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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as
of this 1st day of January, 1998, by and between SCI EXECUTIVE SERVICES, INC.,
a Delaware corporation (the "Company") wholly owned by SERVICE CORPORATION
INTERNATIONAL, a Texas corporation (the "Parent") and successor by assignment
to all of the rights, duties and obligations under this Agreement, and ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ (the "Employee");
WHEREAS, the Company, the Parent and the Employee desire to join
in the execution of this Agreement to set out more fully the rights, duties and
obligations of the parties hereto;
WHEREAS, Employee is employed by the Company in a management
capacity, has extraordinary access to the Company's confidential business
information, and has significant duties and responsibilities in connection with
the conduct of the Company's business which places Employee in a special and
uncommon classification of employees; and
WHEREAS, attendant to Employee's employment by the Company, the
Company and Employee wish for there to be a complete understanding and
agreement between the Company and Employee with respect to the fiduciary duties
owed by Employee to the Company; Employee's obligation to avoid conflicts of
interest, disclose pertinent information to the Company, and refrain from using
or disclosing the Company's information; the term of employment and conditions
for or upon termination thereof; the compensation and benefits owed to
Employee; and the post-employment obligations Employee owes to the Company; and
WHEREAS, but for Employee's agreement to the covenants and
conditions of this Agreement, particularly the conflict of interest provisions,
the provisions with respect to confidentiality of information and the ownership
of intellectual property, and the post-employment obligations of Employee, the
Company would not have entered into this Agreement;
NOW, THEREFORE, in consideration of Employee's continued
employment by the Company and the mutual promises and covenants contained
herein, the receipt and sufficiency of such consideration being hereby
acknowledged, the Company and Employee agree as follows:
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1. Employment and Term. The Company agrees to employ the
Employee and the Employee agrees to remain in the employ of the Company, in
accordance with the terms and provisions of this Agreement, for the period
beginning on the date hereof and ending as of the close of business on December
31, 2000 (such period together with all extensions thereof, is referred to
hereinafter as the "Employment Period"); provided, however, that commencing on
the date one year after the date hereof, and on each January 1 thereafter (each
such date shall be hereinafter referred to as a "Renewal Date") the Employment
Period shall be automatically extended so as to terminate three (3) year(s)
from such Renewal Date if (i) the Compensation Committee of the Board of
Directors of the Parent (hereinafter referred to as the "Compensation
Committee") authorizes such extension during the 60-day period preceding such
Renewal Date and (ii) the Employee has not previously given the Company written
notice that the Employment Period shall not be so extended. In the event that
the Company gives the Employee written notice at any time that the Compensation
Committee has determined not to authorize such extension, or if the Company
fails to notify the Employee of the Compensation Committee's determination
prior to the Renewal Date (the "Renewal Deadline"), the Employment Period shall
be extended so as to terminate three (3) year(s) after the date such notice is
given (or, in case of a failure to notify, three (3) year(s) after the Renewal
Deadline) and shall not thereafter be further extended.
2. Duties and Powers of Employee. (a) Position; Location.
During the Employment Period, the Employee shall perform such duties and have
such powers as designated by the Board of Directors of the Company (the
"Board") in connection with the execution of this Agreement. The Employee's
services shall be performed at the location where the Employee is currently
employed or any office which is the headquarters of the Company and is less
than 50 miles from such location. During the Change of Control Period, the
Employee's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned with or by the Company or the Parent at any time during
the 90-day period immediately preceding the Change of Control Date (as defined
in Section 16(a) below).
(b) Duties. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Employee is
entitled, the Employee agrees to devote his attention and time during normal
business hours to the business and affairs of the Company and to use the
Employee's best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Employee to (i) serve on corporate, civic or charitable
boards
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or committees, (ii) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (iii) manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Employee's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Employee prior to the date of
this Agreement or subsequent thereto consistent with this Section 2(b), the
continued conduct of such activities (or the conduct of activities similar in
nature and scope thereto) shall not thereafter be deemed to interfere with the
performance of the Employee's responsibilities to the Company.
(c) Employee agrees and acknowledges that he owes, and
will comply with, a fiduciary duty of loyalty, fidelity or allegiance to act at
all times in the best interests of the Company and to take no action or fail to
take action if such action or failure to act would injure the Company's
business, its interests or its reputation.
3. Compensation. The Employee shall receive the following
compensation for his services:
(a) Salary. During the Employment Period, he shall be
paid an annual base salary ("Annual Base Salary") at the rate of not
less than $425,000 per year, in substantially equal bi-weekly
installments, and subject to any and all required withholdings and
deductions for Social Security, income taxes and the like. The
Compensation Committee may from time to time direct such upward
adjustments to Annual Base Salary as the Compensation Committee deems to
be appropriate or desirable; provided, however, that during the Change
of Control Period, the Annual Base Salary shall be reviewed at least
annually and shall be increased at any time and from time to time as
shall be substantially consistent with increases in base salary
generally awarded in the ordinary course of business to other employees
of comparable rank with the Company and its affiliated companies (as
defined in Section 16(d) below). Annual Base Salary shall not be reduced
after any increase thereof pursuant to this Section 3(a). Any increase
in Annual Base Salary shall not serve to limit or reduce any other
obligation of the Company under this Agreement.
(b) Incentive Cash Compensation. During the Employment
Period, he shall be eligible annually for a cash bonus at the discretion
of the Compensation Committee (such aggregate awards for each year are
hereinafter referred to as the "Annual Bonus") and at the discretion of
the Compensation Committee to receive awards from any plan of the
Company or any of its affiliated companies providing for the payment of
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bonuses in cash to employees of the Company or its affiliated companies
having rank comparable to that of the Employee (such plans being
referred to herein collectively as the "Cash Bonus Plans") in accordance
with the terms thereof; provided, however, that, during the Change of
Control Period, the Employee shall be awarded, for each fiscal year
ending during the Change of Control Period, an Annual Bonus at least
equal to the Highest Recent Bonus (as defined in Section 16(e) below).
Each Annual Bonus shall be paid no later than the end of the third month
of the fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the Employee shall elect to defer the receipt
of such Annual Bonus.
(c) Incentive and Savings and Retirement Plans. During
the Employment Period, the Employee shall be entitled to participate in
all incentive and savings (in addition to the Cash Bonus Plans) and
retirement plans, practices, policies and programs applicable generally
to other employees of comparable rank with the Company and its
affiliated companies.
(d) Welfare Benefit Plans. During the Employment Period,
the Employee and/or the Employee's family, as the case may be, shall be
eligible for participation in all welfare benefit plans, practices,
policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent
applicable generally to other employees of comparable rank with the
Company and its affiliated companies.
(e) Expenses. During the Employment Period and for so
long as the Employee is employed by the Company, he shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the
Employee in accordance with the policies, practices and procedures of
the Company and its affiliated companies from time to time in effect.
(f) Fringe Benefits. During the Employment Period, the
Employee shall be entitled to fringe benefits in accordance with the
plans, practices, programs and policies of the Company and its
affiliated companies from time to time in effect, commensurate with his
position and on a basis at least comparable to those received by other
employees of comparable rank with the Company and its affiliated
companies.
(g) Office and Support Staff. During the Employment
Period, the Employee shall be entitled to an office or offices of a size
and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance,
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commensurate with his position and on a basis at least comparable to
those received by other employees of comparable rank with the Company
and its affiliated companies.
(h) Vacation and Other Absences. During the Employment
Period, the Employee shall be entitled to paid vacation and such other
paid absences whether for holidays, illness, personal time or any
similar purposes, in accordance with the plans, policies, programs and
practices of the Company and its affiliated companies in effect from
time to time, commensurate with his position and on a basis at least
comparable to those received by other employees of comparable rank with
the Company and its affiliated companies.
(i) Change of Control. During the Change of Control
Period, the Employee's benefits listed under Sections 3(c), 3(d), 3(e),
3(f), 3(g) and 3(h) above shall be at least commensurate in all material
respects with the most valuable and favorable of those received by the
Employee at any time during the 90-day period immediately preceding the
Change of Control Date.
4. Termination of Employment. (a) Death or Disability. The
Employment Period shall terminate automatically upon the Employee's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Employee has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Employee
written notice in accordance with Section 17(b) of its intention to terminate
the Employment Period. In such event, the Employment Period shall terminate
effective on the 30th day after receipt of such notice by the Employee (the
"Disability Effective Date"), provided that, within the 30 days after such
receipt, the Employee shall not have returned to full-time performance of the
Employee's duties. For purposes of this Agreement, "Disability" shall mean the
inability of the Employee to perform the Employee's duties with the Company on
a full-time basis as a result of incapacity due to mental or physical illness
which continues for more than one year after the commencement of such
incapacity, such incapacity to be determined by a physician selected by the
Company or its insurers and acceptable to the Employee or the Employee's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Employment
Period for Cause. For purposes of this Agreement, "Cause" shall mean (i) a
material breach by the Employee of Section 9 which is willful on the Employee's
part or which is committed in bad faith or without reasonable belief that such
breach is in the best interests of the Company and its affiliated companies, or
(ii) a
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material breach by the Employee of the Employee's obligations under Section 2
(other than a breach of the Employee's obligations under Section 2 arising from
the failure of the Employee to work as a result of incapacity due to physical
or mental illness) or any material breach by the Employee of Section 10, 11 or
12 of this Agreement which in either case is willful on the Employee's part,
which is committed in bad faith or without reasonable belief that such breach
is in the best interests of the Company and its affiliated companies and which
is not remedied in a reasonable period of time after receipt of written notice
from the Company specifying such breach, or (iii) the conviction of the
Employee of a felony involving malice which conviction has been affirmed on
appeal or as to which the period in which an appeal can be taken has lapsed.
(c) Good Reason; Window Period. The Employee's
employment may be terminated (i) by the Employee for Good Reason (as defined
below) or (ii) during the Window Period (as defined below) by the Employee
without any reason. For purposes of this Agreement, the "Window Period" shall
mean the 30-day period immediately following the first anniversary of the
Change of Control Date. For purposes of this Agreement, "Good Reason" shall
mean
(i) the assignment to the Employee of
any duties inconsistent in any respect with the Employee's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities prior to the date of such
assignment or any other action by the Company or the Parent which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated and
insubstantial action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Employee;
(ii) any failure by the Company to comply
with any of the provisions of Section 3, other than an isolated and
insubstantial failure not occurring in bad faith and which is remedied
by the Company promptly after receipt of notice thereof given by the
Employee;
(iii) the Company's requiring the Employee
to be based at any office or location other than that described in
Section 2(a);
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(iv) any purported termination by the
Company of the Employee's employment otherwise than as expressly
permitted by this Agreement; or
(v) any failure by the Company or the
Parent to comply with and satisfy Section 16(c), provided that the
successor referred to in Section 16(c) has received at least ten days
prior written notice from the Company or the Employee of the
requirements of Section 16(c).
For purposes of this Section 4(c), during the Change of Control Period, any
good faith determination of "Good Reason" made by the Employee shall be
conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause or by the Employee without any reason during the Window
Period or for Good Reason shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 17(b). For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employment
Period under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 15 days after the
giving of such notice). The failure by the Employee or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive any right of the Employee
or the Company hereunder or preclude the Employee or the Company from asserting
such fact or circumstance in enforcing the Employee's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" means (i)
if the Employee's employment is terminated by the Company for Cause, or by the
Employee during the Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case may
be, (ii) if the Employee's employment is terminated by the Company other than
for Cause or Disability, or by the Employee other than for Good Reason or
during the Window Period, the Date of Termination shall be the date on which
the Company or the Employee, as the case may be, notifies the other of such
termination and (iii) if the Employee's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Employee or the Disability Effective Date, as the case may be. Notwithstanding
the foregoing, if the Company gives the Employee written notice pursuant to the
second sentence of Section 1 hereof, then "Date of Termination" shall mean the
last day of the three (3)-year period
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for which the Employment Period is extended pursuant to such sentence.
5. Obligations of the Company Upon Termination. (a) Certain
Terminations Prior to Change of Control Date. If, during the Employment Period
prior to any Change of Control Date, the employment of the Employee with the
Company shall be terminated (i) by the Company other than for Cause, death or
Disability or (ii) by the Employee for Good Reason, then, in lieu of the
obligations of the Company under Section 3, (i) the Company shall pay to the
Employee in a lump sum in cash within 30 days after the Date of Termination all
Unpaid Agreement Amounts (as defined in Section 5(b)(i)(A) below) and (ii)
notwithstanding any other provision hereunder, for the longer of (A) the
remainder of the Employment Period or (B) to the extent compensation and/or
benefits are provided under any plan, program, practice or policy, such longer
period, if any, as such plan, program, practice or policy may provide, the
Company shall continue to provide to the Employee the compensation and benefits
provided in Sections 3(a), 3(c) and 3(d) (it being understood that if the
Company gives the Employee written notice that the Compensation Committee has
determined not to authorize an extension, or fails to notify the Employee of
the Compensation Committee's determination prior to the Renewal Deadline, in
either case as contemplated by the second sentence of Section 1 hereof, the
giving of such notice or the failure to so notify the Employee shall not be
deemed a termination of the employment of the Employee with the Company during
the Employment Period for purposes of this Section 5(a)).
(b) Certain Terminations After Change of Control Date.
If, during the Change of Control Period, the employment of the Employee with
the Company shall be terminated (i) by the Company other than for Cause, death
or Disability or (ii) by the Employee either for Good Reason or without any
reason during the Window Period, then, in lieu of the obligations of the
Company under Section 3 and notwithstanding any other provision hereunder:
(i) the Company shall pay to the Employee in a
lump sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
(A) the sum of (1) all unpaid amounts
due to the Employee under Section 3 through the Date of
Termination, including without limitation, the Employee's Annual
Base Salary and any accrued vacation pay, (2) the product of (x)
the Highest Recent Bonus and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through
the Date of Termination, and the denominator of which is 365 and
(3) any compensation previously deferred by the Employee
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(together with any accrued interest or earnings thereon) to the
extent not theretofore paid (the sum of the amounts described in
clauses (1), (2) and (3) shall be hereinafter referred to as the
"Accrued Obligations" and the sum of the amounts described in
clauses (1) and (3) shall be hereinafter referred to as the
"Unpaid Agreement Amounts"); and
(B) the amount (such amount shall be
hereinafter referred to as the "Severance Amount") equal to the
sum of
(1) Three (3) multiplied by the
Employee's Annual Base Salary, plus
(2) Three (3) multiplied by the
Employee's Highest Recent Bonus;
(ii) for the longer of (A) the remainder of the
Employment Period or (B) to the extent benefits are provided under any
plan, program, practice or policy, such longer period as such plan,
program, practice or policy may provide, the Company shall continue
benefits to the Employee and/or the Employee's family at least equal to
those which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section 3(d) if the
Employee's employment had not been terminated, in accordance with the
most favorable plans, practices, programs or policies of the Company and
its affiliated companies as in effect and applicable generally to other
employees of comparable rank and their families during the 90-day period
immediately preceding the Change of Control Date or, if more favorable
to the Employee, as in effect generally at any time thereafter with
respect to other employees of comparable rank with the Company and its
affiliated companies and their families; provided, however, that if the
Employee becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer
provided plan, the medical and other welfare benefits described herein
shall be required only to the extent not provided under such other plan
during such applicable period of eligibility. For purposes of
determining eligibility of the Employee for retiree benefits pursuant to
such plans, practices, programs and policies, the Employee shall be
considered to have remained employed until the end of the Employment
Period and to have retired on the last day of such period; and
(iii) to the extent not theretofore paid
or provided, the Company shall timely pay or provide to the Employee
and/or the Employee's family for the remainder of the Employment Period
any other amounts or benefits required to be
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paid or provided or which the Employee and/or the Employee's family is
eligible to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the Company and
its affiliated companies as in effect and applicable generally to other
employees of comparable rank with the Company and its affiliated
companies and their families during the 90-day period immediately
preceding the Change of Control Date or, if more favorable to the
Employee, as in effect generally thereafter with respect to other
employees of comparable rank with the Company and its affiliated
companies and their families.
Such amounts received under this Section 5(b) shall be in lieu of any other
amount of severance relating to salary or bonus continuation to be received by
the Employee upon termination of employment of the Employee under any severance
plan, policy or arrangement of the Company.
(c) Termination as a Result of Death. If the Employee's
employment is terminated by reason of the Employee's death during the
Employment Period, in lieu of the obligations of the Company under Section 3,
the Company shall pay or provide to the Employee's estate (i) all Accrued
Obligations (which shall be paid in a lump sum in cash within 30 days after the
Date of Termination) and the timely payment or provision of the Welfare Benefit
Continuation (as defined below) and the Other Benefits (as defined below) and
(ii) any cash amount to be received by the Employee or the Employee's family as
a death benefit pursuant to the terms of any plan, policy or arrangement of the
Company and its affiliated companies. "Welfare Benefit Continuation" shall
mean the continuation of benefits to the Employee and/or the Employee's family
for the longer of (i) three (3) year(s) from the Date of Termination or (ii)
the period provided by the plans, programs, policies or practices described in
Section 3(d) in which the Employee participates as of the Date of Termination,
such benefits to be at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described
in Section 3(d) if the Employee's employment had not been terminated, in
accordance with the most favorable plans, practices, programs or policies of
the Company and its affiliated companies as in effect and applicable generally
to other employees of comparable rank and their families on the Date of
Termination or, if the Date of Termination occurs after the Change of Control
Date, during the 90-day period immediately preceding the Change of Control Date
or, if more favorable to the Employee, as in effect generally at any time
thereafter with respect to other employees of comparable rank with the Company
and its affiliated companies and their families. "Other Benefits" shall mean
the timely payment or provision to the Employee and/or the Employee's family of
any other amounts or benefits required to be paid or provided or which the
Employee
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and/or the Employee's family is eligible to receive pursuant to this Agreement
and under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies as in effect and applicable generally to
other employees of comparable rank and their families on the Date of
Termination or, if the Date of Termination occurs after the Change of Control
Date, during the 90-day period immediately preceding the Change of Control Date
or, if more favorable to the Employee, as in effect generally thereafter with
respect to other employees of comparable rank with the Company and its
affiliated companies and their families.
(d) Termination as a Result of Disability. If the
Employee's employment is terminated by reason of the Employee's Disability
during the Employment Period, in lieu of the obligations of the Company under
Section 3, the Company shall pay or provide to the Employee (i) all Accrued
Obligations which shall be paid in a lump sum in cash within 30 days after the
Date of Termination and the timely payment or provision of the Welfare Benefit
Continuation and the Other Benefits, provided, however, that if the Employee
becomes reemployed with another employer and is eligible to receive medical or
other welfare benefits under another employer provided plan, the Welfare
Benefit Continuation shall be required only to the extent not provided under
such other plan during such applicable period of eligibility, and (ii) any cash
amount to be received by the Employee as a disability benefit pursuant to the
terms of any plan, policy or arrangement of the Company and its affiliated
companies.
(e) Cause; Other than for Good Reason. If the Employee's
employment shall be terminated during the Employment Period by the Company for
Cause or by the Employee other than during the Window Period and other than for
Good Reason, in lieu of the obligations of the Company under Section 3, the
Company shall pay to the Employee in a lump sum in cash within 30 days after
the Date of Termination all Unpaid Agreement Amounts.
6. Non-exclusivity of Rights. Except as provided in Sections
5(a), 5(b)(i)(B), 5(b)(ii), 5(c) and 5(d), nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Employee may qualify, nor shall anything herein
limit or otherwise affect such rights as the Employee may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Employee is otherwise entitled
to receive under any plan, policy,
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practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract
or agreement except as explicitly modified by this Agreement.
7. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Employee or others. In no event shall the
Employee be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Employee under any of the
provisions of this Agreement and, except as provided in Sections 5(b)(ii) and
5(d), such amounts shall not be reduced whether or not the Employee obtains
other employment. The Company agrees to pay promptly as incurred, to the full
extent permitted by law, all legal fees and expenses which the Employee may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Employee or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Employee about
the amount of any payment pursuant to this Agreement), plus in each case
interest on any payment required to be made under this Agreement but not timely
paid at the rate provided for in Section 280G(d)(4) of the Internal Revenue
Code of 1986, as amended (the "Code").
(b) If there shall be any dispute between the Company and
the Employee (i) in the event of any termination of the Employee's employment
by the Company, whether such termination was for Cause, or (ii) in the event of
any termination of employment by the Employee, whether Good Reason existed,
then, unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or that
the determination by the Employee of the existence of Good Reason was not made
in good faith, the Company shall pay all amounts, and provide all benefits, to
the Employee and/or the Employee's family or other beneficiaries, as the case
may be, that the Company would be required to pay or provide pursuant to
Section 5(a) or 5(b) as though such termination were by the Company without
Cause or by the Employee with Good Reason. The Employee hereby undertakes to
repay to the Company all such amounts to which the Employee is ultimately
adjudged by such court not to be entitled.
8. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 8) (a "Payment")
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would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Employee with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Employee
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Employee of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by an accounting firm of national reputation selected by the Company (the
"Accounting Firm"), which shall provide detailed supporting calculations both
to the Company and the Employee within 15 business days of the receipt of
notice from the Employee that there has been a Payment, or such earlier time as
is requested by the Company. In the event that the Accounting Firm is serving
(or has served within the three years preceding the Change of Control Date) as
accountant or auditor for the individual, entity or group effecting the Change
of Control, or is unwilling or unable to perform its obligations pursuant to
this Section 8, the Employee shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by
the Company to the Employee within five days of the receipt of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax is
payable by the Employee, it shall furnish the Employee with a written opinion
that failure to report the Excise Tax on the Employee's applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon the
Company and the Employee. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 8(c) and the
Employee thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the
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14
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Employee.
(c) The Employee shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Employee is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. The Employee shall not pay such claim prior to the expiration of the 30-
day period following the date on which the Employee gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Employee in
writing prior to the expiration of such period that it desires to contest such
claim, the Company, subject to the provisions of this Section 8(c), shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Employee to pay the tax claimed and
▇▇▇ for a refund or contest the claim in any permissible manner. In this
connection, the Employee agrees, subject to the provisions of this Section
8(c), to (i) prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine, (ii) give the Company any
information reasonably requested by the Company relating to such claim, (iii)
take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company, (iv) cooperate with the Company in good
faith in order to effectively contest such claim and (v) permit the Company to
participate in any proceedings relating to such claim. The foregoing is
subject, however, to the following: (A) the Company shall bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Employee harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed in connection
therewith and the payment of costs and expenses in such connection, (B) if the
Company directs the Employee to pay such claim and ▇▇▇ for a refund, the
Company shall advance the amount of such payment to the Employee, on an
interest-free basis, and shall indemnify and hold the Employee harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance, (C) any extension
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of the statute of limitations relating to payment of taxes for the taxable year
of the Employee with respect to which such contested amount is claimed to be
due shall be limited solely to such contested amount and (D) the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Employee shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 8(c), the Employee becomes entitled
to receive any refund with respect to such claim, the Employee shall (subject
to the Company's complying with the requirements of Section 8(c)) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by the Company pursuant to Section 8(c), a
determination is made that the Employee shall not be entitled to any refund
with respect to such claim and the Company does not notify the Employee in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
9. Confidential Information. The Employee shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Employee during the Employee's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Employee or representatives of the Employee in violation of
this Agreement). After termination of the Employee's employment with the
Company or any of its affiliated companies, the Employee shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it. In no event shall
an asserted violation of the provisions of this Section 9 constitute a basis
for deferring or withholding any amounts otherwise payable to the Employee
under this Agreement. Subject to the previous sentence, nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach, including the recovery of damages
from the Employee.
10. Employee's Obligation to Avoid Conflicts of Interest. (a)
In keeping with Employee's fiduciary duties to the
-15-
16
Company, Employee agrees that he shall not knowingly become involved in
circumstances constituting a conflict of interest with such duties, or upon
discovery thereof, allow such a conflict to continue. Moreover, Employee
agrees that he shall disclose to the Secretary of the Parent or the Company any
facts which might involve a conflict of interest that have not been approved by
the Company. The Board hereby acknowledges and agrees that the activities of
Employee listed on Schedule A hereto do not, and the continuation of such
activities will not, constitute a conflict of interest for purposes of this
Section 10.
(b) In this connection, it is agreed that any direct
interest in, connection with, or benefit from any outside activities,
particularly commercial activities, which might in any way adversely affect the
Company of any of its affiliated companies, involves a possible conflict of
interest. Circumstances in which a conflict of interest on the part of Employee
would or might arise, and which should be reported immediately to the Company
or the Parent, include, but are not limited to, the following:
(i) Ownership of a material interest in any
lender, supplier, contractor, customer or other entity
with which the Company or any of its affiliated companies
does business;
(ii) Acting in any capacity, including director,
officer, partner, consultant, employee, distributor, agent
or the like, for lenders, suppliers, contractors,
subcontractors, customers or other entities with which the
Company or any of its affiliated companies does business;
(iii) Acceptance, directly or indirectly, of
payments, services or loans from a lender, supplier,
contractor, subcontractor, customer or other entity with
which the Company or any of its affiliated companies does
business, including but not limited to, gifts, trips,
entertainment, or other favors of more than a nominal
value, but excluding loans from publicly held insurance
companies and commercial or savings banks at normal rates
of interest;
(iv) Misuse of information or facilities to which
Employee has access in a manner which will be detrimental
to the Company's or any of its affiliated companies'
interest, such as utilization for Employee's own benefit
-16-
17
of know-how or information developed through the Company's
or any of its affiliated companies' business activities;
(v) Disclosure or other misuse of information of
any kind obtained through Employee's connection with the
Company or any of its affiliated companies; or
(vi) Acquiring or trading in, directly or
indirectly, other properties or interests connected with
the design or marketing of products or services designed
or marketed by the Company or any of its affiliated
companies.
(c) In the event that the Company determines, in the
exercise of its reasonable judgment, that a conflict of interest exists between
the Employee and the Company or any of its affiliated companies, the Company
shall notify the Employee in writing in accordance with Section 17(b) hereof,
providing reasonably detailed information identifying the source of the
conflict of interest. Within the 60-day period following receipt of such
notice, the Employee shall take action satisfactory to the Company to eliminate
the conflict of interest. Failure of the Employee to take such action within
such 60-day period shall constitute "Cause" under Section 4(b) hereof.
11. Disclosure of Information, Ideas, Concepts, Improvements,
Discoveries and Inventions. As part of Employee's fiduciary duties to the
Company, Employee agrees that during the Employment Period, and for a period of
six (6) months after the Date of Termination, Employee shall promptly disclose
in writing to the Company all information, ideas, concepts, improvements,
discoveries and inventions, whether patentable or not, and whether or not
reduced to practice, which are conceived, developed, made or acquired by
Employee, either individually or jointly with others, and which relate to the
business, products or services of the Company or any of its affiliated
companies, irrespective of whether Employee utilized the Company's or any of
its affiliated companies' time or facilities and irrespective of whether such
information, idea, concept, improvement, discovery or invention was conceived,
developed, discovered or acquired by Employee on the job, at home, or
elsewhere. This obligation extends to all types of information, ideas and
concepts, including information, ideas and concepts relating to new types of
services, corporate opportunities, acquisition prospects, the identity of key
representatives within acquisition prospect organizations, prospective names or
service marks for the Company's or any of its affiliated companies' business
activities, and the like.
-17-
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12. Ownership of Information, Ideas, Concepts, Improvements,
Discoveries and Inventions and all Original Works of Authorship. (a) All
information, ideas, concepts, improvements, discoveries and inventions, whether
patentable or not, which are conceived, made, developed or acquired by Employee
or which are disclosed or made known to Employee, individually or in
conjunction with others, during Employee's employment by the Company or any of
its affiliated companies and which relate to the Company's or any of its
affiliated companies' business, products or services (including all such
information relating to corporate opportunities, research, financial and sales
data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer's organizations or within the
organization of acquisition prospects, or marketing and merchandising
techniques, prospective names and marks) are and shall be the sole and
exclusive property of the Company. Moreover, all drawings, memoranda, notes,
records, files, correspondence, manuals, models, specifications, computer
programs, maps and all other writings or materials of any type embodying any of
such information, ideas, concepts, improvements, discoveries and inventions are
and shall be the sole and exclusive property of the Company.
(b) In particular, Employee hereby specifically sells,
assigns and transfers to the Company all of his worldwide right, title and
interest in and to all such information, ideas, concepts, improvements,
discoveries or inventions, and any United States or foreign applications for
patents, inventor's certificates or other industrial rights that may be filed
thereon, including divisions, continuations, continuations-in-part, reissues
and/or extensions thereof, and applications for registration of such names and
marks. Both during the period of Employee's employment by the Company or any
of its affiliated companies and thereafter, Employee shall assist the Company
and its nominee at all times in the protection of such information, ideas,
concepts, improvements, discoveries or inventions, both in the United States
and all foreign countries, including but not limited to, the execution of all
lawful oaths and all assignment documents requested by the Company or its
nominee in connection with the preparation, prosecution, issuance or
enforcement of any applications for United States or foreign letters patent,
including divisions, continuations, continuations-in-part, reissues, and/or
extensions thereof, and any application for the registration of such names and
marks.
(c) Moreover, if during Employee's employment by the
Company or any of its affiliated companies, Employee creates any original work
of authorship fixed in any tangible medium of expression which is the subject
matter of copyright (such as
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videotapes, written presentations on acquisitions, computer programs, drawings,
maps, architectural renditions, models, manuals, brochures or the like)
relating to the Company's or any of its affiliated companies' business,
products, or services, whether such work is created solely by Employee or
jointly with others, the Company shall be deemed the author of such work if the
work is prepared by Employee in the scope of his or her employment; or, if the
work is not prepared by Employee within the scope of his or her employment but
is specially ordered by the Company as a contribution to a collective work, as
a part of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation or as an instrumental text, then the work
shall be considered to be work made for hire and the Company shall be the
author of the work. In the event such work is neither prepared by the Employee
within the scope of his or her employment or is not a work specially ordered
and deemed to be a work made for hire, then Employee hereby agrees to assign,
and by these presents does assign, to the Company all of Employee's worldwide
right, title and interest in and to such work and all rights of copyright
therein. Both during the period of Employee's employment by the Company or any
of its affiliated companies and thereafter, Employee agrees to assist the
Company and its nominee, at any time, in the protection of the Company's
worldwide right, title and interest in and to the work and all rights of
copyright therein, including but not limited to, the execution of all formal
assignment documents requested by the Company or its nominee and the execution
of all lawful oaths and applications for registration of copyright in the
United States and foreign countries.
13. Employee's Post-Employment Non-Competition Obligations.
(a) During the Employment Period and, subject to the conditions of Sections
13(b) and 13(c), for a period of three (3) year(s) thereafter (the "Non-
Competition Period"), Employee shall not, acting alone or in conjunction with
others, directly or indirectly, in any of the business territories in which the
Company or any of its affiliated companies is presently or at the time of
termination of employment conducting business, engage in any business in
competition with the business conducted by the Company or any of its affiliated
companies at the time of the termination of the employment relationship,
whether for his own account or by soliciting, canvassing or accepting any
business or transaction for or from any other company or business in
competition with such business of the Company or any of its affiliated
companies.
(b) If Employee's employment is discontinued: (i) by
Company for Cause pursuant to Section 4(b); or (ii) by Employee because of any
reason other than for Good Reason or other than during the Window Period
pursuant to Section 4(c), Employee shall be bound by the obligations of Section
13(a) and the Company shall have no obligation to make the Non-Competition
Payments (as defined
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in Section 13(c) below). However, if the employment relationship is terminated
by any other circumstance or for any other reason, Employee's post-employment
non-competition obligations required by Section 13(a) shall be subject to the
Company's obligation to make the Non-Competition Payments specified in Section
13(c).
(c) Notwithstanding the provisions of Section 4 of this
Agreement, whenever Employee's employment is terminated due to the expiration
of the Employment Period in accordance with the provisions of Section 1, or due
to Employee's Disability (Section 4(a)), or by the Company without Cause
(Section 4(b)), unless the Company exercises its option as hereinafter
provided, Employee shall be entitled to continue to receive payments (the
"Non-Competition Payments") equal to his then current Annual Base Salary (as of
the Date of Termination) during the Non-Competition Period. During the Non-
Competition Period, the Employee shall not, however, be deemed to be an
employee of the Company or be entitled to continue to receive any other
employee benefits other than as set forth in Section 5 or Section 8. Moreover,
the Non-Competition Payments shall be reduced to the extent Employee has
already received lump-sum payments in lieu of salary and bonus pursuant to
Section 5. The Company shall have the option, exercisable at any time on or
within one (1) month after: (i) the date the Company gives the Employee notice
that the Employment Period will not be extended (or in the case of failure to
notify, on or within one month after the Renewal Deadline), in accordance with
Section 1; or (ii) in the case of termination due to Employee's disability or
by the Company without Cause, the Date of Termination, to cancel Employee's
post-employment non-competition obligations under Section 13(a) and the
Company's corresponding obligation to make the Non-Competition Payments. Such
option shall be exercised by the Company mailing a written notice thereof to
Employee in accordance with Section 17(b); if the Company does not send such
notice within the prescribed one-month period, the Company shall remain
obligated to make the Non-Competition Payments and Employee shall remain
obligated to comply with the provisions of Section 13(a). The amounts to be
paid by the Company are not intended to be liquidated damages or an estimate of
the actual damages that would be sustained by the Company if Employee breaches
his post-employment non-competition obligations. If Employee breaches his
post-employment non-competition obligations, the Company shall be entitled to
cease making the Non-Competition Payments and shall be entitled to all of its
remedies at law or in equity for damages and injunctive relief.
14. Obligations to Refrain From Competing Unfairly. In addition
to the other obligations agreed to by Employee in this Agreement, Employee
agrees that during the Employment Period and for three (3) year(s) following
the Date of Termination, he shall not at any time, directly or indirectly for
the benefit of any
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other party than the Company or any of its affiliated companies, (a) induce,
entice, or solicit any employee of the Company or any of its affiliated
companies to leave his employment, or (b) contact, communicate or solicit any
customer of the Company or any of its affiliated companies derived from any
customer list, customer lead, mail, printed matter or other information secured
from the Company or any of its affiliated companies or their present or past
employees, or (c) in any other manner use any customer lists or customer leads,
mail, telephone numbers, printed material or material of the Company or any of
its affiliated companies relating thereto.
15. Successors. (a) This Agreement is personal to the Employee
and without the prior written consent of the Company shall not be assignable by
the Employee otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Employee's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise. The Parent will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Parent or the Parent to
assume expressly and agree to perform the Parent's obligations hereunder in the
same manner and to the same extent that the Parent would be required to perform
them if no such succession had taken place. As used in this Agreement, "Parent"
shall mean the Parent as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform the Parent's
obligations hereunder by operation of law, or otherwise.
16. Certain Definitions. The following defined terms used in
this Agreement shall have the meanings indicated:
(a) The "Change of Control Date" shall mean the first
date on which a Change of Control occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and if the Employee's
employment with the Company is
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terminated or there is a change in the circumstances of the Employee's
employment which constitutes Good Reason, and if it is reasonably demonstrated
by the Employee that such termination or change in circumstances: (i) was at
the request of a third party who has taken steps reasonably calculated to
effect the Change of Control; or (ii) otherwise arose in connection with or
anticipation of the Change of Control, then, for all purposes of this
Agreement, the "Change of Control Date" shall mean the date immediately prior
to the date of such termination or cessation.
(b) The "Change of Control Period" shall mean the period
commencing on the Change of Control Date and ending on the last day of the
Employment Period.
(c) "Change of Control" shall mean:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended the "Exchange Act") (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (A) the
then outstanding shares of Common Stock of the Parent (the "Outstanding
Parent Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Parent entitled to vote generally
in the election of directors (the "Outstanding Parent Voting
Securities"); provided, however, that the following acquisitions shall
not constitute a Change of Control: (A) any acquisition directly from
the Parent (excluding an acquisition by virtue of the exercise of a
conversion privilege), (B) any acquisition by the Parent, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Parent or any corporation controlled by the Parent or
(D) any acquisition by any corporation pursuant to a reorganization,
merger or consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (A), (B) and (C) of
subsection (iii) of this definition of "Change of Control" are
satisfied; or
(ii) Individuals who, as of the effective date
hereof, constitute the Board of Directors of the Parent (the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Board of Directors of the Parent; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Parent's shareholders, was approved by
(A) a vote of at least a majority of the directors then constituting the
Incumbent Board of the Parent, or (B) a vote of at least a majority of
the directors then comprising the Executive Committee of the Board of
Directors of the Parent at a time
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when such committee consisted of at least five members and all members
of such committee were either members of the Incumbent Board or
considered as being members of the Incumbent Board pursuant to clause
(A) of this subsection (ii), shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of Directors
of the Parent; or
(iii) Approval by the shareholders of the Parent
of a reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (A) more than
60% of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation
and the combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Parent Common Stock
and Outstanding Parent Voting Securities immediately prior to such
organization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding Parent
Common Stock and Outstanding Parent Voting Securities, as the case may
be, (B) no Person (excluding the Parent, any employee benefit plan or
related trust of the Parent or such corporation resulting from such
reorganization, merger or consolidation and any Person beneficially
owning, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 20% or more of the Outstanding
Parent Common Stock or Outstanding Parent Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation
or the combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such reorganization,
merger or consolidation; or
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(iv) Approval by the shareholders of the Parent
of (A) a complete liquidation or dissolution of the Parent or (B) the
sale or other disposition of all or substantially all of the assets of
the Parent, other than to a corporation, with respect to which following
such sale or other disposition, (A) more than 60% of, respectively, the
then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Parent Common Stock and Outstanding
Parent Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Parent Common Stock and Outstanding Parent Voting Securities, as the
case may be, (B) no Person (excluding the Parent and any employee
benefit plan or related trust of the Parent or such corporation and any
Person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the Outstanding
Parent Common Stock or Outstanding Parent Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors and (C) at least a majority of the members of the
Board of Directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or action of
the Board of Directors of the Parent providing for such sale or other
disposition of assets of the Parent.
(d) The term "affiliated company" shall mean any company
controlled by, controlling or under common control with the Company.
(e) The term "Highest Recent Bonus" shall mean the
highest Annual Bonus (annualized for any fiscal year consisting of less than
twelve full months) paid or payable, including by reason of any deferral, to
the Employee by the Company and its affiliated companies in respect of the
three most recent full fiscal years ending on or prior to, (i) if prior to a
Change of Control, the Date of Termination, or (ii) if after a Change of
Control, the Change of Control Date.
17. Miscellaneous. (a) This Agreement supersedes all previous
agreements and discussions relating to the same or similar subject matters
between Employee and the Company and shall be
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governed by and construed in accordance with the laws of the State of Texas,
without reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended, modified, repealed, waived,
extended or discharged except by an agreement in writing signed by the party
against whom enforcement of such amendment, modification, repeal, waiver,
extension or discharge is sought. No person, other than pursuant to a
resolution of the Board or a duly authorized committee thereof, shall have
authority on behalf of the Company to agree to amend, modify, repeal, waive,
extend or discharge any provision of this Agreement or anything in reference
thereto.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Employee:
▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Company:
SCI Executive Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
If to the Parent:
Service Corporation International
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such federal, state or local taxes as
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26
shall be required to be withheld pursuant to any applicable law or regulation.
(e) The Employee's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Employee or the Company may
have hereunder, including, without limitation, the right of the Employee to
terminate employment for Good Reason pursuant to Section 4(c) of this
Agreement, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
(f) No breach, whether actual or alleged, of this
Agreement by the Employee shall constitute grounds for the Company to withhold
or offset any payment or benefit due to the Employee under any other agreement,
contract, plan, program, policy or practice of the Company.
IN WITNESS WHEREOF, the Employee and, pursuant to due
authorization from the Board, the Company have caused this Agreement to be
executed this 1st day of January, 1998.
▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
"EMPLOYEE"
SCI EXECUTIVE SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
"COMPANY"
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Pursuant to due authorization from its Board of Directors, the Parent,
by its execution hereof, absolutely and unconditionally guarantees to Employee
the full and timely payment and performance of each obligation of the Company
to Employee under this Agreement, waives any and all rights that it may
otherwise have to require Employee to proceed against the Company for
nonpayment or nonperformance, waives any and all defenses that would otherwise
be a defense to this guarantee, and agrees to remain liable to Employee for all
payment and performance obligations of the Company under this Agreement,
whether arising before, on or after the date of this Agreement, until this
Agreement shall terminate pursuant to its terms.
SERVICE CORPORATION
INTERNATIONAL
By: /s/ ▇▇▇▇▇ ▇. Shelger
Name: ▇▇▇▇▇ M Shelger
Senior Vice President
General Counsel
and Secretary
"PARENT"
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