, (ii) the Executive or (iii) others, of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including, without limitation, as a result of any contest
by the Executive about the amount of any payment pursuant to this Agreement),
plus in each case interest on any delayed payment at the applicable Federal
rate provided for in Section 7872(f) (2) (A) of the Internal Revenue Code
of 1986, as amended (the “Code”).

 

9.                                       Certain Additional Payments by the Company.

 

(a)                                  Anything in
this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 9) (a “Payment”) would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive 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 Executive shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section 9(a),
if it shall be determined that the Executive is entitled to a Gross-Up Payment,
but that the Payments do not exceed 110% of the greatest amount (the “Reduced
Amount”) that could be paid to the Executive such that the receipt of Payments
would not give rise to any Excise Tax, then no Gross-Up Payment shall be made
to the Executive and the Payments, in the aggregate, shall be reduced to the
Reduced Amount.

 

(b)                                 Subject to the provisions of Section 9(c),
all determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by such certified public accounting firm as may be designated by
the Company (the “Accounting Firm”) which shall provide detailed supporting
calculations both to

 

9

 

the
Company and the Executive within 15 business days of the receipt of notice from
the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
of Control, the Company shall appoint another nationally recognized 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. Any Gross-Up Payment,
as determined pursuant to this Section 9, shall be paid by the Company to
the Executive within five days of the receipt of the Accounting Firm’s
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive.

 

(c)                                  The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten business days after
the Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:

 

(i)                                     give the Company any information reasonably
requested by the Company relating to such claim,

 

(ii)                                  take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,

 

(iii)                               cooperate with the Company in good faith in order
effectively to contest such claim, and

 

(iv)                              permit the Company to participate in any proceedings relating to such claim;

 

provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions of this Section 9(c),
the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and
hold

 

10

 

the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

 

(d)                                 If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(c), the Executive
becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of Section 9(c))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to Section 9(c),
a determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

 

10.                                 Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the
Executive during the Executive’s employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive’s employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of
the provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.

 

11.                                 Successors.

 

(a)                                  This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal representatives.

 

(b)                                 This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.

 

(c)                                  The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, “Company” shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

 

11

 

12.                                 Miscellaneous.

 

(a)                                  This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. Any legal action, suit or
proceeding arising out of or relating to this Agreement shall be instituted in
the state or federal courts in the State of Delaware and the parties agree not
to assert, in any action, suit or proceeding by way of motion, as a defense or
otherwise, any claim that either party is not personally subject to the
jurisdiction of such court, or that such action, suit or proceeding is brought
in an inconvenient forum, or that the venue is improper or that the subject
matter hereof cannot be enforced in such court. 
The parties hereby irrevocably submit to the jurisdiction of any such
court in any such action, suit or proceeding.

 

(b)                                 The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal representatives.

 

(c)                                  All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the other
party, by FedEx or other commercial overnight courier or by registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:

 

If to the Executive:

 

819
Southern Shore Drive

Peachtree
City, Georgia 30269

 

If to the Company:

 

1000 Abernathy Road

Suite 1200

Atlanta, Georgia 30328

Attention: Company Secretary

 

or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.

 

(d)                                 The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

 

(e)                                  The Company may withhold from any amounts
payable under this Agreement such Federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.

 

(f)                                    The
Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 5(c)(i) through (v) of this Agreement, shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement.

 

(g)                                 Except as may otherwise be provided under any
other written agreement between the Executive and the Company, the Executive
and the Company acknowledge that the employment of the Executive by the Company
is “at will” and, subject to Section 1 hereof, prior to the Effective
Date, the Executive’s employment and/or this Agreement may be terminated by
either the Executive or the Company at any time prior to the Effective Date, in
which case the Executive shall have no further rights under this Agreement.
From and after the Effective Date, this Agreement shall supersede any other
agreement between the parties with respect to the subject matter hereof and,
upon the Effective Date, any such other agreement shall be null, void and of no
further force or effect.

 

12

 

IN WITNESS WHEREOF, the Executive has hereunto set
the Executive’s hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  FRED J. FRATTO

  
	
   

  	
   

  	
   

  
	
   

  	
  BEAZER HOMES USA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Ian J. McCarthy

  
	
   

  	
   

  	
  President and Chief Executive Officer

  

 

13

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