EXHIBIT 10.9
SAFETY-KLEEN CORP. SEVERANCE AGREEMENT
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THIS AGREEMENT, dated this 1st day of January, 1995 is entered by and
between SAFETY-KLEEN CORP. (the "Company"), and DONALD W. BRINCKMAN, Chairman of
the Board (the "Employee").
WHEREAS, the Company desires to induce the Employee to remain in the employ
of the Company or a subsidiary thereof; and
WHEREAS, the Company and the Employee entered into an Employment Agreement
dated February 5, 1988 (the "Former Agreement") and deem it mutually beneficial
to enter into a new agreement superseding the Former Agreement in its entirely;
WHEREAS, the Company desires to enter into an agreement with the Employee
upon the terms and conditions set forth herein, and the Employee wishes to enter
into such an agreement with the Company.
NOW, THEREFORE, IN consideration of the foregoing and the mutual covenants
and conditions contained herein, the parties hereto agree as follows:
ARTICLE I.
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DEFINITIONS
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For purposes hereof the following words and phrases, when used herein,
unless their context clearly indicates otherwise, shall have the following
respective meanings:
1.1 "Change of Control" means the occurrence of any of the following:
(a) The acquisition, by a person or group of persons acting in concert, of
an ownership interest in the Company resulting in the total ownership interest
of such
person or group of persons equalling or exceeding 20% of the issued and
outstanding common (voting) stock (the "Stock") of the Company. The Change of
Control shall be deemed to occur on the date that the ownership interest of the
acquiring person or group of persons first equals or exceeds 20% of the issued
and outstanding Stock of the Company.
(b) A change, within a period of 24 months or less, in the composition of
the Board of Directors of the Company, such that at the end of such period the
majority of directors who are then serving were not serving at the beginning of
such period, unless at the end of such period, the majority of the directors in
office were nominated upon the recommendation of a majority of the Board of
Directors at the beginning of such period. The Change of Control shall be
deemed to occur on the date the last director necessary to constitute a change
of control takes office.
(c) The merger, consolidation, or other reorganization having substantially
the same effect as a merger or consolidation, or the sale of substantially all
the assets of the Company. The Change of Control shall be deemed to occur on
the date on which the transaction is approved by the Company's stockholders.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Discharge for Cause" means termination of employment of the Employee
by the Company, any parent or subsidiary of the Company or any successor to the
Company or any parent or subsidiary of the Company because of (a) commission by
the Employee of any felony which includes as an element of the crime a
premeditated intention to commit the act; (b) an inability to perform his duties
due to his habitual alcohol or
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drug addiction; (c) serious misconduct in the course of his employment involving
dishonesty; or (d) the Employee's habitual neglect of his duties. Discharge for
Cause shall not mean a discharge because of:
(a) bad judgment or negligence other than habitual neglect of duty;
(b) any act or omission believed by the Employee in good faith to have been
in or not opposed to the interest of the Company, any subsidiary of the Company
or any successor to the Company or any parent or subsidiary of the Company
(without intent of the Employee to gain therefrom, directly or indirectly, a
profit to which he was not legally entitled); or
(c) any act or omission in respect of which a determination could properly
have been made by the Board of Directors of the Company or, if employed by any
parent or subsidiary of the Company, such parent or subsidiary or, if employed
by any successor to the Company or any parent or subsidiary of the Company, such
successor that the Employee met the applicable standard of conduct for
indemnification or reimbursement under the bylaws of such company or the laws
and regulations under which such company is governed, in each case in effect at
the time of such act or omission; or
(d) any act or omission with respect to which notice of termination of
employment of the Employee is given more than twelve (12) months after the
earliest date on which any member of the Board of Directors of the Company or,
if employed by a parent or subsidiary of the Company, such parent or subsidiary
or, if employed by a successor to the Company or any parent or subsidiary of the
Company, such successor who is not a party to the act or omission knew or should
have known of such act or omission.
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1.4 "Voluntary Termination" means the voluntary resignation of the Employee
from employment by the Company, any parent or subsidiary of the Company or any
successor to the Company or any parent or subsidiary of the Company, but such
term shall not include a resignation by the Employee following (a) a material
reduction or adverse alteration in the nature of the Employee's position,
responsibilities or authorities, (b) the Employee becoming the holder of a
lesser office or title than that held, (c) any reduction of the Employee's
aggregate bonus opportunity, compensation and benefits, (d) the relocation of
the Employee's job more than fifty miles from his present location, or (e) any
other material adverse change to the terms and conditions of the Employee's
employment.
ARTICLE II.
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TERMINATION OF FORMER AGREEMENT
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Employee and the Company hereby agree to terminate the Former Agreement in
its entirety, effective the date hereof. Employee and the Company agree that
the Former Agreement shall hereinafter have no force or effect and shall be
invalid.
ARTICLE III.
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BEST EFFORTS AND CONTINUED EMPLOYMENT
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Subject to the provisions of Section 6.1, the Employee agrees that (a) he
will not Voluntarily Terminate his employment while there is an imminent Change
of Control, and (b) that during any such period of employment with the Company
he will continue to devote his full time and best efforts to the business of the
Company.
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ARTICLE IV.
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GENERAL SEVERANCE BENEFIT
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4.1 Entitlement. If the Employee's employment by the Company, any parent
or subsidiary of the Company or any successor to the Company or any parent or
subsidiary of the Company is terminated for reasons other than death, a
Voluntary Termination or a Discharge for Cause following a Change of Control but
not later than the third anniversary of the Change of Control, the Company shall
pay the Employee forthwith a lump sum severance benefit equal to three times the
sum of (a) and (b) where: (a) equals the Employee's annual rate of salary
(excluding bonuses) in effect on the date of the Employee's termination
(provided that such rate shall in no event be less than the rate in effect on
the date of Change of Control) and (b) equals the greater of (i) the bonus which
the Employee received in the year prior to the year in which the Employee's
termination occurs, or if larger, the year prior to the Change of Control or
(ii) the maximum bonus to which the Employee would be entitled for the year in
which the Employee's termination occurs. If the Employee's employment by the
Company, any parent or subsidiary of the Company or any successor to the Company
or any parent or subsidiary of the Company is terminated later than the third
anniversary of the Change of Control there shall be no severance benefit payable
hereunder.
4.2 No Duplication of Benefits. The severance benefits provided for herein
are in lieu of severance benefit provisions under the Company severance pay
policies and plans or under any other contract between the Company or any
parent, subsidiary or affiliate thereof and the Employee, including, but not
limited to, benefits payable under
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employment agreements by virtue of termination of employment prior to the
expiration of the agreement. The Employee shall not be entitled to any
severance benefits under such policies, plans or other contracts unless the
benefits provided thereunder are greater than the severance benefits payable
hereunder, in which case the severance benefits under such other policies, plans
or contracts shall be provided in lieu of the severance benefits hereunder.
ARTICLE V.
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TAX BENEFITS
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5.1 Limit On Benefits. Notwithstanding any of the provisions of this
Agreement to the contrary, if any payments under this Agreement ("Agreement
Parachute Payments") count in determining whether the Employee has received
"parachute payments" (as defined in Code Section 280G(b)(2)), and if the sum of
the present values (as determined under Code Section 280G(d)(4)) of (a) the
Agreement Parachute Payments to the Employee, plus (b) any other payments or
benefits which count in determining whether the Employee has received parachute
payments excluding payments or benefits attributable to options granted under
the Company's stock option plans ("Other Parachute Payments"), received by the
Employee from the Company or any other member of the same affiliated group as
the Company (as defined in Code Section 1504, determined without regard to Code
Section 1504(b)) equals or exceeds three (3) times the Employee's base amount
(as defined in Code Section 280G(b)(3)), then the amount of the Agreement
Parachute Payments shall be reduced to the extent necessary so that
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the sum of the present values of the Agreement Parachute Payments and Other
Parachute Payments equals three (3) times the Employee's base amount less $1.00.
5.2 Gross-up.
(a) If it is determined (in the reasonable opinion of the Company or in the
opinion of counsel to the Company if such an opinion is requested by the
Employee) that any payment or benefit made pursuant to this Agreement or
otherwise, received or deemed received by the Employee from the Company or any
other member of the same affiliated group as the Company (as defined in Code
Section 1504, determined without regard to Code Section 1504(b)) (collectively
referred to as the "Payments") is or will become subject to any excise tax under
Section 4999 of the Code or any similar tax payable under any federal, state,
local or other law ("Excise Taxes"), then the Company shall, immediately upon
such determination, pay the Employee an amount equal to the sum of (i) any such
Excise Taxes, plus (ii) the amount necessary to reimburse the Employee for any
federal, state, local or other income, excise or other taxes payable by the
Employee with respect to (A) the amount of Excise Taxes reimbursement herein
provided, and (B) the amount paid to the Employee as reimbursement of any such
federal, state, local or other income, excise or other taxes, as determined (for
both clauses (A) and (B) hereof) in accordance with the formula set forth on
Exhibit I attached hereto. All determinations hereunder shall be made in
adequate time to permit the Employee to prepare and file his individual tax
returns in a timely fashion.
(b) The Company, in determining whether the Payments are subject to Excise
Taxes, may have reasonably concluded that certain items are neither subject to
Excise
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Taxes nor to be counted in determining whether Payments are subject to Excise
Taxes (such items hereinafter referred to as "Non-Parachute Items"). If at a
later date, it is determined (pursuant to final regulations or published rulings
of the IRS, final judgment of a court of competent jurisdiction or, if requested
by Employee, an opinion of counsel to the Company) that any of the Non-Parachute
Items are subject to Excise Taxes, or are to be counted in determining whether
any of the Payments are subject to Excise Taxes, with the result that the amount
of Excise Taxes payable by the Employee is greater than the amount so determined
by the Company pursuant to paragraph (a) above, then the Company shall pay the
Employee, in accordance with the formula set forth on Exhibit I, an amount equal
to the sum of (i) such additional Excise Taxes (ii) any interest, fines,
penalties, expenses, and other costs incurred by Employee and resulting from the
Employee having taken a position that payments are not subject to Excise Taxes
in accordance with the determination made in paragraph (a), above; plus (iii) an
amount necessary to reimburse the Employee for any federal, state, local, or
other income, excise, or other taxes payable by the Employee with respect to (A)
the amounts specified in subparagraphs (i) and (ii) above, and (B) the
reimbursement provided by this subparagraph (iii).
5.3 Consultation. At the Company's reasonable request, the Employee shall
consult with the Company regarding (a) the preparation and filing of the
Employee's federal income and excise tax returns for any year in which any
Payments are received, and (b) any federal tax issues which may arise with
respect to any Payments made in connection with a Change in Control. At the
Company's request, Employee shall retain
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counsel and other experts and consultants reasonably satisfactory to Company in
connection with any or all of the matters described in items (a) and (b) above
and Company shall reimburse Employee (in accordance with Section 6.2 hereof) for
all fees, expenses and costs (including audit costs, attorneys' fees and
expenses, and court costs) incurred by Employee as a result of the retention of
such counsel and other experts and consultants. Anything to the contrary herein
notwithstanding, the Employee shall not in any way be restricted from making
such disclosure in his individual tax returns with respect to the Payments as he
shall deem reasonable and appropriate.
ARTICLE VI.
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MISCELLANEOUS
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6.1 No Employment Guarantee. This Agreement shall not be deemed to entitle
the Employee to continued employment with the Company, any parent or subsidiary
of the Company or any successor to the Company or any parent or subsidiary of
the Company and the rights of the Company, any parent or subsidiary of the
Company or any successor to the Company or any parent or subsidiary of the
Company to terminate the employment of the Employee shall continue as fully as
if this Agreement were not in effect.
6.2 Expenses.
(a) If the Employee incurs (i) legal or other fees and expenses in an effort
to establish entitlement to benefits under this Agreement, regardless of whether
the Employee ultimately prevails, or (ii) legal, accounting and other fees and
expenses in connection with the retention of counsel and other experts and
consultants as requested
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by the Company pursuant to Section 5.3 hereof, the Company shall reimburse him
for such fees and expenses.
(b) Reimbursement of fees and expenses described in paragraph (a), above,
shall be made monthly during the course of any action upon the written
submission of a request for reimbursement together with proof that the fees and
expenses were incurred.
6.3 Unfunded Obligation. The obligation of the Company under this
Agreement shall be unfunded and unsecured, and the Company shall not be required
to segregate any assets that may at any time be required to provide the benefits
under this Agreement.
6.4 Assignment, Successors. The Company may freely assign its respective
rights and obligations under this Agreement to a successor of the Company's
business, without the prior written consent of the Employee. This Agreement
shall be binding upon and inure to the benefit of the Employee and his estate
and the Company and any assignee of or successor to the Company.
6.5 Beneficiary. If the Employee dies prior to receiving all of the
benefits payable hereunder, such benefits when payable shall be paid to the
beneficiary designated in writing by the Employee and if no such beneficiary is
designated, to the Employee's estate.
6.6 Nonalienation of Benefits. Benefits payable under this Agreement shall
not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, prior to actually being received by the
Employee; and any attempt to
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anticipate, alienate, sell, transfer, assign, pledge, encumber, charge, garnish,
execute on, levy or otherwise dispose of any right to benefits payable
hereunder, shall be void.
6.7 Severability. If all or any part of this Agreement is declared by any
court or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of this Agreement not
declared to be unlawful or invalid. Any Section or part of a Section so
declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such Section or part of a Section to the
fullest extent possible while remaining lawful and valid.
6.8 Amendment and Waiver. Subject to Section 5.9, this Agreement shall not
be altered, amended or modified except by written instrument executed by the
Company and Employee. A waiver of any term, covenant, agreement or condition
contained in this Agreement shall not be deemed a waiver of any other term,
covenant, agreement or condition, and any waiver of any default in any such
term, covenant, agreement or condition shall not be deemed a waiver of any later
default thereof or of any other term, covenant, agreement or condition.
6.9 Cancellation. The Company may, at any time prior to a Change of
Control, unilaterally cancel this Agreement on behalf of all parties hereto by
notifying the Employee of such cancellation in writing at least twelve (12)
months prior to the effective date of cancellation.
6.10 Notices. All notices required by this Agreement shall be in writing
and delivered by hand or by first class registered or certified mail, postage
prepaid, and addressed as follows:
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If to the Company: Safety-Kleen Corp.
1000 North Randall Road
Elgin, Illinois 60123
If to the Employee: Donald W. Brinckman
5615 Hamilton
Woodstock, Illinois 60098
Either party may from time to time designate a new address by notice given in
accordance with this Section.
6.11 No Reductions or Mitigation. Except as specifically provided herein,
all amounts payable pursuant to this Agreement shall be paid without reduction
regardless of any amounts of salary, compensation or other amounts which may be
paid or payable to Employee from any source; provided that the Company shall be
permitted to make all payments pursuant to this Agreement net of any legally
required tax withholdings.
6.12 Applicable Law. The provisions of this Agreement shall be interpreted
and construed in accordance with the laws of the state of Illinois, without
regard to its choice of law principles.
6.13 Recitals. The recitals set forth above are hereby incorporated into
and made a part hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
SAFETY-KLEEN CORP.
/s/ SAFETY-KLEEN CORP.
By:_______________________________
EMPLOYEE:
/s/ DONALD W. BRINCKMAN
_________________________________
DONALD W. BRINCKMAN
CHAIRMAN OF THE BOARD
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EXHIBIT I
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Gross-up Formula
Any payment made pursuant to Section 5.2 of the Agreement (a "Gross-up
Payment") shall be calculated as follows:
A. The Gross-up Payment shall be the product of (i) the amount of the
Excise Taxes (and in the case of Section 5.2(b), any interest, fines,
penalties, expenses, and other costs relating to Excise Taxes) incurred by
the Employee times (ii) a fraction the numerator of which is 1, and the
denominator of which is 1 minus the combined total rates expressed as a
fraction, determined in accordance with paragraph B hereof, of all federal,
state, local and other income and other taxes and any Excise Taxes
applicable to such Gross-up Payment. In the event that different rates of
tax are applicable to any portion of a Gross-up Payment, the denominator of
the fraction set forth in clause (ii) above shall be 1 minus the combined
total of the weighted average rates expressed as a fraction, determined in
accordance with paragraph B hereof, of all federal, state, local and other
income and other taxes and any Excise Taxes applicable to such Gross-up
Payment.
B. For purposes of determining the denominator of the fraction set
forth in clause (ii) of paragraph A hereof, the rates of federal, state,
local and other income and other taxes and Excise Taxes shall be the actual
rates of such taxes (giving effect to the Employee's net effective tax rates
determined net of the benefit of any tax deduction or tax credit); provided,
however, that if the combined total of such rates shall exceed 75%, such
combined total shall be deemed to be 75%.
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