Document:

ex10_1.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This amended and restated EMPLOYMENT AGREEMENT is made as of December 15, 2011 (the “Agreement”), among Standard Microsystems Corporation, a Delaware corporation (the “Employer” or “SMSC”), and Christine King (the “Employee”).

 

1.  Employment, Duties and Agreements.

 

(a)            The Employer hereby agrees to employ the Employee as its Chief Executive Officer, and the Employee shall serve, subject to shareholder election after her initial appointment, without additional compensation, as a member of the Board of Directors of the Employer (the “Board”), subject to the By-laws of the Employer, as applicable, and the Employee hereby accepts such positions and agrees to serve the Employer in such capacities during the employment period fixed by Section 3 hereof (the “Employment Period”).  The Employee shall report to the Board and shall have such duties, authority and responsibilities, and shall act in accordance with all reasonable instructions and directions of the Board and of the Employer, in each case, as are consistent with her position as Chief Executive Officer of the Employer.

 

(b)            During the Employment Period, excluding any periods of vacation and sick leave to which the Employee is entitled, the Employee shall devote her full working time, energy and attention to the performance of her duties and responsibilities hereunder and shall faithfully and diligently endeavor to promote the business and best interests of the Employer.

 

(c)            During the Employment Period, the Employee may not, without the prior written consent of the Employer, operate, participate in the management, operations or control of, or act as an employee, officer, consultant, agent or representative of, any type of business or service (other than as an employee and director of the Employer), provided that it shall not be a violation of the foregoing or of Section 1(b) above for the Employee to (i) act or serve as a director, trustee or committee member of any civic or charitable organization, (ii) manage her personal, financial and legal affairs, or (iii) serve as a director of Idaho Power Company, and Open Silicon Inc.,  so long as such activities (described in clauses (i), (ii),  and (iii)) do not interfere with the performance of her duties and responsibilities to the Employer as provided hereunder.  Service on any other entity’s board of directors must be approved by the Board.

 

2.  Compensation.

 

(a)            As compensation for the agreements made by the Employee herein and the performance by the Employee of her obligations hereunder, during the Employment Period, the Employer shall pay the Employee, pursuant to the Employer’s normal and customary payroll procedures, a base salary (the “Base Salary”) at the rate of $675,000.00 per annum.  The Compensation Committee  shall review the Employee’s Base Salary annually and may (but is not required to) increase the Base Salary in its sole discretion. 

  

  

  

 

(b)            In addition to the Base Salary, during the Employment Period the Employee shall have an opportunity, subject to the terms and conditions of the Employer’s Selected Officer Management Incentive Plan (the “Management Incentive Plan or MIP”), to earn an annual bonus (the “Bonus”) with a target amount of 150% of Base Salary (the “Target Bonus”) based on the achievement of  performance objectives pursuant to the MIP which shall be established and approved by the Compensation Committee of the Board (the “Compensation Committee”) Notwithstanding anything in the Management Incentive Plan or this Agreement to the contrary, in no event shall such Bonus (or any other amount payable pursuant to this Section 2(b)(i)) be paid later than the fifteenth (15) day of the third month following the end of the fiscal year with respect to which such Bonus (or such other amount) was earned, if at all. 

(c)            The Compensation Committee shall make an annual equity grant to Employee on April 15th of each year (or if the NASDAQ is closed on April 15 on the next business day thereafter on which the NASDAQ is open) in which Employee is employed by the Company, after consultation with the Board solely on how the Employee and Company are performing. The equity grant shall be subject to the terms and conditions of the equity incentive plan of the Company from which such grants are made and may consist of stock options, restricted stock units, a combination of the foregoing or other equity based instruments. The first such grant shall be made on April 15, 2012.  

 

(d)            The Employee shall also be eligible to participate in the Company’s Executive Relocation Plan, should an event occur that would cause Employee to change involuntarily the primary location at which she works.

(e)            During the Employment Period: (i) the Employee shall be entitled to participate in the following benefits on the terms and conditions generally in effect for such plans, practices, policies and programs from time to time for all employees:  SMSC Flex Benefit Plan, including medical, dental and vision coverage; health care and dependent care reimbursement accounts; basic life/AD&D insurance; long term disability insurance, executive long term disability insurance, executive health benefit and 401(k) savings and retirement plan.

(f)             During the Employment Period, the Employee shall be entitled to take paid vacation of six weeks per year; Employee shall comply with all other aspects of the Employer’s vacation policy as may be in effect from time to time.

 

(g)            The Employer shall promptly reimburse the Employee for all reasonable business expenses incurred by the Employee in connection with the performance of her duties and responsibilities hereunder upon the presentation of statements of such expenses in accordance with the Employer’s policies and procedures now in force or as such policies and procedures may be modified from time to time; provided that in no event shall such reimbursement be made later than the date that is two and one-half months following the end of the taxable year following the taxable year in which such expenses were incurred.

  

  

  

  

 

(h)            In addition to the indemnification of the Employee as provided for under the Employer’s certificates of incorporation and by-laws, the Employer shall provide, at its expense, the Employee with coverage under its directors’ and officers’ liability insurance policy at the same level provided the other directors and officers of the Employer, and the standard form indemnity agreement annexed hereto as Exhibit B.

 

(i)             For purposes of clarification, nothing herein shall hinder or interfere with the right of the Employer to amend, modify or terminate any plan, practice, policy and program as it deems appropriate, from time to time, in its sole discretion.

 

3.  Employment Period.

 

The Employment Period shall commence on December 15, 2011 (the “Effective Date”) and shall continue for an initial term of three (3) years.   Thereafter, the Employment Period shall automatically renew for one (1) year terms unless the Employer provides a Notice of Non-Renewal of the Agreement at least one hundred eighty (180) days prior to the expiration of the Employment Period.  Notwithstanding the foregoing, the Employee’s employment hereunder may be terminated during the Employment Period upon the earliest to occur of the following events (at which time the Employment Period shall be terminated in accordance with Section 4). 

 

(a)            Death.  The Employee’s employment hereunder shall terminate upon her death.

 

(b)            Disability.  The Employer shall be entitled to terminate the Employee’s employment hereunder for “Disability” as a result of (i) the inability of the Employee to engage in any substantial gainful activity or (ii) the receipt by the Employee of income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Employer, in each case by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, as determined by the Employer.

 

(c)            Cause.  The Employer may terminate the Employee’s employment hereunder for Cause.  For purposes of this Agreement, the term “Cause” shall mean the Employee’s (A) gross negligence or willful misconduct in the performance of the Employee’s duties for the Employer (other than due to the Employee’s physical or mental incapacity), (B) breach or violation, in any material respect, of any written agreement between the Employee and the Employer or any material policy of the Employer, as may be in effect from time to time (including, without limitation, the Employer’s code of conduct or similar employee conduct policy), (C) commission of a non-de minimis act of dishonesty or breach of trust with regard to the Employer, any of its subsidiaries or affiliates, or (D) commission of a felony or other crime of moral turpitude.

 

(d)            Without Cause; for Good Reason; and Non-Renewal by Employer. The Employer may terminate the Employee’s employment hereunder during the Employment Period without Cause, and the Employee may terminate her employment hereunder during the Employment Period for Good Reason.  In addition, the Employer may terminate the Employee’s employment pursuant to a Notice of Non-Renewal given by the Employer. For purposes of this Agreement, the term “Good Reason” shall mean the occurrence of any of the following events, without the Employee’s prior written consent: (i) any materially adverse change to the Employee’s then base salary and bonus opportunity, responsibilities, duties, authority or status or any material adverse change in the Employee’s then positions, titles or reporting responsibilities; provided, that, the Employer ceasing to be or becoming a publicly traded company shall not be deemed a material adverse change; (ii) a relocation, without the consent of the Employee, of the Employee’s principal business location to an area outside a 50 mile radius of her principal business location as of the Effective Date; or (iii) a material breach by the Employer of this Agreement; provided, that, within sixty (60) days following the occurrence of any of the events set forth therein, the Employee has delivered written notice to the Employer of the Employee’s intention to terminate the Employee’s employment for Good Reason, and the Employer shall not have cured such circumstances (if susceptible to cure) within thirty (30) days following receipt of such notice (or, in the event that such grounds cannot be corrected within such thirty (30) day period, the Employer has not taken reasonable steps within such thirty (30) day period to correct such grounds as promptly as practicable thereafter). 

  

  

  

 

(e)            Voluntarily.  The Employee may voluntarily terminate her employment hereunder, provided that the Employee provides the Employer with written notice of her intent to terminate her employment at least one hundred eighty (180) days in advance of the Date of Termination (as defined in Section 4 below).

 

4.  Termination Procedure.

 

(a)  Notice of Termination.  Any termination of the Employee’s employment by the Employer or by the Employee during the Employment Period (other than termination pursuant to Section 3(a)) shall be communicated by written “Notice of Termination” to the other party hereto in accordance with Section 8(a).

 

(b)  Date of Termination.  “Date of Termination” shall mean (i) if the Employee’s employment is terminated by her death, the date of her death, (ii) if the Employee’s employment is terminated pursuant to Section 3(b), thirty (30) days after Notice of Termination, (iii) if the Employee voluntarily terminates her employment, the date specified in the notice given pursuant to Section 3(e) herein which shall not be less than one hundred eighty (180) days after the Notice of Termination (iv) if the Employee’s employment is terminated in connection with the Employer’s delivery of a Notice of Non-Renewal, the expiration of the then current Employment Period, and (v) if the Employee’s employment is terminated for any other reason, the date on which a Notice of Termination is given or any later date set forth in such Notice of Termination.

 

(c)  Board/Committee Resignation.  Upon termination of Employee’s employment with the Employer for any reason, Employee agrees to resign, as of the Date of Termination and to the extent applicable, all positions and titles with the Employer, including as a member of the Board (and any committee thereof) and all positions and titles, including service as a member of the Board of Directors (and any committee thereof), of any of the Employer’s affiliates. 

  

  

  

 

5.  Termination Payments.

 

(a) Without Cause and for Good Reason.  In the event of the termination of the Employee’s employment during the Employment Period by the Employer without Cause or by the Employee for Good Reason the Employer shall pay to the Employee (i) within thirty (30) days following the Date of Termination, (A) Employee’s accrued but unused vacation, (B) Employee’s Base Salary through the Date of Termination (to the extent not theretofore paid), (C) any unreimbursed business expenses properly incurred by Employee in accordance with Section 2(g) hereof (provided that claims for such expenses are submitted to the Employer within fifteen (15) days following the Date of Termination) (collectively, the “Accrued Obligations”),  (ii) a lump sum payable with thirty (30) days following the Date of Termination equal to the sum of (A) a payment (the “Base Salary Termination Payment”) equal to two times the Employee’s Base Salary as in effect immediately prior to the Date of Termination  and (B) two times the Termination Payment (as defined below),  (iii) all stock options, stock appreciation rights or other equity awards held by the Employee and outstanding as of the Date of Termination that would have vested within one (1) year from the Date of Termination shall immediately vest on the Date of Termination, and (iv) the Employer shall provide family group health insurance equivalent to the coverage  provided by Employer to Employee as of the date of  such termination, excluding group life and group disability plans, for a period of 24 months from the date of termination. In the event such Date of Termination occurs within the one-year period immediately following a Change of Control (as defined below),  all stock options, stock appreciation rights or other equity awards held by the Employee and outstanding as of the Date of Termination shall immediately vest as of the Date of Termination. Notwithstanding the foregoing, all of the foregoing payments and benefits (other than the Accrued Obligations) are subject to and conditioned upon the Employee, within forty-five (45) days of the Date of Termination (the “Release Period”), executing a valid general release and waiver (in a form satisfactory to the Employer), waiving all claims the Employee may have against the Employer, its successors, assigns, affiliates, employees, officers and directors.  Any payment that otherwise would be made prior to Executive’s delivery of such executed release shall be paid to the Executive on the first business day following the conclusion of the Release Period.  Notwithstanding anything to the contrary in this Agreement, Employee shall not be entitled to receive any bonus payment pursuant to any bonus plan of the Company (including, without limitation, pursuant to Section 2(b) hereof) for any measuring period in which her employment with the Company has terminated, or any subsequent period.

 

For purposes of this Agreement, “Change of Control” has the meaning ascribed to the phrase “Change in the Ownership or Effective Control of a Corporation or in the Ownership of a Substantial Portion of the Assets of a Corporation” under Treasury Department Final Regulation 1.409A-3(i)(5), or any successor thereto, and in the event that such regulations are withdrawn or such phrase (or a substantially similar phrase) ceases to be defined, as determined (reasonably and in good faith) by the Board.

 

For purposes of this Agreement, “Termination Payment” shall be equal to one hundred and fifty percent (150%) of the Employee’s then current Base Salary. 

  

  

  

 

(b) For Non-Renewal by the Employer.  In the event of Employer sends a Notice of Non-Renewal to the Employee the Employer shall pay to the Employee , within fifteen (15) days following the Date of Termination (but in no event later than the fifteenth day of the third month following the end of the fiscal year in which such Notice of Non-Renewal was sent to the Employee), (i) the Accrued Obligations, (ii) a lump-sum payment equal to the Employee’s Base Salary as in effect immediately prior to the Date of Termination,  (iii) the Termination Payment,  (iv) all stock options, stock appreciation rights or other equity awards held by the Employee and outstanding as of the Date of Termination that would have vested within one (1) year from the Date of Termination shall immediately vest on the Date of Termination, and (v) the Employer shall provide family group health insurance equivalent to the coverage provided by Employer to Employee as of the date of  such termination, excluding group life and group disability plans, for a period of 12 months from the date of termination. Notwithstanding the foregoing, all of the foregoing payments and benefits (other than the Accrued Obligations) are subject to and conditioned upon the Employee, within the Release Period, executing a valid general release and waiver (in a form satisfactory to the Employer), waiving all claims the Employee may have against the Employer, its successors, assigns, affiliates, employees, officers and directors.    Any payment that otherwise would be made prior to Executive’s delivery of such executed release shall be paid to the Executive on the first business day following the conclusion of the Release Period.   Notwithstanding anything to the contrary in this Agreement, Employee shall not be entitled to receive any bonus payment pursuant to any bonus plan of the Company (including, without limitation, pursuant to Section 2(b) hereof) for any measuring period in which her employment with the Company has terminated, or any subsequent period.

 

(c)            Disability or Death.  If the Employee’s employment is terminated during the Employment Period as a result of the Employee’s death or Disability, the Employer shall pay the Employee or the Employee’s estate, as the case may be, (i) within thirty (30) days following the Date of Termination, the Accrued Obligations, and (ii) a “Pro-Rata Bonus”  equal to the product of the Bonus that the Employee would have earned for such fiscal year pursuant to Section 2(b) herein and a fraction, the numerator of which is the number of calendar days beginning on the first day of the Employer’s fiscal year in which the Date of Termination occurs and ending on and including the Date of Termination and the denominator of which is 365, such Pro-Rata Bonus to be paid on the date annual bonuses are otherwise paid to other executive officers of the Employer (but in no event later than the date that is two and one-half months following the end of the fiscal year in which the Date of Termination occurs).

 

(d)            Cause or Voluntarily.  If the Employee’s employment is terminated during the Employment Period by the Employer for Cause or voluntarily by the Employee without Good Reason, the Employer shall pay to the Employee, within thirty (30) days following the Date of Termination, the Accrued Obligations. 

(e)            (i)  If all or any portion of the amounts payable or benefits provided to Employee under this Agreement or otherwise are “excess parachute payments” and, as a result, are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”, and such excise tax, the “Excise Tax”), and if the net after-tax amount (taking into account all applicable taxes payable by the Employee, including without limitation the Excise Tax) that Employee would receive with respect to such payments or benefits exceeds the net after-tax amount Employee would receive if the amount of such payments and benefits were reduced to the maximum amount which could otherwise be payable to Employee without the imposition of the Excise Tax, then, only to the extent necessary to eliminate the imposition of the Excise Tax, such payments and benefits shall be reduced, in the order and of the type mutually agreed to by the Employee and the Employer. The calculations required under this Section 5(e) shall be prepared by the Employer and reviewed for accuracy by the Employee and the Employer’s regular certified public accountants.

  

  

  

 

(ii)            Notwithstanding anything herein to the contrary, if at the time of Employee’s termination of employment with the Employer, Employee is a “specified employee” as defined in Section 409A of the Code and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the payments to which Employee would otherwise be entitled during the first six months following her termination of employment shall be deferred and accumulated (without any reduction in such payments or benefits ultimately paid or provided to Employee) for a period of six months from the date of the Employee’s separation from service (as determined under Section 409A of the Code) and paid in a lump sum on the first day of the seventh month following such separation from service  (or, if earlier, the date of the Employee’s death).

 

(f)            Except as provided in this Section 5, the Employer shall have no additional obligations to the Employee under this Agreement or otherwise and the Employee shall not be entitled to any other severance or similar benefits under any other plan, program, policy or agreement.  Notwithstanding the foregoing, the terms and conditions of any agreements relating to stock options, stock appreciation rights or other equity awards held by the Employee on the Date of Termination shall continue in full force and effect except as specifically set forth herein or unless inconsistent with or prohibited by the applicable plan document.

 

6.  Restrictive Covenants.  The Employee acknowledges and recognizes the highly competitive nature of the businesses of the Employer (which, for purposes of this Section 6, shall include the Employer, all of Employer’s subsidiaries and all affiliated companies and joint ventures connected by ownership to Employer at any time) and accordingly agrees as follows: 

(a)            Non-competition with Employer.  During the Restricted Period, Employee shall not become an employee, director, or independent contractor of, or consultant to, or perform any services for, any Competitor of Employer.  For purposes of this Agreement, a “Competitor of Employer” shall mean (i) any unit, division, line of business, parent, subsidiary or subsidiary of the parent of any of the competitors listed in the Employer’s Annual Report on Form 10-K filed immediately preceding termination; or (ii) any individual or entity that within the one-year period immediately following the Date of Termination could reasonably be expected to generate more than $5 million in annualized gross revenue from any activity that competes, or combination of activities that competes, with any business of Employer.  For purposes of this Agreement, Restricted Period shall mean the period commencing on the Effective Date and ending on (i) in the event the Employee’s employment is terminated without Cause or for Good Reason, the twenty four month anniversary of the Date of Termination or (ii) in the event the Employee’s employment is terminated for any other reason, the twelve month anniversary of the Date of Termination.

  

  

  

 

(b) Non-solicitation of Employer Customers.  During the Restricted Period, Employee shall not, directly or indirectly, on behalf of Employee or of anyone other than Employer, solicit or attempt to solicit (or assist any third party in soliciting or attempting to solicit) any of Employer’s then current and actively sought potential customers (“Customers”) in connection with any business activity that is operated by a Competitor of Employer.

 

(c)            Non-solicitation of Employer Employees.  During the Restricted Period, , Employee shall not, without the prior written consent of the Board, directly or indirectly, on behalf of Employee or any third party, solicit or hire or recruit or, other than in the good faith performance of Employee’s duties hereunder, induce or encourage (or assist any third party in hiring, soliciting, recruiting, inducing or encouraging) any employees of Employer or any individuals who were employees within the six-month period immediately prior thereto to terminate or otherwise alter her employment with Employer.  Notwithstanding the foregoing, the restrictions contained in this Section 6(c) shall not apply to general published solicitations that are not specifically directed to employees of the Employer.

 

(d)            Non-disclosure of Confidential Information and Trade Secrets. During the Restricted Period and thereafter, except in the good faith performance of Employee’s duties hereunder or where required by law, statute, regulation or rule of any governmental body or agency, or pursuant to a subpoena or court order, Employee shall not, directly or indirectly, for Employee’s own account or for the account of any other person, firm or entity, use or disclose any Confidential Information or proprietary Trade Secrets of Employer (each as defined below) to any third person.  For purposes of this Agreement, “Confidential Information” shall mean all information regarding Employer and any of its affiliates, any Employer activity or the activity of any affiliate, Employer business or the business of any affiliate or Employer Customer or the Customers of any affiliate that is not generally known to persons not employed or retained (as employees or as independent contractors or agents) by Employer, that is not generally disclosed by Employer practice or authority to persons not employed by Employer, that does not rise to the level of a Trade Secret and that is the subject of reasonable efforts to keep it confidential.  Confidential Information shall, to the extent such information is not a Trade Secret, include, but not be limited to product code, product concepts, production techniques, technical information regarding Employer or affiliate products or services, production processes and product/service development, operations techniques, product/service formulas, information concerning Employer or affiliate techniques for use and integration of its website and other products/services, current and future development and expansion or contraction plans of Employer or any affiliate, sale/acquisition plans and contacts, marketing plans and contacts, information concerning the legal affairs of Employer or any affiliate and certain information concerning the strategy, tactics and financial affairs of Employer or any affiliate.  “Confidential Information” shall not include information that (i) has become generally known or available to the public, other than information that has become available as a result, directly or indirectly, of the Employee’s failure to comply with any of her obligations to Employer or its affiliates, or (ii) is already known by the Employee prior to the Effective Date of this Agreement and not subject to a duty of confidentiality to Employer or another party, or (iii) is hereafter rightfully furnished to the Employee by a third party without a confidentiality obligation and without breach of this Agreement.  This definition shall not limit any definition of “confidential information” or any equivalent term under the Uniform Trade Secrets Act or any other state, local or federal law. 

  

  

  

For purposes of this Agreement, “Trade Secret” shall mean all secret, proprietary or confidential information regarding Employer (which shall mean and include all of Employer’s subsidiaries and all affiliated companies and joint ventures connected by ownership to Employer at any time) or any Employer activity that fits within the definition of “trade secrets” under the Uniform Trade Secrets Act or other applicable law.  Without limiting the foregoing or any definition of Trade Secrets, Trade Secrets protected hereunder shall include all source codes and object codes for Employer’s software and all website design information to the extent that such information fits within the Uniform Trade Secrets Act.  Nothing in this agreement is intended, or shall be construed, to limit the protections of any applicable law protecting trade secrets or other confidential information.  “Trade Secrets” shall not include information that (i) has become generally known or available to the public, other than information that has become available as a result, directly or indirectly, of the Employee’s failure to comply with any of Employee’s obligations to Employer or its affiliates, or (ii) is already known by the Employee prior to the Effective Date of this Agreement and not subject to a duty of confidentiality to Employer or another party, or (iii) is hereafter rightfully furnished to the Employee by a third party without a confidentiality obligation and without breach of this Agreement.  This definition shall not limit any definition of “trade secrets” or any equivalent term under the Uniform Trade Secrets Act or any other state, local or federal law.

 

(e)            Intellectual Property.  Employee agrees that all right, title and interest to all works of whatever nature generated in the course of her employment with the Employer or its affiliates resides with Employer and its affiliates, and that Employee will do all acts and execute all documents necessary to vest such right, title and interest with the Employer.  Employee agrees that in connection with any termination of Employee’s employment with the Employer she will return to Employer, not later than the Date of Termination, all property, in whatever form (including computer files and other electronic data), of Employer or its affiliates in her possession, including without limitation, all copies (in whatever form) of all files or other information pertaining to Employer, its officers, directors, shareholders, customers or affiliates, and any business or business opportunity of Employer and its affiliates. 

(f)             No Disparagement.  During the Employment Period and the Restricted Period, the Employee shall not make any statements, encourage others to make statements or release information to disparage or defame Employer, any of its affiliates or any of their respective directors or officers.  Notwithstanding the foregoing, nothing in this Section 6(f) shall prohibit the Employee from making truthful statements when required by order of a court or other body having jurisdiction or as required by law.

 

(g)            Employer Property.  In connection with any termination of Employee’s employment with the Employer, the Employee hereby agrees to return to Employer and to cease using any property of Employer, including without limitation, security key cards, corporate credit cards, telephone calling cards or home office equipment provided by Employer and to return such property no later than the Date of Termination.

  

  

  

 

(h)            Enforceability of Covenants.  Employee acknowledges that Employer has a present and future expectation of business from and with the Customers.  Employee acknowledges the reasonableness of the term, geographical territory, and scope of the covenants set forth in this Section 6, and Employee agrees that Employee will not, in any action, suit or other proceeding, deny the reasonableness of, or assert the unreasonableness of, the premises, consideration or scope of the covenants set forth herein and Employee hereby waives any such defense.  Employee further acknowledges that complying with the provisions contained in this Agreement will not preclude Employee from engaging in a lawful profession, trade or business, or from becoming gainfully employed.  Employee agrees that Employee’s covenants under this Section 6 are separate and distinct obligations under this Agreement, and the failure or alleged failure of Employer or the Board to perform obligations under any other provisions of this Agreement shall not constitute a defense to the enforceability of Employee’s covenants and obligations under this Section 6.  Employee agrees that any breach of any covenant under this Section 6 will result in irreparable damage and injury to Employer and that Employer will be entitled to injunctive relief in any court of competent jurisdiction without the necessity of posting any bond.

 

7.    Representations.

 

(a)    The parties hereto hereby represent that they each have the authority to enter into this Agreement, and the Employee hereby represents to the Employer that the execution of, and performance of duties under, this Agreement shall not constitute a breach of or otherwise violate any other agreement to which the Employee is a party.

 

(b)    The Employee hereby represents to the Employer that she will not utilize or disclose any confidential information obtained by the Employee in connection with her former employment with respect to her duties and responsibilities hereunder.

 

(c)    The Employee is not a party to any litigation.

 

8.      Miscellaneous.

 

(a)  Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and delivered personally or sent by registered or certified mail, postage prepaid, addressed as follows (or if it is sent through any other method agreed upon by the parties). 

 

If to the Employer, to:

 

 

SMSC

80 Arkay Drive

Hauppauge, NY 11788

Attention: Walter Siegel, Esq.

Senior Vice President and General Counsel

  

  

  

 

Copy:  Chairman of the Compensation Committee of the Employer

 

If to the Employee, to the address on record with Employer; or, for either party, to such other address as any party hereto may designate by notice to the others, and shall be deemed to have been given upon receipt.

 

(b)            This Agreement shall constitute the entire agreement among the parties hereto with respect to the Employee’s employment hereunder, and supersedes and is in full substitution for any and all prior understandings or agreements with respect to the Employee’s employment.

 

(c)            This Agreement may be amended only by an instrument in writing signed by the parties hereto, and any provision hereof may be waived only by an instrument in writing signed by the party or parties against whom or which enforcement of such waiver is sought.  The failure of any party hereto at any time to require the performance by any other party hereto of any provision hereof shall in no way affect the full right to require such performance at any time thereafter, nor shall the waiver by any party hereto of a breach of any provision hereof be taken or held to be a waiver of any succeeding breach of such provision or a waiver of the provision itself or a waiver of any other provision of this Agreement.

 

(d)            The parties hereto acknowledge and agree that each party has reviewed and negotiated the terms and provisions of this Agreement and has had the opportunity to contribute to its revision.  Accordingly, the rule of construction to the effect that ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement.  Rather, the terms of this Agreement shall be construed fairly as to both parties hereto and not in favor or against either party.

 

(e)            Employee shall provide Employee’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during Employee’s employment hereunder.  In such an event, Employer shall reimburse Employee for all reasonable expenses incurred at Employer’s request; provided that in no event shall such reimbursement be made later than the date that is two and one-half months following the end of the taxable year following the taxable year in which such expenses were incurred.   This provision shall survive any termination of this Agreement, without implication of the survival of any other provision of this Agreement. 

 

(f)    (i)     This Agreement is binding on and is for the benefit of the parties hereto and their respective successors, permitted assigns, heirs, executors, administrators and other legal representatives.  Neither this Agreement nor any right or obligation hereunder may be assigned by the Employee.

 

(ii)    The Employer shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Employer to assume this Agreement in the same manner and to the same extent that the Employer would have been required to perform it if no such succession had taken place.  As used in the Agreement, “the Employer” shall mean both the Employer as defined above and any such successor that assumes this Agreement, by operation of law or otherwise.

  

  

  

 

(g)           Any provision of this Agreement (or portion thereof) which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this Section, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions thereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction.  If any covenant should be deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable.  No waiver of any provision or violation of this Agreement by Employer shall be implied by Employer’s forbearance or failure to take action.

 

(h)            The Employer may withhold from any amounts payable to the Employee hereunder all federal, state, city or other taxes that the Employer may reasonably determine are required to be withheld pursuant to any applicable law or regulation (it being understood that the Employee shall be responsible for payment of all taxes in respect of the payments and benefits provided herein).

 

(i)             This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to its principles of conflicts of law. 

(j)             Any disagreement, dispute, controversy or claim arising out of or relating to this Agreement or the interpretation hereof or any agreements relating hereto or contemplated herein or the interpretation, breach, termination, validity or invalidity hereof shall be settled exclusively and finally by arbitration; provided that the Employer shall not be required to submit claims for injunctive relief to enforce the covenants contained in Sections 6 of this Agreement to arbitration.  The arbitration shall be conducted in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (the “AAA”), except as amplified or otherwise varied hereby.  The Employer and the Employee jointly shall appoint one individual to act as arbitrator within thirty (30) days of initiation of the arbitration.  If the parties shall fail to appoint such arbitrator as provided above, such arbitrator shall be appointed by the President of the New York Bar Association and shall be a person who maintains her principal place of business in the New York metropolitan area and shall be an attorney, accountant or other professional licensed to practice by the State of New York who has substantial experience in employment and executive compensation matters.  All fees and expenses of such arbitrator shall be shared equally by the Employer and the Employee.  The situs of the arbitration shall be New York City.  Any decision or award of the arbitral tribunal shall be final and binding upon the parties to the arbitration proceeding.  The parties hereto hereby waive to the extent permitted by law any rights to appeal or to seek review of such award by any court or tribunal.  The arbitration award shall be paid within thirty (30) days after the award has been made.  Judgment upon the award may be entered in any federal or state court having jurisdiction over the parties and shall be final and binding.  Each party shall be required to keep all proceedings related to any such arbitration and the final award and judgment strictly confidential; provided that either party may disclose such award as necessary to enter the award in a court of competent jurisdiction or to enforce the award, and to the extent required by law, court order, regulation or similar order

  

  

  

 

(k)            This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

 

(l)             The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof.

 

(m)           If any provision of this Agreement (or any award of compensation or benefits provided under this Agreement) would cause Employee to incur any additional tax or interest under Section 409A of the Code, the Employer shall use reasonable efforts to reform such provision to comply with 409A and agrees to maintain, to the maximum extent practicable without violating 409A of the Code, the original intent and economic benefit to Employee of the applicable provision; provided that nothing herein shall require the Employer to provide the Employee with any gross-up for any tax, interest or penalty incurred by Employee under Section 409A of the Code.

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

	 	
 

Standard Microsystems Corporation.

	 
	 	 	 
	 	
/s/ Timothy P. Craig

	 
	 	
By: Timothy P. Craig

	 
	 	
Title: Chairman of the Compensation Committee of the Board of Directors

	 
	 	  	 
	 	
Christine King

	 
	 	 	 
	 	
/s/ Christine King

	 

  

  

  

 

Exhibit B

INDEMNITY AGREEMENT

This Indemnity  Agreement  ("Agreement") is made as of ____________ by and between  Standard  Microsystems  Corporation,  a Delaware  corporation  (the "Company"), and ___________________ ("Indemnitee").

RECITALS

WHEREAS,  highly  competent  persons  have become more  reluctant  to serve publicly-held  corporations  as  directors  or officers  or in other  capacities unless they are provided with adequate  protection through insurance or adequate indemnification  against  inordinate  risks of claims and actions  against  them arising out of their service to and activities on behalf of the  corporation and as a result of the added liabilities imposed by the Sarbanes Oxley Act;

WHEREAS, the Board of Directors of the Company (the "Board") has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The By-Laws of the Company (the "By-Laws") require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to applicable provisions of the Delaware General Corporation Law ("DGCL"). The By-Laws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors, officers and other persons with respect to indemnification;

WHEREAS,   the   uncertainties   relating   to   such   insurance   and  to indemnification  have  increased the difficulty of attracting and retaining such persons;

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

WHEREAS,   it  is  reasonable,   prudent  and  necessary  for  the  Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent  permitted by applicable law so that they will serve or continue to serve the Company  free from undue  concern  that they will not be so indemnified;

WHEREAS,  this  Agreement  is a  supplement  to and in  furtherance  of the By-Laws of the Company and any resolutions  adopted pursuant thereto,  and shall not be deemed a substitute  therefor,  nor to diminish or abrogate any rights of Indemnitee thereunder; and

WHEREAS,  Indemnitee is willing to serve,  continue to serve and to take on additional  service for or on behalf of the Company on the condition  that he be so indemnified;

NOW,  THEREFORE,  in  consideration  of  the  premises  and  the  covenants contained  herein,  the Company and  Indemnitee do hereby  covenant and agree as follows:

1.   SERVICES TO THE COMPANY. Indemnitee will serve or continue to serve as an officer, or director or key employee of the Company for so long as Indemnitee is duly elected or appointed or until Indemnitee  tenders his or her resignation or is terminated by the Company.

 

  

  

  

2.   DEFINITIONS. As used in this Agreement:

(a) References to "agent" shall mean any person who is or was a director, officer, or employee of the Company or a Subsidiary of the Company or other person authorized by the Company to act for the Company serving in such capacity as a director, officer, employee, fiduciary or other official of another corporation, partnership, limited liability company, joint venture, trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a Subsidiary of the Company.

      (b) The terms "Beneficial Owner" and "Beneficial Ownership" shall have the  meanings  set forth in Rule 13d-3  promulgated  under the  Exchange Act (as defined below) as in effect on the date hereof.

  (c) A "Change in Control"  shall be deemed to occur upon the  earliest to occur after the date of this Agreement of any of the following events:

(i) Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors, unless (1) the change in the relative Beneficial Ownership of the Company's securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors, or (2) such acquisition was approved in advance by the Continuing Directors (as defined below) and such acquisition would not constitute a Change in Control under part (iii) of this definition;

(ii) Change in Board of Directors. Individuals who, as of the date hereof,  constitute the Board,  and any new director whose election by the Board or nomination for election by the Company's  stockholders was approved by a vote of at least a majority of the directors  then still in office who were directors on the date hereof or whose  election for nomination for election was previously so approved (collectively,  the "Continuing Directors"), cease for any reason to constitute at least a majority of the members of the Board;

(iii) Corporate Transactions. The effective date of a reorganization, merger or consolidation of the Company (a "Business Combination"), in each case, unless, following such Business Combination: (1) all or substantially all of the individuals and entities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more Subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors; (2) no Person (excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15% or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of such corporation except to the extent that such ownership existed prior to the Business Combination; and (3) at least a majority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination;

(iv) Liquidation.  The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement or series of agreements for the sale or  disposition by the Company of all or  substantially  all of the Company's  assets,  other than  factoring the Company's  current  receivables or escrows due (or, if such approval is not required,  the decision by the Board to proceed with such a liquidation,  sale, or  disposition in one  transaction or a series of related transactions); or

(v) Other  Events.  There  occurs any other event of a nature that would be required  to be  reported  in response to Item 6(e) of Schedule  l4A of Regulation  14A (or a response  to any similar  item on any similar  schedule or form) promulgated under the Exchange Act (as defined below),  whether or not the Company is then subject to such reporting requirement.

 

  

  

  

  (d) "Corporate  Status" describes the status of a person who is or was a director,  officer,  trustee,  general partner,  managing  member,  fiduciary, employee or agent of the Company or of any other  Enterprise  (as defined below) which such  person is or was  serving  in such  capacity  at the  request of the Company.

 

  (e) "Delaware  Court" shall mean the Court of Chancery of the State of Delaware.

 

  (f) "Disinterested  Director" shall mean a director of the Company who is not and was not a party to the  Proceeding  (as defined  below) in respect of which indemnification is sought by Indemnitee.

  (g)  "Enterprise"  shall mean the Company  and any other  corporation, constituent corporation (including any constituent of a constituent) absorbed in a  consolidation  or merger to which the  Company  (or any of its  wholly  owned subsidiaries) is a party, limited liability company, partnership, joint venture, trust,  employee  benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director,  officer,  trustee, general partner, managing member, fiduciary, employee or agent.

  (h) "Exchange Act" shall mean the Securities  Exchange Act of 1934, as amended.

 

  (i) "Expenses" shall include reasonable attorneys' fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding (as defined below) . Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding (as defined below), including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

  (j) "Independent Counsel" shall mean a law firm or a member of a law firm that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements); or (ii) any other party to the Proceeding (as defined below) giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement.

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

  (l) The term "Person"  shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange  Act as in effect on the date hereof;  provided, however, that "Person" shall exclude: (i) the Company; (ii) any Subsidiaries (as defined below) of the Company;  (iii) any employment benefit plan of the Company or of a  Subsidiary  (as  defined  below) of the  Company or of any  corporation owned,   directly  or  indirectly,   by  the  stockholders  of  the  Company  in substantially  the same  proportions as their ownership of stock of the Company; and (iv) any trustee or other  fiduciary  holding  securities  under an employee benefit plan of the Company or of a Subsidiary (as defined below) of the Company or of a corporation  owned  directly or indirectly  by the  stockholders  of the Company in substantially the same proportions as their ownership of stock of the Company.

 

  

  

  

  (m) A "Potential  Change in Control"  shall be deemed to have occurred if: (i) the Company enters into an agreement or arrangement, the consummation of which would result in the occurrence of a Change in Control;  (ii) any Person or the Company  publicly  announces an intention to take or consider taking actions which if consummated would constitute a Change in Control;  (iii) any Person who becomes the  Beneficial  Owner,  directly or  indirectly,  of  securities of the Company  representing  five percent (5%) or more of the combined voting power of the Company's  then  outstanding  securities  entitled to vote  generally in the election of  directors  increases  such  Person's  Beneficial  Ownership of such securities  by five  percent (5%) or more over the  percentage  so owned by such Person on the date hereof;  or (iv) the Board adopts a resolution  to the effect that,  for  purposes  of this  Agreement,  a  Potential  Change in  Control  has occurred.

(n) The term "Proceeding" shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative nature, in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director or officer or key employee of the Company, by reason of any action (or failure to act) taken by him or of any action (or failure to act) on his part while acting as a director or officer of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of any other Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement.

  (o) The term "Subsidiary," with respect to any Person,  shall mean any corporation  or other  entity of which a  majority  of the  voting  power of the voting equity securities or equity interest is owned, directly or indirectly, by that Person.

3.   INDEMNITY IN THIRD-PARTY PROCEEDINGS.  The Company shall indemnify and hold harmless  Indemnitee in accordance with the provisions of this Section 3 if Indemnitee was, is, or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding,  other than a Proceeding by or in the right of the  Company  to  procure a judgment  in its  favor.  Pursuant  to this Section 3  Indemnitee  shall be  indemnified  against all  Expenses,  judgments, liabilities, fines, penalties and amounts paid in settlement (if such settlement is approved in advance by the Company, which  approval shall not be unreasonably withheld) (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses,  judgments,  fines, penalties and amounts paid in settlement) actually and reasonably incurred by or on behalf of Indemnitee in connection with such  Proceeding or any claim,  issue or matter therein,  if  Indemnitee  acted  in good  faith  and in a manner  he  reasonably believed to be in or not opposed to the best  interests  of the Company  and, in the case of a criminal  Proceeding,  had no reasonable cause to believe that his

conduct was unlawful.

4.   INDEMNITY  IN  PROCEEDINGS BY OR  IN THE  RIGHT  OF  THE COMPANY.  The Company  shall  indemnify and hold  harmless  Indemnitee in accordance  with the provisions of this Section 4 if Indemnitee was, is, or is threatened to be made, a party to or a participant  (as a witness or otherwise) in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4,  Indemnitee  shall be indemnified  against all Expenses  actually and reasonably  incurred  by or on  behalf of  Indemnitee  in  connection  with such Proceeding or any claim,  issue or matter therein,  if Indemnitee  acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company.  No  indemnification  for Expenses shall be made under this Section 4 in respect of any claim,  issue or matter as to which  Indemnitee shall have been finally adjudged by a court to be liable to the Company,  unless and only to the extent that any court in which the Proceeding was brought or the Delaware Court shall determine upon application  that,  despite the adjudication of liability  but in view of all the  circumstances  of the case,  Indemnitee is fairly and reasonably entitled to indemnification.

 

  

  

  

5.    INDEMNIFICATION FOR  EXPENSES  OF A  PARTY  WHO IS  WHOLLY  OR  PARTLY SUCCESSFUL.  Notwithstanding  any other  provisions  of this  Agreement,  to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise,  in any Proceeding or in defense of any claim, issue or matter  therein,  in whole or in part,  the  Company  shall  indemnify  and hold harmless Indemnitee against all Expenses actually and reasonably incurred by him in  connection  therewith.  If  Indemnitee  is not  wholly  successful  in  such Proceeding but is successful,  on the merits or otherwise, as to one or more but less than all claims,  issues or matters in such  Proceeding,  the Company shall indemnify  and hold  harmless  Indemnitee  against  all  Expenses  actually  and reasonably incurred by him or on his behalf in connection with each successfully resolved  claim,  issue or matter.  For  purposes  of this  Section  and without limitation,  the termination of any claim,  issue or matter in such a Proceeding by  dismissal,  with or without  prejudice,  shall be deemed to be a  successful result as to such claim, issue or matter.

6.    INDEMNIFICATION FOR EXPENSES OF A WITNESS.  Notwithstanding  any other provision of this Agreement,  to the extent that Indemnitee is, by reason of his Corporate  Status,  a witness in any  Proceeding  to which  Indemnitee  is not a party, he shall be indemnified and held harmless  against all Expenses  actually and reasonably incurred by or on behalf of Indemnitee in connection therewith.

7.    ADDITIONAL INDEMNIFICATION. Notwithstanding any limitation in Sections 3, 4, or 5, the  Company  shall  indemnify  and  hold  harmless,  to the  extent permitted by law, against all Expenses,  judgments, fines, penalties and amounts paid in settlement  (including all interest,  assessments and other charges paid or payable in connection with or in respect of such Expenses,  judgments, fines, penalties and amounts paid in settlement)  actually and  reasonably  incurred by Indemnitee if, by reason of Indemnitee's Corporate Status, Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the  Company to procure a judgment  in its  favor).  The only limitation  that shall  exist upon the  Company's  obligations  pursuant to this Agreement  shall be that the Company  shall not be obligated to make any payment to Indemnitee that is finally  determined (under the procedures,  and subject to the presumptions, set forth in Sections 12, 13 and 14) to be unlawful.

8.     CONTRIBUTION IN THE EVENT OF JOINT LIABILITY.

(a) To the fullest extent  permissible  under  applicable  law, if the indemnification  and hold  harmless  rights  provided for in this  Agreement are unavailable  to  Indemnitee  in any  Proceeding  in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding),  the Company, in lieu of indemnifying and holding harmless Indemnitee, shall pay, in the first instance,  the entire  amount  incurred by  Indemnitee,  whether for  judgments, liabilities,  fines, penalties,  amounts paid or to be paid in settlement and/or for Expenses,  in connection with any Proceeding without requiring Indemnitee to contribute to such payment,  and the Company hereby waives and  relinquishes any right of contribution it may have at any time against Indemnitee.

(b) The Company shall not enter into any  settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

(c) The Company  hereby  agrees fully to indemnify  and hold  harmless Indemnitee  from any claims for  contribution  which may be brought by officers, directors or employees of the Company other than  Indemnitee  who may be jointly liable with Indemnitee.

9.    EXCLUSIONS.  Notwithstanding  any  provision  in this  Agreement,  the Company  shall not be obligated  under this  Agreement to make any  indemnity in connection with any claim made against Indemnitee:

(a) for which  payment has actually  been  received by or on behalf of Indemnitee under any insurance policy or other indemnity provision,  except with respect to any excess beyond the amount  actually  received  under any insurance policy, contract, agreement, other indemnity provision or otherwise;

 

  

  

  

(b) for an  accounting  of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or similar  provisions  of state  statutory law or common law; or

 

(c) except as otherwise  provided in Sections  l4(e) - (f) hereof,  in connection  with any  Proceeding  (or any part of any  Proceeding)  initiated by Indemnitee,  including any Proceeding (or any part of any Proceeding)  initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees,  unless (i) the Board authorized the Proceeding (or any part of any Proceeding)   prior  to  its  initiation  or  (ii)  the  Company   provides  the indemnification,  in its sole  discretion,  pursuant to the powers vested in the Company under applicable law.

10.  ADVANCES OF EXPENSES; DEFENSE OF CLAIM.

(a)  Notwithstanding  any provision of this Agreement to the contrary, and to the fullest extent permitted by applicable law, the Company shall advance the Expenses incurred by Indemnitee (or reasonably  expected by Indemnitee to be incurred by Indemnitee  within three months) in connection  with any  Proceeding within  ten (10)  days  after the  receipt  by the  Company  of a  statement  or statements requesting such advances from time to time, whether prior to or after final  disposition of any  Proceeding.  Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee's ability to repay the Expenses  and  without   regard  to   Indemnitee's   ultimate   entitlement   to indemnification  under the other  provisions of this  Agreement.  Advances shall include  any and all  reasonable  Expenses  incurred  pursuing a  Proceeding  to enforce this right of advancement,  including  Expenses  incurred  preparing and forwarding  statements  to the  Company to support  the  advances  claimed.  The Indemnitee  shall  qualify for  advances,  to the fullest  extent  permitted  by applicable  law,  solely upon the  execution  and  delivery to the Company of an undertaking providing that the Indemnitee undertakes to repay the advance to the extent that it is ultimately  determined  that  Indemnitee is not entitled to be indemnified by the Company under the provisions of this Agreement,  the By-Laws, applicable  law or  otherwise.  This Section  10(a) shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 9.

(b) The Company will be entitled to  participate  in the Proceeding at its own expense.

(c) The Company shall not settle any action,  claim or Proceeding  (in whole or in part) which would impose any  Expense,  judgment,  fine,  penalty or limitation on the Indemnitee  without the  Indemnitee's  prior written  consent, which consent shall not be unreasonably withheld.

11.  PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION.

(a) Indemnitee  agrees to notify  promptly the Company in writing upon being  served  with any  summons,  citation,  subpoena,  complaint,  indictment, information or other document  relating to any Proceeding or matter which may be subject to  indemnification  or advancement of Expenses covered  hereunder.  The failure of  Indemnitee to so notify the Company shall not relieve the Company of any obligation  which it may have to the  Indemnitee  under this  Agreement,  or otherwise.

(b) Indemnitee may deliver to the Company a written application to indemnify and hold harmless Indemnitee in accordance with this Agreement. Such application(s) may be delivered from time to time and at such time(s) as Indemnitee deems appropriate in his or her sole discretion. Following such a written application for indemnification by Indemnitee, the Indemnitee's entitlement to indemnification shall be determined according to Section 12(a) of this Agreement.

12.  PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.

(a) A  determination,  if required by applicable  law, with respect to Indemnitee's  entitlement to indemnification  shall be made in the specific case by one of the following  methods,  which shall be at the election of Indemnitee: (i) by a majority vote of the Disinterested  Directors,  even though less than a quorum of the Board or (ii) by Independent  Counsel in a written  opinion to the Board,  a copy of which shall be delivered to Indemnitee.  The Company  promptly will  advise  Indemnitee  in  writing  with  respect to any  determination  that Indemnitee is or is not entitled to indemnification,  including a description of any  reason or basis  for which  indemnification  has been  denied.  If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such  determination.  Indemnitee  shall reasonably   cooperate   with  the  person,   persons  or  entity   making  such determination  with  respect to  Indemnitee's  entitlement  to  indemnification, including  providing to such person,  persons or entity upon reasonable  advance request any  documentation  or information  which is not privileged or otherwise protected from  disclosure  and which is reasonably  available to Indemnitee and reasonably  necessary to such  determination.  Any costs or Expenses  (including attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with the person,  persons or entity making such  determination  shall be borne by the Company  (irrespective of the  determination  as to Indemnitee's  entitlement to indemnification)   and  the  Company  hereby  indemnifies  and  agrees  to  hold Indemnitee harmless therefrom.

 

  

  

  

(b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be selected as provided in this Section 12(b). The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of "Independent Counsel" as defined in Section 2 of this Agreement. If the Independent Counsel is selected by the Board, the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of "Independent Counsel" as defined in Section 2 of this Agreement. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Delaware Court, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 12(a) hereof. Upon the delivery of its opinion pursuant to Section 12(a) or, if earlier, the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

(c) The  Company  agrees to pay the  reasonable  fees and  expenses of Independent  Counsel and to fully  indemnify and hold harmless such  Independent Counsel  against any and all Expenses,  claims,  liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

13.  PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.

(a)  In  making  a  determination   with  respect  to  entitlement  to indemnification   hereunder,   the  person,   persons  or  entity   making  such determination shall presume that Indemnitee is entitled to indemnification under this  Agreement if  Indemnitee  has submitted a request for  indemnification  in accordance with Section 11(b) of this Agreement,  and the Company shall have the burden of proof to overcome that  presumption  in connection  with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company  (including by its  directors or  Independent Counsel) to have made a  determination  prior to the  commencement of any action pursuant to this Agreement that  indemnification  is proper in the circumstances because  Indemnitee  has met the applicable  standard of conduct,  nor an actual determination by the Company (including by its directors or Independent Counsel) that  Indemnitee  has not met such  applicable  standard of conduct,  shall be a defense to the action or create a presumption  that  Indemnitee  has not met the applicable standard of conduct.

 

  

  

  

(b) If the  person,  persons or entity  empowered  or  selected  under Section 12 of this  Agreement to  determine  whether  Indemnitee  is entitled to indemnification  shall not have made a  determination  within  thirty  (30) days after   receipt  by  the  Company  of  the  request   therefor,   the  requisite determination  of  entitlement to  indemnification  shall be deemed to have been made and  Indemnitee  shall be  entitled to such  indemnification,  absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary  to  make  Indemnitee's  statement  not  materially   misleading,   in connection  with  the  request  for  indemnification,  or (ii) a final  judicial determination that any or all such indemnification is expressly prohibited under applicable law; provided, however, that such 30-day period may be extended for a reasonable  time, not to exceed an additional  fifteen (15) days, if the person, persons or entity  making the  determination  with  respect  to  entitlement  to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto.

(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment,  order,  settlement or conviction,  or upon a plea of nolo contendere or its equivalent,  shall not (except as otherwise expressly provided in this  Agreement)  of  itself  adversely  affect  the right of  Indemnitee  to indemnification  or create a  presumption  that  Indemnitee  did not act in good faith and in a manner  which he  reasonably  believed to be in or not opposed to the best  interests of the Company or, with respect to any criminal  Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

(d) For purposes of any determination of good faith,  Indemnitee shall be deemed to have  acted in good  faith if  Indemnitee's  action is based on the records or books of account of the Enterprise,  including financial  statements, or on  information  supplied to Indemnitee by the officers of the  Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on  information  or records  given or reports  made to the  Enterprise  by an independent  certified  public  accountant  or by an  appraiser  or other expert selected by the  Enterprise.  The  provisions of this Section 13(d) shall not be deemed to be exclusive or to limit in any way the other  circumstances  in which the  Indemnitee  may be deemed or found to have met the  applicable  standard of conduct set forth in this Agreement.

(e) The  knowledge  and/or  actions,  or failure to act,  of any other director,  officer,  trustee,  partner,  managing  member,  fiduciary,  agent or employee of the  Enterprise  shall not be imputed to Indemnitee  for purposes of determining the right to indemnification under this Agreement.

14.  REMEDIES OF INDEMNITEE.

 

(a) In the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses, to the fullest extent permitted by applicable law, is not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12(a) of this Agreement within thirty (30) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6, 7 or the last sentence of Section 12(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) a contribution payment is not made in a timely manner pursuant to Section 8 of this Agreement, or (vi) payment of indemnification pursuant to Section 3 or 4 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication by the Delaware Court to such indemnification, contribution or advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Except as set forth herein, the provisions of Delaware law (without regard to its conflict of laws rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee's right to seek any such adjudication or award in arbitration.

  

  

  

 

(b) In the event that a determination shall have been made pursuant to Section   12(a)  of  this   Agreement   that   Indemnitee  is  not  entitled  to indemnification,  any judicial  proceeding or arbitration  commenced pursuant to this  Section 14 shall be  conducted  in all  respects  as a de novo  trial,  or arbitration,  on the merits and Indemnitee  shall not be prejudiced by reason of that adverse determination.  In any judicial proceeding or arbitration commenced pursuant  to this  Section  14,  Indemnitee  shall be presumed to be entitled to indemnification  under this  Agreement  and the Company shall have the burden of proving  Indemnitee  is  not  entitled  to  indemnification  or  advancement  of Expenses, as the case may be, and the Company may not refer to or introduce into evidence any  determination  pursuant to Section 12(a) of this Agreement adverse to Indemnitee for any purpose. If Indemnitee  commences a judicial proceeding or arbitration  pursuant to this  Section 14,  Indemnitee  shall not be required to reimburse  the  Company  for any  advances  pursuant to Section 10 until a final determination   is  made   with   respect   to   Indemnitee's   entitlement   to indemnification  (as to which  all  rights  of appeal  have  been  exhausted  or lapsed).

(c) If a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d) The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.

(e) The Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted by law against all Expenses and, if requested by Indemnitee, shall (within ten (10) days after the Company's receipt of such written request) advance to Indemnitee, to the fullest extent permitted by applicable law, such Expenses which are incurred by Indemnitee in connection with any judicial proceeding or arbitration brought by Indemnitee (i) to enforce his rights under, or to recover damages for breach of, this Agreement or any other indemnification, advancement or contribution agreement or provision of the Company's By-Laws now or hereafter in effect; or (ii) for recovery or advances under any insurance policy maintained by any person for the benefit of Indemnitee, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance, contribution or insurance recovery, as the case may be.

(f) Interest  shall be paid by the Company to  Indemnitee at the legal rate under Delaware law for amounts which the Company  indemnifies or is obliged to  indemnify  for the  period  commencing  with the  date on  which  Indemnitee requests  indemnification,  contribution,  reimbursement  or  advancement of any Expenses and ending with the date on which such payment is made to Indemnitee by the Company.

15. ESTABLISHMENT OF TRUST. In the event of a Potential Change in Control, the Company shall, upon written request by Indemnitee, create a "Trust" for the benefit of Indemnitee and from time to time upon written request of Indemnitee shall fund such Trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for, participating in or defending any Proceedings, and any and all judgments, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such judgments, fines penalties and amounts paid in settlement) in connection with any and all Proceedings from time to time actually paid or claimed, reasonably anticipated or proposed to be paid. The trustee of the Trust (the "Trustee") shall be a bank or trust company or other individual or entity chosen by the Indemnitee and reasonably acceptable to the Company. Nothing in this Section 15 shall relieve the Company of any of its obligations under this Agreement. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by mutual agreement of the Indemnitee and the Company or, if the Company and the Indemnitee are unable to reach such an agreement, by Independent Counsel selected in accordance with Section 12(b) of this Agreement. The terms of the Trust shall provide that, except upon the consent of both the Indemnitee and the Company, upon a Change in Control: (a) the Trust shall not be revoked or the principal thereof invaded, without the written consent of the Indemnitee; (b) the Trustee shall advance, to the fullest extent permitted by applicable law, within two (2) business days of a request by the Indemnitee and upon the execution and delivery to the Company of an undertaking providing that the Indemnitee undertakes to repay the advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company, any and all Expenses to the Indemnitee; (c) the Trust shall continue to be funded by the Company in accordance with the funding obligations set forth above; (d) the Trustee shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise; and (e) all unexpended funds in such Trust shall revert to the Company upon mutual agreement by the Indemnitee and the Company or, if the Indemnitee and the Company are unable to reach such an agreement, by Independent Counsel selected in accordance with Section 12(b) of this Agreement, that the Indemnitee has been fully indemnified under the terms of this Agreement. The Trust shall be governed by Delaware law (without regard to its conflicts of laws rules) and the Trustee shall consent to the exclusive jurisdiction of the Delaware Court in accordance with Section 23 of this Agreement.

 

  

  

  

16.  SECURITY.  Notwithstanding  anything  herein to the  contrary,  to the extent requested by the Indemnitee and approved by the Board, the Company may at any  time and from  time to time  provide  security  to the  Indemnitee  for the Company's  obligations  hereunder  through an  irrevocable  bank line of credit, funded  trust or other  collateral.  Any such  security,  once  provided  to the Indemnitee,  may not be revoked or released without the prior written consent of the Indemnitee.

17.  NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.

 

           (a) The  rights  of  indemnification  and to  receive  advancement  of Expenses as  provided by this  Agreement  shall not be deemed  exclusive  of any other rights to which  Indemnitee may at any time be entitled  under  applicable law,  the  Company's  By-Laws,  any  agreement,  a  vote  of  stockholders  or a resolution of directors,  or  otherwise.  No amendment,  alteration or repeal of this  Agreement or of any provision  hereof shall limit or restrict any right of Indemnitee  under this  Agreement  in respect of any action  taken or omitted by such Indemnitee in his Corporate  Status prior to such amendment,  alteration or repeal.  To the extent that a change in  applicable  law,  whether by statute or judicial  decision,  permits greater  indemnification or advancement of Expenses than would be afforded  currently under the Company's By-Laws or this Agreement, it is the intent of the  parties  hereto  that  Indemnitee  shall  enjoy by this Agreement  the greater  benefits so afforded by such change.  No right or remedy herein  conferred is intended to be exclusive of any other right or remedy,  and every other right and remedy shall be cumulative  and in addition to every other right and remedy  given  hereunder  or now or  hereafter  existing  at law or in equity or otherwise;  provided,  however,  that to the extent the  provisions of this Agreement are  inconsistent  with the Company's  By-Laws and this Agreement provides  Indemnitee  with a greater  benefit,  the provisions of this Agreement shall apply.  The assertion or employment of any right or remedy  hereunder,  or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b) The DGCL and the Company's  By-Laws permit the Company to purchase and maintain  insurance or furnish similar protection or make other arrangements including,  but not limited to,  providing  a trust fund,  letter of credit,  or surety bond ("Indemnification Arrangements") on behalf of Indemnitee against any liability  asserted  against  him or  incurred by or on behalf of him or in such capacity as a director,  officer,  employee or agent of the Company,  or arising out of his status as such,  whether or not the  Company  would have the power to indemnify him against such  liability  under the provisions of this Agreement or under the DGCL, as it may then be in effect.  The purchase,  establishment,  and maintenance of any such  Indemnification  Arrangement shall not in any way limit or affect the rights and  obligations of the Company or of the Indemnitee  under this  Agreement  except as expressly  provided  herein,  and the  execution  and delivery of this  Agreement by the Company and the  Indemnitee  shall not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under any such Indemnification Arrangement.

 

  

  

  

(c) To the extent that the Company  maintains an  insurance  policy or policies  providing  liability  insurance  for  directors,  officers,  trustees, partners, managing members, fiduciaries,  employees, or agents of the Company or of any other  Enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their  terms  to the  maximum  extent  of the  coverage  available  for any such director,  officer, trustee,  partner,  managing member, fiduciary,  employee or agent under such policy or policies. If, at the time the Company receives notice from  any  source  of a  Proceeding  as to  which  Indemnitee  is a  party  or a participant  (as a witness or  otherwise),  the Company has director and officer liability  insurance  in effect,  the Company  shall give prompt  notice of such Proceeding to the insurers in accordance  with the  procedures  set forth in the respective  policies.  The  Company  shall  thereafter  take  all  necessary  or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts  payable as a result of such  Proceeding in accordance with the terms of such policies.

(d) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

(e) The Company's obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such Enterprise.

 

18. DURATION OF AGREEMENT. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee serves as a director or officer of the Company or as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other Enterprise which Indemnitee serves at the request of the Company and shall continue thereafter so long as Indemnitee shall be subject to any possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement) by reason of his Corporate Status, whether or not he is acting in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.

19.  SEVERABILITY.  If any provision or  provisions of this Agreement shall be held to be invalid,  illegal or unenforceable for any reason whatsoever:  (a) the validity,  legality and  enforceability of the remaining  provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement  containing any such provision held to be invalid, illegal or unenforceable,  that is not itself invalid, illegal or unenforceable) shall  not  in any  way  be  affected  or  impaired  thereby  and  shall  remain enforceable  to the fullest  extent  permitted  by law;  (b) such  provision  or provisions  shall be deemed  reformed  to the  extent  necessary  to  conform to applicable  law and to give the  maximum  effect to the  intent  of the  parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including,  without  limitation,  each  portion of any  Section,  paragraph  or sentence of this  Agreement  containing  any such  provision held to be invalid, illegal or unenforceable,  that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

20.  ENFORCEMENT AND BINDING EFFECT.

(a) The Company expressly confirms and agrees that it has entered into this  Agreement  and  assumed the  obligations  imposed on it hereby in order to induce  Indemnitee  to serve as a  director,  or officer or key  employee of the Company,  and the Company  acknowledges  that  Indemnitee  is relying  upon this Agreement in serving as a director, or officer or key employee of the Company.

 

  

  

  

(b) Without limiting any of the rights of Indemnitee under the By-Laws as they may be amended from time to time, this Agreement  constitutes the entire agreement  between the parties  hereto with respect to the subject matter hereof and  supersedes  all prior  agreements  and  understandings,  oral,  written and implied, between the parties hereto with respect to the subject matter hereof.

(c) The  indemnification  and  advancement of expenses  provided by or granted  pursuant to this Agreement  shall be binding upon and be enforceable by the parties hereto and their  respective  successors and assigns  (including any direct or indirect successor by purchase, merger,  consolidation or otherwise to all or  substantially  all of the  business  or  assets of the  Company),  shall continue as to an Indemnitee who has ceased to be a director,  officer, employee or agent of the Company or of any other Enterprise at the Company's request, and shall inure to the benefit of Indemnitee and his or her spouse,  assigns, heirs, devisees, executors and administrators and other legal representatives.

(d) The Company shall require and cause any successor  (whether direct or  indirect  by  purchase,  merger,  consolidation  or  otherwise)  to  all  or substantially all of the business or assets of the Company, by written agreement in form and substance  satisfactory to the  Indemnitee,  expressly to assume and agree to perform  this  Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

(e) The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement,  at some later date, may be inadequate,  impracticable and difficult of proof,  and further agree that such breach may cause Indemnitee irreparable  harm.  Accordingly,  the parties  hereto agree that  Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific  performance hereof,  without any necessity of showing actual damage or irreparable  harm and that by seeking injunctive relief and/or specific performance,  Indemnitee shall not be precluded  from seeking or obtaining  any other relief to which he may be entitled.  The Company and  Indemnitee  further agree that  Indemnitee  shall be entitled to such specific performance and injunctive relief, including temporary restraining orders,  preliminary injunctions and permanent injunctions,  without the necessity of posting bonds or other undertaking in connection therewith. The Company  acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by the Court,  and the Company  hereby waives any such requirement of such a bond or undertaking.

21.  MODIFICATION  AND  WAIVER.  Except as provided  in Section  17(a),  no supplement,  modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this  Agreement  shall be  deemed  or shall  constitute  a waiver  of any  other provisions  of this  Agreement  nor shall any  waiver  constitute  a  continuing waiver.

22.  NOTICES. All notices, requests, demands and other communications under this  Agreement  shall be in writing and shall be deemed to have been duly given (i) if delivered by hand and  receipted  for by the party to whom said notice or other  communication  shall have been  directed,  or (ii) mailed by certified or registered mail with postage  prepaid,  or (iii) sent by a courier service (paid by  sender)  on the third  (3rd)  business  day after the date on which it is so mailed:

(a) If to Indemnitee,  at the address  indicated on the signature page of this Agreement,  or such other address as Indemnitee shall provide in writing to the Company.

(b) If to the Company, to:

Standard Microsystems Corporation

80 Arkay Drive

Hauppauge, New York 11788

Attention:       General Counsel

or to any other  address as may have been  furnished to Indemnitee in writing by the Company.

 

  

  

  

23.  APPLICABLE  LAW AND CONSENT TO  JURISDICTION.  This  Agreement and the legal  relations  among the parties  shall be  governed  by, and  construed  and enforced in accordance  with, the laws of the State of Delaware,  without regard to its conflict of laws rules. Except with respect to any arbitration  commenced by  Indemnitee  pursuant  to Section  14(a) of this  Agreement,  the Company and Indemnitee hereby irrevocably and unconditionally:  (a) agree that any action or proceeding  arising out of or in connection with this Agreement shall be brought only in the  Delaware  Court and not in any other state or federal  court in the United  States of  America  or any court in any other  country;  (b)  consent to submit to the exclusive  jurisdiction  of the Delaware Court for purposes of any action or proceeding  arising out of or in connection with this  Agreement;  (c) waive any  objection to the laying of venue of any such action or  proceeding in the Delaware Court;  and (d) waive, and agree not to plead or to make, any claim that any such  action  or  proceeding  brought  in the  Delaware  Court has been brought in an  improper  or  inconvenient  forum,  or is subject (in whole or in part) to a jury trial.

24.  IDENTICAL  COUNTERPARTS. This Agreement may be executed in one or more counterparts,  each of which shall for all  purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.  Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

25.  MISCELLANEOUS. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.  The headings of the paragraphs of this Agreement are inserted for  convenience  only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

IN WITNESS WHEREOF,  the parties have caused this Agreement to be signed as of the day and year first above written.

 

 

	
STANDARD MICROSYSTEMS CORPORATION

	 	
INDEMNITEE

	 
	  	 	  	 
	
By:  /s/

	 	
By:  /s/

	 
	 	 	
 

	 
	
By:

	 	
Name:

	 
	  	 	
Address:ex10_2.htm

Exhibit 10.2

 

 

Standard Microsystems

 

U.S. Domestic Employee Relocation Benefits Guide

 

Executive Program

 

 

Effective December 2011

 

 

 

Relocation benefits are administered by Paragon Relocation Resources, Inc.

 

 

  

  

  

 

Disclaimer: This guide highlights the Company’s relocation program. The Company has the absolute right at any time to revise, grant exceptions with its consent, and if necessary, to interpret, amend, suspend, or terminate all or parts of this program. This guide should not be considered or construed as an employment contract and does not confer upon you any right to continued employment; nor does it supersede any other employment administration practices. This policy is effective as of July 1, 2008.

 

Table of Contents

	
Table of Contents

	 	 	2	 
	
Getting Started with Your Relocation

	 	 	3	 
	
Resources

	 	 	3	 
	
Guidelines

	 	 	3	 
	
Repayment Agreement

	 	 	4	 
	
Tax Assistance

	 	 	4	 
	
A Note About Your Privacy

	 	 	4	 
	
Relocation Evaluation

	 	 	4	 
	
Home Marketing Assistance

	 	 	5	 
	
Eligibility

	 	 	5	 
	
Overview / Guidelines

	 	 	5	 
	
Supporting Documents/Tax Treatment

	 	 	5	 
	
Buyer Value Option (BVO)

	 	 	6	 
	
Eligibility

	 	 	6	 
	
Overview / Guidelines

	 	 	6	 
	
Supporting Documents

	 	 	7	 
	
Sunset Clause with Discount Buyout

	 	 	8	 
	
Sequence of Events/ Accepting the Offer

	 	 	8	 
	
Self-Sale Option

	 	 	9	 
	
Supporting Documents (Self-Sale)

	 	 	9	 
	
Tax Treatment (Self-Sale)

	 	 	9	 
	
Homefinding Assistance and Preferred Mortgage Program

	 	 	10	 
	
Eligibility

	 	 	10	 
	
Overview / Guidelines

	 	 	10	 
	
Supporting Documents/Tax Treatment

	 	 	10	 
	
Househunting Trip(s)/ Temporary Living

	 	 	10	 
	
Eligibility

	 	 	11	 
	
Lump Sum Payment

	 	 	11	 
	
Supporting Documents/Tax Treatment

	 	 	11	 
	
New Home Closing Costs

	 	 	12	 
	
Eligibility

	 	 	12	 
	
Overview / Guidelines

	 	 	12	 
	
Supporting Documents/Tax Treatment

	 	 	13	 
	
Household Goods Shipment

	 	 	14	 
	
Eligibility

	 	 	14	 
	
Overview / Guidelines

	 	 	14	 
	
Supporting Documents/Tax Treatment

	 	 	15	 
	
Final Move En Route Expenses

	 	 	16	 
	
Guidelines

	 	 	16	 
	
Overview

	 	 	16	 
	
Required Documents/ Tax Treatment

	 	 	16	 
	
Miscellaneous Expense Allowance

	 	 	17	 
	
Eligibility

	 	 	17	 
	
Overview / Guidelines

	 	 	17	 
	
Supporting Documents/ Tax Treatment

	 	 	17	 

 

  

  

  

 

Getting Started with Your Relocation

 

Resources

 

Standard Microsystems has selected Paragon Relocation Resources, Inc. (Paragon), a global mobility management firm, to navigate you through the relocation process. Personalized, in-depth counseling on the specific benefits, provisions, and reimbursement procedures of the Program will be provided before the move.

 

Paragon oversees and centrally coordinates the activities of your move, from when you are first initiated for relocation, through your transition to a new community. You will be provided with an approved vendor list to utilize and maximize relocation your benefits. Failure to use approved vendors may jeopardize some or all of the benefits provided in this Guide. Therefore, you are instructed not to begin any part of the process, such as house hunting, listing the home, shipping household goods, etc., — before speaking with your Paragon Relocation Consultant.

 

Guidelines

 

Standard Microsystems is committed to relocating you and your family smoothly. While this program is intended to cover the typical costs of relocation, it is not designed to replicate your former lifestyle.

 

	
o

	
You will have 1 year from the effective date of transfer to utilize all your relocation benefits.

	
 
o

	
Family members covered under this program include your spouse and any other dependent family members (who qualify under Company-sponsored corporate benefits programs) who permanently reside with you at the time you accept the position.

  

  

  

 

	
 
o

	
If you or any other household member receives relocation assistance from a former, current, or prospective employer, or upon discharge from the military; relocation assistance will be provided; however, benefits will be reduced by the amount provided by other sources.

	
 
o

	
In order for moving expenses to be tax deductible, the distance between the former residence to the new work location must be 50 miles greater than the distance between the former residence to the former work location.

	
 
o

	
You must be a full-time employee in the general location of the new residence for at least 39 weeks in the 12-month period immediately following the start of work in the new location.

	
 
o

	
Business travel expenses, including interviewing expenses, must be kept separate from relocation expenses for tax purposes. Send relocation-related expenses to your Paragon Relocation Consultant for audit and payment.

 

Repayment Agreement

 

The Company has agreed to provide you with relocation benefits and/or reimbursements for relocation expenses, as outlined in this guide. The relocation benefits being offered to you are at a significant cost to the Company. As a condition for relocation assistance, you will be required to sign a Repayment Agreement, outlining the repayment terms and conditions should you voluntarily or involuntarily for cause leave the Company within the designated timeframe.

 

Tax Assistance

 

Under current IRS regulations, the Company is required to report all non-deductible relocation expenses paid to you, or on your behalf, as income on your W-2 form. You must report such reimbursements as gross income on your Federal, State and Local (if applicable) tax returns. However, you may be entitled to claim a deduction on your personal income tax return for certain relocation-related expenses.

 

To help reduce the burden of additional Federal and State taxes resulting from taxable relocation reimbursements, the Company will gross-up certain reimbursed expenses that may have no offsetting deduction and ultimately result in tax liability.

 

Information on taxability or non-taxability of specific moving expenses can be obtained from your tax advisor or by reading IRS Publication 521 (Moving Expenses) or Publication 523 (Tax Information on Selling Your Home). These booklets can be obtained by contacting the IRS at 1-800-TAX-FORM, or logging into their website at www.irs.gov.

 

Your Paragon Relocation Consultant cannot provide tax advice. Please consult your personal tax advisor regarding your individual circumstances.

  

  

  

 

A Note About Your Privacy

 

As part of the relocation process it may be necessary to share personal identifiable information about you to third-party vendors who are acting on behalf of the Company in administering the relocation program. When it is necessary to share personal identifiable information with vendors, such as your address or telephone number, please be assured every reasonable means possible to protect this information are employed and that this information is not shared beyond those who have a need to know as part of the administration of your Company provided relocation benefits.

 

Relocation Evaluation

 

After your move has been completed, Paragon will send you an online relocation evaluation survey. Please take a few moments to complete the evaluation about your move. Your feedback is essential in order for the Company to identify areas to improve relocation services and procedures for other employees.

 

Home Marketing Assistance

 

Eligibility

 

If you own a primary residence in the departure location and are selling the property as a result of the relocation, you are strongly encouraged to utilize Home Marketing Assistance coordinated by Paragon.

 

Overview / Guidelines

 

Selling a home is a very personal experience. It is important to try to separate the emotional aspect from the reality of what a ready, willing, and able buyer will pay and what the market will support. Paragon’s Consultants are experienced in marketing and selling homes. Home Marketing Assistance is provided to help you achieve the most realistic selling price for the home in a reasonable time period, allowing you to focus on finding a new home and community.

 

Your Paragon Relocation Consultant will coordinate Home Marketing Assistance including agent selection, marketing strategy, offer negotiation and the closing process. Guidelines of the program include:

 

	
 
o

	
2 Broker Market Analyses (BMAs) ordered to determine competitive pricing

	
 
o

	
Home must be listed within 105% of the average of the “Most Likely Sales Price” according the 2 independent BMA reports

	
 
o

	
SMSC strongly recommends listing with a Paragon preferred broker experienced in relocation-related transactions. If not using a recommended agent, Paragon must qualify the agent of your choice

  

  

  

	
 
o

	
Strategic updates throughout the marketing process

	
 
o

	
Assistance in evaluating offers

 

Supporting Documents

 

	
 
o

	
Listing Agreement with Broker Exclusion Clause (provided to agent by Paragon)

	
 
o

	
Homeowners’ Disclosure (non-disclosure may result in liability on the part of the seller)

 

Tax Treatment

 

	
 
o

	
Non-income item

 

Buyer Value Option (BVO)

 

Eligibility

 

If you own a principle residence in the departure location, and are selling the property as a result of the relocation, you may be eligible for the Buyer Value Option. You must be in compliance with the Home Marketing program in order to receive this benefit.

 

Certain restrictions may make the home ineligible for assistance including:

 

	
 
o

	
Any home in which a part is used for non-residential purposes;

	
 
o

	
Any home built on or in close proximity to a hazardous site/location or with hazardous or potentially hazardous or toxic substances, materials, chemicals or gases including but not limited to radon gas, urea formaldehyde foam insulation (UFFI), asbestos, lead-base paint and chlordane (at least in excess of the legal limit established by the EPA or any other pertinent regulatory agency);

	
 
o

	
Any home built with materials that are included in an adjudicated or pending class action law suit for defects;

	
 
o

	
Any home with an exterior finish commonly known as “synthetic stucco”, also referred to as Exterior Insulation and Finish Systems (EIFS), or hybrid stucco;

	
 
o

	
Any home with excessive (five or more) acres;

	
 
o

	
Any home in which the employee does not have clear title;

	
 
o

	
Mobile homes and cooperative apartments;

	
 
o

	
Houseboats;

	
 
o

	
Income property including but not limited to farms, businesses, investment properties, etc.;

	
 
o

	
Any home currently in possession of a tenant, where and when vacating cannot be achieved within 30 days of offer date by the third-party homesale company;

  

  

  

	
 
o

	
Any home in excess of $750,000 without the Company’s approval;

	
 
o

	
Any home which all or a portion of is incomplete;

	
 
o

	
Any home which cannot be financed by a lending institution.

 

If your home is deemed ineligible for the Buyer Value Option program, or you choose to sell and close independent of the Homesale Program, some assistance may be provided through the Company’s Direct Reimbursement provision. Contact your Paragon Consultant for more details.

 

Overview / Guidelines

 

Benefits of the program include:

 

	
 
o

	
You will be relieved of the responsibilities of property ownership upon vacate or contract date with Paragon, whichever is later.

	
 
o

	
You will be relieved of the necessity of attending the closing, as all documents will be pre-signed.

	
 
o

	
You will receive the equity from the home upon contracting with Paragon and do not have to wait until the property closes with the buyer.

	
 
o

	
You will not have to submit expense forms for reimbursement of homesale costs, as these will be billed directly to the Company.

 

Once marketing efforts attract a buyer to purchase your home, Paragon must be notified so that your Relocation Consultant can evaluate the offer made by the potential buyer. You should not sign any purchase and sale agreement or accept a deposit or down payment. This is critical in order to provide a tax-safe transaction related to homesale reimbursements. After the offer is approved by Paragon and fully negotiated, Paragon will extend a formal offer to purchase your home from you. A Contract of Sale will be sent for your execution.

 

Under the BVO program the following costs will be covered by the Company saving you money and insulating you from the taxes due on these costs if they were directly reimbursed to you.

 

	
 
o

	
Broker commission (local and customary for the area, up to 6%)

	
 
o

	
Transfer and documentary taxes which the seller is required to pay

	
 
o

	
Miscellaneous and customary selling expenses which include:

	
  

	

 
o

	
Title Insurance

	
  

	

 
o

	
Attorney's fees and title fees normal and customary for the area

	
  

	

 
o

	
Abstracting

	
  

	

 
o

	
Escrow and survey fees

	
  

	

 
o

	
Recording fees which are normally paid by the seller

	
  

	

 
o

	
Mortgage pre-payment penalties on 1st mortgage

	
  

	

 
o

	
Homeowners’ Warranty Plan

	
  

	

 
o

	
Recording fees which are normally paid by the seller

	
  

	

 
o

	
Any other normal and customary fees which have been incurred but not by the choice of the seller

 

  

  

  

Expenses which are not covered by the Company are as follows:

 

	
 
o

	
Real estate or personal property tax

	
 
o

	
Prepaid items such as interest, insurance, and annual homeowner dues

	
 
o

	
Incentives to purchase / buyer’s concessions

	
 
o

	
Discount points paid to assist the buyer

	
 
o

	
Any expenses which are normally paid by the buyer

	
 
o

	
Home improvement or repair costs needed to make the sale

 

Supporting Documents

 

	
 
o

	
Listing Agreement with Broker Exclusion Clause (provided to agent by Paragon)

	
 
o

	
Homeowners’ Disclosure

	
 
o

	
Clear Title (search ordered by Paragon, you must be on title)

	
 
o

	
Executed Deed Package (sent by Paragon’s closing agent, Morreale Real Estate Services)

	
 
o

	
Executed Paragon Contract of Sale (provided by your Paragon Relocation Consultant)

 

Once the sale paperwork is finalized with Paragon, your equity is calculated as of the Paragon contract date or your scheduled vacate date, whichever is later. You will need to coordinate the timing of your equity check with your Relocation Consultant. Your equity is determined by the following factors:

 

	
 
o

	
Sale price,

	
 
o

	
Less your mortgage balance, prorated mortgage interest and real estate taxes,

	
 
o

	
Less any liens, special assessments, outstanding repair items, or buyer concessions

 

Sunset Clause with Discount Buyout

 

Should you be unsuccessful in obtaining a buyer within 180 days of listing your home, Paragon will initiate the appraisal process in order to provide a “safety-net” buyout offer.

 

Sequence of events:

 

	
1.

	
You will be provided a list of area relocation certified (ERC) appraisers. You will choose two appraisers and one as an alternate and then relay your choices to your consultant.

 

  

  

  

 

	An ERC appraisal is an estimate of the anticipated sales price of your home over a reasonable selling period (up to 120 days). Appraisers estimate value primarily by comparing your home to the sales of similar properties, making detailed adjustments for the differences between those properties and yours. Location, size, age, condition and marketability, among other factors, are considered by the appraisers.

 

	
2.

	
Chosen appraisers will contact you and arrange times to review your property.

 

	
3.

	
Two appraisals will be averaged. The appraisal process can take up to 30 days to be complete. However, if there is a variance of more than 5% from the highest appraisal, a 3rd appraisal will be ordered from the alternate choice and the 3 appraisals will then be averaged to obtain your offer.

 

	
4.

	
Any inspections will be ordered concurrently with the appraisals

 

	
  

	
 
o

	
General Home (homes older than 10 years)

	
  

	
 
o

	
Termite

	
  

	
 
o

	
Other inspections as required by the appraisals

 

	
5.

	
Once the appraisals and inspections have been received, Paragon will extend an offer to you that will be calculated as 95% of the average of the ERC appraisals.

 

	
6.

	
It is required to have your home listed no greater than 105% of the offer price.

 

	
7.

	
You will have 60 days from the offer date to continue marketing your home.

 

Accepting the offer:

 

You may accept the Buyout at the expiration of the offer period. However, it is contingent upon inspection issue resolution.

 

	
 
o

	
Your agent can assist in obtaining estimates for any needed repairs.

	
 
o

	
SMSC will cover the costs of the inspections but you are responsible for the costs of any corrective action for issues noted in the inspection results

	
 
o

	
Paragon cannot purchase your home until issues are resolved

	
 
o

	
Inspection results are required to be disclosed to potential buyers

	
 
o

	
You must vacate the home within 30 days

  

  

  

Tax Treatment

 

The BVO Program is designed to be a tax-safe transaction for both you and the Company. To ensure compliance, please work closely with your Paragon Relocation Consultant.

Excludable from Income Self-Sale Option

If your home is deemed ineligible for traditional homesale assistance or you choose to participate outside the guidelines of the homesale program, you may be eligible for reimbursement of home selling costs after closing.

 

Supporting Documents (Self-Sale)

 

	
 
o

	
Copy of the executed HUD-1 (provided at closing)

	
 
o

	
Expense Reimbursement Form / Online Submission

 

Tax Treatment (Self-Sale)

 

	
 
o

	
Payment processed by Paragon

	
 
o

	
Taxable income

	
  

	
o

	
Tax gross-up provided for homes ineligible for the tax-safe programs

	
  

	
o

	
Tax gross-up not provided for homes eligible for tax-safe transaction opting to sell and close independent of Paragon

  

  

  

Homefinding Assistance and Preferred Mortgage Program

 

Eligibility

 

If you own a primary residence in the departure location and are purchasing a property in the new location as a result of the relocation, you are encouraged to utilize the Homefinding Assistance benefit.

 

Overview / Guidelines Paragon will help you by:

 

	
 
o

	
Identifying needs concerning housing;

	
 
o

	
Providing interpretation of the Company’s Relocation Program;

	
 
o

	
Obtaining financial and mortgage pre-qualification;

	
 
o

	
Recommending a qualified real estate broker in the new area;

	
 
o

	
Assisting with local custom information and negotiation strategy; and

	
 
o

	
On-going support and follow-up.

	
 
o

	
SMSC strongly recommends listing with a Paragon preferred broker experienced in relocation-related transactions. If not using a recommended agent, Paragon must qualify the agent of your choice

 

The recommended real estate broker in the new area will:

 

	
 
o

	
Answer questions about area communities, tax and school comparisons, public transportation, medical, cultural, shopping, banking and recreational facilities, and other data;

	
 
o

	
Provide relocation packets that contain state and local information of interest, maps, updated mortgage information and any other material you may specifically request;

	
 
o

	
Provide a guided tour of area homes and communities;

	
 
o

	
Coordinate the search for a suitable home based on your needs and preferences, with information on homes in the appropriate price range in selected areas.

 

Benefits of the Preferred Mortgage Program:

 

	
 
o

	
National mortgage broker offering customer choice through a single provider

  

  

  

 

	
 
o

	
Personal Home Finance Consultant researching the best financial solution

	
 
o

	
Competitive rates / ease of closing

	
 
o

	
Experienced in the nuances of relocation benefits-related transactions

	
 
o

	
Direct-billing may be available to those who qualify for reimbursement of new home closing costs

 

Supporting Documents/ Tax Treatment

 

	
 
o

	
None required

	
 
o

	
Non-income item

Househunting Trip(s)/Temporary Living

 

Eligibility

 

	
 
o

	
You and your spouse

	
 
o

	
1-2 trip(s)

	
 
o

	
You are required to utilize the Homefinding Assistance program in order to remain eligible for reimbursement

 

Lump Sum Payment

 

You will be provided a lump sum allowance to cover typical Homefinding and Temporary Living expenses. The lump sum factors your family size and move distance as well as higher cost of living locations. You are responsible for managing the funds to best meet your circumstances. Requests for additional funds will not be granted.

 

The non-receipted lump sum payment is intended to pay for, but is not limited to, reimbursement for the following:

 

	
 
o

	
Homefinding travel expenses, i.e, airfare, driving, train, etc;

	
 
o

	
Homefinding meals and lodging;

	
 
o

	
Dependent child/elder care expenses during Homefinding/Temp Living;

	
 
o

	
Auto rental necessary to Homefinding or Temp Living;

	
 
o

	
Temporary living meals, lodging, and transportation;

	
 
o

	
Return trips to the former location including the trip home to assist with the final move and;

	
 
o

	
All other miscellaneous Homefinding and Temp Living expenses.

 

Supporting Documents/Tax Treatment

 

Paragon will initiate payment of the lump sum upon your initiation date. Although the lump sum is a non-receipted payment, you should retain copies of actual receipts in the event of a tax audit. This payment is taxable income and will be tax assisted.

 

  

  

  

New Home Closing Costs

 

Eligibility

 

	
 
o

	
Current Homeowners choosing to purchase in the new location (must occur within 1 year of the effective date of transfer)

	
 
o

	
SMSC strongly recommends listing with a Paragon preferred broker experienced in relocation-related transactions. If not using a recommended agent, Paragon must qualify the agent of your choice

	
 
o

	
New construction homes are excluded from this program

 

Overview / Guidelines

 

The Company will reimburse normal closing costs for those items which, by local custom, are normally paid by the buyer.

 

Reimbursable Home Purchase Expenses

	
 
o

	
Loan processing fees (appraisal, credit report, lender inspection, mortgage insurance application fee, assumption fee)

	
 
o

	
Lender fees (application, processing, underwriting, commitment, document preparation) capped at the preferred mortgage provider rate

	
 
o

	
Employment verification fee

	
 
o

	
Flood zone determination fee

	
 
o

	
VA funding fee

	
 
o

	
Title examination charges

	
 
o

	
Document preparation fees

	
 
o

	
Settlement / closing fees

	
 
o

	
Attorney / notary fees

	
 
o

	
2nd mortgage closing costs

	
 
o

	
Recording fees

	
 
o

	
Inspections

	
 
o

	
Transfer Fee/Documentary Stamps (State, City & County)

	
 
o

	
Courier / express mail and wire fees

	
Non-Reimbursable Home Purchase Expenses

	
 
o

	
Real Estate and Personal Property Tax Prorations

	
 
o

	
Private or government mortgage guarantee premiums

	
 
o

	
Pro-rated Waste Collection Fees

	
 
o

	
Hazard, Fire, Flood and any other type of homeowner's insurance

	
 
o

	
Improvement Assessments by State/City/County taxing authorities

	
 
o

	
Private Mortgage Insurance

	
 
o

	
Prepaid or pro-rated interest on mortgage

	
 
o

	
Pro-rated rent

	
 
o

	
Pro-rated water, electric, gas, or other utility bills

  

  

  

	
 
o

	
VA/FHA or any other discount points or costs NORMALLY charged to the seller

	
 
o

	
Pro-rated homeowner’s association dues

	
 
o

	
Broker Administration fee

 

Supporting Documents

 

Preferred lender program

	
  

	
o

	
No documentation required

	
  

	
o

	
Direct-billed to the Company

 

Non-preferred lender

	
  

	
o

	
HUD-1 Statement

	
  

	
o

	
Expense Reimbursement Form / Online Submission

 

Tax Treatment

 

	
 
o

	
Taxable income

	 	
o

	
Tax gross-up provided on all items except points

  

  

  

Household Goods Shipment

 

Eligibility

 

	
 
o

	
Paragon will select a moving company to assist you with the movement of household goods and will work with you to coordinate the details.

	
 
o

	
The Company will cover van line shipment expenses

 

Overview / Guidelines

 

The Company covers the actual amount of reasonable moving services during regular work hours. Overtime and holidays are excluded. Services provided include, but may not be limited to:

 

	
 
o

	
Packing, loading, transportation, unloading, and partial unpacking

	
 
o

	
Full replacement value coverage up to $100,000 during transit and storage

	
 
o

	
Storage of household goods for a period not to exceed 60 days

	
 
o

	
Delivery of household goods from storage to permanent residence

	
 
o

	
Debris pick-up

	
 
o

	
Shipment of vehicle (1 for moves up to 500 miles / 2 for moves over 500 miles)

	
 
o

	
Third-party major appliance servicing / hook up

 

Certain items and services are not paid by the Company, unless the Company specifically consents. Some examples include, but may not be limited to:

	
 
o

	
Transport of special handle items such as antiques, paintings, pianos, art collections, wine collections, etc.

	
 
o

	
Valuable jewelry; precious stones; coin or stamp collections; money (cash, securities, bonds, notes, etc.) or other items of extraordinary value

	
 
o

	
House cleaning in either location

	
 
o

	
Removal or installation of fixtures (drapery rods, lights, etc)

	
 
o

	
Removal, crating and installation of satellite dishes, television antennas or flat screen televisions

	
 
o

	
Disassembling/assembling of stereo equipment, book shelves, wall units, water beds, canopy beds, playhouses and swing sets

	
 
o

	
Access to household goods while in storage

	
 
o

	
Loading or transportation of items in storage units

	
 
o

	
Recreational vehicles/boats that exceed 14 feet

	
 
o

	
Above ground swimming pools/spas

	
 
o

	
Perishable items

	
 
o

	
Firearms, ammunition, explosives

	
 
o

	
Building materials (lumber, rocks, bricks, patio blocks, etc.)

	
 
o

	
Satellite dishes

	
 
o

	
Building materials

	
 
o

	
Farm animals or equipment

	
 
o

	
Live plants

  

  

  

 

	
 
o

	
Any item prohibited by Federal or state regulatory agencies

	
 
o

	
Miscellaneous other items at the discretion of the Company

 

Costs and transport of excluded household goods is your full responsibility.

Supporting Documents

 

	
 
o

	
Inventory List

	
 
o

	
Claim Forms (if applicable)

 

Tax Treatment

 

	
 
o

	
Invoice processed by Paragon directly to the preferred provider

	
 
o

	
Excludable from income

	
 
o

	
Days of storage beyond 30 days are considered taxable income and will be grossed-up

  

  

  

Final Move En Route Expenses

 

Guidelines

 

	
 
o

	
If you are driving to the destination city, you are expected to drive a minimum of 400 miles a day until you reach your destination via the most direct route, as established by a standard Rand McNally table or equivalent. This requirement complies with Internal Revenue Service (IRS) rules.

	
 
o

	
Days of lodging beyond this first night in the new location are considered temporary living.

 

Overview / Guidelines Reimbursable expenses include:

	
 
o

	
Airfare

	
 
o

	
Mileage

	
 
o

	
Lodging

	
 
o

	
Meals (excluding alcohol)

	
 
o

	
Parking / Tolls

	
 
o

	
Ground Transportation

	
 
o

	
Rental Car (up to 10 days)

 

Required Documents

 

	
 
o

	
Original receipts

	
 
o

	
Expense Reimbursement Form / Online Submission

 

Tax Treatment

 

	
 
o

	
Reimbursement payment processed by Paragon

	
 
o

	
Most items excludable from income

	
 
o

	
Tax gross-up provided on taxable items

	
  

	
·

	
Portion of final move miles

	
  

	
·

	
Meals

 

  

  

  

Miscellaneous Expense Allowance

 

Eligibility

 

You will receive $4,000.

 

Overview / Guidelines

 

There are many expenses incurred when you relocate. The majority of these expenses are covered in the relocation program. However, since the program cannot possibly cover every expense, the Company will provide you a non-receipted Miscellaneous Expense Allowance. This lump sum will assist you in covering those expenses incurred in setting up your new residence and are not directly reimbursable under the relocation program. Some of the items this allowance is intended to cover include:

 

	
 
o

	
Telephone hook-ups

	
 
o

	
Cutting and seaming carpet; drapery installation or cleaning

	
 
o

	
License fees (automobiles, drivers, pets, etc.) attendant to an intrastate move

	
 
o

	
Cleaning of old or new residence

	
 
o

	
Any dependent care costs which are attendant to the move

	
 
o

	
Mover gratuities

	
 
o

	
Other miscellaneous expenses not covered by this program

 

Supporting Documents

 

No documentation required

 

	
 
o

	
Tax Treatment

	
 
o

	
Payment initiated by Paragon on your first date of employment or the effective date of transfer

	
 
o

	
Taxable income

	
  

	

o

	
Tax gross-up not provided

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