Document:

Exhibit 10.73

 

SECOND AMENDMENT TO LEASE

 

THIS
AGREEMENT made as of this 18th day of November 2003 by and between
ESTATE OF RUSSELL BERRIE (“Landlord”) and RUSS BERRIE & CO. (WEST), INC.
(“Tenant”).

 

WITNESSETH

 

WHEREAS,
HUNTER STREET, INC., and RUSS BERRIE & CO. (WEST), INC. entered into a
lease dated July 1, 1987, which was later amended by the First Amendment to
Lease dated March 15, 1994, (as amended, the “Lease”) covering premises known
as South McDowell Extension, Petaluma, California, as more particularly
described on Schedule “A” of the Lease (the “Premises”); and

 

WHEREAS,
Russell Berrie, who was successor in title to Hunter Street, Inc., is deceased
and his estate is now the Landlord under the Lease; and

 

WHEREAS,
the Lease terminates on June 30, 2004; and

 

WHEREAS,
by letter dated May 12, 2003, Tenant notified Landlord that it would not
exercise its option to renew the Lease and would vacate the premises on or
before the date of termination of the Lease;

 

WHEREAS,
Tenant now wishes to extend its tenancy beyond the termination date of Lease
and Landlord has agreed to extend the term of the lease on the terms and
conditions agreed to by the parties as hereinafter set forth.

 

NOW,
THEREFORE, in consideration of the foregoing recitals, which by reference are
incorporated herein, and for ten dollars and other good and valuable
consideration, the parties agree as follows:

 

1.             Section 1.02, entitled “Term of Lease,” shall
be deleted in its entirety and shall be replaced with the following paragraph
to read as follows:

 

Section 1.02  Term of Lease             To
have and to hold unto the Tenant, its successors and permitted assigns, for a
term to commence on the commencement date as defined in Article 5 hereof, and
to terminate on June 30, 2005, unless sooner terminated or extended, as
otherwise hereinafter provided.

 

2.             Section 3.01 of the Lease shall be amended
effective as of July 1, 2004 and thereafter by adding the following:

 

Section 3.01   Effective July 1, 2004 to and through June
30, 2005, the Tenant shall pay to the Landlord as net annual basic rent (the
“Basic Rent”) for the Demised Premises the sum of Nine Hundred Thirty-Seven
Thousand and No/100 Dollars ($937,000.00) per annum, payable in equal monthly
installments of Seventy-Eight Thousand Eighty-Three and 33/100 Dollars
($78,083.33) due and payable the first day of each and every month in
advance.  Said rent and all payments due
hereunder shall be paid as specified above, or as Landlord may otherwise direct
in writing.  It is the intention of the
parties that the Basic Rent shall be net to the Landlord, so that this Lease
shall yield to the Landlord the Basic Rent during the term so specified and
that all costs, expenses and obligations of every kind and nature whatsoever
relating to the Demised

 

 

Premises shall be paid by the Tenant, except as otherwise specifically
provided in this Lease.

 

3.             Article 24.06 of the Lease, entitled “Renewal
Option A.” and “B. Basic Rent”, shall be deleted in its entirety and shall be
replaced with the following paragraph to read as follows:

 

Section 24.06   Renewal Option   A. Providing that an event of default has
not occurred and is not then continuing, Tenant may renew the term of this
Lease for a period of one (1) year, commencing on July 1, 2005 and terminating
June 30, 2006, for the same Basic Rent in sum of Nine Hundred Thirty-Seven
Thousand and No/100 Dollars ($937,000.00) per annum, payable in equal monthly
installments of Seventy-Eight Thousand Eighty-Three and 33/100 Dollars
($78,083.33). Such renewal shall be subject to all terms and conditions of this
Lease. Said option shall be exercised by the Tenant delivering written notice
to the Landlord no later than the close of business August 1, 2004.  Said notice shall be delivered in accordance
with Article 16 of the Lease.

 

4.             In the event of a conflict between the terms
of the Lease and the terms of this Second Amendment to Lease, the terms of this
Second Amendment shall prevail. 
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Lease. 
Except as otherwise provided herein to the contrary, the parties ratify
and confirm all the terms, covenants and conditions of the Lease and all of
said provisions are incorporated herein as though set forth at length.

 

IN
WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals the
day and year first above written.

 

	
  WITNESS

  	
  ESTATE
  OF RUSSELL BERRIE,

  
	
   

  	
  Landlord

  
	
   

  	
   

  
	
  11/18/03

  	
   

  	
  /s/  Ilan Kaufthal

  	
   

  
	
   

  	
  Ilan
  Kaufthal, solely in his capacity as an

  executor of the Estate of Russell Berrie

  
	
   

  	
   

  
	
  11/18/03

  	
   

  	
  /s/  Angelica Urra Berrie

  	
   

  
	
   

  	
  Angelica
  Urra Berrie, solely in her capacity

  as an executor of the Estate of Russell Berrie

  
	
   

  	
   

  
	
  11/18/03

  	
   

  	
  /s/  Myron Rosner

  	
   

  
	
   

  	
  Myron
  Rosner, solely in his capacity as an

  executor of the Estate of Russell Berrie

  
	
   

  	
   

  
	
  WITNESS

  	
  RUSS
  BERRIE & CO. (WEST), INC.,

  
	
   

  	
  Tenant

  
	
   

  	
   

  
	
   

  	
   

  
	
  11/18/03

  	
   

  	
  By:

  	
  /s/  A. Curts Cooke

  	
   

  
	
   

  	
  Name:
  A. Curts Cooke

  
	
   

  	
  Title:
  Vice PresidentEXHIBIT 10.74

 

RUSS BERRIE AND COMPANY, INC.

CHANGE IN CONTROL SEVERANCE PLAN

 

 

The purpose of
this Change in Control Severance Plan (the “Plan”) is to enable Russ Berrie and
Company, Inc., a New Jersey corporation (the “Company”), to offer a form of
income protection to “Participants” (as defined in Section 7.5 below) in the
event their employment with the Company terminates under certain circumstances
due to a “Change in Control” (as defined in Section 7.2 below).

 

ARTICLE I: BENEFITS

 

1.1           Eligibility for
Benefits; Benefits; Payment; and Rights of Participants.

 

(a)           If a Participant’s
employment with the Company is terminated by the Company without “Cause” (as
defined in Section 7.1 below) or by the Participant for “Good Reason” (as
defined in Section 7.4 below) (each, a “Qualifying Termination”) during the
period commencing six months prior to and ending two years after a Change in
Control, such Participant shall be paid the applicable “Severance Benefit” (as
defined below) and shall receive the additional benefits described in this
Article I. The term “Severance Benefit” shall mean:

 

(i)                                     if
the Qualifying Termination occurs during the six-month period preceding or the
one-year period following the Change in Control, an amount equal to 150% of the
Participant’s “Current Total Annual Compensation” (as defined in Section 7.3
below); and

 

(ii)                                  if
the Qualifying Termination occurs during the second year after the Change in
Control, an amount equal to 75% of the Participant’s Current Total Annual
Compensation.

 

(b)           Any Participant
entitled to a Severance Benefit (in accordance with Section 1.1(a) above) shall
receive his Severance Benefit in the form of a lump-sum payment within 30
business days after his employment with the Company terminates or the Change in
Control occurs, whichever is later, or at such earlier time as required by
applicable law.

 

1.2           Additional Benefits.
A Participant entitled to receive a Severance Benefit shall also receive the
following additional benefits:

 

(a)           The Company shall cause
options to purchase Company stock (“Stock Options”) held by a Participant that
are not fully vested and exercisable on the date of the Qualifying Termination
to:

 

(i)                                     if
the Qualifying Termination occurs during the six months preceding or the first
year following the Change in Control, become

 

 

fully vested
and exercisable as of the date of such Qualifying Termination (or, if later, as
of the date on which the Change in Control occurred); and

 

(ii)                                  if
the Qualifying Termination occurs during the second year following the Change
in Control, become fully vested and exercisable as of the date of such
Qualifying Termination as to those Stock Options that would otherwise have
vested within one year after the Qualifying Termination.

 

(b)           The Company shall cause
unvested restricted shares of Company stock (the “Restricted Shares”) held by a
Participant on the date of the Qualifying Termination to:

 

(i)                                     if
the Qualifying Termination occurs during the six months preceding or the first
year following the Change in Control, become fully vested as of the date of
such Qualifying Termination (or, if later, as of the date on which the Change
in Control occurred) as to those Restricted Shares for which the vesting
restrictions would otherwise have lapsed within one year after the Qualifying
Termination; and

 

(ii)                                  if
the Qualifying Termination occurs during the second year after the Change in
Control, become fully vested as of the date of such Qualifying Termination as
to those Restricted Shares for which the vesting restrictions otherwise would
have lapsed within six months after the Qualifying Termination.

 

(c)           The Company shall for a
period of 18 months (in the case of a Qualifying Termination to which Section
1.1(a)(i) applies) or one year (in the case of a Qualifying Termination to
which Section 1.1(a)(ii) applies) following the Qualifying Termination continue
to provide to the Participant (i) use of an automobile or payment of an
automobile allowance in an amount sufficient to compensate the Participant to
substantially the same extent as if the Company continued to provide the
automobile and (ii) medical and other insurance benefits, in each case to the
extent and on substantially the same basis as provided immediately prior to the
Qualifying Termination (disregarding any reduction described in clause (B) of
the definition of Good Reason).

 

1.3           Reduction of
Payments. If a Participant’s receipt of any payment and/or non-monetary
benefit under this Plan (including, without limitation, the accelerated vesting
of Stock Options and/or Restricted Shares) (collectively, the “Plan Payments”)
would cause him or her to become subject to the excise tax imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the
Company shall reduce his or her Plan Payments to the extent necessary to avoid
the application of such excise tax if (i) the required reduction does not
exceed 10% of the aggregate amount of the Plan Payments and (ii) as a result of
such reduction, the net benefits to the Participant of the Plan Payments as so
reduced (after payment of applicable 

 

2

 

income taxes)
exceeds the net benefit to the Participant of the Plan Payments without such
reduction (after payment of applicable income taxes and excise taxes). If a
reduction in Plan Payments to a Participant in the amount permitted by clause
(i) is insufficient to avoid the application of such excise tax, then the
provisions of “Exhibit A,” attached hereto and incorporated herein, shall apply
to that Participant.

 

1.4           Rights of
Participants. Nothing contained herein shall be held or construed to create
any liability or obligation on the Company to retain any Participant in its
service or in a corporate officer position. All Participants shall remain subject
to discharge or discipline to the same extent as if the Plan did not exist.

 

ARTICLE II: FUNDING

 

2.1           Funding. The
Plan shall be funded out of the general assets of the Company as and when
benefits are payable under the Plan. All Participants shall be solely general
creditors of the Company.

 

ARTICLE III: ADMINISTRATION OF THE PLAN

 

3.1           Plan Administrator.
The general administration of the Plan shall be placed with the Compensation
Committee of the Board of Directors of the Company (the “Board”) or an
administrative committee appointed by the Board (the “Committee”).

 

3.2           Reimbursement of
Expenses of Committee. The Company shall pay or reimburse the members of
the Committee for all reasonable expenses incurred in connection with their
duties hereunder.

 

3.3           Action by the Plan
Committee. Decisions of the Committee shall be made by a majority of its
members attending a meeting at which a quorum is present (which meeting may be
held telephonically), or by written action in accordance with applicable law. No
member of the Committee may act with respect to a matter which involves only
that member.

 

3.4           Delegation of
Authority. The Committee may delegate any and all of its powers and
responsibilities hereunder to other persons by formal resolution filed with and
accepted by the Board. Any such delegation shall not be effective until it is
accepted by the Board and the persons designated and may be rescinded at any
time by written notice from the Committee to the person to whom the delegation
is made.

 

3.5           Retention of
Professional Assistance. The Committee may employ such legal counsel,
accountants and other persons as may be required in carrying out its work in
connection with the Plan, and the Company shall pay the fees and expenses of
such persons.

 

3.6           Accounts and Records.
The Committee shall maintain such accounts and records regarding the fiscal and
other transactions of the Plan, and such other data as may be required to carry
out its functions under the Plan and to comply with all applicable laws.

 

3

 

3.7           Compliance with
Applicable Law. The Company shall be deemed the administrator of the Plan
for the purposes of any applicable law and shall be responsible for the
preparation and filing of any required returns, reports, statements or other
filings with appropriate governmental agencies. The Company shall also be
responsible for the preparation and delivery of information to persons entitled
to such information under any applicable law.

 

3.8           Reimbursement of
Expenses. If any contest or dispute shall arise under this Plan involving
termination of a Participant’s employment with the Company or involving the
failure or refusal of the Company to perform fully in accordance with the terms
hereof and the Participant prevails on the merits in such contest or dispute,
the Company shall, promptly after the date a court issues a final order from
which no appeal can be taken, or with respect to which the time period to
appeal has expired, reimburse such Participant for all reasonable legal fees
and expenses, if any, paid by the Participant in connection with such contest
or dispute (together with interest in an amount equal to the J.P. Morgan Chase
Bank prime rate from time to time in effect, such interest to begin to accrue
on the dates Participant actually paid such fees and expenses through the date
of payment thereof).

 

ARTICLE IV: AMENDMENT

 

4.1           Amendment. The
Company reserves the right to amend, in whole or in part, any or all of the
provisions of this Plan by action of the Board at any time; provided, that, no such amendment may
reduce the benefits and payments due to any Participant hereunder in the event
of a Qualifying Termination.

 

ARTICLE V: SUCCESSORS

 

5.1           Successors. The
Company shall require any successor or assignee, whether direct or indirect, by
purchase or otherwise (and whether or not by operation of law), to all or
substantially all the business or assets of the Company, expressly and
unconditionally to assume and agree to perform the Company’s obligations under
this Plan, in the same manner and to the same extent that the Company would be
required to perform if no such succession or assignment had taken place, provided, that, no such assumption and
agreement shall be required from a successor or assignee that becomes obligated
for the Company’s obligations hereunder through a merger, consolidation or
otherwise by operation of law. In such event, the term “Company,” as used in
this Plan, shall mean the Company, as applicable, as hereinbefore defined and any
successor or assignee to the business or assets which by reason hereof becomes
bound by the terms and provisions of this Plan. Any payment or benefit to which
a Participant has become entitled under this Plan which remains unpaid at the
time of such Participant’s death shall be paid to the estate of such
Participant when it becomes due.

 

4

 

ARTICLE VI: MISCELLANEOUS

 

6.1           No Duty to
Mitigate/Set-off. No Participant entitled to receive a Severance Benefit
shall be required to seek other employment or to attempt in any way to reduce
any amounts payable to him pursuant to this Plan. The Severance Benefit payable
hereunder shall not be reduced by any compensation earned by the Participant as
a result of employment by another employer or otherwise. Subject to Section
6.5, the Company’s obligations to pay the Severance Benefits and to perform its
obligations hereunder shall not be affected by any circumstances including
without limitation, any set off, counterclaim, recoupment, defense or other
right which the Company may have against the Participant.

 

6.2           Headings. The
headings of the Plan are inserted for convenience of reference only and shall
have no effect upon the meaning of the provisions hereof.

 

6.3           Use of Words.
Whenever used in this instrument, a masculine pronoun shall be deemed to
include the masculine and feminine gender, and a singular word shall be deemed
to include the singular or plural, in all cases where the context so requires.

 

6.4           Controlling Law.
The construction and administration of the Plan shall be governed by the laws
of the State of New York (without reference to rules relating to conflicts of
law).

 

6.5           Withholding. The
Company shall have the right to make such provisions as it deems necessary or
appropriate to satisfy any obligations it reasonably believes it may have to
withhold federal, state or local income or other taxes incurred by reason of
payments pursuant to this Plan.

 

6.6           Severability.
Should any provision of the Plan be deemed or held to be unlawful or invalid
for any reason, such fact shall not adversely affect the other provisions of
the Plan unless such determination shall render impossible or impracticable the
functioning of the Plan, and in such case, an appropriate provision or
provisions shall be adopted so that the Plan may continue to function properly.

 

6.7           Rights Under Other
Plans, Policies, Practices and Agreements.

 

(a)           Other than as expressly
provided herein, the Plan does not supersede any other plans, policies, and/or
practices of the Company.

 

(b)           The Plan supersedes any
other change in control severance plans, policies and/or practices of the
Company as to the Participants; provided,
that, the Plan shall not supersede any individual executed agreement
or arrangement between a single Participant and the Company in effect on
January 1, 2003 or thereafter, which agreement specifically addresses payments
or benefits made or provided upon termination of employment or in connection
with a Change in Control (an “Additional Agreement”). If a Participant is due
benefits or payments under both an Additional Agreement and the Plan and/or
where the Plan and the Applicable

 

5

 

Additional
Agreement have inconsistent or conflicting terms and conditions, the
Participant shall receive the greater of the benefits and payments, and the
more favorable terms and conditions to him, under the Additional Agreement and
the Plan, determined on an item-by-item basis.

 

ARTICLE VII: DEFINITIONS.

 

7.1           “Cause” shall
mean: (A) refusal or repeated failure by a Participant to perform his or her
duties as an employee of the Company; (B) gross negligence or willful
misconduct by a Participant in connection with such Participant’s employment by
the Company; (C) misappropriation or fraud with regard to the Company or its
assets; or (D) conviction of, or the pleading of guilty or nolo contendere to, a felony or, to the
extent involving the assets or business of the Company, a misdemeanor or other
criminal offense; which, in the case of clause (A) is not fully remedied (to
the extent reasonably possible to be remedied) within 15 days after the Company
gives the Participant notice thereof.

 

7.2           “Change in Control”
shall mean the occurrence of any of the following: (A) any “person” (as defined
in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) or group (as defined in Rule 13d-5 under the Exchange Act),
excluding any Permitted Holder or any Permitted Group (or the members thereof)
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act) of securities of the Company representing 25% (or such greater percentage
as may then represent the percentage of total combined voting power held by all
Permitted Holders) or more of the total combined voting power of the Company’s
then outstanding securities, other than by reason of receiving a distribution
from any person referred to in clause (vi), (vii), (viii), (ix), (x) or (xi) of
the definition of Permitted Holder; (B) as a result of any proxy solicitation
made otherwise than by or on behalf of (x) the Board, (y) one or more Permitted
Holders, or (z) any Permitted Group (or the members thereof), Continuing
Directors to cease to be a majority of the Board (a “Continuing Director” is
any member of the Board who (a) was a member of the Board on January 1, 2003,
(b) first became a member of the Board as a result of or following his election
or nomination for election by the Board at a time that Continuing Directors form
a majority of the Board) or (c) first became a member of the Board as a result
of or following his election or nomination for election by the Board with the
approval of a majority of Continuing Directors in office at the time of such
appointment or nomination; (C) the merger, consolidation or other business
combination of or by the Company
(a “Transaction”), other than a Transaction immediately following which (x) the
stockholders of the Company immediately prior to the Transaction continue to be
the beneficial owners of securities of the Company or other  resulting
entity representing more than a majority of the voting power in the Company or other  resulting entity, in substantially the same
proportions as their ownership of Company voting securities immediately prior
to the Transaction or (y) Permitted Holders are the beneficial owners of
securities of the resulting entity representing more than a majority of the
voting power in such equity; (D) the sale of all or substantially all of the
Company’s assets, other than a sale immediately following which (x) the
stockholders of the Company immediately prior to the sale are the beneficial
owners of securities of the purchasing entity representing more than a majority
of the voting power in the purchasing entity, in substantially the same
proportions as their ownership of Company voting securities immediately prior
to the Transaction or (y) Permitted Holders are the beneficial owners of
securities of the 

 

6

 

purchasing
entity representing more than a majority of the voting power in such equity; (E) a recapitalization or similar transaction
of the Company in which any “person” (as defined in Section 3(a)(9) of the
Exchange Act) or “group” (as defined in Rule 13d-5 under the Exchange Act),
excluding any Permitted Holder or any Permitted Group (or the members thereof)
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act) of securities of the Company representing 20% or more of the total combined
voting power of the Company’s then outstanding securities; or (E) the
approval by the shareholders of a plan of liquidation or dissolution of the
Company.

 

7.3           “Current Total
Annual Compensation” shall be the sum of the following amounts: (A) the greater
of a Participant’s highest rate of annual salary during the calendar year in
which his employment terminates or such Participant’s highest rate of annual
salary during the calendar year immediately prior to the year of such
termination; (B) the greater of a Participant’s annual bonus compensation
(prior to any bonus deferral election) earned in respect of each of the two
most recent calendar years immediately preceding the calendar year in which the
Participant’s employment terminated; and (C) the amount of the Company’s
contribution to the Participant’s 401(k) account for the last full year prior
to such termination.

 

7.4           “Good Reason”
shall mean the occurrence of any of the following events after a Change in
Control without the Participant’s express written consent: (A) material
diminution in the importance of a Participant’s position, status or authority
as of the date immediately prior to the Change in Control; (B) a material
reduction in a Participant’s aggregate compensation or benefits; (C) a failure
of any successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) of the Company to assume in writing (or by
operation of law in a merger) the obligations of the Company hereunder as
required by Section 5.1; or (D) the Company’s requiring the Participant to
relocate the Participant’s office outside of the metropolitan area in which it
is located immediately prior to the Change in Control (for this purpose, the
Northern New Jersey suburbs shall constitute the “metropolitan area” for
Participants whose office is located in Oakland, New Jersey or elsewhere in the
Northern New Jersey suburbs) . A termination for Good Reason shall mean a
termination by a Participant effected by written notice given by the
Participant to the Company within 30 days after the occurrence of the Good
Reason event, unless the Company shall, within 15 days after receiving such
notice, take such action as is necessary to fully remedy such Good Reason event
and give the Participant written notice thereof, in which case the Good Reason
event shall be deemed to have not occurred.

 

7.5           “Participant”
shall mean such individuals as may from time to time be designated as such by
the Board or a duly authorized committee thereof.

 

7.6           “Permitted Group”
means a group, as defined in Rule 13d-5 under the Exchange Act, in which the
Permitted Holders that are members of such group have (x)  beneficial
ownership of voting securities of the Company having a majority of the voting
power of all voting securities of the Company that are beneficially owned by members of the group and (y) the power to
direct the voting of a majority of the voting securities of the Company held by
all members of the group.

 

7

 

7.7           “Permitted Holder”
shall mean (i) the Company; (ii) any subsidiary of the Company; (iii) any
employee benefit plan sponsored or maintained by the Company; (iv) Angelica
Berrie; (v) any lineal descendent of Russell Berrie; (vi) the Estate of Russell
Berrie; (vii) The Russell Berrie 2001 Annuity Trust; (viii) The Russell Berrie
1999 Charitable Remainder Trust; (ix) The Russell Berrie 2002A Trust; (x) The
Russell Berrie Foundation, a New Jersey Nonprofit Corporation; (xi) any trust
created pursuant to the terms of the instruments governing or creating any of
the persons referred to in clause (vi), (vii), (viii), (ix) and (x); and (xii)
any fiduciary of any of the persons referred to in clause (vi), (vii), (viii),
(ix), (x) and (xi) acting in his or her capacity as such.

 

7.8           “year” shall
mean the period from any day in a calendar year to the same day in the
immediately succeeding calendar year.

 

8

 

Exhibit A

 

Gross-Up.
This Exhibit A shall apply to a Participant only as provided by the last
sentence of Section 1.3 of the Plan; “Affected Participant” shall mean any
Participant to which this Exhibit A so applies.

 

(a)           For purposes of this
Exhibit A, the following terms shall have the following meanings:

 

“Payment”
shall mean any payment or distribution (or acceleration of benefits) by the
Company to or for the benefit of the Affected Participant (whether paid or
payable or distributed or distributable (or accelerated) pursuant to the terms
of this Plan or otherwise, but determined without regard to any additional
payments required under this Exhibit A). In addition, “Payment” shall also
include the amount of income deemed to be received by the Affected Participant
as a result of the acceleration of the exercisability of any of the Affected
Participant’s options to purchase stock of the Company, the acceleration of the
lapse of restrictions on restricted stock of the Company held by the Affected
Participant or the acceleration of payment from any deferral plan.

 

“Excise Tax”
shall mean the excise tax imposed by Section 4999 of the Code, or any interest
or penalties incurred by the Affected Participant with respect to such excise
tax.

 

“Income Tax”
shall mean all taxes other than the Excise Tax (including any interest or
penalties imposed with respect to such taxes) including, without limitation,
any income and employment taxes imposed by any United States federal (including
(i) FICA and Medicare taxes, and (ii) the tax resulting from the loss of any
federal deductions or exemptions which would have been available to the
Affected Participant but for receipt of the Payment), state or local
government.

 

(b)           In the event it shall
be determined in accordance with this Exhibit A that a Payment is subject to an
Excise Tax, then the Affected Participant shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount such that after payment
by the Affected Participant of Income Tax and Excise Tax imposed upon the
Gross-Up Payment, the Affected Participant retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment.

 

(c)           All determinations
required to be made under this Exhibit A, 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 the public
accounting firm that is retained by the Company as of the date immediately
prior to a Change in Control or, if such accounting firm fails to agree to
perform the functions contemplated by this Exhibit A, an accounting firm of
national reputation designated by the Company (in either case,

 

9

 

the
“Accounting Firm”), which shall provide detailed supporting calculations both
to the Company and to the Affected Participant within 20 business days of the
receipt of notice from the Affected Participant that there has been a Plan
Payment, or such earlier time as is requested by the Company (collectively, the
“Determination”). All fees and expenses of the Accounting Firm with respect to
the matters contemplated by this Exhibit A shall be borne by the Company. Any
Gross-Up Payment, as determined pursuant to this Exhibit A, shall be paid by
the Company to the Affected Participant within ten days of the Determination.
If the Accounting Firm determines that no Excise Tax is payable, the Affected
Participant may request the Accounting Firm to furnish the Affected Participant
with a written opinion that there is a reasonable basis for that determination.  The Determination by the Accounting Firm
shall be binding upon the Company and the Affected Participant, except as
provided in paragraph (d) below. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the Determination, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (“Underpayment”), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to paragraph (d) below and the Affected Participant is
thereafter required to make payment of any Excise Tax or Income 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 Affected Participant.

 

(d)           The Affected
Participant 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 or the Underpayment. Such notification shall be given
as soon as practicable but no later than five business days after the Affected
Participant is informed in writing of such claim and shall include copies of
all communications received from the Internal Revenue Service and apprize the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Affected Participant shall not pay such claim prior
to the expiration of the 30-day period following the date on which such notice
is given to the Company. If the Company notifies the Affected Participant in
writing prior to the expiration of such period that it desires to contest such
claim, the Affected Participant shall not pay such claim unless directed to do
so by the Company and:

 

(i)            give
the Company any information reasonably requested by the Company relating to
such claim and provide the Company with copies of all communications received
from the Internal Revenue Service or other taxing authority with respect to
such claim, or served on it in any related litigation, upon receipt,

 

(ii)           take
such action in connection with contesting such claim as the Company shall from
time to time direct, 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

 

10

 

(iv)          permit
the Company to control any proceeding 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 Affected Participant harmless, on an after-tax basis, for any Excise
Tax or Income Tax imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions of this
paragraph (d), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect to such claim and may, at its sole option, either direct
the Affected Participant to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and the Affected Participant shall
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 further, that
if the Company directs the Affected Participant to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the Affected
Participant on an interest-free basis and shall indemnify and hold the Affected
Participant harmless, on an after-tax basis, from any Excise Tax or Income Tax
imposed with respect to such advance or with respect to any imputed income with
respect to such advance. 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 or an Underpayment and the Affected Participant 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, provided that such action by the Affected
Participant does not affect the Company’s ability to settle or contest issues
with respect to which a Gross-Up Payment would be payable or an Underpayment.

 

(e)           If, after the receipt
by the Affected Participant of an amount advanced by the Company pursuant to
paragraph (d) above, the Affected Participant receives any refund with respect
to such claim, the Affected Participant shall promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon
after payment of taxes applicable thereto). If, after the receipt by the
Affected Participant of an amount advanced by the Company pursuant to paragraph
(d) above, the proceedings contemplated by paragraph (d) above, result in a
final determination not subject to further review or appeal to the effect that
the Affected Participant is not be entitled to any refund with respect to such claims
then such advance shall be forgiven and shall not be required to be repaid.

 

11

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