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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") made and entered into
as of this 11th day of November, 1991, amended and restated as of August 12,
1992, further amended and restated as of May 12, 1993 and further amended and
restated as of January 1, 1997 by and between SCI EXECUTIVE SERVICES, INC., a
Delaware corporation (the "Company") wholly owned by and successor by
assignment to all of the rights, duties and obligations under this Agreement of
SERVICE CORPORATION INTERNATIONAL, a Texas corporation (the "Parent"), and R.
L. Waltrip (the"Employee");
WHEREAS, in order to achieve certain administrative
efficiencies in providing professional management services to its affiliated
companies, the Parent has transferred the Employee to the employ of the Company
effective January 1, 1997;
WHEREAS, the Company, the Parent and the Employee desire to
join in the execution of this amended and restated Agreement to (i) provide for
the transfer of the employment of the Employee and (ii) 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;
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 employment by
the Company and the mutual promises and covenants contained herein, the receipt
and sufficiency of such consideration being hereby acknowledged, the Company
and Employee agree as follows:
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1. Employment and Term. The Company agrees to employ
the Employee and the Employee agrees to remain in the employ of the Company, in
accordance with the terms and provisions of this Agreement, for the period
beginning on the date of this Agreement (i.e. November 11, 1991) and ending as
of the close of business on the fifth (5th) anniversary of the date hereof
(such period together with all extensions thereof, including any Change of
Control Period (as defined in Section 16(b) below), are referred to hereinafter
as the "Employment Period"); provided, however, that commencing on the date one
year after the date hereof, and on each annual anniversary of such date (such
date and each annual anniversary thereof shall be hereinafter referred to as a
"Renewal Date") the Employment Period shall be automatically extended so as to
terminate five (5) years from such Renewal Date, unless at least 60 days prior
to the Renewal Date either the Company or the Employee gives the other written
notice that the Employment Period shall not be so 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") or any duly authorized committee thereof 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 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.
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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
$798,000.00 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 Board may from time to time direct
such upward adjustments to Annual Base Salary as the Board 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
Board (such aggregate awards for each year are hereinafter referred to as the
"Annual Bonus") and at the discretion of the Board to receive awards from any
plan of the Company or any of its affiliated companies providing for the
payment of 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
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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, 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) 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
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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 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);
(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 15(c), provided that the successor referred
to in Section 15(c) has received at least ten days prior written
notice from the Company or the Employee of the requirements of Section
15(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.
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(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.
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).
(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:
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(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) Five (5) multiplied by the
Employee's Annual Base Salary, plus
(2) Five (5) 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
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(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) five (5) years 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,
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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 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
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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 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 the Company's outside independent auditor (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
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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 effectively to 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
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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) In keeping with Employee's fiduciary duties to the 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 Company any facts which might involve a conflict of interest
that has not been approved by the Company. The Board hereby acknowledges and
agrees that the
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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 or 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,
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 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
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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.
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
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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.
13. Employee's Post-Employment Non-Competition
Obligations: In Certain Situations such Obligations Apply only if the Company
Opts to Continue Employee's Salary Payment. (a) During the Employment Period
and, subject to the conditions of Sections 13(b) and 13(c), for a period of
five (5) years thereafter (the "Non-Competition Period") provided, however,
that the Non-Competition Period shall not exceed five (5) years from the Date
of Termination, 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.
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(b) If Employee has been terminated for Cause (Section
4(b)) or if Employee terminates his employment for any reason other than for
Good Reason or other than during the Window Period (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 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 the employment relationship is terminated due to the
expiration of its term because the Company or Employee timely gave written
notice of termination (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 within one (1) month after Employee's 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 time, 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 purpose of
this paragraph is to make the non-competition obligations of Employee more
reasonable from the Employee's point of view. 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 five (5) years
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
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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 or 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 terminated or the Employee ceases to have the
position with the Company or the Parent which the Employee had prior to the
date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Employee that such termination or cessation (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:
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(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
comprising 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 was comprised 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
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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,
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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 replaces and merges
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 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:
R. L. Waltrip
1929 Allen Parkway
Houston, TX 77019
If to the Company:
SCI Executive Services, Inc.
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.
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(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 of Directors of the Company, the Company have
caused this Agreement to be executed this 1st day of January, 1997, effective
as of the day and year first above written.
R. L. WALTRIP
/s/ R. L. WALTRIP
---------------------------------
"EMPLOYEE"
SCI EXECUTIVE SERVICES, INC.
By: /s/ CURTIS G. BRIGGS
------------------------------
Curtis G. Briggs
Vice President
"COMPANY"
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Pursuant to due authorization from its Board of Directors, the Parent,
by its execution hereof, absolutely and unconditionally guarantees to Employee
the full and timely payment and performance of each obligation of the Company
to Employee under this Agreement, WAIVES any and all rights that it may
otherwise have to require Employee to proceed against the Company for
nonpayment or nonperformance, WAIVES any and all defenses that would otherwise
be a defense to this guarantee, and agrees to remain liable to Employee for all
payment and performance obligations of the Company under this Agreement,
whether arising before, on or after the date of this Agreement, until this
Agreement shall terminate pursuant to its terms.
SERVICE CORPORATION INTERNATIONAL
By: /s/ JAMES M. SHELGER
------------------------------
James M. Shelger
Senior Vice President
General Counsel & Secretary
"PARENT"
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