1
EXHIBIT 10.7
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 Xxxx X.
Xxxxxx, Xx. (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:
2
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
-2-
3
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
$350,000 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
-3-
4
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,
-4-
5
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
-5-
6
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);
-6-
7
(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
-7-
8
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
-8-
9
(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
-9-
10
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
-10-
11
and/or the Employee's family of any other amounts or benefits required to be
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 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, 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,
-11-
12
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")
-12-
13
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
-13-
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 xxx 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 xxx
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
-14-
15
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 of
-16-
17
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-
18
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
-18-
19
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
-19-
20
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
-20-
21
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
-21-
22
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
-22-
23
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
-23-
24
(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
-24-
25
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:
Xxxx X. Xxxxxx, Xx.
0000 Xxxxxx Xxxxx Xxxx.
Xxxxxxx, XX 00000
If to the Company:
SCI Executive Services, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Corporate Secretary
If to the Parent:
Service Corporation International
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
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
-25-
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.
XXXX X. XXXXXX, XX.
/s/ Xxxx X. Xxxxxx
----------------------------------
"EMPLOYEE"
SCI EXECUTIVE SERVICES, INC.
By:/s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------
Title: Vice President
----------------------------
"COMPANY"
-26-
27
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/ Xxxxx X. Shelger
Name: Xxxxx X. Shelger
Senior Vice President
General Counsel
and Secretary
"PARENT"
-27-
