Document:

Exhibit 10.1

 

EMPLOYMENT
AGREEMENT

 

This Employment Agreement
(this “Agreement”) is made and entered into by and between Veritas DGC Inc., a
Delaware corporation (hereinafter referred to as “Employer”), and Dennis S.
Baldwin, an individual currently resident in Houston, Texas (hereinafter
referred to as “Employee”), effective as of November 7, 2005 (the “Effective
Date”).

 

W
I  T  N  E  S  S  E  T  H:

 

WHEREAS, attendant
to Employee’s employment by Employer, Employer and Employee wish for there to
be a complete understanding and agreement between Employer and Employee with
respect to, among other terms, Employee’s duties and responsibilities to
Employer; the compensation and benefits owed to Employee; the fiduciary duties
owed by Employee to Employer; Employee’s obligation to avoid conflicts of
interest, disclose pertinent information to Employer, and refrain from using or
disclosing Employer’s information; and the term of Employee’s employment;

 

WHEREAS, Employer
considers the establishment and maintenance of a sound and vital management to
be essential to protecting and enhancing its best interests and the best
interests of its stockholders;

 

WHEREAS, Employer
recognizes that, because Employer is a publicly held company and as is the case
with many such companies, the possibility of a change in control may exist and
that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of Employer and its stockholders;

 

WHEREAS, the Board
of Directors of Employer (the “Board”) has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of Employer’s management, including Employee, to their assigned
duties without distraction in the face of the potentially disturbing
circumstances arising from the possibility of a change in control of Employer;

 

WHEREAS, Employer
recognizes that Employee could suffer adverse financial and professional
consequences if a change in control of Employer were to occur;

 

WHEREAS, Employer
and Employee wish to enter into this Agreement to, among other things, protect
Employee if a change in control of Employer occurs, thereby encouraging
Employee to remain in the employ of Employer and not to be distracted from the
performance of his duties to Employer by the possibility of a change in control
of Employer;

 

NOW, THEREFORE, in
consideration of the mutual promises contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Employer and Employee agree as follows:

 

 

Section 1.  General Duties of Employer and Employee.

 

(a)                                  Employer
agrees to employ Employee and Employee agrees to accept employment by Employer
and to serve Employer in an executive capacity as its Vice President, Corporate
Controller.  At the commencement of this
Agreement, Employee will report to the Executive Vice President, Chief
Executive Officer & Treasurer of Employer.  The powers, duties and responsibilities of
Employee as Vice President, Corporate Controller include those duties that are
the usual and customary powers, duties and responsibilities of such office,
including those powers, duties and responsibilities specified in Employer’s Bylaws,
and such other and further duties appropriate to such position as may from time
to time be assigned to Employee by the Executive Vice President, Chief
Executive Officer & Treasurer or the Board.

 

(b)                                 While
employed hereunder, Employee will devote substantially all reasonable and
necessary time, efforts, skills and attention for the benefit of and with his
primary attention to the affairs of Employer in order that he may faithfully
perform his duties and obligations.  The
preceding sentence will not, however, be deemed to restrict Employee from
attending to matters or engaging in activities not directly related to the
business of Employer, provided that (i) such activities or matters are
reasonable in scope and time commitment and not otherwise in violation of this
Agreement, and (ii) Employee will not become a director of any corporation
or other entity (excluding charitable or other non-profit organizations)
without prior written disclosure to, and consent of, Employer.

 

(c)                                  Employee
is currently based at Employer’s headquarters located at 10300 Town Park,
Houston, Texas (the “Place of Employment”).

 

(d)                                 Employee
agrees and acknowledges that during the term of this Agreement, he owes a
fiduciary duty of loyalty, fidelity and allegiance to act at all times in the
best interests of Employer and to do no act knowingly which would injure
Employer’s business, its interests or its reputation.

 

Section 2.  Compensation and Benefits.

 

(a)                                  Employer
will pay to Employee during the term of this Agreement a base salary at the
rate of $170,000 per annum (such base salary as increased by the Compensation
Committee of the Board as hereinafter provided is referred to herein as the “Base
Salary”).  The Compensation Committee of
the Board will review the Base Salary from time to time and, during the term of
this Agreement, may increase, but may not decrease, the Base Salary.  The Base Salary will be paid to Employee in
equal installments every two weeks or on such other schedule as Employer
may establish from time to time for its management personnel.

 

(b)                                 During
each  fiscal year during the term of this
Agreement, Employee will be eligible to participate in that year’s Global
Management Incentive Plan or other replacement incentive or bonus plan Employer
establishes for its key executives.

 

(c)                                  Employee
will be eligible for option grants to purchase shares of Employer’s common
stock, $.01 par value (“Common Stock”), or other equity securities of Employer
as provided under Employer’s Global Management Incentive Plan (or other
replacement incentive or bonus plan Employer establishes for its key
executives).

 

2

 

(d)                                 Employee
will be entitled to paid vacation of not less than three (3) weeks each
year.  Vacation may be taken by Employee
at the time and for such periods as may be mutually agreed upon between
Employer and Employee.

 

(e)                                  Employee
will be reimbursed in accordance with Employer’s normal expense reimbursement
policy for all of the actual and reasonable costs and expenses incurred by him
in the performance of his services and duties hereunder, including, but not
limited to, travel and entertainment expenses. 
Employee will furnish Employer with all invoices and vouchers reflecting
amounts for which Employee seeks Employer’s reimbursement.

 

(f)                                    Employee
will be entitled to participate in all insurance and retirement plans,
incentive compensation plans (at a level appropriate to his position) and such
other benefit plans or programs as may be in effect from time to time for the
key management employees of Employer including, without limitation, those
related to savings and thrift, retirement, welfare, medical, dental,
disability, salary continuance, accidental death, travel accident, life
insurance, incentive bonus, membership in business and professional
organizations, and reimbursement of business and entertainment expenses.

 

(g)                                 All
Base Salary, bonus and other payments made by Employer to Employee pursuant to
this Agreement will be subject to such payroll and withholding deductions as
may be required by law and other deductions applied generally to employees of
Employer for insurance and other employee benefit plans in which Employee
participates.

 

Section 3.  Fiduciary Duty; Confidentiality.

 

(a)                                  In
keeping with Employee’s fiduciary duties to Employer, Employee agrees that he
will not knowingly take any action that would create a conflict of interest
with Employer, or upon discovery thereof, allow such a conflict to
continue.  In the event that Employee
discovers that such a conflict exists, Employee agrees that he will disclose to
the Board any facts which might involve a conflict of interest that has not
been approved by the Board.

 

(b)                                 As
part of Employee’s fiduciary duties to Employer, Employee agrees to protect and
safeguard Employer’s information, ideas, concepts, improvements, discoveries,
and inventions and any proprietary, confidential and other information relating
to Employer or its business (collectively, “Confidential Information”) and,
except as may be required by Employer, Employee will not knowingly, either
during his employment by Employer or thereafter, directly or indirectly, use
for his own benefit or for the benefit of another, or disclose to another, any
Confidential Information, except (i) with the prior written consent of
Employer; (ii) in the course of the proper performance of Employee’s
duties under this Agreement; (iii) for information that becomes generally
available to the public other than as a result of the unauthorized disclosure
by Employee; (iv) for information that becomes available to Employee on a
nonconfidential basis from a source other than Employer or its affiliated
companies who is not bound by a duty of confidentiality to Employer; or (v) as
may be required by any applicable law, rule, regulation or order.

 

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(c)                                  Upon
termination of his employment with Employer, Employee will immediately deliver
to Employer all documents in Employee’s possession or under his control which
embody any of Employer’s Confidential Information.

 

(d)                                 In
addition to the foregoing provisions of this Section 3, and effective as
of the Effective Date, Employee agrees to enter into an Employee
Confidentiality and Intellectual Property Agreement with Employer, a copy of
which is attached hereto as Exhibit A.

 

Section 4.  Term.

 

Employee’s
employment with Employer, having previously commenced, will continue until
terminated in accordance with Section 5

 

Section 5.  Termination.

 

(a)                                  Employee’s
employment with Employer hereunder will terminate upon the first to occur of
the following:

 

(1)                                  The
death or “Disability” (as defined in Section 5 (b) hereof) of
Employee;

 

(2)                                  Employer
terminates such employment for “Cause” (as defined in Section 5(c) hereof);

 

(3)                                  Employee
terminates such employment for “Good Reason” (as defined in Section (d) hereof);

 

(4)                                  Employer
terminates such employment for any reason other than Cause or for no reason at
all;

 

(5)                                  Employee
terminates such employment for any reason other than Good Reason or for no
reason at all; or

 

(6)                                  Employee’s
sixty-fifth (65th) birthday, at which time Employee will continue to
be employed by Employer as an employee at will.

 

(b)                                 As
used in this Agreement, “Disability” means permanent and total disability
(within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended (the “Code”), or any successor provision) which has existed
for at least 180 consecutive days.

 

(c)                                  As
used in this Agreement, “Cause” means:

 

(1)                                  the
willful and continued failure by Employee to substantially perform his
obligations under this Agreement (other than any such failure resulting from
his Disability) after a demand for substantial performance has been delivered
to him by the Board which specifically identifies the manner in which the Board
believes Employee has not substantially performed such provisions and

 

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Employee has failed to remedy the situation within ten
(10) days after such demand;

 

(2)                                  Employee’s
willfully engaging in conduct materially and demonstrably injurious to the
property or business of Employer, including without limitation, fraud,
misappropriation of funds or other property of Employer, other willful
misconduct, gross negligence or conviction of a felony or any crime of moral
turpitude; or

 

(3)                                  Employee’s
material breach of this Agreement which breach has not been remedied by
Employee within ten (10) days after receipt by Employee of written notice
from Employer that he is in material breach of the Agreement, specifying the
particulars of such breach.

 

For purposes of this
Agreement, no act, or failure to act, on the part of Employee shall be deemed “willful”
or engaged in “willfully” if it was due primarily to an error in judgment or
negligence, but shall be deemed “willful” or engaged in “willfully” only if
done, or omitted to be done, by Employee not in good faith and without
reasonable belief that his action or omission was in the best interest of
Employer.  Notwithstanding the foregoing,
Employee shall not be deemed to have been terminated as a result of “Cause”
hereunder unless and until there shall have been delivered to Employee a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the Board then in office at a meeting of the Board called and
held for such purpose (after reasonable notice to Employee and an opportunity
for Employee, together with his counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board of Directors, Employee has
committed an act set forth above in this Section 5(c) and specifying
the particulars thereof in detail. 
Nothing herein shall limit the right of Employee or his legal
representatives to contest the validity or propriety of any such determination.

 

(d)                                 As
used in this Agreement, “Good Reason” means:

 

(1)                                  Employer’s
failure to comply with any of the provisions of Section 2 of this
Agreement (including, but not limited to, such a failure resulting from any
reduction in the Base Salary) which failure is not remedied within ten (10) days
after receipt of written notice from Employee specifying the particulars of
such breach;

 

(2)                                  Employer’s
breach of any other material provision of this Agreement which is not remedied
within ten (10) days after receipt by Employer of written notice from
Employee specifying the particulars of such breach;

 

(3)                                  the
assignment to Employee of any duties materially inconsistent with Employee’s
position (including status, offices, titles, and reporting requirements),
duties, functions, responsibilities, or authority as contemplated by Section 1
of this Agreement or other action by Employer that results in a diminution
(other than an isolated, inconsequential or insubstantial diminution which is
remedied by Employer promptly after receipt of written notice thereof given by
Employee) in such position, duties, functions, responsibilities or authority;
or

 

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(4)                                  the
relocation of  Employee’s principal place
of performance of his duties and responsibilities under this Agreement to a
location more than one hundred miles (100) miles from the Place of Employment;

 

(5)                                  After
a “Change in Control” (as defined in Section 6(g) hereof), (i) Employer’s
failure to continue in effect any benefit or compensation plan (including, but
not limited to, any bonus, incentive, retirement, supplemental executive
retirement, savings, profit sharing, pension, performance, stock option, stock
purchase, deferred compensation, life insurance, medical, dental, health,
hospital, accident or disability plans) in which Employee is participating at
the time of such Change in Control (or plans providing to Employee, in the
aggregate, substantially similar benefits as the benefits enjoyed by Employee
under the benefit and compensation plans in which Employee is participating at
the time of such Change in Control), or (ii) the taking of any action by
Employer that would adversely affect Employee’s participation in or materially
reduce Employee’s benefits under any of such plans or deprive Employee of any
material fringe benefit enjoyed by Employee at the time of such Change in
Control;

 

(6)                                  Any
failure by Employer to comply with Section 11(c); or

 

(7)                                  Any
purported termination of Employee’s employment by Employer which is not
effected pursuant to a Notice of Termination satisfying the requirements of Section 5(e) hereof
(and for purposes of this Agreement, no such purported termination shall be
effective).

 

(e)                                  Any
termination by Employer or Employee of Employee’s employment with Employer
(other than any such termination occurring on Employee’s sixty-fifth (65th)
birthday) shall be communicated by written notice (a “Notice of Termination”)
to the other party that shall:

 

(1)                                  indicate
the specific provision of this Agreement relied upon for such termination;

 

(2)                                  indicate
the specific provision of this Agreement pursuant to which Employee is to
receive compensation and other benefits as a result of such termination; and

 

(3)                                  otherwise
comply with the provisions of this Section 5(e) and Section 13(a).

 

If a Notice of
Termination states that Employee’s employment with Employer has been terminated
as a result of Employee’s Disability, the notice shall (i) specifically
describe the basis for the determination of Employee’s Disability, and (ii) state
the date of the determination of Employee’s Disability, which date shall be not
more than ten (10) days before the date such notice is given.  If the notice is from Employer and states
that Employee’s employment with Employer is terminated by Employer as a result
of the occurrence of Cause, the Notice of Termination shall specifically
describe the action or inaction of Employee that Employer believes constitutes
Cause and shall be accompanied by a copy of the resolution satisfying Section 5(c).  If the Notice of Termination is from Employee
and states that Employee’s

 

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employment with Employer
is terminated by Employee as a result of the occurrence of Good Reason, the
Notice of Termination shall specifically describe the action or inaction of
Employer that Employee believes constitutes Good Reason.  Any purported termination by Employer of
Employee’s employment with Employer shall be ineffective unless such
termination shall have been communicated by Employer to Employee by a Notice of
Termination that meets the requirements of this Section 5(e) and the
provisions of Section 13(a).

 

(f)                                    As
used in this Agreement, “Date of Termination” means:

 

(1)                                  if
Employee’s employment with Employer is terminated for Disability, sixty (60)
days after Notice of Termination is received by Employee or any later date
specified therein, provided that within such sixty (60) day period Employee
shall not have returned to full-time performance of Employee’s duties;

 

(2)                                  if
Employee’s employment with Employer is terminated as a result of Employee’s
death, the date of death of Employee;

 

(3)                                  if
Employee’s employment with Employer is terminated for Cause, the date Notice of
Termination, accompanied by a copy of the resolution satisfying Section 5(c),
is received by Employee or any later date specified therein, provided that
Employer may, in its discretion, condition Employee’s continued employment upon
such considerations or requirements as may be reasonable under the circumstances
and place a reasonable limitation upon the time within which Employee will
comply with such considerations or requirements;

 

(4)                                  if
Employee’s employment with Employer is terminated upon the occurrence of
Employee’s sixty-fifth (65th) birthday, the date of such birthday,
at which time Employee will continue to be employed by Employer as an employee
at will; or

 

(5)                                  if
Employee’s employment with Employer is terminated for any reason other than
Employee’s Disability, Employee’s death, Cause or the occurrence of Employee’s
sixty-fifth (65th) birthday, or for no reason, the date that is
fourteen (14) days after the date of receipt of the Notice of Termination.

 

Section 6.  Effect of Termination.

 

(a)                                  Upon
termination of Employee’s employment by Employer for Cause, or by Employee for
no reason or any reason other than Good Reason, all compensation and benefits
will cease upon the Date of Termination other than: (i) those benefits
that are provided by retirement and benefit plans and programs specifically adopted
and approved by Employer for Employee that are earned and vested by the Date of
Termination, (ii) as provided in Section 10, (iii) Employee’s
Base Salary through the Date of Termination; (iv) any incentive
compensation due Employee if, under the terms of the relevant incentive
compensation arrangement, such incentive compensation was due and payable to
Employee on or before the Date of Termination; and (v) medical and similar
benefits the continuation of which is required by applicable law or provided by
the applicable benefit plan.

 

7

 

(b)                                 Upon
termination of Employee’s employment due to the death of Employee or upon
termination by Employer due to the Disability of Employee, all compensation and
benefits will cease upon the Date of Termination other than: (i) those
benefits that are provided by retirement and benefit plans and programs
specifically adopted and approved by Employer for Employee that are earned and
vested by the Date of Termination, (ii) as provided in Section 10, (iii) Employee’s
Base Salary through the Date of Termination; (iv) any incentive
compensation due Employee if, under the terms of the relevant incentive
compensation arrangement, such incentive compensation was due and payable to
Employee on or before the Date of Termination; and (v) medical and similar
benefits the continuation of which is required by applicable law or provided by
the applicable benefit plan.

 

(c)                                  Upon
termination of this Agreement due to Employee’s reaching his sixty-fifth (65th)
birthday, Employee will continue to be employed by Employer as an employee at
will.

 

(d)                                 Except
as otherwise provided in Section 6(e), if Employee’s employment with
Employer is terminated (i) by Employer for no reason or for any reason other
than Cause, the death or Disability of Employee, or Employee’s reaching his
sixty-fifth (65th) birthday, or (ii) by Employee for Good
Reason, the obligations of Employer and Employee under Sections 1 and 2 will
terminate as of the Date of Termination, and Employer will pay or provide to
Employee the following:

 

(1)                                  Employee’s
Base Salary through the Date of Termination;

 

(2)                                  incentive
compensation due Employee, if any, under the terms of the relevant incentive
compensation arrangement;

 

(3)                                  during
the one-year period ending on the first anniversary of the Date of Termination,
Employer shall pay to Employee an aggregate amount (the “Severance Payment”)
equal to one (1) times Employee’s Base Salary at the highest annual rate
in effect on or before the Date of Termination (but prior to giving effect to
any reduction therein which precipitated such termination), which Severance
Payment will be paid to Employee in equal installments every two weeks during
such one-year period; provided, however, that at any time during
such one-year period Employer may, in its discretion, elect to pay to Employee
the then remaining balance of the Severance Payment in the form of a lump sum
cash payment; and

 

(4)                                  if
immediately prior to the Date of Termination Employee (and, if applicable, his
spouse and/or dependents) was covered under Employer’s group medical, dental,
health and hospital plan in effect at such time, then Employer shall, at its
election, pay or provide to Employee one (but not both) of the following:

 

(i)                                     for
one (1) year after the Date of Termination, and provided that Employee has
timely elected under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended

 

8

 

(“COBRA”), to continue coverage under such plan,
Employer will, at no greater cost or expense to Employee than was the case
immediately prior to the Date of Termination, maintain such continued coverage
in full force and effect; or

 

(ii)                                  pay
to Employee a lump sum cash payment (the “Section 6(d)(4)(ii) Payment”)
equal to the sum of:

 

(A)                              an
amount equal to (I) twelve (12), multiplied by (II) the amount of the
applicable monthly COBRA premium (determined based upon the applicable COBRA
premium rate in effect immediately after the Date of Termination) Employee
would pay if Employee elected under COBRA to maintain coverage identical to the
coverage Employee (and, if applicable, his spouse and/or dependents) had under
such plan immediately prior to the Date of Termination; plus

 

(B)                                an
amount equal to the excess of (I) an amount determined by dividing (x) the
amount determined under Section 6(d)(4)(ii)(A) above, by (y) one (1) minus
the sum of the following which shall be determined for the calendar year that
includes the date of payment of the Section 6(d)(4)(ii) Payment and
shall be expressed as a decimal:  (i) the highest marginal U.S. federal income tax rate
applicable to individuals for such calendar year, plus (ii) the
highest foreign, state, provincial and/or local individual income tax rate or
rates, if any, to which the Section 6(d)(4)(ii) Payment is subject
for such calendar year (which shall be determined based on the assumption that
Employee pays income tax to any such foreign, state, provincial or local
jurisdiction at the highest marginal rate of income tax imposed by such
jurisdiction on individuals), plus, (iii) the
Hospital (Medicare) Insurance tax rate under Section 3101(b) of the
Code (or any corresponding successor statute) for such calendar year, over (II)
the amount determined under Section 6(d)(4)(ii)(A) above.

 

Except as otherwise
provided above and in Section 10, all other compensation and benefits will
cease upon the Date of Termination other than the following: (i) those
benefits that are provided by retirement and benefit plans and programs
specifically adopted and approved by Employer for

 

9

 

Employee that are earned
and vested by the Date of Termination, (ii) any rights Employee or his
survivors may have under any grants of options to purchase Employer’s Common
Stock or under any grants of restricted stock of Parent; and (iii) medical
and similar benefits the continuation of which is required by applicable law or
as provided by the applicable benefit plan. 
As a condition to making the payments and providing the benefits
specified in this Section 6(d), Employer will require that Employee
execute a release of all claims Employee may have against Employer at the time
of Employee’s termination.  Such release
will be in substantially the same form as Exhibit B attached hereto.

 

(e)                                  If
(i) a “Change in Control” (as defined in Section 6(g) hereof)
shall have occurred, and (ii) within two (2) years after such Change
in Control Employee’s employment with Employer is terminated (x) by Employer
for no reason or for any reason other than Cause, the death or Disability of
Employee, or Employee’s reaching his sixty-fifth (65th) birthday, or
(y) by Employee for Good Reason, the obligations of Employer and Employee
under Sections 1 and 2 will terminate as of the Date of Termination, Section 6(d) above
shall not apply, and Employer will pay or provide to Employee:

 

(1)                                  Employee’s
Base Salary through the Date of Termination;

 

(2)                                  incentive
compensation due Employee, if any, under the terms of the relevant incentive
compensation arrangement;

 

(3)                                  within
thirty (30) days after the Date of Termination, a lump sum cash payment equal
to two (2) times the sum of:

 

(i)                                     Employee’s
Base Salary at the highest annual rate in effect  on or before the Date of Termination (but
prior to giving effect to any reduction therein which precipitated such
termination), plus

 

(ii)                                  An
amount equal to the greater of:

 

(A)                              the
average of the incentive bonuses paid to Employee for the last three (3) full
fiscal years of Employer ending before the Date of Termination (or, if Employee
was not employed by Employer hereunder for such last three (3) full fiscal
years, the average of the incentive bonuses paid to Employee for the number of
full fiscal years of Employer ending before the Date of Termination during
which Employee was employed by Employer hereunder);

 

(B)                                the
incentive bonus paid to Employee for the last full fiscal year of Employer
ending before the Date of Termination; or

 

10

 

(C)                                an
amount equal to Employee’s Base Salary described in Section 6(e)(3)(i) multiplied
by Employee’s target percentage under the Global Management Incentive Plan or
other replacement incentive or bonus plan of Employer for the fiscal year which
includes the Date of Termination;

 

(4)                                  if
immediately prior to the Date of Termination Employee (and, if applicable, his
spouse and/or dependents) was covered under Employer’s group medical, dental,
health and hospital plan in effect at such time, then Employer shall, at its
election, pay or provide to Employee one (but not both) of the following:

 

(i)                                     for
eighteen (18) months after the Date of Termination, and provided that Employee
has timely elected under COBRA to continue coverage under such plan, Employer will,
at no greater cost or expense to Employee than was the case immediately prior
to the Date of Termination, maintain such continued coverage in full force and
effect; or

 

(ii)                                  pay
to Employee a lump sum cash payment (the “Section 6(e)(4)(ii) Payment”)
equal to the sum of:

 

(A)                              an
amount equal to (I) eighteen (18), multiplied by (II) the amount of the
applicable monthly COBRA premium (determined based upon the applicable COBRA
premium rate in effect immediately after the Date of Termination) Employee would
pay if Employee elected under COBRA to maintain coverage identical to the
coverage Employee (and, if applicable, his spouse and/or dependents) had under
such plan immediately prior to the Date of Termination; plus

 

(B)                                an
amount equal to the excess of (I) an amount determined by dividing (x) the
amount determined under Section 6(e)(4)(ii)(A) above, by (y) one (1) minus
the sum of the following which shall be determined for the calendar year that
includes the date of payment of the Section 6(e)(4)(ii) Payment and
shall be expressed as a decimal:  (i) the highest marginal U.S. federal income tax rate
applicable to individuals for such calendar year, plus (ii) the
highest foreign, state, provincial and/or local individual income tax rate or
rates, if any, to which the Section 6(e)(4)(ii) Payment is subject
for such

 

11

 

calendar year (which shall be determined based on the
assumption that Employee pays income tax to any such foreign, state, provincial
or local jurisdiction at the highest marginal rate of income tax imposed by
such jurisdiction on individuals), plus, (iii) the
Hospital (Medicare) Insurance tax rate under Section 3101(b) of the
Code (or any corresponding successor statute) for such calendar year, over (II)
the amount determined under Section 6(e)(4)(ii)(A) above; and

 

(5)                                  the
following shall occur immediately upon the occurrence of such Change in
Control:

 

(i)                                     each
option to acquire Common Stock or other equity securities of Employer held by
Employee immediately prior to such Change in Control shall become fully
exercisable, regardless of whether or not the vesting conditions set forth in
the relevant stock option agreement have been satisfied in full, and shall
remain fully exercisable for the remainder of the term specified in the applicable option grant agreement; and

 

(ii)                                  all
restrictions on any restricted Common Stock or other equity securities of
Employer granted to Employee prior to such Change in Control shall be removed
and such Common Stock or other equity securities shall be freely transferable
(subject to applicable securities laws), regardless of whether the conditions
set forth in the relevant restricted stock agreements have been satisfied in
full.

 

As a condition to making
the payments and providing the benefits specified in this Section 6(e),
Employer will require that Employee execute a release of all claims Employee
may have against Employer at the time of Employee’s termination.  Such release will be in substantially the
same form as Exhibit B attached hereto.

 

(f)                                    Notwithstanding
anything contained in this Agreement to the contrary, if following the
commencement of any discussion with a third person that ultimately results in a
Change in Control, (i) Employee’s employment with Employer is terminated
by Employer for no reason or for any reason other than Cause, (ii) Employee
is removed from any material duties or position with Employer, or (iii) Employer
fails to comply with any of the provisions of Section 2 of this Agreement,
then for all purposes of this Agreement, such Change in Control shall be deemed
to have occurred on the date immediately prior to the date of such termination,
removal, or failure.

 

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(g)                                 For
purposes of this Agreement, a “Change in Control” shall mean the occurrence of
any of the following after the Effective Date:

 

(1)                                  the
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended from time to
time (the “Exchange Act”), or any successor statute) (a “Covered Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 25% or more of either (i) the then outstanding shares
of Common Stock (the “Outstanding Company Common Stock”), or (ii) the
combined voting power of the then outstanding voting securities of Employer
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes
of this Section 6(g)(1), the following acquisitions shall not constitute a
Change in Control: (i) any acquisition directly from Employer, (ii) any
acquisition by Employer, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by Employer or any entity
controlled by Employer, or (iv) any acquisition by any corporation
pursuant to a transaction which complies with Section 6(g)(3)(i), (ii) or
(iii); or

 

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

 

(3)                                  consummation
of (xx) a reorganization, merger, amalgamation, consolidation, sale or other
form of business combination of Employer or any subsidiary of Employer, or (yy)
a sale, lease, exchange, disposition or other transfer of all or substantially
all of the assets of Employer (a “Business Combination”), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 75% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns
Employer or all or substantially all of Employer’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as
their ownership immediately prior to such Business Combination of the
Outstanding

 

13

 

Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Covered Person (excluding any
employee benefit plan (or related trust) of Employer or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation, except to the extent that such ownership existed prior to the
Business Combination, and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such Business Combination,
were members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board of Directors, providing for such
Business Combination; or

 

(4)                                  approval
by the stockholders of Employer of a complete liquidation or dissolution of
Employer.

 

Section 7.  Excise Tax.

 

(a)                                  Anything
in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by, or benefit from, Employer or
any of its affiliates to or for the benefit of Employee, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (any such payments, 
distributions or benefits being individually referred to herein as a “Payment,”
and any two or more of such payments, distributions or benefits being referred
to herein as “Payments”), would be subject to the excise tax imposed by Section 4999
of the Code (such excise tax, together with any interest thereon, any
penalties, additions to tax, or additional amounts with respect to such excise
tax, and any interest in respect of such penalties, additions to tax or
additional amounts, being collectively referred herein to as the “Excise Tax”),
then Employee shall be entitled to receive an additional payment or payments
(individually referred to herein as a “Gross-Up Payment” and any two or more of
such additional payments being referred to herein as “Gross-Up Payments”) in an
amount such that after payment by Employee of all taxes (as defined in Section 7(k))
imposed upon the Gross-Up Payment, Employee retains an amount of such Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.

 

(b)                                 Subject
to the provisions of Section 7(c) through (i), any determination
(individually, a “Determination”) required to be made under this Section 7(b),
including whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall initially be made, at Employer’s expense, by nationally
recognized tax counsel selected by Employer (“Tax Counsel”).  Tax Counsel shall provide detailed supporting
legal authorities, calculations, and documentation both to Employer and
Employee within 15 business days of the termination of Employee’s employment,
if applicable, or such other time or times as is reasonably requested by
Employer or Employee.  If Tax Counsel
makes the initial Determination that no Excise Tax is payable by Employee with
respect to a Payment or Payments, it shall furnish Employee with an opinion
reasonably acceptable to Employee that no Excise Tax will be imposed with
respect to any such Payment or Payments. 
Employee shall have the right to dispute any Determination (a “Dispute”)
within 15 business days after delivery of Tax Counsel’s opinion with respect to
such Determination.  The Gross-Up
Payment, if any, as determined pursuant to such Determination

 

14

 

shall, at Employer’s
expense, be paid by Employer to or for the benefit of Employee within five
business days of Employee’s receipt of such Determination.  The existence of a Dispute shall not in any
way affect Employee’s right to receive the Gross-Up Payment in accordance with
such Determination.  If there is no
Dispute, such Determination shall be binding, final and conclusive upon
Employer and Employee, subject in all respects, however, to the provisions of Section 7(c) through
(i) below.  As a result of the
uncertainty in the application of Sections 4999 and 280G of the Code, it
is possible that Gross-Up Payments (or portions thereof) which will not have
been made by Employer should have been made (“Underpayment”), and if upon any
reasonable written request from Employee or Employer to Tax Counsel, or upon
Tax Counsel’s own initiative, Tax Counsel, at Employer’s expense, thereafter
determines that Employee is required to make a payment of any Excise Tax or any
additional Excise Tax, as the case may be, Tax Counsel shall, at Employer’s
expense, determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by Employer to or for the benefit of
Employee.

 

(c)                                  Employer
shall defend, hold harmless, and indemnify Employee on a fully grossed-up after
tax basis from and against any and all claims, losses, liabilities,
obligations, damages, impositions, assessments, demands, judgements,
settlements, costs and expenses (including reasonable attorneys’, accountants’,
and experts’ fees and expenses) with respect to any tax liability of Employee
resulting from any Final Determination (as defined in Section 7(j)) that
any Payment is subject to the Excise Tax.

 

(d)                                 If
a party hereto receives any written or oral communication with respect to any
question, adjustment, assessment or pending or threatened audit, examination,
investigation or administrative, court or other proceeding which, if pursued
successfully, could result in or give rise to a claim by Employee against
Employer under this Section 7 (“Claim”), including, but not limited to, a
claim for indemnification of Employee by Employer under Section 7(c), then
such party shall promptly notify the other party hereto in writing of such
Claim (“Tax Claim Notice”).

 

(e)                                  If
a Claim is asserted against Employee (“Employee Claim”), Employee shall take or
cause to be taken such action in connection with contesting such Employee Claim
as Employer shall reasonably request in writing from time to time, including
the retention of counsel and experts as are reasonably designated by Employer
(it being understood and agreed by the parties hereto that the terms of any
such retention shall expressly provide that Employer shall be solely
responsible for the payment of any and all fees and disbursements of such
counsel and any experts) and the execution of powers of attorney, provided
that:

 

(1)                                  within
30 calendar days after Employer receives or delivers, as the case may be, the
Tax Claim Notice relating to such Employee Claim (or such earlier date that any
payment of the taxes claimed is due from Employee, but in no event sooner than
five calendar days after Employer receives or delivers such Tax Claim Notice),
Employer shall have notified Employee in writing (“Election Notice”) that
Employer does not dispute its obligations (including, but not limited to, its
indemnity obligations) under this Agreement and that Employer elects to
contest, and to control the defense or prosecution of, such Employee Claim at
Employer’s sole risk and sole cost and expense; and

 

15

 

(2)                                  Employer
shall have advanced to Employee on an interest-free basis, the total amount of
the tax claimed in order for Employee, at Employer’s request, to pay or cause
to be paid the tax claimed, file a claim for refund of such tax and, subject to
the provisions of the last sentence of Section 7(g), sue for a refund of
such tax if such claim for refund is disallowed by the appropriate taxing
authority (it being understood and agreed by the parties hereto that Employer
shall only be entitled to sue for a refund and Employer shall not be entitled
to initiate any proceeding in, for example, United States Tax Court) and shall
indemnify and hold Employee harmless, on a fully grossed-up after tax basis,
from any tax imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and

 

(3)                                  Employer
shall reimburse Employee for any and all costs and expenses resulting from any
such request by Employer and shall indemnify and hold Employee harmless, on
fully grossed-up after-tax basis, from any tax imposed as a result of such
reimbursement.

 

(f)                                    Subject
to the provisions of Section 7(e) hereof, Employer shall have the
right to defend or prosecute, at the sole cost, expense and risk of Employer,
such Employee Claim by all appropriate proceedings, which proceedings shall be
defended or prosecuted diligently by Employer to a Final Determination; provided,
however, that (i) Employer shall not, without Employee’s prior
written consent, enter into any compromise or settlement of such Employee Claim
that would adversely affect Employee, (ii) any request from Employer to Employee
regarding any extension of the statute of limitations relating to assessment,
payment, or collection of taxes for the taxable year of Employee with respect
to which the contested issues involved in, and amount of, Employee Claim relate
is limited solely to such contested issues and amount, and (iii) Employer’s
control of any contest or proceeding shall be limited to issues with respect to
Employee Claim and Employee shall be entitled to settle or contest, in his sole
and absolute discretion, any other issue raised by the Internal Revenue Service
or any other taxing authority.  So long
as Employer is diligently defending or prosecuting such Employee Claim,
Employee shall provide or cause to be provided to Employer any information
reasonably requested by Employer that relates to such Employee Claim, and shall
otherwise cooperate with Employer and its representatives in good faith in
order to contest effectively such Employee Claim.  Employer shall keep Employee informed of all
developments and events relating to any such Employee Claim (including, without
limitation, providing to Employee copies of all written materials pertaining to
any such Employee Claim), and Employee or his authorized representatives shall
be entitled, at Employee’s expense, to participate in all conferences, meetings
and proceedings relating to any such Employee Claim.

 

(g)                                 If,
after actual receipt by Employee of an amount of a tax claimed (pursuant to an
Employee Claim) that has been advanced by Employer pursuant to Section 7(e)(2) hereof,
the extent of the liability of Employer hereunder with respect to such tax
claimed has been established by a Final Determination, Employee shall promptly
pay or cause to be paid to Employer any refund actually received by, or
actually credited to, Employee with respect to such tax (together with any
interest paid or credited thereon by the taxing authority and any recovery of
legal fees from such taxing authority related thereto), except to the extent
that any amounts are then due and payable by Employer to Employee, whether
under the provisions

 

16

 

of this Agreement or
otherwise.  If, after the receipt by
Employee of an amount advanced by Employer pursuant to Section 7(e)(2), a
determination is made by the Internal Revenue Service or other appropriate
taxing authority that Employee shall not be entitled to any refund with respect
to such tax claimed and Employer does not notify Employee in writing of its
intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of any Gross-Up Payments and other payments required
to be paid hereunder.

 

(h)                                 With
respect to any Employee Claim, if Employer fails to deliver an Election Notice
to Employee within the period provided in Section 7(e)(1) hereof or,
after delivery of such Election Notice, Employer fails to comply with the
provisions of Section 7(e)(2) and (3) and (f) hereof, then
Employee shall at any time thereafter have the right (but not the obligation),
at his election and in his sole and absolute discretion, to defend or
prosecute, at the sole cost, expense and risk of Employer, such Employee
Claim.  Employee shall have full control
of such defense or prosecution and such proceedings, including any settlement
or compromise thereof.  If requested by
Employee, Employer shall cooperate, and shall cause its Affiliates to
cooperate, in good faith with Employee and his authorized representatives in
order to contest effectively such Employee Claim.  Employer may attend, but not participate in
or control, any defense, prosecution, settlement or compromise of any Employee
Claim controlled by Employee pursuant to this Section 7(h) and shall
bear its own costs and expenses with respect thereto.  In the case of any Employee Claim that is
defended or prosecuted by Employee, Employee shall, from time to time, be
entitled to current payment, on a fully grossed-up after tax basis, from
Employer with respect to costs and expenses incurred by Employee in connection
with such defense or prosecution.

 

(i)                                     In
the case of any Employee Claim that is defended or prosecuted to a Final
Determination pursuant to the terms of this Section 7(i), Employer shall
pay, on a fully grossed-up after tax basis, to Employee in immediately
available funds the full amount of any taxes arising or resulting from or
incurred in connection with such Employee Claim that have not theretofore been
paid by Employer to Employee, together with the costs and expenses, on a fully
grossed-up after tax basis, incurred in connection therewith that have not
theretofore been paid by Employer to Employee, within ten calendar days after
such Final Determination.  In the case of
any Employee Claim not covered by the preceding sentence, Employer shall pay,
on a fully grossed-up after tax basis, to Employee in immediately available
funds the full amount of any taxes arising or resulting from or incurred in
connection with such Employee Claim at least ten calendar days before the date
payment of such taxes is due from Employee, except where payment of such taxes
is sooner required under the provisions of this Section 7(i), in which case
payment of such taxes (and payment, on a fully grossed-up after tax basis, of
any costs and expenses required to be paid under this Section 7(i) shall
be made within the time and in the manner otherwise provided in this Section 7(i).

 

(j)                                     For
purposes of this Agreement, the term “Final Determination” shall mean (A) a
decision, judgment, decree or other order by a court or other tribunal with
appropriate jurisdiction, which has become final and non-appealable; (B) a
final and binding settlement or compromise with an administrative agency with
appropriate jurisdiction, including, but not limited to, a closing agreement
under Section 7121 of the Code; (C) any disallowance of

 

17

 

a claim for refund or
credit in respect to an overpayment of tax unless a suit is filed on a timely
basis; or (D) any final disposition by reason of the expiration of all
applicable statutes of limitations.

 

(k)                                  For
purposes of this Agreement, the terms “tax” and “taxes” mean any and all taxes
of any kind whatsoever (including, but not limited to, any and all Excise
Taxes, income taxes, and employment taxes), together with any interest thereon,
any  penalties, additions to tax, or
additional amounts with respect to such taxes and any interest in respect of
such penalties, additions to tax, or additional amounts.

 

Section 8.  Expenses of Enforcement.

 

Upon demand by Employee
made to Employer, Employer shall reimburse Employee for the reasonable expenses
(including attorneys’ fees and expenses) incurred by Employee after a Change in
Control in enforcing or seeking to enforce the payment of any amount or other
benefit to which Employee shall have become entitled under this Agreement as a
result of the termination of Employee’s employment with Employer within two (2) years
after such Change in Control, including, but not limited to, those incurred in
connection with any arbitration concerning same initiated pursuant to Section 14
(regardless of the outcome of such arbitration).  To the extent that any such reimbursement
would be subject to the Excise Tax, then Employee shall be entitled to receive
Gross-Up Payments in an amount such that after payment by Employee of all taxes
imposed on such Gross-Up Payments, Employee retains an amount equal to the
Excise Tax imposed upon the reimbursement, and the other provisions of Section 7
hereof shall also apply to such circumstance unless the context thereof
otherwise indicates.

 

Section 9.  No Obligation to Mitigate; No Rights of
Offset.

 

(a)                                  Employee
shall not be required to mitigate the amount of any payment or other benefit
required to be paid to Employee pursuant to this Agreement, whether by seeking
other employment or otherwise, nor shall the amount of any such payment or
other benefit be reduced on account of any compensation earned by Employee as a
result of employment by another person.

 

(b)                                 Employer’s
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which
Employer may have against Employee or others.

 

Section 10.  No Effect on Other Rights.

 

Nothing in this Agreement shall prevent or limit Employee’s continuing
or future participation in any plan, program, policy or practice of or provided
by Employer or any of its affiliates and for which Employee may qualify, nor
shall anything herein limit or otherwise affect such rights as Employee may
have under any stock option or other agreements with Employer or any of its
affiliates.  Amounts which are vested
benefits or which Employee is otherwise entitled to receive under any plan,
program, policy or practice of or provided by, or any other contract or
agreement with, Employer or any of its affiliates at or subsequent to the Date
of Termination shall be payable or otherwise provided in accordance with such

 

18

 

plan, program, policy or
practice or contract or agreement except as explicitly modified by this
Agreement.

 

Section 11.  Successors; Binding Agreement.

 

(a)                                  This
Agreement is personal to Employee and without the prior written consent of
Employer shall not be assignable by Employee otherwise than by will or the laws
of descent and distribution.  This
Agreement shall inure to the benefit of and be enforceable by Employee’s
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.

 

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

 

(c)                                  Employer
will require any successor (whether direct or indirect, by purchase, merger,
amalgamation, consolidation or otherwise) to all or substantially all of the
business and/or assets of Employer, by agreement in form and substance
reasonably satisfactory to Employee, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that Employer would be
required to perform it if no such succession had taken place.  As used in this Agreement, “Employer” shall
mean Employer as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
execution and delivery of the agreement provided for in this Section 11(c) or
which otherwise becomes bound by the terms and provisions of this Agreement by
operation of law or otherwise.

 

Section 12.  Non-Competition; Non-Solicitation; No Hire.

 

(a)                                  Employee
agrees that, effective as of the Effective Date and for a period that includes
the term of this Agreement and (i) twelve (12) months thereafter in the
event of a termination of Employee’s employment with Employer described in Section 6(e),
and (ii) six (6) months thereafter in the event of a termination of
Employee’s employment with Employer described in Section 6(d) (such
applicable period being referred to herein as the “Non-Compete Period”),
Employee shall not, without the prior written consent of Employer, directly or
indirectly, anywhere in the world, engage, invest, own any interest, or
participate in, consult with, render services to, or be employed by any
business, person, firm or entity that is in competition with the “Business” (as
defined in Section 12(d)) of Employer or any of its subsidiaries or
affiliates, except for the account of Employer and its subsidiaries and
affiliates; provided, however, that during the Non-Compete Period
Employee may acquire, solely as a passive investment, not more than five
percent (5%) of the outstanding shares or other units of any security of any
entity subject to the requirements of Section 13 or 15(d) of the
Exchange Act.  Employee acknowledges that
a remedy at law for any breach or attempted breach of this covenant not to
compete will be inadequate and further agrees that any breach of this covenant
not to compete will result in irreparable harm to Employer, and, accordingly,
Employer shall, in addition to any other remedy that may be available to it, be
entitled to specific performance and temporary and permanent injunctive and
other equitable relief (without proof of actual damage or inadequacy of

 

19

 

legal remedy) in case of any such breach or attempted breach.  Employee acknowledges that this covenant not
to compete is being provided as an inducement to Employer to enter into this
Agreement and that this covenant not to compete contains reasonable limitations
as to time, geographical area and scope of activity to be restrained that do
not impose a greater restraint than is necessary to protect the goodwill or
other business interest of Employer. 
Whenever possible, each provision of this covenant not to compete shall
be interpreted in such a manner as to be effective and valid under applicable
law but if any provision of this covenant not to compete shall be prohibited by
or invalid under applicable law, such provision of this covenant not to compete
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this covenant not to compete.  If any provision of this covenant not to
compete shall, for any reason, be judged by any court of competent jurisdiction
to be invalid or unenforceable, such judgment shall not affect, impair or
invalidate the remainder of this covenant not to compete but shall be confined
in its operation to the provision of this covenant not to compete directly
involved in the controversy in which such judgment shall have been
rendered.  In the event that the
provisions of this covenant not to compete should ever be deemed to exceed the
time or geographic limitations permitted by applicable laws, then such
provision shall be reformed to the maximum time or geographic limitations
permitted by applicable law.

 

(b)                                 In
addition to the restrictions set forth in Section 12(a), Employee agrees
that, during the Non-Compete Period, Employee will not, either directly or
indirectly, (i) make known to any person, firm or entity that is in
competition with the Business of Employer or any of its subsidiaries or
affiliates the names and addresses of any of the suppliers or customers of
Employer or any of its subsidiaries or affiliates, potential customers of
Employer or any of its subsidiaries or affiliates upon whom Employer or any of
its subsidiaries or affiliates has called upon in the last twelve (12) months
or contacts of Employer or any of its subsidiaries or affiliates or any other
information pertaining to such persons, or (ii) call on, solicit, or take
away, or attempt to call on, solicit or take away any of the suppliers or
customers of Employer or any of its subsidiaries or affiliates, whether for
Employee or for any other person, firm or entity.

 

(c)                                  Regardless
of the reason for any termination of Employee’s employment, effective as of the
Effective Date and for a period that includes the term of this Agreement and
twelve (12) months thereafter, Employee will not, either on his own account or
for any other person, firm, partnership, corporation, or other entity (i) solicit
any employee of Employer or any of its subsidiaries or affiliates to leave such
employment; or (ii) induce or attempt to induce any such employee to
breach her or his employment agreement with Employer or any of its subsidiaries
or affiliates.

 

(d)                                 As
used in this Agreement, “Business” means the business of acquiring, processing
and/or interpreting geophysical data and/or producing and/or conducting
geophysical surveys, including, but not limited to, (x) the business of surface
seismic acquisition and/or surface seismic data processing and/or
interpretation for the purpose of providing and/or interpreting seismic images
of the subsurface of the earth, and (y) the following activities and services:  (i) all forms of surface land, marine,
ocean

 

20

 

bottom cable and transition zone seismic data acquisition; (ii) all
forms of surface seismic data processing, including the processing of two,
three and/or four dimensional vertical seismic profiling; (iii) recording
of data from wellbore seismic arrays performed during simultaneous acquisition
of surface two, three and/or four dimensional data; (iv) trenched in,
buried near surface or seabed permanent array installation and acquisition; (v) surface
seismic acquisition, processing, interpretation and/or sales, in each case, of
multiclient surveys; (vi) maintenance of surface seismic data processing
centers, including licensing and support of surface seismic processing software;
(vii) equipment design and manufacture for surface seismic acquisition,
processing and interpretation; (viii) research and development programs
for any of the items described in this Section 12(d) and
seismically-assisted reservoir solutions, including software relating thereto; (ix) surface
seismic data management services; (x) interpretation activities related to or
in support of acquisition and processing activities described in this Section 12(d);
(xi) borehole seismic acquisition and installation and acquisition of data from
wellbore seismic arrays; (xii) reservoir management; (xiii) commercial
seismically-assisted reservoir solutions; and (xiv) non-seismic data management
and non-seismic dynamic reservoir characterization and performance prediction.

 

Section 13.  Miscellaneous.

 

(a)                                  All
notices and other communications required or permitted hereunder or necessary
or convenient in connection herewith will be in writing and will be delivered
by hand or by registered or certified mail, return receipt requested to the
addresses set forth below in this Section 13(a):

 

If to Employer,
to:

 

Veritas DGC Inc.

10300 Town Park

Houston, Texas 77072

Attention: 
Chief Executive Officer

 

If to Employee, to:

 

Mr. Dennis S. Baldwin

1116 Danbury

Houston, Texas 77055

 

or to such other
names or addresses as Employer or Employee, as the case may be, designate by
notice to the other party hereto in the manner specified in this Section.

 

(b)                                 With
the exception of the Indemnity Agreement by and between Employer and Employee
dated as of November 7, 2005 which is specifically not superceded or
replaced by or merged into this Agreement, this Agreement (including the
Exhibits attached hereto) supersedes, replaces and merges all previous
agreements and discussions relating to the same or similar subject matters
between Employee and Employer and constitutes the entire agreement between
Employee and Employer with respect to the subject matter of this
Agreement.  This

 

21

 

Agreement may not be
modified in any respect by any verbal statement, representation or agreement
made by any employee, officer, or representative of Employer or by any written
agreement unless signed by an officer of Employer who is expressly authorized
by the Board to execute such document.

 

(c)                                  If
any provision of this Agreement or application thereof to anyone or under any
circumstances should be determined to be invalid or unenforceable, such
invalidity or unenforceability will not affect any other provisions or applications
of this Agreement which can be given effect without the invalid or
unenforceable provision or application. 
In addition, if any provision of this Agreement is held by an
arbitration panel or a court of competent jurisdiction to be invalid, unenforceable,
unreasonable, unduly restrictive or overly broad, the parties intend that such
arbitration panel or court modify said provision so as to render it valid,
enforceable, reasonable and not unduly restrictive or overly broad.

 

(d)                                 The
internal laws of the State of Texas will govern the interpretation, validity,
enforcement and effect of this Agreement without regard to the place of
execution or the place for performance thereof.

 

Section 14.  Arbitration.

 

(a)                                  Employer
and Employee agree to submit to final and binding arbitration any and all
disputes or disagreements concerning the interpretation or application of this
Agreement.  Any such dispute or
disagreement will be resolved by arbitration in accordance with the National Rules for
the Resolution of Employment Disputes of the American Arbitration Association
(the “AAA Rules”).  Arbitration will take
place in Houston, Texas, unless the parties mutually agree to a different
location.  Within 30 calendar days of the
initiation of arbitration hereunder, each party will designate an
arbitrator.  The appointed arbitrators
will then appoint a third arbitrator. 
Employee and Employer agree that the decision of the arbitrators will be
final and binding on both parties.  Any
court having jurisdiction may enter a judgment upon the award rendered by the
arbitrators.  In the event the
arbitration is decided in whole or in part in favor of Employee, Employer will
reimburse Employee for his reasonable costs and expenses of the arbitration
(including reasonable attorneys’ fees); provided, however, that
Employer shall reimburse Employee in accordance with Section 8 for the
reasonable expenses (including attorneys’ fees and expenses) incurred by
Employee in enforcing or seeking to enforce in any arbitration the payment of
any amount or other benefit described in Section 8 regardless of the
outcome of such arbitration.  Regardless
of the outcome of any arbitration, Employer will pay all fees and expenses of
the arbitrators and all of Employer’s costs of such arbitration.

 

(b)                                 Notwithstanding
the provisions of Section 14(a), Employer may, if it so chooses, bring an
action in any court of competent jurisdiction for injunctive relief to enforce
Employee’s obligations under Sections 3(b), 3(c), 3(d) or 12 hereof.

 

22

 

IN WITNESS
WHEREOF, the undersigned, intending to be legally bound, have executed this
Agreement as to be effective as of the Effective Date.

 

 

	
   

  	
  EMPLOYER:

  
	
   

  	
   

  
	
   

  	
  VERITAS DGC INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  THIERRY PILENKO

  	
   

  
	
   

  	
   

  	
  Thierry
  Pilenko

  
	
   

  	
   

  	
  Chairman &
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   /s/
  DENNIS S. BALDWIN

  	
   

  
	
   

  	
   

  	
  Dennis S.
  Baldwin

  
					

 

23

 

 

EMPLOYEE
CONFIDENTIALITY

 

AND

 

INTELLECTUAL
PROPERTY AGREEMENT

 

 

As part of the consideration for my employment or
continued employment with Veritas DGC Inc. or any company affiliated with
Veritas (collectively referred to as “Veritas”), I agree to the following:

 

1.                                       Confidential Information.  I
understand that during my employment with Veritas, I will have access to
Confidential Information that belongs to Veritas.  Some examples of the types of Confidential
Information I may receive include:

 

(a).                               Customer
lists, customer requirements, customer contracts and service agreements,
customer profitability and other financial information;

 

(b).                              Business
plans, pricing and marketing techniques and strategies, product information,
business software and computer programs, costing methodologies and allocation
modeling, and methods of business operation or procedure;

 

(c).                               Suppliers,
business associates, business connections and opportunities and information
concerning the financial status and private affairs of Veritas; and

 

(d).                              Trade
secrets, inventions, improvements, developments, technical data, test results,
designs, and materials for which Veritas may or may not have obtained patent,
copyright or trademark protection.

 

I may receive Confidential Information in
writing, orally, or electronically.

 

2.                                       Confidentiality Agreement. 
I agree to hold all Confidential Information in confidence during and
following my employment.  I will not
divulge it to anyone without the express written authorization of the
Company.  I further agree that if my
employment ceases, I will not take any Confidential Information with me or
disclose it to anyone not authorized by the Company.

 

EXHIBIT A

 

1

 

3.                                       Assignment of Intellectual Property.  I assign to Veritas all inventions, novel
ideas (including ideas relating to new products, new services, or new methods
of doing business), improvements or discoveries which I conceive or make,
either alone or with others: (a) with the use of Veritas’ time, materials,
or facilities; or (b) resulting from or suggested by my work for Veritas;
or (c) in any way related to any business Veritas is engaged in or plans
to engage in.  All such inventions,
improvements, and developments will automatically become the property of
Veritas immediately as I make them or conceive them.  I agree to assign to Veritas the rights to
such inventions, improvements and developments at any time Veritas requests,
even after my employment terminates.

 

4.                                       Execution of Documents.    At any time
Veritas requests, either during my employment or after termination, and without
charge to Veritas, but at its expense, I agree to execute, acknowledge, and
deliver all additional papers (including applications for patents and
assignments of patents) and to perform such other lawful acts as Veritas may
deem reasonably necessary to obtain or maintain patents for such inventions in
any country and to vest title to such inventions in Veritas.

 

5.                                       This
Agreement may not be modified, released, discharged, abandoned or terminated,
except as agreed in writing between Veritas and the undersigned employee.

 

IN WITNESS WHEREOF this Agreement has been signed and delivered this                 
day of                                         ,
20      .

 

 

	
   

  	
   

  	
   

  	
   

  
	
  WITNESS

  	
   

  	
  EMPLOYEE SIGNATURE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  PRINTED NAME

  	
   

  	
  PRINTED NAME

  	
   

  

 

 

AGREEMENT AND
RELEASE OF ALL CLAIMS

 

This Agreement, entered into as of the date
written by Employee’s signature below, is by and between Veritas DGC Inc. (“Veritas”),
a Delaware corporation, and                               
(“Employee”).  (As used in this
Agreement, the term “Veritas” includes Veritas DGC Inc., and all of its
subsidiary and affiliated companies).

 

Veritas and Employee agree as follows:

 

Section 1.  Within 5 business days after the Separation
Date, as defined in Section 3 below, and whether or not Employee executes
and returns this Agreement, Veritas will pay Employee the following amounts:

 

•                                          Employee’s
regular base salary prorated through the Separation Date;

 

•                                          Employee’s
vacation pay accrued as of the Separation Date; and

 

•                                          any expense
reimbursement owed to Employee under Veritas policy.

 

All
of the above amounts will be reduced by
applicable taxes and withholding.

 

Section 2.  [Insert Option A or Option
B, whichever is applicable:]

 

[Option A:  During the
one-year period ending on the last day of the first year after the Separation
Date, Employer shall pay to Employee an aggregate amount (the “Severance
Payment”) equal to one (1) times Employee’s Base Salary (as defined in the
Employment Agreement between Employer and Employee dated November 7, 2005,
the “Employment Agreement”) at the highest annual rate in effect on or before
the Separation Date (but prior to giving effect to any reduction therein which
precipitated such termination), which Severance Payment will be paid to
Employee in equal installments every two weeks during such one-year period; provided,
however, that at any time during such one-year period Employer may, in
its discretion, elect to pay to Employee the then remaining balance of the
Severance Payment in the

 

EXHIBIT B

 

 

form
of a lump sum cash payment.  All amounts
so paid will be reduced by applicable taxes
and withholding.

 

In
addition, Employer will pay or provide for Employee’s medical, dental, health,
and hospital coverage for one year or pay Employee a lump cash payment in lieu
of such coverage, in accordance with Section 6(d)(4) of the
Employment Agreement.]

 

[Option B:  Within 30
calendar days after the Effective Date, as defined in Section 15 below,
Veritas will pay to Employee a lump sum equal to                     .  This amount will be reduced
by applicable taxes and withholding.

 

In
addition, Employer will pay or provide for Employee’s medical, dental, health,
and hospital coverage for eighteen months or pay Employee a lump cash payment
in lieu of such coverage, in accordance with Section 6(e)(4) of the
Employment Agreement by and between Employer and Employee effective November 7,
2005 (the “Employment Agreement”).]

 

Section 3.  Employee’s termination from employment will
be effective at the close of business on the Separation Date.  The Separation Date
as used in this Agreement means                   .

 

Section 4.  Employee agrees to release Veritas from any
claims he has or may have against Veritas as of the date he signs this
Agreement.  The claims he is releasing
include all of the following:

 

•                                          any
claims under any bonus or incentive plans;

 

•                                          any
claims for tortious action or inaction of any sort (“tortious action or
inaction” means, among other things, claims for such things as negligence,
fraud, libel, or slander);

 

2

 

•                                          any
claims arising under the Age Discrimination in Employment Act of 1967 as
amended (29 U.S.C. § 621, et seq.)  (the Age Discrimination in Employment Act of
1967 prohibits, in general, discrimination against employees on the basis of
age);

 

•                                          any
claims arising under Title VII of the Civil Rights Act of 1964 as amended (42
U.S.C. § 2000e, et seq.), or
the Texas Commission on Human Rights Act (Texas Labor Code § 21.001, et seq.)  (both of
these statutes, in general, prohibit discrimination in employment on the basis
of race, religion, national origin or gender);

 

•                                          any
claims arising under the Americans with Disabilities Act of 1990, as amended
(42 U.S.C. § 12101, et seq.)  (the Americans with Disabilities Act of 1990
prohibits, in general, discrimination in employment on the basis of an employee’s
or applicant’s disability);

 

•                                          any
claims arising under Texas Labor Code Sections 451.001, et seq.
for retaliation or discrimination in connection with a claim for workers’
compensation benefits; and,

 

•                                          any
claims for breach of contract, wrongful discharge, constructive discharge,
retaliation, or conspiracy.

 

The release contained in this Section 4 will not affect any of the
following:

 

•                                          Any
claim by Employee under this Agreement;

 

•                                          Employee’s
rights or benefits under Veritas’ 401(k) retirement savings plan, Veritas’
Employee Stock Purchase Plan, or any pension or retirement plan in

 

3

 

which Employee
is a participant on the Separation Date 
(Employee’s rights and benefits will be determined by the applicable
plan documents);

 

•                                          Employee’s
right to elect continued health and/or dental benefits under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”);

 

•                                          Employee’s
right to exercise any options to purchase Veritas DGC Inc. common stock in
accordance with the terms of the applicable stock option grant, including any
terms of the grant modified by Section 6(e)(5) of the Employment
Agreement;

 

•                                          Employee’s
rights under any restricted stock agreement between Employee and Veritas DGC
Inc. under the terms of which Employee has been granted Veritas DGC Inc.
restricted stock, including any terms of the grant modified by Section 6(e)(5) of
the Employment Agreement;

 

•                                          Employee’s
right to claim and receive reimbursement for or indemnity from excise taxes in
accordance with Section 7 of the Employment Agreement;

 

•                                          Employee’s
rights to indemnity under that one certain Indemnity Agreement effective November 7,
2005, by and between Employer and Employee;

 

•                                          Any
other benefit to which Employee may be entitled under any other health or
benefit plan in accordance with the applicable plan documents; or

 

•                                          Employee’s
rights under any workers’ compensation statue; the Jones Act, 46 U.S.C. Appx.
§688, as amended; general maritime law or similar laws; and any other right
Employee may have with respect to bodily injury.

 

Section 5.  Veritas and Employee agree that this
Agreement is a binding contract.  The
purpose of the Agreement is to compromise doubtful or disputed claims, avoid
litigation, and

 

4

 

buy peace.  Employee agrees that
although Veritas is making payment to Employee in exchange for a release of
claims, Veritas does not admit any wrongdoing of any kind.

 

Section 6.  Employee agrees to assist Veritas in
defending any legal proceedings against Veritas arising out of matters which
occurred on or prior to the Separation Date. 
Veritas agrees to reimburse Employee for his time and expense or costs
he may incur in that regard.

 

Section 7.  Employee confirms that after the Effective
Date he remains subject to and agrees to comply with:

 

•                                          those
obligations of confidentiality contained in Section 3(b) and 3(c) of
the Employment Agreement;

 

•                                          the
provisions relating to competition with Employer contained in Section 12
of the Employment Agreement;

 

•                                          the
provisions relating to solicitation or hiring of Employer’s employees contained
in Section 12 of the Employment Agreement; and

 

•                                          the
terms of the Employee Confidentiality and Intellectual Property Agreement with
Employer which Employee signed effective November 7, 2005.

 

Section 8.                                            This
Agreement has been delivered to Employee on                     .

 

•                                          Employee will
have 21 calendar days from                       
or until the close of business on                       
to decide whether to sign and return this Agreement and be bound by its terms.
In the event Employee has not signed and returned this Agreement to Veritas on
or before                     ,
this Agreement will become null and void.

 

•                                          Veritas and
Employee agree that if they agree to change the terms of this Agreement in any
manner after it is delivered to Employee, even if the changes

 

5

 

are material, the 21-day period specified in the
previous paragraph will not restart or be extended.

 

•                                          After signing
this Agreement, Employee will have the right to revoke the Agreement for a
period of 7 calendar days after signing it by (a) notifying Veritas in
writing that Employee revokes the Agreement and (b) returning to Veritas
any consideration paid Employee under Section 2 above.  In the event Employee revokes the Agreement,
it will become null and void.

 

Section 9.  Employee acknowledges that he has read this
Agreement.  He understands that, except
for the exceptions set out in Section 4 above, this Agreement will have
the effect of waiving any claim he may pursue against Veritas.

 

Section 10.  Employee acknowledges that he makes this
Agreement knowingly and voluntarily.

 

Section 11.  This Agreement constitutes the entire
understanding between Veritas and Employee with respect to the subject matter
hereof.

 

Section 12.  This Agreement will benefit and be binding
upon Veritas and its successors and assigns and Employee and his successors and
legal representatives.  Employee will not
assign or attempt to assign any of his rights under this Agreement.

 

Section 13.  If a court determines that any provision of
this Agreement is invalid, the other provisions will remain in effect.

 

Section 14.  This Agreement will be governed by, construed
under, and enforced in accordance with the laws of the State of Texas, not
including, however, its conflicts of law rules that might otherwise refer
to the law of another forum or jurisdiction.

 

Section 15.  This Agreement will become effective and enforceable
only after a period of

 

6

 

7 days has expired following Employee’s execution and delivery of this
Agreement to Veritas (this date is referred to in this Agreement as the “Effective Date”).

 

THIS
AGREEMENT IS SUBJECT TO ARBITRATION IN

ACCORDANCE
WITH THE FOLLOWING SECTION

 

Section 16.                                      Employer
and Employee agree to submit to final and binding arbitration any and all
disputes or disagreements concerning the interpretation or application of this
Agreement.  Any such dispute or
disagreement will be resolved by arbitration in accordance with the National Rules for
the Resolution of Employment Disputes of the American Arbitration Association
(the “AAA Rules”).  Arbitration will take
place in Houston, Texas, unless the parties mutually agree to a different
location.  Within 30 calendar days of the
initiation of arbitration hereunder, each party will designate an
arbitrator.  The appointed arbitrators
will then appoint a third arbitrator. 
Employee and Employer agree that the decision of the arbitrators will be
final and binding on both parties.  Any
court having jurisdiction may enter a judgment upon the award rendered by the
arbitrators.  In the event the
arbitration is decided in whole or in part in favor of Employee, Employer will
reimburse Employee for his reasonable costs and expenses of the arbitration
(including reasonable attorneys’ fees). 
Regardless of the outcome of any arbitration, Employer will pay all fees
and expenses of the arbitrators and all of Employer’s costs of such
arbitration.

 

Notwithstanding the provisions of the
previous paragraph, Employer may, if it so chooses, bring an action in any
court of competent jurisdiction for injunctive relief to enforce Employee’s
obligations under Section 7 of this Agreement.

 

 

[SIGNATURES ON FOLLOWING
PAGE]

 

7

 

IN WITNESS
WHEREOF, the parties have executed this Agreement effective as of the Effective
Date.

 

 

	
   

  	
  VERITAS:

  
	
   

  	
   

  
	
   

  	
  VERITAS DGC INC.

  
	
   

  	
    and subsidiary and affiliated
  companies

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

 

NOTICE TO
EMPLOYEE

 

BY SIGNING THIS DOCUMENT, YOU MAY BE
GIVING UP IMPORTANT LEGAL RIGHTS.  YOU
ARE ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO SIGNING AND RETURNING THIS
DOCUMENT TO VERITAS.

 

	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
				

 

8Exhibit 10.56

 

Amendment to Employment
Agreement

 

This Amendment is
made this 9th day of September, 2005, by and between Interline
Brands, Inc., a New Jersey Corporation (“Company”), whose address is 801 West
Bay Street, Jacksonville, Florida  32204
and William R. Pray (“Executive”).

 

WHEREAS, the Executive
is currently an employee of the Company; and

WHEREAS, the Company
and the Executive desire to amend and restate the employment agreement entered
into by, and between the parties, dated as of December 15, 2004 (“Agreement”);
and

WHEREAS, the Company
considers it essential to its best interests and the best interests of its
stockholders to provide for the continued employment of the Executive by the
Company and to amend the Agreement; and

WHEREAS, the Executive
is willing to accept and continue his employment on the terms hereinafter set
forth in this Amendment;

NOW,
THEREFORE, in consideration of the premises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company and Executive agree as follows:

 

1.                                       Section 4 of the Agreement entitled “Bonus” is hereby deleted in its entirety and shall be
replaced with the following provisions and incorporated into the Agreement as
the new and substituted Section 4:

 

“4.           Bonus.  With respect to each calendar year during the
Employment Term, the Executive shall be eligible to earn an annual bonus award with
a target of 50% percent of the Base Salary, based upon and subject to the terms
of any bonus program established by the Board or a committee thereof from time
to time.

 

2.                                       Except as modified or amended herein, the
Agreement remains in full force and effect. 
Nothing contained herein invalidates or shall impair or release any covenant,
condition or stipulation in the Agreement, and the same, except as herein
modified and amended, shall continue in full force and effect.

 

3.                                       This Amendment may be executed in one or
more counterparts, each of which shall constitute an original and all of which
taken together shall constitute one Agreement. 
The parties specifically agree that facsimile signatures are acceptable
and permitted and shall be considered original and authentic.  Each party executing this Amendment
represents that such party has the full authority and legal power to do so.

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment,
which is effective as of the date first above written.

 

	
  INTERLINE BRANDS, INC.

  	
   

  	
  EXECUTIVE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  (Signature)

  	
   

  	
  (Signature)

  
	
  Name: 

  	
   

  	
   

  	
  Name: 

  	
  William R. Pray

  
	
  Title: 

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
  Date:

  	
   

  	
   

  	
  Date:

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