Exhibit 10.2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as
of this 1st day of January, 1999, 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 W. Blair
Waltrip (the "Employee").
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, 2001 (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. During the Employment Period,
the Employee shall serve as the Executive Vice President of the Parent and the
Company and shall have the duties, powers and authority heretofore possessed by
the holder of such offices and such other powers consistent therewith as are
delegated to him in writing from time to time by the Board of Directors of the
Parent (the "Board"). 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 15(a) below).
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 $450,000 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 awarded
to Employee prior to the Change of Control Period. 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 (as defined in Section 15(d)
below) providing for the payment of bonuses in cash to senior management
employees of the Company or its affiliated companies (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 15(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 senior management employees of 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 senior management
employees of 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, past practices, programs and policies of the Company and its
affiliated companies from time to time in effect.
(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, commensurate with his position.
(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.
(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 one-year 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 16(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) the Employee's deliberate and intentional continuing refusal to
substantially perform his duties and obligations under this Agreement
(other than a breach of the Employee's obligations under this Agreement
arising from the failure of the Employee to work as a result of incapacity
due to physical or mental illness) if he shall have either failed to remedy
such alleged breach within 60 days from his receipt of written notice from the
Secretary of the Company demanding that he remedy such alleged breach, or
shall have failed to take reasonable steps in good faith to that end during
such 60 day period and thereafter, or (ii) 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);
(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 14(c), provided that the
successor referred to in Section 14(c) has received at least ten days
prior written notice from the Company or the Employee of the
requirements of Section 14(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 16(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, (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) and (iv) if the termination is by the Company for Cause,
indicates that the Board has determined that a basis for termination for
Cause exists, that the Employee has failed to take reasonable steps in good
faith to remedy the alleged basis for such termination, and contains a
certified copy of a resolution of the Board adopted by the affirmative vote
of not less than two-thirds of the entire membership of the Board in a
meeting called and held for that purpose in which the Employee was
given an opportunity to be heard, finding that a basis for termination for Cause
exists and that the Employee has failed to take reasonable steps in good faith
to remedy such alleged basis for termination. 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 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(b)(based on the Highest Recent Bonus), 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 (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 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 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, 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 Sec-tions 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")
would be subject to the excise tax imposed by Section 4999 (or a successor
provision of like import) 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 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 sue 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 sue
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 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)
The Employee shall comply with the conflict of interest policy of the Parent as
in effect from time to time.
11. 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 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.
12. Employee's Post-Employment Non-Competition Obligations. (a)
During the Employment Period and, subject to the conditions of Sections 12(b)
and 12(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 12(a) and the Company shall have no obligation to make
the Non-Competition Payments (as defined in Section 12(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 12(a) shall be subject to the Company's
obligation to make the Non-Competition Payments specified in Section 12(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)), or by Employee for Good Reason or during the Window Period
pursuant to Section 4(c) 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 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 12(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 16(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 12(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.
13. 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 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.
14. 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.
15. 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
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 secu-rities 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 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
(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.
16. 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 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 or the Parent
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:
W. Blair Waltrip
1929 Allen Parkway
Houston, TX 77019
If to the Company:
SCI Executive Services, Inc.
1929 Allen Parkway
Houston, Texas 77019
Attention: Corporate Secretary
If to the Parent:
Service Corporation International
1929 Allen Parkway
Houston, Texas 77019
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 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, 1999.
W. BLAIR WALTRIP
/s/ W. Blair Waltrip
"EMPLOYEE"
SCI EXECUTIVE SERVICES, INC.
By: /s/ Curtis G. Briggs
Name: Curtis G. Briggs
Title: Vice President
"COMPANY"
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/ James M. Shelger
Name: James M. Shelger
Title: Senior Vice President
General Counsel
and Secretary
"PARENT"