Document:

Exhibit 10.1

 

Conformed Copy

 

SECOND LOAN MODIFICATION AGREEMENT

 

This Second Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as of March 5, 2012 by and among (a) SILICON VALLEY BANK, a California corporation, with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at 275 Grove Street, Suite 2-200, Newton, Massachusetts 02466 (“Bank”), and (b) AXCELIS TECHNOLOGIES, INC., a Delaware corporation (“ATI”) and AXCELIS TECHNOLOGIES CCS CORPORATION, a Delaware corporation (“ATCC”), each with offices located at 108 Cherry Hill Drive, Beverly, Massachusetts 01915 (ATI and ATCC are referred to herein, individually and collectively, jointly and severally, as “Borrower”).

 

1.             DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS.  Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan arrangement dated as of April 25, 2011, evidenced by, among other documents, a certain Second Amended and Restated Loan and Security Agreement dated as of April 25, 2011, between Borrower and Bank, as amended by a certain First Loan Modification Agreement dated as of December 27, 2011, between Borrower and Bank (as amended, supplemented, restated or otherwise modified from time to time, the “Loan Agreement”).  Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement.

 

2.             DESCRIPTION OF COLLATERAL.  Repayment of the Obligations is secured by the Collateral as described in the Loan Agreement and the intellectual property as described in a certain Amended and Restated Intellectual Property Security Agreement dated as of March 12, 2010, between ATI and Bank, as amended by a certain First Amendment to Amended and Restated Intellectual Property Security Agreement dated as of April 25, 2011, between ATI and Bank, and as further amended by a certain Second Amendment to Intellectual Property Security Agreement (the “Second Amendment to IP Agreement”) dated of even date herewith, between ATI and Bank (as amended, supplemented, restated or otherwise modified, the “IP Security Agreement”) (together with the Loan Agreement and any other documents granting collateral security to Bank, the “Security Documents”). Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations, shall be referred to as the “Existing Loan Documents”.

 

3.             DESCRIPTION OF CHANGE IN TERMS.

 

A.                                   Modifications to Loan Agreement.

 

1                                          The Loan Agreement shall be amended by deleting the following appearing as Section 6.9 thereof (entitled “Financial Covenants”):

 

“6.9        Financial Covenants.

 

(a)           Adjusted Quick Ratio.  Borrower and its Subsidiaries, on a consolidated basis, shall maintain at all times (other than the period commencing April 1, 2011 through and including April 30, 2011), to be tested as of the last day of each calendar quarter commencing with the calendar quarter ended March 31, 2011, a ratio of Quick Assets to Current Liabilities minus Deferred Revenue of at least 1.4:1.0.

 

(b)           Minimum Adjusted Net Income.  Borrower and its Subsidiaries, on a consolidated basis, shall achieve Adjusted Net Income of at least (i) $3,000,000 for the trailing six (6) month period ending on the last day of

 

 

the fiscal quarter ending March 31, 2011; (ii) $5,000,000 for each trailing six (6) month period ending on the last day of the fiscal quarters ending June 30, 2011 and September 30, 2011; (iii) ($3,000,000.00) for the trailing six month period ending on the last day of the fiscal quarter ending December 31, 2011; and (iv) $7,500,000 for the trailing six (6) month period ending on the last day of the fiscal quarter ending March 31, 2012 and for each trailing six (6) month period ending on the last day of each fiscal quarter thereafter.”

 

and inserting in lieu thereof the following:

 

“6.9        Financial Covenants.

 

(a)           Adjusted Quick Ratio.  Borrower and its Subsidiaries, on a consolidated basis, shall maintain at all times (other than the period commencing April 1, 2011 through and including April 30, 2011), to be tested (i) prior to the 2012 Effective Date, as of the last day of each calendar quarter commencing with the calendar quarter ended March 31, 2011, and (ii) on and after the 2012 Effective Date, as of the last day of each month, a ratio of Quick Assets to Current Liabilities minus Deferred Revenue of at least 1.4:1.0.

 

(b)           Minimum Adjusted Net Income.  Borrower and its Subsidiaries, on a consolidated basis, shall achieve Adjusted Net Income of at least (i) $3,000,000 for the trailing six (6) month period ending on the last day of the fiscal quarter ending March 31, 2011; (ii) $5,000,000 for each trailing six (6) month period ending on the last day of the fiscal quarters ending June 30, 2011 and September 30, 2011; (iii) ($3,000,000.00) for the trailing six month period ending on the last day of the fiscal quarter ending December 31, 2011; (iv) ($6,000,000.00) for the trailing six (6) month period ending on the last day of the fiscal quarter ending March 31, 2012; (v) ($9,000,000.00) for the trailing six (6) month period ending on the last day of the fiscal quarter ending June 30, 2012; (vi) $1.00 for the trailing six (6) month period ending on the last day of the fiscal quarter ending September 30, 2012; (vii) $2,500,000.00 for the trailing six (6) month period ending on the last day of the fiscal quarter ending December 31, 2012; and (viii) for the trailing six (6) month period ending on March 1, 2013, and for each trailing six month period ending on the last day of each fiscal quarter thereafter, an amount that is $1,000,000.00 greater than the required minimum Adjusted Net Income for the immediately preceding trailing six (6) month period ending on the last day of the immediately preceding calendar quarter.”

 

2                                          The Loan Agreement shall be amended by inserting the following new definition to appear alphabetically in Section 13.1 thereof:

 

““2012 Effective Date” is March 5, 2012.”

 

3                                          The Compliance Certificate appearing as Exhibit B to the Loan and Security Agreement shall be amended by deleting the following text appearing in Schedule 1 thereof:

 

“II.          Minimum Adjusted Net Income (Section 6.9(b))

 

Required: at least (a) $3,000,000 for the trailing six (6) month period ending on the last day of the fiscal quarter ending March 31, 2011; (b)

 

 

$5,000,000 for each trailing six (6) month period ending on the last day of the fiscal quarters ending June 30, 2011 and September 30, 2011; (c) ($3,000,000.00) for the trailing six month period ending on the last day of the fiscal quarter ending December 31, 2011;and (d) $7,500,000 for the trailing six (6) month period ending on the last day of the fiscal quarter ending March 31, 2012 and for each trailing six (6) month period ending on the last day of each fiscal quarter thereafter”

 

and inserting in lieu thereof the following:

 

“II.          Minimum Adjusted Net Income (Section 6.9(b))

 

Required: at least (i) $3,000,000 for the trailing six (6) month period ending on the last day of the fiscal quarter ending March 31, 2011; (ii) $5,000,000 for each trailing six (6) month period ending on the last day of the fiscal quarters ending June 30, 2011 and September 30, 2011; (iii) ($3,000,000.00) for the trailing six month period ending on the last day of the fiscal quarter ending December 31, 2011; (iv) ($6,000,000.00) for the trailing six (6) month period ending on the last day of the fiscal quarter ending March 31, 2012; (v) ($9,000,000.00) for the trailing six (6) month period ending on the last day of the fiscal quarter ending June 30, 2012; (vi) $1.00 for the trailing six (6) month period ending on the last day of the fiscal quarter ending September 30, 2012; (vii) $2,500,000.00 for the trailing six (6) month period ending on the last day of the fiscal quarter ending December 31, 2012; and (viii) for the trailing six (6) month period ending on March 1, 2013, and for each trailing six month period ending on the last day of each fiscal quarter thereafter, an amount that is $1,000,000.00 greater than the required minimum Adjusted Net Income for the immediately preceding trailing six (6) month period ending on the last day of the immediately preceding calendar quarter”

 

4.             FEES.  Borrower shall pay to Bank a modification fee equal to Five Thousand Dollars ($5,000.00), which fee shall be due on the date hereof and shall be deemed fully earned as of the date hereof.  Borrower shall also reimburse Bank for all legal fees and expenses incurred in connection with this amendment to the Existing Loan Documents.

 

5.             RATIFICATION OF IP SECURITY AGREEMENT.  ATI hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of the IP Security Agreement, and acknowledges, confirms and agrees that said IP Security Agreement contains an accurate and complete listing of all registered intellectual property as described in said IP Security Agreement, and remains in full force and effect.

 

6.             RATIFICATION OF PERFECTION CERTIFICATE.  Each Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a certain Perfection Certificate dated as of April 25, 2011 delivered by such Borrower in favor of Bank (individually and collectively, the “Perfection Certificate”), and acknowledges, confirms and agrees the disclosures and information each Borrower provided to Bank in the Perfection Certificate have not changed as of the date hereof, except for changes reflected in the Second Amendment to IP Agreement and other immaterial changes in the ordinary course of business.

 

7.             CONSISTENT CHANGES.  The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.

 

 

8.             RATIFICATION OF LOAN DOCUMENTS.  Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of all security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations.

 

9.             NO DEFENSES OF BORROWER.  Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.

 

10.           CONTINUING VALIDITY.  Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents.  Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect.  Bank’s agreement to modifications to the existing Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the Obligations.  Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations.  It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing.  No maker will be released by virtue of this Loan Modification Agreement.

 

11.           COUNTERSIGNATURE.  This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank.

 

[The remainder of this page is intentionally left blank]

 

 

This Loan Modification Agreement is executed as a sealed instrument under the laws of the Commonwealth of Massachusetts as of the date first written above.

 

	
BORROWER:
    	
 
    	
BANK:
    
	
 
    	
 
    	
 
    
	
AXCELIS TECHNOLOGIES, INC.
    	
 
    	
SILICON VALLEY BANK
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Mary G. Puma
    	
 
    	
By:
    	
/s/   Michael Quinn
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Mary G. Puma
    	
 
    	
Name:
    	
Michael   Quinn
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
Chairman, CEO and President
    	
 
    	
Title:
    	
Vice   President
    

 

	
AXCELIS TECHNOLOGIES CCS   CORPORATION
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Mary G. Puma
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Mary G. Puma
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
President
    	
 
    	
 
    	
 
    

 

The undersigned, Fusion Technology International, Inc., ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Amended and Restated Unconditional Guaranty dated March 12, 2010 (the “FTI Guaranty”) and acknowledges, confirms and agrees that the FTI Guaranty shall remain in full force and effect and shall in no way be limited by the execution of this Loan Modification Agreement, or any other documents, instruments and/or agreements executed and/or delivered in connection herewith.

 

 

	
 
    	
 
    	
 
    	
FUSION TECHNOLOGY INTERNATIONAL, INC.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/ Mary G. Puma
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    	
Mary G. Puma
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
President
    

 

The undersigned, Fusion Investments, Inc., ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Amended and Restated Unconditional Guaranty dated March 12, 2010 (the “FI Guaranty”) and acknowledges, confirms and agrees that the FI Guaranty shall remain in full force and effect and shall in no way be limited by the execution of this Loan Modification Agreement, or any other documents, instruments and/or agreements executed and/or delivered in connection herewith.

 

	
 
    	
 
    	
 
    	
FUSION INVESTMENTS, INC.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/ Mary G. Puma
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    	
Mary G. Puma
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
President
    

 

The undersigned, High Temperature Engineering Corporation, ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Amended and Restated Unconditional Guaranty dated March 12, 2010 (the “HTEC Guaranty”) and acknowledges, confirms and agrees that the HTEC Guaranty shall remain in full force and effect and shall in no way be limited by the execution of this Loan Modification Agreement, or any other documents, instruments and/or agreements executed and/or delivered in connection herewith.

 

 

	
 
    	
 
    	
 
    	
HIGH TEMPERATURE ENGINEERING CORPORATION
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/ Mary G. Puma
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    	
Mary G. Puma
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
President
    

 

The undersigned, Axcelis Technologies (Israel), Inc., ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Amended and Restated Unconditional Guaranty dated March 12, 2010 (the “ATI Guaranty”) and acknowledges, confirms and agrees that the ATI Guaranty shall remain in full force and effect and shall in no way be limited by the execution of this Loan Modification Agreement, or any other documents, instruments and/or agreements executed and/or delivered in connection herewith.

 

 

	
 
    	
 
    	
 
    	
AXCELIS TECHNOLOGIES (ISRAEL), INC.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/ Mary G. Puma
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    	
Mary G. Puma
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
PresidentExhibit 10.1

 

AMENDED AND RESTATED
 EXECUTIVE EMPLOYMENT AGREEMENT

 

 

THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) by and between Alexandria Real Estate Equities, Inc., a Maryland corporation (“Corporation”) and Joel S. Marcus, an individual (“Officer”), is effective as of April 26, 2012 (the “Effective Date”).

 

RECITAL

 

WHEREAS, Corporation desires to continue to employ Officer as its Chairman and Chief Executive Officer, and Officer is willing to continue to accept such employment by Corporation, on the terms and subject to the conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to amend and restate this Agreement as follows:

 

1.                                    Position and Duties; Location.

 

During the Term (as defined below), Officer and Corporation agree that Officer shall be employed by and serve Corporation as its full-time Chairman and Chief Executive Officer; provided that either Corporation or Officer may make an election (an “Executive Chairman Election”) on or after October 1, 2014 that, effective the later of January 1, 2015 or 14 days after the election is made, Officer shall cease to hold the position of Chief Executive Officer and instead shall be employed as full-time Executive Chairman through December 31, 2016 or such later date as may be mutually agreed.  In addition, Officer agrees to serve in such capacities for Corporation’s subsidiaries, and in such additional capacities consistent with Officer’s position as a senior executive officer as set forth above, as may be determined by the Board of Directors of Corporation (the “Board”).  Officer shall devote such of his business time, energy, and skill to the affairs of Corporation and its subsidiaries as shall be necessary to perform the duties of such positions.  Notwithstanding the foregoing, subject to any written policies of Corporation, nothing in this Agreement shall preclude Officer from (i) engaging in charitable and community affairs and not-for-profit activities, so long as they are consistent with his duties and responsibilities under this Agreement; (ii) managing his family and other personal investments; (iii) serving on the boards of directors of non-profit companies; and (iv) serving on the boards of directors of other for-profit companies; provided, however, that, prior to accepting a position hereafter on any such for-profit board of directors, Officer shall obtain the approval of the Board (or, if applicable, the appropriate committee thereof), which shall not be unreasonably withheld.  In his position as Chief Executive Officer or as Executive Chairman, Officer shall only report to and be responsible directly to the lead independent director and to the Board and at all times during the Term shall have powers and duties at least commensurate with his positions, including, without limitation, while serving as Chief Executive Officer, the right to hire or terminate any subordinate officers and any employees without the approval or consent of the Board or any other officer of Corporation; provided, however, that Officer shall consult with the Board before exercising his right, while serving as Chief Executive Officer, to hire or terminate the Chief Financial Officer, Chief Operating Officer, and President of Corporation; and provided further that Officer and Corporation acknowledge that nothing in this Agreement modifies the authority of the Compensation Committee of the Board (the “Compensation Committee”) to establish the aggregate compensation levels of senior officers, above the level of vice president, of Corporation.  Officer shall be based at the principal executive offices of Corporation in the Los Angeles, California metropolitan area, except for reasonable required travel on Corporation’s business.

 

 

2.                                    Term of Employment.

 

The Term of this Agreement (the “Term”) shall be for a period commencing on the Effective Date and ending on December 31, 2014 or, if an Executive Chairman Election is made, December 31, 2016 or a mutually agreed upon later date (the “Termination Date”), unless terminated earlier pursuant to this Agreement (the “Early Termination Date,” and, as the context so requires, a “Termination Date”).  The parties agree that, at the request of either, they shall, during the calendar quarter at the end of which the Term would otherwise expire, negotiate in good faith the extension of this Agreement, or the implementation of a new agreement, relating to Officer’s provision thereafter of full-time services as Executive Chairman.

 

3.                                    Compensation, Benefits and Reimbursement.

 

3.1                            Base Salary.  During the Term, Officer shall be entitled to the following base salary:

 

(a)                               Minimum Base Salary.  During the Term and subject to the terms and conditions set forth herein, Corporation agrees to pay to Officer an annual “Base Salary” of $895,000, or such higher amount as may from time to time be determined by Corporation.  Unless otherwise agreed in writing by Officer and Corporation, the salary shall be payable in substantially equal semi-monthly installments in accordance with the standard policies of Corporation in existence from time to time.

 

(b)                              Earned Base Salary.  For purposes of any early termination of this Agreement as provided in Paragraph 4, the term “Earned Base Salary” shall mean all semi-monthly installments of the Base Salary which have become due and payable to Officer, together with any partial monthly installment prorated on a daily basis up to and including the applicable Termination Date.

 

3.2                            Increases in Base Salary.  Officer’s Base Salary shall be reviewed by the Compensation Committee no less frequently than on each anniversary of the Effective Date during the Term.  The Base Salary payable to Officer may be increased on each such anniversary date (and such other times as the Compensation Committee may deem appropriate during the Term) to an amount determined by the Compensation Committee.  Any increase in Base Salary or other compensation shall in no way limit or reduce any other obligations of Corporation hereunder and, once established at an increased specified rate, Officer’s Base Salary shall not be reduced unless Officer otherwise agrees in writing.

 

3.3                            Bonus.  Officer shall be eligible to receive a cash bonus (“Bonus”) for each fiscal year of Corporation (or portion thereof) during the Term, in accordance with the terms set forth in Exhibit A hereto, which is hereby incorporated herein by reference.

 

3.4                            Additional Benefits.  During the Term, Officer shall be entitled to the following additional benefits:

 

(a)                               Officer Benefits.  Officer shall be eligible to participate in such of Corporation’s benefit and deferred compensation plans as are made available to executive officers of Corporation, including, without limitation, Corporation’s stock incentive and other equity-based compensation plans, annual incentive compensation plans, profit sharing/pension plans, deferred compensation plans, annual physical examinations, dental plans, vision plans, sick pay, medical plans, personal catastrophe and accidental death insurance plans, financial planning, automobile arrangements, retirement plans and supplementary executive retirement plans, if any.  For purposes of establishing the length of service under any benefit plans or programs of Corporation, Officer’s employment with Corporation shall be deemed to have commenced on January 5, 1994.

 

- 2 -

 

(b)                              Vacation.  Officer shall be entitled to accrue a minimum of six weeks of paid vacation during each year during the Term and any extensions thereof, prorated for partial years.  Any accrued vacation not taken during any year may be carried forward to subsequent years; provided that Officer may not accrue more than 12 weeks of unused vacation at any time.  Unused vacation in excess of Officer’s allowable accrued vacation under the foregoing proviso shall be promptly paid to Officer at the end of each year in a cash amount equal to (i) the number of weeks of excess vacation time, multiplied by (ii) weekly Base Salary.

 

(c)                               Life Insurance.  During the Term, Corporation shall, at its sole cost and expense, procure and keep in effect term life insurance (a minimum five-year term certain policy) on the life of Officer, payable to such beneficiaries as Officer may from time to time designate, in the aggregate amount of $5,000,000.  Such policy shall be owned by Officer or by a member of his immediate family.  Corporation shall have no incidents of ownership therein.

 

(d)                              Disability Insurance.  During the Term, Corporation shall, at its sole cost and expense, procure and keep in effect long-term disability and short-term disability coverage (the “Disability Policy”) similar to Officer’s current disability insurance policy on Officer (or, if better, any subsequent policy), payable to Officer in an annual amount not less than 60% of Officer’s then existing Base Salary, Bonus and other cash compensation, subject to such limitations as may be applicable under California law and under standard insurance underwriters requirements.  The premiums for the foregoing coverage shall be included in Officer’s gross income.

 

(e)                              Reimbursement for Expenses.  During the Term, Corporation shall reimburse Officer for all reasonable out-of-pocket business and entertainment expenses incurred by Officer for the purpose of and in connection with the performance of his services pursuant to this Agreement.  Officer shall be entitled to such reimbursement upon the presentation by Officer to Corporation of vouchers or other statements itemizing such expenses in reasonable detail consistent with Corporation’s policies.  In addition, Officer shall be entitled to reimbursement for (i) dues and membership fees in professional organizations and industry associations in which Officer is currently a member or becomes a member; (ii) appropriate industry seminars and mandatory continuing education and (iii) membership in a health club or other health-related activity of Officer’s choosing up to a maximum annual fee of $5,000.  The amount of expenses eligible for reimbursement pursuant to this Paragraph 3.4(e) during a calendar year shall not affect the amount of expenses eligible for reimbursement in any other calendar year.  Without extending the time of payment that would apply in the absence of this sentence, Corporation shall reimburse Officer for any expense eligible for reimbursement pursuant to this Paragraph 3.4(e) on or before the end of the calendar year following the calendar year in which the expense was incurred.  Corporation shall pay Officer for all reasonable attorney’s fees, disbursements and costs incurred by Officer in connection with the negotiation, preparation and execution of this Agreement, within 15 days following presentation of invoices which have been paid.

 

(f)                                  Withholding.  Compensation and benefits paid to Officer under this Agreement shall be subject to applicable federal, state and local wage deductions and other deductions required by law.

 

(g)                              Certain Restricted Stock; Certain Other Equity-Related Provisions.

 

(i)                                   Renewal Restricted Stock Bonus.  As soon as practicable following the Effective Date, but no later than five days following the Effective Date, Officer shall be granted (A) a number of shares of restricted stock of Corporation that have an aggregate fair market value of $3,000,000 (based on the closing price of Corporation’s stock on the trading day immediately preceding the date of grant), which shares shall vest 1/3rd on December 31 of 2012, 2013 and

 

- 3 -

 

2014, provided that Officer’s employment with Corporation has continued through such dates, except as otherwise provided in Paragraphs 3.4(g)(iii), 4.3 and 4.5 hereof,  and (B) a number of shares of restricted stock of Corporation that have an aggregate fair market value of $2,000,000 (based on the closing price of Corporation’s stock on the trading day immediately preceding the date of grant), which shares shall vest 1/3rd on December 31 of 2012, 2013 and 2014 (the “2012 Performance-Based Restricted Stock”), subject to the satisfaction each year of specified corporate performance criteria set forth in Exhibit B hereto, which is hereby incorporated herein by reference.

 

(ii)                                Long-Term Incentive Grant.  With respect to each fiscal year of Corporation during the Term,  Officer shall be eligible to receive an annual long-term incentive compensation award in the form of restricted stock (an “LTI Grant”) pursuant to Corporation’s Amended and Restated 1997 Stock Award and Incentive Plan or any other long-term incentive plan(s) in effect from time to time, subject to the terms and conditions thereof to the extent not inconsistent with this Agreement, which grant shall be made annually no later than 10 days following the end of the Corporation’s fiscal year  to which the LTI Grant relates.  For the avoidance of doubt, the LTI Grant with respect to 2012 shall be made in 2013 but no later than January 10, 2013; the LTI Grant with respect to 2013 shall be made in 2014 but no later than January 10, 2014, and so on.  Officer’s target LTI Grant with respect to each such fiscal year shall have an aggregate fair market value of $6,875,000, subject to increase or decrease at the discretion of the Compensation Committee based on its assessment of Corporation’s performance for the relevant fiscal year, converted into a number of shares of Corporation’s stock based on the closing price of Corporation’s stock on the trading day immediately preceding the date of grant.  Fifty percent (50%) of the LTI Grant (the “Time-Based Stock”) shall vest 1/36th each month over the 36-month period following the date of grant; and the remaining fifty percent (50%) of the LTI Grant (the “Performance-Based Stock”) shall vest 1/3rd on each of the three dates (each a “Performance-Based Stock Vesting Date”) that is not later than thirty (30) days following the end of each of the three (3) successive fiscal years beginning with the fiscal year in which the grant of Performance-Based Stock is made, based on the determination and written certification of the Compensation Committee on the Performance Stock Vesting Date with respect to specified corporate performance criteria and subject to the terms set forth in Exhibit C hereto, which is hereby incorporated herein by reference; provided that, except as otherwise provided in Paragraphs 3.4(g)(iii), 4.3 and 4.5 hereof, vesting of the Time-Based Stock and the Performance-Based Stock shall be subject to Officer’s continued employment with Corporation on the applicable vesting date; and provided further that, so long as Officer is employed by Corporation on the December 31st  immediately prior to the applicable Performance-Based Stock Vesting Date, the portion of the Performance-Based Stock award that is scheduled by its terms to  vest on such Performance-Based Stock Vesting Date shall not be subject to forfeiture as a result of any termination on or after such December 31st and shall be eligible to vest based on the Compensation Committee’s determination and certification as described above.

 

(iii)                             Dividends; Vesting.  Officer shall receive the full cash dividends attributable to all nonforfeited shares of restricted stock (or units), regardless of whether such shares (or units) have become vested on or before the record date for such dividends on the shares (or, as applicable, the underlying shares).  Upon a Change in Control (as defined below), (i) any and all equity or equity-based compensation (including, without limitation, restricted stock and stock options), the vesting of which depends only upon the passage of time, shall vest; (ii) any and all awards of equity or equity-based compensation (including, without limitation,  restricted stock and stock options), the vesting of which depends upon the satisfaction of performance criteria, shall vest in an amount equal to (A) the amount of the award that would have been earned if the target level of performance had been achieved, multiplied by (B) a fraction (x) the

 

- 4 -

 

numerator of which is the number of days during the performance period on which Officer was employed as of the date of the Change in Control and (y) the denominator of which is the number of days in the performance period; and (iii) any and all options shall be exercisable for their full terms without regard to the termination of Officer’s employment.  Upon Officer’s termination of service on or after Officer’s attainment of age 69, unless such termination is for Cause, (i) all of Officer’s outstanding and unvested equity or equity-based compensation awards (including, without limitation, restricted stock and stock options), the vesting of which depends only upon the passage of time, shall fully and immediately vest; (ii) all of Officer’s outstanding and unvested equity or equity-based compensation awards (including, without limitation, restricted stock and stock options), the vesting of which otherwise depends upon the satisfaction of corporate performance criteria, shall fully and immediately vest if and when the applicable corporate or other performance goals are ultimately satisfied; and (iii) any and all outstanding options shall remain exercisable for their full terms without regard to the termination.  In addition, without limiting the generality of any other provision of this Paragraph 3.4, Officer shall be eligible during the Term to participate in any other equity or equity-based compensation plans of general applicability of Corporation on bases that are no less favorable than those applicable to other senior executives of Corporation.

 

(h)                              Compensation Upon and After an Executive Chairman Election.   For periods on and after the effective time of an Executive Chairman Election made in accordance with Paragraph 1, Officer’s compensation shall be determined by the Compensation Committee, but in no event shall the rate of compensation for the first two years beginning on and immediately following the effective time of such election be less than the sum of (i) Base Salary in effect at the time of such election and (ii) the amount of the Bonus payable at target level of performance for the fiscal year during which the election is made.

 

4.                                    Termination of this Agreement; Change in Control.

 

4.1                            Termination by Corporation Defined.

 

(a)                               Termination Without Cause.  Subject to the provisions set forth in Paragraph 4.3, “Termination Without Cause” shall constitute any termination of Officer’s employment by Corporation other than termination for Cause (as defined below).

 

(b)                              Termination for Cause.  Subject to the provisions set forth in Paragraph 4.3, prior to the Termination Date, Corporation shall have the right to terminate this Agreement for Cause 30 days after written notice has been delivered to Officer, which notice shall specify the specific facts relating to and reason for, and the effective date of, such termination (which date shall be the applicable Early Termination Date).  For purposes of this Agreement, “Cause” shall mean the following:

 

(i)                                   Officer’s use of alcohol or narcotics which proximately results in the willful material breach or habitual willful neglect of Officer’s duties under this Agreement;

 

(ii)                                Officer’s criminal conviction of fraud, embezzlement, misappropriation of assets, or any felony, but in no event traffic or similar violations; or

 

(iii)                             Officer’s willful Material Breach (as defined below) of this Agreement, if such willful Material Breach is not cured by Officer within 30 days after Corporation’s written notice thereof specifying the nature of such willful Material Breach.  For purposes of this Paragraph 4.1(b), the term willful “Material Breach” (A) shall mean the substantial and continual

 

- 5 -

 

willful nonperformance of Officer’s material duties under this Agreement resulting from Officer’s gross negligence or willful misconduct which the Board reasonably determines has resulted in material injury to Corporation and (B) notwithstanding anything in this Paragraph 4.1(b) to the contrary, the term willful “Material Breach” shall include Officer’s willful material violation of any specific and proper resolution passed by the Board (or a committee thereof) consistent with this Agreement.

 

Notwithstanding the foregoing, Cause shall in no event be deemed to exist except (i) as to any event or condition allegedly constituting Cause, as to which notice is given not more than 30 days following the date that such event or condition first becomes known to the Board, and (ii) upon a finding reflected in a resolution of the Board approved by at least two-thirds of the members of the Board, excluding Officer (whose finding shall not be binding upon or entitled to any deference by any court, arbitrator or other decision-maker ruling on this Agreement), at a meeting of which Officer shall have been given proper notice and at which Officer (and Officer’s counsel) shall have a reasonable opportunity to present Officer’s case.

 

For purposes of this Paragraph 4.1(b), no act or omission or other conduct shall be considered “willful” if Officer believed in good faith that such act or omission or conduct was in or not opposed to the best interests of Corporation.

 

(c)                               Termination by Reason of Death or Disability.  Subject to the provisions set forth in Paragraph 4.3, prior to the Termination Date, Corporation shall have the right to terminate this Agreement by reason of Officer’s death or Permanent Disability.  For purposes of this benefit, “Permanent Disability” shall mean any physical or mental disability which causes Officer to be unable to perform all of Officer’s material duties as an employee of Corporation for 180 consecutive business days.  Notwithstanding the foregoing, if Corporation asserts that Officer has a Permanent Disability; (i)  Corporation shall give Officer at least 15 business days’ advance written notice thereof; (ii) Officer shall have the right within 10 business days after such notice to dispute Corporation’s assertion; (iii) within 10 business days after exercising such right Officer shall submit to a physical examination by a physician affiliated with any major metropolitan hospital and selected by Officer; provided, however, that, prior to such physical examination, Officer shall obtain the approval of the Board (or if applicable, its designated committee) with respect to the selection of such physician, which approval shall not be unreasonably withheld; and (iv) if such physician shall issue his written statement to the effect that in his opinion, based on his diagnosis, Officer is capable of resuming his employment and devoting his full time and energy to discharging his duties within 10 business days after the date of such statement, Corporation shall not have the right to terminate Officer under this Paragraph 4.1(c) without further dispute.

 

4.2                            Termination by Officer Defined.

 

(a)                               Termination Other than for Good Reason.  Subject to the provisions set forth in Paragraph 4.3, Officer shall have the right to terminate this Agreement for any reason other than for Good Reason (as defined below), at any time prior to the Termination Date, upon written notice delivered to Corporation 30 days prior to the effective date of termination specified in such notice (which date shall be the applicable Early Termination Date).

 

(b)                              Termination for Good Reason.  Subject to the provisions of Paragraph 4.3, Officer shall have the right to terminate this Agreement prior to the Termination Date in the event of Good Reason.  For the purposes of this Agreement, “Good Reason” shall mean, without Officer’s express written consent, the occurrence of any of the following circumstances, and in the case of clauses (i), (iii), (v), (vi), (vii), (viii) and (ix) of this Paragraph 4.2(b), failure of Corporation to cure such circumstances within 30 days after written notice thereof specifying the nature of such circumstances has been delivered

 

- 6 -

 

to Corporation (it being agreed that, if Corporation effects a cure of an event or condition under any particular one of such clauses, it shall not again be permitted during the Term to cure an event or condition under that same clause); provided that Officer shall be required to provide such written notice to Corporation within 30 days following the date that such circumstance first becomes known to Officer:

 

(i)                                   the assignment to Officer of any duties inconsistent with Officer’s positions as set forth in Paragraph l, or an adverse alteration in the nature or status of Officer’s responsibilities, other than by virtue of an Executive Chairman Election made in accordance with Paragraph 1;

 

(ii)                                upon or after a Change in Control (as defined below), a substantial change in the nature of the business operations of Corporation;

 

(iii)                             a reduction by Corporation in Officer’s Base Salary or bonus opportunities (including, without limitation, any reduction in the target Bonus) as in effect on the date hereof or as the same may be increased from time to time;

 

(iv)                            the relocation of Corporation’s principal executive offices to a location outside the Los Angeles and Pasadena, California metropolitan areas, or Corporation’s requiring Officer to be based anywhere other than Corporation’s principal executive offices except for required travel on Corporation’s business to an extent substantially consistent with Officer’s business travel obligations immediately prior to the date hereof;

 

(v)                               the failure by Corporation to pay Officer any portion of his current compensation, or to pay Officer any portion of an installment of deferred compensation under any deferred compensation program of Corporation, within seven days of the date such compensation is due;

 

(vi)                            upon or after a Change in Control, the failure by Corporation to continue in effect any compensation plan in which Officer participates immediately prior to the Change in Control which is material to Officer’s total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by Corporation to continue Officer’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of participation relative to other participants, as existed prior to the Change in Control;

 

(vii)                         upon or after a Change in Control, the failure by Corporation to continue to provide Officer with benefits substantially similar to those under any of Corporation’s directors and officers liability insurance, life insurance, medical, health and accident, or disability plans in which Officer was participating at the time of a Change in Control, the taking of any action by Corporation which would directly or indirectly materially reduce any of such benefits or deprive Officer of any material fringe benefit enjoyed by him at the time of a Change in Control, or the failure by Corporation to provide Officer with the number of paid vacation days to which he is entitled on the basis of years of service with Corporation in accordance with Corporation’s normal vacation policy in effect at the time of the Change in Control;

 

(viii)                      the failure of Corporation to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement; or

 

(ix)                            a material breach of this Agreement by Corporation.

 

- 7 -

 

Officer’s right to terminate Officer’s employment for Good Reason shall not be affected by Officer’s incapacity due to physical or mental illness.  In addition, notwithstanding any other provision of this Agreement, any termination of employment by Corporation (other than a termination by Corporation for Cause), shall be treated as a termination by Officer for Good Reason.

 

4.3                            Effect of Termination.  In the event that this Agreement is terminated by Corporation or Officer prior to the Termination Date in accordance with the provisions of this Paragraph 4, the obligations and covenants of the parties under this Paragraph 4 shall be of no further force and effect, except for the obligations of the parties set forth in this Paragraph 4.3 and, for the avoidance of doubt Paragraph 4.5, and such other provisions of this Agreement which shall survive termination of this Agreement as provided in Paragraph 6.11.  Except as otherwise specifically set forth in this Agreement, all amounts due upon termination shall be payable on the date such amounts would otherwise have been paid had the Agreement continued through its Term; provided, however, that subject to the provisions of each plan governing Deferred Amounts (as defined below), including, but not limited to, provisions that may delay the payment of Deferred Amounts until six months and one day after Officer’s Separation From Service (as defined in Paragraph 4.4(b)(i)), Deferred Amounts shall be payable within 30 days following the Early Termination Date.  In the event of any such early termination in accordance with the provisions of this Paragraph 4.3, Officer shall be entitled to the following:

 

(a)                               Termination by Corporation.

 

(i)                                   Termination Without Cause.  In the event that Corporation terminates this Agreement without Cause pursuant to Paragraph 4.1(a), Officer shall be entitled to:  (i) Earned Base Salary; (ii) any earned Bonus, for the fiscal year of Corporation immediately prior to the fiscal year in which Officer is terminated, that Officer is entitled to receive, pursuant to Paragraph 3.3, but which has not been paid to Officer as of the Early Termination Date, in the amount in which such Bonus either has been determined or approved by the Board or Compensation Committee or is readily ascertainable (in all cases without regard to any ability of the Board or Compensation Committee to exercise any negative discretion regarding payment), at the same time that other executive bonuses are determined, by reference to performance criteria previously established by the Board or Compensation Committee (an “Earned Bonus”); (iii) vested benefits pursuant to written employee benefit plans (“Earned Benefits”) and reimbursable expenses; (iv) any compensation earned but deferred (“Deferred Amounts”); (v) a pro rata Bonus for the portion of the fiscal year in which Officer’s termination occurs based on the amount that would have been earned (as determined by an independent certified public accountant mutually acceptable to Officer and Corporation) if the target level of performance had been achieved, provided,  that the Bonus that is to be prorated for the applicable year shall not be less than the Bonus for the immediately preceding year (a “Pro Rata Bonus”); (vi) the Severance Payment (as defined below); (vii) continued participation throughout the three-year period following Officer’s termination of employment in all medical and dental benefit plans, to the extent permitted by those plans (but at such costs no higher to Officer than as in effect immediately preceding such termination); provided that, after receiving reasonable request from Corporation reasonably in advance of the expiration of the election periods under COBRA (as defined in Paragraph 4.4(c)(iii)) and analogous provisions of state law, as applicable, Officer and covered dependents shall make reasonable efforts to make applicable elections thereunder (to the extent available); and provided further, that Corporation shall in no event be required to provide any benefits otherwise required by this clause (vii) after such time as Officer becomes enrolled in a plan of another employer or recipient of Officer’s services under which he is entitled to receive benefits of the same type (e.g., medical or dental); (viii) payment of full salary in lieu of all accrued but unused vacation; (ix) for a period of up to 180 days following Officer’s termination of employment, outplacement services (which shall be reasonable for an officer of Officer’s status at

 

- 8 -

 

a company such as Corporation) through a bona fide outplacement organization acceptable to Officer that, at a minimum, agrees to supply Officer with outplacement counseling, a private office and administrative support, including telephone service (“Applicable Outplacement Services”); (x) (A) full and immediate vesting of any and all outstanding and unvested equity or equity-based compensation awards (including, without limitation,  restricted stock and stock options), the vesting of which otherwise depends only upon the passage of time, (B) if the applicable corporate or other performance goals are ultimately satisfied, the vesting of any and all awards of equity or equity-based compensation (including, without limitation, restricted stock and stock options), the vesting of which otherwise depends upon the satisfaction of corporate performance criteria, in an amount equal to (I) the amount of the award multiplied by (II) a fraction (x) the numerator of which is the number of days during the performance period on which Officer was employed and (y) the denominator of which is the number of days in the performance period, and (C) exercisability of any and all outstanding options for their full terms without regard to the termination; and (xi) (A) to the extent that any restricted stock award has not yet been granted for 2011, a fully vested restricted stock grant in an amount equal to the number of shares of restricted stock awarded in the year prior to the year in which the termination occurs, or, if higher, the average of the number of shares of restricted stock awarded for the second, third, and fourth fiscal years prior to the fiscal year in which the termination occurs (reduced by any grants already made for 2011), (B) for 2012 and thereafter, to the extent an LTI Grant has not been made with respect to the fiscal year prior to the fiscal year in which the termination occurs, a fully vested restricted stock grant in an amount equal to the number of shares of restricted stock awarded in the year prior to the year in which the termination occurs, or, if higher, the average of the number of shares of restricted stock awarded in the second, third, and fourth fiscal years prior to the fiscal year in which the termination occurs, and (C) for 2012 and thereafter, a fully vested restricted stock grant in an amount equal to the number of shares of restricted stock awarded in the year prior to the year in which the termination occurs, or, if higher, the average of the number of shares of restricted stock awarded in the second, third, and fourth fiscal years prior to the fiscal year in which the termination occurs.  Notwithstanding the foregoing, in the event Officer’s participation in any such plan, program or arrangement described in this Paragraph 4.3(a)(i) is barred, or in the case of clause (vii),  subjects Corporation or Officer to materially adverse penalties or excise taxes, Corporation shall arrange to provide Officer with substantially similar benefits (on a post-tax basis).

 

(ii)                                Termination for Cause.  In the event that Corporation terminates this Agreement for Cause pursuant to Paragraph 4.1(b), Officer shall be entitled to (i) Earned Base Salary; (ii) any Earned Bonus; (iii) Earned Benefits and reimbursable expenses; and (iv) any Deferred Amounts.  Officer shall not be entitled to any Pro Rata Bonus, future annual Bonus or Severance Payment.

 

(iii)                             Termination Due to Death or Permanent Disability.  In the event that Officer’s employment is terminated by reason of death or Permanent Disability, he shall be entitled to all compensation and benefits described in Paragraph 4.3(a)(i) except that clause (vii) therein (relating to medical and dental benefits) shall be applied by substituting “18-month” for “three-year,” as the latter appears therein and, and clause (ix) therein shall be inapplicable.

 

(b)                              Termination by Officer.

 

(i)                                   Termination Other than for Good Reason.  In the event that Officer terminates this Agreement other than for Good Reason, Officer shall be entitled to (i) Earned Base Salary; (ii) any Earned Bonus; (iii) Earned Benefits and reimbursable expenses; and (iv) any Deferred Amounts.  Officer shall not be entitled to any Pro Rata Bonus, future annual Bonus or

 

- 9 -

 

Severance Payment.  In addition, if the termination by Officer is on or after attainment of age 69, Officer shall be entitled to the payments and benefits described in clauses (vii), (viii) and (xi) of the first sentence of Paragraph 4.3(a)(i).

 

(ii)                                Termination for Good Reason.  In the event that Officer terminates this Agreement for Good Reason, Officer shall be entitled to all of the compensation and benefits to which he would be entitled under Paragraph 4.3(a)(i) in the event of a termination by Corporation without Cause; provided, however, that in the event that Officer terminates this Agreement for Good Reason pursuant to Paragraph 4.2(b)(iii), Earned Base Salary shall mean all semi-monthly installments of Base Salary as in effect on the date of termination or the date immediately prior to any reduction under Paragraph 4.2(b)(iii), whichever is greater, which have become due and payable to Officer, together with any partial monthly installment prorated on a daily basis up to and including the applicable Termination Date.

 

4.4                            Severance Payment; Post-Employment Consulting

 

(a)                               Definition of “Severance Payment.”  For purposes of this Agreement, the term “Severance Payment” shall mean an amount equal to three times the sum of (i) Base Salary as in effect on the date of termination; plus (ii) an amount equal to (A) the sum of the Bonus paid to Officer with respect to each of the last three fiscal years of Corporation preceding the year in which the termination of this Agreement occurs, divided by (B) three; provided, however, that in the event that Officer terminates this Agreement for Good Reason pursuant to Paragraph 4.2(b)(iii), Severance Payment shall mean three times the sum of (i) the greater of (A) Base Salary, as in effect on the date of termination, or (B) Base Salary, as in effect on the date immediately prior to any reduction described in Paragraph 4.2(b)(iii); plus (ii) an amount equal to (A) the sum of the Bonus paid to Officer with respect to each of the last three fiscal years of Corporation preceding the year in which the termination of this Agreement occurs, divided by (B) three.  In the event that Officer is entitled to a Severance Payment, except by virtue of death or Permanent Disability, Officer shall provide post-employment consulting services pursuant to Paragraph 4.4(c)).  Notwithstanding the foregoing, if termination is after the effective time of an Executive Chairman Election, the Severance Payment shall mean the sum of (i) Officer’s Base Salary as in effect at the time of such election, plus (ii) the amount of the Bonus payable at target level of performance for the fiscal year during which the election is made or, if higher, for the prior fiscal year.

 

(b)                              Payment of Severance Payment and Pro Rata Bonus; Section 409A.  In the event that Officer is entitled to any Severance Payment or Pro Rata Bonus pursuant to Paragraph 4.3 or 4.5, such Severance Payment and Pro Rata Bonus shall be payable in a lump sum within 10 days following Officer’s termination of employment; provided, however, that:

 

(i)                                   payment of such amounts and any other amounts or benefits provided under this Agreement in connection with Officer’s termination of employment that constitute “deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”) shall not commence in connection with Officer’s termination of employment unless and until Officer has also incurred a “separation from service” (as such term is defined in Treasury Regulations Section 1.409A-1(h) (“Separation From Service”)), unless Corporation reasonably determines that such amounts and benefits may be provided to Officer without causing Officer to incur the adverse personal tax consequences under Section 409A; and

 

(ii)                                it is intended that (a) each installment of any amounts or benefits payable under this Agreement be regarded as a separate “payment” for purposes of Treasury Regulations Section 1.409A-2(b)(2)(i) (and each such installment is hereby designated as separate for such purpose), (b) all

 

- 10 -

 

payments of any such amounts or benefits satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4) and 1.409A-1(b)(9)(iii), and (c) any such amounts or benefits consisting of COBRA premiums also satisfy, to the greatest extent possible, the exemption from the application of Section 409A provided under Treasury Regulations Section 1.409A-1(b)(9)(v).  However, if any such amounts or benefits constitute “deferred compensation” under Section 409A and Officer is a “specified employee” of Corporation, as such term is defined in Section 409A(a)(2)(B)(i), then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of such benefit payments shall be delayed as follows: on the earlier to occur of (a) the date that is six months and one day after Officer’s Separation From Service and (b) the date of Officer’s death (such applicable date, the “Delayed Initial Payment Date”), Corporation shall (1) pay Officer a lump sum amount equal to the sum of the benefit payments that Officer would otherwise have received through the Delayed Initial Payment Date if the commencement of the payment of the benefits had not been delayed pursuant to this paragraph and (2) commence paying the balance, if any, of the benefits in accordance with the applicable payment schedule.

 

Officer and Corporation agree that one-half of any Severance Payment shall constitute consideration for Officer’s compliance with the post-employment consulting provisions of Paragraph 4.4(c) and the noncompetition obligation of Paragraph 5.

 

(c)                               Post-Employment Consulting.

 

(i)                                   Consulting Period.  In the event that Officer is entitled to a Severance Payment, except by virtue of death or Permanent Disability, Officer shall continue to provide services to Corporation as a consultant for the period (the “Consulting Period”) from the termination of Officer’s employment through the earlier of: the 12-month period following Officer’s termination of employment, or the date of the termination of Officer’s service as a consultant by Corporation due to Officer’s material breach of this Agreement.

 

(ii)                                Consulting Duties.  Officer shall be available to provide consulting services during the Consulting Period (or shorter period, if applicable) in Officer’s areas of expertise, as requested by the Chief Executive Officer of Corporation or the Board (or a committee of the Board).  Officer shall make himself available to provide such services for up to 20 hours per month for the first three months of the Consulting Period, and five hours per month for the remainder of the Consulting Period; provided that Officer shall not be required to provide services that would conflict with or otherwise interfere in any way with his duties or responsibilities (including, without limitation,  as to the time, place and manner of services) for any subsequent employer or other recipient of his services.  Corporation shall require such services at reasonable times and places mutually agreed upon by Corporation and Officer.  By way of example, it shall not be a breach of this Agreement if Officer has made himself available to render such services and Corporation does not require Officer to render all such services.

 

(iii)                             Independent Contractor Status.  During the Consulting Period (or shorter period, if applicable), Officer acknowledges and agrees that he (i) shall be an independent contractor of Corporation and not an employee, and (ii) shall not be entitled to any of the benefits that Corporation may make available solely to its employees, except as otherwise specifically set forth in this Agreement or to the extent that Officer elects continued health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or analogous provisions of state law.  Consultant shall execute Corporation’s standard form of independent contractor consulting agreement, which shall among other things, require Consultant to refrain from unauthorized use and disclosure of Corporation’s confidential and proprietary information (but which shall in no event be more restrictive than this Agreement as to such matters).

 

- 11 -

 

(iv)                            Expense Reimbursement.  Corporation shall reimburse Officer for all reasonable out-of-pocket business expenses incurred by Officer for the purpose of and in connection with the performance of his consulting services pursuant to this Agreement.  Officer shall be entitled to such reimbursement upon the presentation by Officer to Corporation of vouchers or other statements itemizing such expenses in reasonable detail consistent with Corporation’s policies.  The amount of expenses eligible for reimbursement pursuant to this Paragraph 4.4(c)(iv) during a calendar year shall not affect the amount of expenses eligible for reimbursement in any other calendar year.  Corporation shall reimburse Officer for any expense eligible for reimbursement pursuant to this Paragraph 4.4(c)(iv) on or before the end of the calendar year following the calendar year in which the expense was incurred.

 

4.5                            Change in Control.

 

(a)       Effect of Termination Following a Change in Control.  In the event that Corporation terminates this Agreement without Cause pursuant to Paragraph 4.1(a) or Officer terminates this Agreement for Good Reason pursuant to Paragraph 4.2(b), in each case within 12 months following the effective date of a Change in Control, then, without limiting any other provision of this Agreement, Officer shall be entitled to all of the compensation and benefits to which he would be entitled under Paragraph 4.3(a)(i) in the event of a termination by Corporation without Cause; provided, however, that, in the event that Officer terminates this Agreement for Good Reason pursuant to Paragraph 4.2(b)(iii), Earned Base Salary shall mean all semi-monthly installments of Base Salary as in effect on the date of termination or the date immediately prior to any reduction under Paragraph 4.2(b)(iii), whichever is greater, which have become due and payable to Officer, together with any partial monthly installment prorated on a daily basis up to and including the applicable Termination Date.

 

(b)      Change in Control Defined.  For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred if:

 

(i)                                   Any Person (as such term is used in section 3(a)(9) of the Securities Exchange Act of 1934 as amended from time to time (the “Exchange Act”), as modified and used in sections 13(d) and 14(d) thereof, except that such term shall not include (A) Corporation or any of its subsidiaries, (B) a trustee or other fiduciary holding securities under an employee benefit plan of Corporation or any of its affiliates, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by the stockholders of Corporation in substantially the same proportions as their ownership of stock of Corporation) becomes the Beneficial Owner, as such term is defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of Corporation (not including in the securities beneficially owned by such Person any securities acquired directly from Corporation or its affiliates other than in connection with the acquisition by Corporation or its affiliates of a business) representing 25% or more of the combined voting power of Corporation’s then outstanding securities; or

 

(ii)                                The following individuals cease for any reason to constitute a majority of the number of directors then serving:  individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of Corporation) whose appointment or election by the Board or nomination for election by Corporation’s stockholders was approved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or

 

- 12 -

 

(iii)                             There is consummated a merger or consolidation of Corporation with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of Corporation outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of Corporation or any subsidiary of Corporation, at least 75% of the combined voting power of the securities of Corporation or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of Corporation (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Corporation (not including in the securities beneficially owned by such Person any securities acquired directly from Corporation or its affiliates other than in connection with the acquisition by Corporation or its affiliates of a business) representing 25% or more of the combined voting power of Corporation’s then outstanding securities; or

 

(iv)                            The stockholders of Corporation approve a plan of complete liquidation or dissolution of Corporation or there is consummated an agreement for the sale or disposition by Corporation of all or substantially all of Corporation’s assets, other than a sale or disposition by Corporation of all or substantially all of Corporation’s assets to an entity, at least 75% of the combined voting power of the voting securities of which are owned by stockholders of Corporation in substantially the same proportions as their ownership of Corporation immediately prior to such sale.

 

(c)                               Limitation on Payments.  If all, or any portion, of the payments provided under this Agreement, either alone or together with other payments or benefits that Officer receives or is entitled to receive from Corporation or an affiliate, would constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), then Officer shall be entitled to receive (i) an amount limited so that no portion thereof shall be subject to an excise tax under Section 4999 of the Code (the “Limited Amount”), or (ii) if the amount otherwise payable hereunder (without regard to clause (i)) reduced by the excise tax imposed by Section 4999 of the Code (the “Excise Tax”) is greater than the Limited Amount, the amount otherwise payable hereunder.  Any reductions under this Paragraph 4.5 shall be made first from cash payments that are not payments of deferred compensation subject to Section 409A of the Code, next from other cash payments, and finally from the cancellation of the accelerated vesting of equity awards.

 

4.6                            No Mitigation or Offset.  Officer shall not be required to mitigate damages under this Agreement by seeking other comparable employment or otherwise, and the amount of any payment or benefit provided for in this Agreement, shall not be reduced by any compensation earned by or provided to Officer as the result of employment by an employer other than Corporation.

 

5.                                    Noncompetition.

 

During the Term and ending (i) 12 months following the date that Officer ceases to be an employee of Corporation other than in the event of a termination following a Change in Control pursuant to Paragraph 4.5, or (ii) three years following the date that Officer ceases to be an employee of Corporation in the event of a termination following a Change in Control pursuant to Paragraph 4.5, Officer shall not engage in any activity directly and materially competitive, with a material adverse impact on Corporation, with the business of Corporation.  (By way of example and for avoidance of ambiguity, the noncompetition period in the preceding sentence is intended to run for the stated period (12 months or three years, as applicable) from termination of employment, regardless of whether Officer is consulting for all or part of that period pursuant to the terms of Paragraph 4.4.)  This provision shall not

 

- 13 -

 

be construed to prohibit Officer from owning up to 5% of the outstanding voting shares of the equity securities of any corporation whose common stock is listed for trading on any national securities exchange or on the NASDAQ system.

 

6.                                    Miscellaneous.

 

6.1                            Payment Obligations.  Corporation’s obligation to pay Officer the compensation and to make the arrangements provided herein shall be unconditional, and Officer shall have no obligation whatsoever to mitigate damages hereunder.  If arbitration after a Change in Control shall be brought to enforce or interpret any provision contained herein, Corporation shall, to the extent permitted by applicable law and Corporation’s Articles of Incorporation and By-Laws, indemnify Officer for Officer’s attorneys’ fees and disbursements incurred in such arbitration.

 

6.2                            Confidentiality.  Officer agrees that all confidential and proprietary information relating to the business of Corporation shall be kept and treated as confidential both during and after the Term, except as may be permitted in writing by the Board or as such information is within the public domain or comes within the public domain without any breach of this Agreement; provided, however, that this Paragraph 6.2 imposes no obligation upon Officer with respect to information that (i) was in Officer’s possession before receipt from Employer; (ii) is disclosed to immediate family members, or to tax, financial, or legal advisors for purposes of obtaining such advice; (iii) is rightfully received by Officer from a third party who does not have a duty of confidentiality; or (iv) is disclosed as required by law or legal process.

 

6.3                            Waiver.  The waiver of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach of the same or other provision hereof.

 

6.4                            Entire Agreement; Modifications.

 

(a)       Except as otherwise provided herein, this Agreement (together with the agreements and plans referred to herein) represents the entire understanding among the parties with respect to the subject matter hereof, and this Agreement supersedes any and all prior understandings, agreements, plans and negotiations, whether written or oral, with respect to the subject matter hereof, including without limitation that certain Amended and Restated Executive Employment Agreement between Corporation and Officer effective as of January 1, 2005 (other than the second sentence of the third paragraph of Section 3.4(g) thereof, which shall survive in accordance with its terms).  All modifications to the Agreement must be in writing and signed by the party against whom enforcement of such modification is sought.

 

(b)      Notwithstanding the foregoing, nothing in this Agreement shall adversely affect any compensation or benefit earned for a period beginning prior to the Effective Date, or any incentive award granted on a date prior to the Effective Date.

 

6.5                            Notices.  All notices and other communications under this Agreement shall be in writing and shall be given by facsimile or first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given three days after mailing or 24 hours after transmission of a facsimile (if the receipt of the facsimile is confirmed) to the respective persons named below:

 

- 14 -

 

	
If   to Corporation:
    	
Alexandria Real Estate   Equities, Inc.
    
	
 
    	
385   East Colorado Boulevard
    
	
 
    	
Suite 299
    
	
 
    	
Pasadena,   CA  91101
    
	
 
    	
Phone:  (626)   578 0777
    
	
 
    	
 
    
	
If   to Officer:
    	
Joel S. Marcus,
    
	
 
    	
at   the address shown on the execution page hereof.
    
	
 
    	
 
    
	
 
    	
With   a copy to:
    
	
 
    	
 
    
	
 
    	
Ropes &   Gray LLP
    
	
 
    	
1211   Avenue of the Americas
    
	
 
    	
New   York, New York 10036-8704
    
	
 
    	
Attention:   Andrew L. Oringer, Esq.
    
	
 
    	
Phone:  (212)   596 9702
    

 

Any Party may change such Party’s address for notices by notice duly given pursuant hereto.

 

6.6                            Headings.  The Paragraph headings herein are intended for reference only and shall not by themselves determine the construction or interpretation of this Agreement.

 

6.7                            Governing Law.  Other than with respect to Paragraph 6.13, this Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to its principles of conflict of laws.

 

6.8                            Arbitration.  Any dispute arising out of or relating to this Agreement or its enforcement, breach, performance, or interpretation, that cannot be settled by good faith negotiation between the parties shall be submitted to Judicial Arbitration and Mediation Services, Inc. (“JAMS”), or its successor, for final and binding arbitration by a single arbitrator in Los Angeles, California, pursuant to JAMS’ then applicable arbitration rules (incorporated herein by reference), which arbitration shall be the exclusive remedy of the parties hereto.  By agreeing to this arbitration procedure, the parties waive the right to resolve any such dispute through a trial by jury or judge or by administrative proceeding.  The resulting arbitration shall be deemed equivalent to a final order of a court having jurisdiction over the subject matter, shall not be appealable, and shall be enforceable in any court of competent jurisdiction.  The arbitrator shall (i) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law, and (ii) issue a written arbitration decision including the arbitrator’s essential findings and conclusions and a statement of the award.  Corporation shall pay all of JAMS’ administrative fees (including but not limited to arbitrator fees) for this arbitration.  Submission to arbitration shall not preclude the right of any party hereto involved in a dispute regarding this Agreement (each, a “Disputing Party” and collectively, the “Disputing Parties”) to institute proceedings for injunctive relief to prevent irreparable harm pending the arbitration of a matter subject to arbitration pursuant to this Agreement.  Subject to the exceptions contained in Paragraph 6.2, any documentation and information submitted by any party in the arbitration proceeding shall be kept strictly confidential by the parties and the arbitrator.

 

6.9                            Severability.  Should a court or other body of competent jurisdiction determine that any provision of this Agreement is excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, and enforced along with all other provisions of this Agreement to the extent possible under applicable law consistent with the intent of the parties.

 

- 15 -

 

6.10                    Survival of Corporation’s Obligations.  Corporation’s obligations hereunder shall not be terminated by reason of any liquidation, dissolution, bankruptcy, cessation of business, or similar event relating to Corporation.  This Agreement shall not be terminated by any merger or consolidation or other reorganization of Corporation.  In the event any such merger, consolidation or reorganization shall be accomplished by transfer of stock or by transfer of assets or otherwise, the provisions of this Agreement shall be binding upon and inure to the benefit of the surviving or resulting corporation or person.  This Agreement shall be binding upon and inure to the benefit of the executors, administrators, heirs, successors and assigns of the parties; provided, however, that except as herein expressly provided, this Agreement shall not be assignable either by Corporation (except to an affiliate of Corporation, in which event Corporation shall remain liable if the affiliate fails to meet any obligations to make payments or provide benefits or otherwise) or by Officer.

 

6.11                    Survival of Certain Rights and Obligations.  The rights and obligations of the parties hereto pursuant to Paragraphs 4.3, 4.4, 4.5, 4.6, 5, 6.1 through 6.11 and 6.13, hereof shall survive the termination of this Agreement.

 

6.12                    Counterparts.  This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same Agreement.

 

6.13                    Indemnification and Insurance.  In addition to any rights to indemnification to which Officer is entitled under Corporation’s Articles of Incorporation and By-Laws, Corporation shall indemnify Officer at all times during and after the Term to the maximum extent permitted under Section 2-418 of the General Corporation Law of the State of Maryland or any successor provision thereof and any other applicable state law, and shall pay Officer’s expenses in defending any civil or criminal action, suit, or proceeding in advance of the final disposition of such action, suit, or proceeding, to the maximum extent permitted under such applicable state laws.  It is expressly understood and agreed that Corporation shall continue to indemnify Officer as provided above after the Term has ended for any claims that may be made against him with respect to his service as a director or officer of Corporation.  Corporation shall cover Officer, at Corporation’s expense, under director and officer insurance which provides coverage not less than the amount of coverage on the date hereof, covering any and all claims arising out of Officer’s tenure as an officer, director or manager of Corporation, both during and, at all times while potential liability exists, after the Term on a basis no less favorable in each and every respect as is applicable to any officer, director or manager (whether current or former), as applicable, of Corporation.

 

- 16 -

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

 

	
 
    	
CORPORATION: 
    
	
 
    	
 
    
	
 
    	
ALEXANDRIA REAL   ESTATE EQUITIES, INC., 
    
	
 
    	
a Maryland corporation   
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dean A. Shigenaga
    
	
 
    	
 
    	
Name: Dean A. Shigenaga
    
	
 
    	
 
    	
Title: Chief Financial   Officer
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
April 26, 2012
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
OFFICER: 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Joel S. Marcus 
    
	
 
    	
 
    	
Joel S. Marcus 
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
April 26, 2012
    

 

 

EXHIBIT A

 

BONUS

 

 

 

 

1.                                    Bonus.

 

With respect to each fiscal year of Corporation occurring during the Term, Officer shall be eligible to receive a Bonus, 60% of which shall be payable based on upon the achievement of certain corporate performance criteria (“Corporate Performance Criteria”), and 40% of which shall be payable based upon the achievement of certain individual performance criteria (“Individual Performance Criteria”).  The Bonus payable, if any, shall have a threshold amount equal to 75% of Base Salary, a target amount equal to 150% of Base Salary, and a maximum amount equal to 225% of Base Salary.  The Bonus payable, if any, for any fiscal year shall be payable only following written certification by the Compensation Committee of the requisite corporate performance in two installments, with 50% payable on April 1 and the remaining 50% payable on July 1 of the year immediately following the fiscal year to which such Bonus relates.

 

2.                                    Performance Criteria.

 

The specific Corporate Performance Criteria to be achieved (i) shall be determined by the Compensation Committee  (A) with respect to 2012, not later than 90 days after the execution of the Agreement, and (B) with respect to any other fiscal year of Corporation, not later than 90 days after the beginning of the fiscal year, and (ii) shall be based on Corporation’s achievement during the applicable fiscal year of the following categories of initiatives with the following weightings: (1) balance sheet management, including investment grade rating, capital allocation and debt/equity raising, 30%, (2) net operating income growth, excluding the impact of asset sales, 30%, (3) operating margins relative to peers, excluding the impact of asset sales, 20%, and (4) leasing activity/quality, 20%.  The specific Individual Performance Criteria to be achieved shall be determined by the Compensation Committee  with respect to 2012, not later than 90 days after the execution of the Agreement, and with respect to any other fiscal year of Corporation, not later than 90 days after the beginning of the fiscal year.  Both the Corporate Performance Criteria and the Individual Performance Criteria shall be reasonably determined by the Compensation Committee in good faith following consultation with Officer.

 

 

EXHIBIT B

 

2012 PERFORMANCE-BASED RESTRICTED STOCK GRANT

 

 

Performance Criteria

 

In connection with the 2012 Performance-Based Restricted Stock grant, for each fiscal year of Corporation during the three-year period beginning from January 1, 2012 through December 31, 2014, the Compensation Committee shall determine not later than 90 days after the beginning of the applicable fiscal year, or, in the case of 2012, concurrent with the grant of such award in the time period specified in Section 3.4(g)(i) of this Agreement, specific performance criteria to be achieved during that fiscal year by Corporation related to one or more of the following categories of initiatives (i) compounded annual growth rate in normalized funds from operations per diluted share, (ii) compounded annual growth rate on investment in common stock, and (iii) funds from operations multiple.  The specific performance criteria (which, for the avoidance of doubt, shall not be based on or relate to Officer’s individual performance) shall be reasonably determined by the Compensation Committee in good faith following consultation with Officer, and the level of performance achieved shall be certified in writing by the Compensation Committee before any portion of such grant may vest.

 

 

EXHIBIT C

 

CERTAIN PERFORMANCE-BASED STOCK

 

 

1.                                    Performance-Based Stock.

 

During the Term, Officer shall be eligible to receive an LTI Grant, 50% of which shall be in the form of an award of Performance-Based Stock payable based on the achievement of performance criteria with respect to two components, an absolute component (the “Absolute Component”) and a relative component (the “Relative Component”), each representing 50% of the award.  For the avoidance of doubt, performance criteria shall not be based on or relate to Officer’s individual performance.

 

2.                                    Performance Criteria.    The following criteria shall apply with respect to each LTI Grant.

 

2.1 Absolute Component.  The Absolute Component shall be 50% of the Performance-Based Stock award.  For each Performance Year (as defined below), 33.33% of one-third of the Absolute Component shall be earned if total shareholder return of Corporation, as calculated below (“TSR”), for the Performance Year is equal to 6%, and 100% of one-third of the Absolute Component shall be earned if TSR for the Performance Year is greater than or equal to 10% (the “Maximum Absolute TSR”), with a proportionate amount earned interpolated on a linear basis if TSR is greater than 6% and less than the Maximum Absolute TSR.  For example, 83.33% of one-third of the Absolute Component would be earned if TSR for the Performance Year is equal to 9%.

 

2.2 Relative Component.  The Relative Component shall be 50% of the Performance-Based Stock award.  For each Performance Year, 50% of one-third of the Relative Component shall be earned if TSR for the Performance Year is equal to the FTSE NAREIT Equity Office Index, and 100% of one-third of the Relative Component shall be earned if TSR for the Performance Year is greater than or equal to the sum of the FTSE NAREIT Equity Office Index plus 3% (the “Maximum Relative TSR”), with a proportionate amount earned interpolated on a linear basis if TSR is greater than the FTSE NAREIT Equity Office Index and less than the Maximum Relative TSR.  For example, 83.33% of one-third of the Relative Component would be earned if TSR for the Performance Year is equal to the sum of the FTSE NAREIT Equity Office Index plus 2%.  Notwithstanding the foregoing, a minimum of 50% of one-third of the Relative Component shall be earned in any year if the TSR for such Performance Year is greater than or equal to 10%.

 

2.3 Calculating TSR.

 

(a)  With respect to an LTI Grant, a “Performance Year” shall mean the fiscal year of Corporation, with the first Performance Year being the fiscal year of Corporation in which the LTI Grant is made, and the second and third Performance Years being the immediately succeeding fiscal years of Corporation.

 

(b)  For purposes of calculating Corporation’s annual TSR with respect to both the Absolute Component and the Relative Component for an LTI Grant, TSR shall be measured based on the change in the price of a share of Corporation’s common stock from the beginning of the Performance Year (using the closing price of Corporation’s stock on the last day on which Corporation’s stock is traded during the immediately preceding fiscal year) until the end of the Performance Year (using the closing price of Corporation’s stock on the last day on which Corporation’s stock is traded during such Performance Year), adjusted to reflect the reinvestment of dividends.  TSR with respect to each

 

 

Performance Year shall be determined and certified in writing by the Compensation Committee as soon as practicable, but not later than 30 days following the end of the applicable Performance Year.

 

3.                                    Carry-Back and Carry-Forward.

 

If, with respect to any Performance Year, TSR exceeds the Maximum Absolute TSR or the Maximum Relative TSR, such excess, as applicable, may be applied to the TSR for the Absolute Component or Relative Component, as applicable, in a prior or subsequent Performance Year in which the Maximum Absolute TSR or Maximum Relative TSR, respectively, was not achieved.  For example, with respect to the Absolute Component, if, during the second Performance Year, TSR equals 14%, the excess over the Maximum Absolute TSR (i.e., 4%) may be applied to the TSR in the first or third Performance Years to the extent the Maximum Absolute TSR was not achieved in such year.  Carry-backs shall be effected first, with remaining amounts being carried forward.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00203-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00203-of-00352.parquet"}]]