EXHIBIT 4
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SAFETY-KLEEN CORP.
CHANGE OF CONTROL SEVERANCE AGREEMENT
TABLE OF CONTENTS
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ARTICLE I. - PURPOSES....................................................... 1
ARTICLE II. - CERTAIN DEFINITIONS........................................... 1
2.1 "Accrued Obligations"........................................... 1
2.2 "Agreement Term"................................................ 1
2.3 "Article"....................................................... 2
2.4 "Beneficial Owner".............................................. 2
2.5 "Cause"......................................................... 2
2.6 "Change of Control"............................................. 2
2.7 "Code".......................................................... 2
2.8 "Disability".................................................... 2
2.9 "Effective Date"................................................ 2
2.10 "Good Reason"................................................... 3
2.11 "Gross-up Payment".............................................. 3
2.12 "Imminent Change of Control Date"............................... 3
2.13 "IRS"........................................................... 3
2.14 "1934 Act"...................................................... 3
2.15 "Notice of Termination"......................................... 3
2.16 "Plans"......................................................... 3
2.17 "Policies"...................................................... 3
2.18 "Post-Change Period"............................................ 3
2.19 "SEC"........................................................... 3
2.20 "Section"....................................................... 3
2.21 "Subsidiary".................................................... 3
2.22 "Termination Date".............................................. 3
2.23 "Termination Performance Period"................................ 4
2.24 "Voting Securities"............................................. 4
ARTICLE III. - POST-CHANGE PERIOD PROTECTIONS............................... 4
3.1 Position and Duties............................................. 4
3.2 Compensation.................................................... 5
3.3 Stock Options................................................... 7
ARTICLE IV. - TERMINATION OF EMPLOYMENT..................................... 7
4.1 Disability...................................................... 7
4.2 Death........................................................... 8
4.3 Cause........................................................... 8
4.4 Good Reason..................................................... 9
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TABLE OF CONTENTS
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ARTICLE V. - OBLIGATIONS OF THE COMPANY UPON TERMINATION.................... 10
5.1 If by the Executive for Good Reason or by the Company Other
Than for Cause or Disability................................. 10
5.2 If by the Company for Cause..................................... 11
5.3 If by the Executive Other Than for Good Reason.................. 11
5.4 If by the Company for Disability................................ 11
5.5 If upon Death................................................... 12
ARTICLE VI. - NON-EXCLUSIVITY OF RIGHTS..................................... 12
6.1 Waiver of Other Severance Rights................................ 12
6.2 Other Rights.................................................... 12
ARTICLE VII. - CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY................... 12
7.1 Gross-up for Certain Taxes...................................... 12
7.2 Determination by the Executive.................................. 13
7.3 Additional Gross-up Amounts..................................... 14
7.4 Gross-up Multiple............................................... 14
7.5 Opinion of Counsel.............................................. 14
7.6 Amount Increased or Contested................................... 15
7.7 Refunds......................................................... 16
ARTICLE VIII. - EXPENSES AND INTEREST....................................... 16
8.1 Legal Fees and Other Expenses................................... 16
8.2 Interest........................................................ 16
ARTICLE IX. - NO SET-OFF OR MITIGATION...................................... 17
9.1 No Set-off by Company........................................... 17
9.2 No Mitigation................................................... 17
ARTICLE X. - CONFIDENTIALITY AND NONCOMPETITION............................. 17
10.1 Confidentiality................................................. 17
10.2 Noncompetition/Nonsolicitation.................................. 18
10.3 Remedy.......................................................... 18
ARTICLE XI. - MISCELLANEOUS................................................. 19
11.1 No Assignability................................................ 19
11.2 Successors...................................................... 19
11.3 Payments to Beneficiary......................................... 19
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TABLE OF CONTENTS
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11.4 Non-alienation of Benefits...................................... 19
11.5 Severability.................................................... 19
11.6 Amendments...................................................... 20
11.7 Notices......................................................... 20
11.8 Counterparts.................................................... 20
11.9 Governing Law................................................... 20
11.10 Captions........................................................ 20
11.11 Tax Withholding................................................. 20
11.12 No Waiver....................................................... 20
11.13 Entire Agreement................................................ 21
11.14 Cancellation.................................................... 21
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EXHIBIT 4
SAFETY-KLEEN CORP.
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT dated as of August 18, 1997, is made between SAFETY-KLEEN
CORP., a Wisconsin corporation having its principal place of business in Elgin,
Illinois (the "Company"), and _____________________ (the "Executive"), a
resident of Illinois.
The Company and the Executive agree that this Agreement supersedes the
Safety-Kleen Corp. Severance Agreement (the "Prior Agreement") dated February 3,
1995, between the Company and the executive which is hereby cancelled.
ARTICLE I.
PURPOSES
The Board of Directors of the Company (the "Board") has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued service of the Executive, despite the
possibility or occurrence of a change of control of the Company. The Board
believes it is imperative to reduce the distraction of the Executive that would
result from the personal uncertainties caused by a pending or threatened change
of control, to encourage the Executive's full attention and dedication to the
Company, and to provide the Executive with compensation and benefits
arrangements upon a change of control which ensure that the expectations of the
Executive will be satisfied and are competitive with those of similarly-situated
corporations. This Agreement is intended to accomplish these objectives.
ARTICLE II.
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 "Accrued Obligations" -- see Section 5.3.
2.2 "Agreement Term" means the period commencing on the date of this
Agreement and ending on the date which is twelve (12) months following the date
that the Company gives notice of cancellation pursuant to Section 11.14 hereof
(the "Expiration Date"); provided, however, that if an Imminent Change of
Control Date occurs before the Expiration Date, then the Agreement Term shall
automatically extend to a date which is twelve (12) months after the date of the
Imminent Change of Control Date, as further extended under the terms of this
sentence should any Imminent Change of Control Date occur prior to the
expiration of the Agreement Term as from time to time so extended; and
provided further, that if a Change of Control occurs before the Expiration Date,
the Expiration Date shall automatically be extended to the last day of the Post-
Change Period.
2.3 "Article" means an article of this Agreement.
2.4 "Beneficial owner" means such term as defined in Rule 13d-3 of the SEC
under the 1934 Act.
2.5 "Cause" -- see Section 4.3(b).
2.6 "Change of Control" means, except as otherwise provided below, the
occurrence of any of the following:
a. any person (as such term is used in Rule 13d-5 of the SEC under
the 1934 Act) or group (as such term is defined in Section 13(d) of the
1934 Act), other than a Subsidiary or any employee benefit plan (or any
related trust) of the Company or a Subsidiary, becomes the beneficial owner
of 20% or more of the common stock of the Company or of Voting Securities
representing 20% or more of the combined voting power of all Voting
Securities of the Company;
b. within a period of 24 months or less, the individuals who, as of
any date, constitute the Board (the "Incumbent Directors") cease for any
reason to constitute at least a majority of the Board unless at the end of
such period, the majority of individuals then constituting the Board were
nominated upon the recommendation of a majority of the Incumbent Directors.
c. approval by the stockholders of the Company of any of the
following:
(1) a merger, reorganization or consolidation ("Merger") with
respect to which the individuals and entities who were the respective
beneficial owners of the stock and Voting Securities of the Company
immediately before such Merger do not, after such Merger,
beneficially own, directly or indirectly, more than 80% of,
respectively, the common stock and the combined voting power of the
Voting Securities of the corporation resulting from such Merger in
substantially the same proportion as their ownership immediately
before such Merger, or
(2) the sale or other disposition of all or substantially all of
the assets of the Company.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
2.8 "Disability" -- see Section 4.1(b).
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2.9 "Effective Date" means the first date on which a Change of Control
occurs during the Agreement Term. Despite anything in this Agreement to the
contrary, if the Company terminates the Executive's employment before the date
of a Change of Control, and if the Executive reasonably demonstrates that such
termination of employment (a) was at the request of a third party who had taken
steps reasonably calculated to effect the Change of Control or (b) otherwise
arose in connection with or anticipation of the Change of Control, then
"Effective Date" shall mean the date immediately before the date of such
termination of employment.
2.10 "Good Reason" -- see Section 4.4(b).
2.11 "Gross-up Payment" -- see Section 7.1.
2.12 "Imminent Change of Control Date" means any date on which occurs (a)
a presentation to the Company's stockholders generally or any of the Company's
directors or executive officers of a proposal or offer for a Change of Control,
or (b) the public announcement (whether by advertisement, press release, press
interview, public statement, SEC filing or otherwise) of a proposal or offer for
a Change of Control, or (c) such proposal or offer remains effective and
unrevoked.
2.13 "IRS" means the Internal Revenue Service.
2.14 "1934 Act" means the Securities Exchange Act of 1934.
2.15 "Notice of Termination" means a written notice given in accordance
with Section 12.7 which sets forth (a) the specific termination provision in
this Agreement relied upon by the party giving such notice, (b) in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under such termination provision and (c) if the
Termination Date is other than the date of receipt of such Notice of
Termination, the Termination Date.
2.16 "Plans" means plans, programs, policies or practices of the Company.
2.17 "Policies" means policies, practices or procedures of the Company.
2.18 "Post-Change Period" means the period commencing on the Effective
Date and ending on the third anniversary of such date.
2.19 "SEC" means the Securities and Exchange Commission.
2.20 "Section" means, unless the context otherwise requires, a section of
this Agreement.
2.21 "Subsidiary" means a corporation as defined in Section 424(f) of the
Code with the Company being treated as the employer corporation for purposes of
this definition.
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2.22 "Termination Date" means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be not
more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company terminates the Executive's employment
other than for Cause or Disability, then the Termination Date shall be the date
of receipt of such Notice of Termination and (b) if the Executive's employment
is terminated by reason of death or Disability, then the Termination Date shall
be the date of death of the Executive or the Disability Effective Date, as the
case may be.
2.23 "Termination Performance Period" -- see Section 3.2(b)(2)(B).
2.24 "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.
ARTICLE III.
POST-CHANGE PERIOD PROTECTIONS
3.1 Position and Duties.
a. During the Post-Change Period, (1) the Executive's position
(including offices, titles, reporting requirements and responsibilities),
authority and duties shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at
any time during the 90-day period immediately before the Effective Date and
(2) the Executive's services shall be performed at the location where the
Executive was employed immediately before the Effective Date or any other
location less than 40 miles from such former location.
b. During the Post-Change Period (other than any periods of
vacation, sick leave or disability to which the Executive is entitled), the
Executive agrees to devote the Executive's full attention and time to the
business and affairs of the Company and, to the extent necessary to
discharge the duties assigned to the Executive in accordance with this
Agreement, to use the Executive's best efforts to perform faithfully and
efficiently such duties. During the Post-Change Period, the Executive may
(1) serve on corporate, civic or charitable boards or committees, (2)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (3) manage personal investments, so long as such
activities are consistent with the Policies of the Company at the Effective
Date and do not significantly interfere with the performance of the
Executive's duties under this Agreement. To the extent that any such
activities have been conducted by the Executive before the Effective Date
and were consistent with the Policies of the Company at the Effective Date,
the continued conduct of such activities (or activities similar in nature
and scope) after the Effective Date shall not be deemed to interfere with
the performance of the Executive's duties under this Agreement.
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3.2 Compensation.
a. Base Salary. During the Post-Change Period, the Company shall
pay or cause to be paid to the Executive an annual base salary in cash
("Guaranteed Base Salary"), which shall be paid in a manner consistent with
the Company's payroll practices in effect immediately before the Effective
Date at a rate at least equal to 12 times the highest monthly base salary
paid or payable to the Executive by the Company in respect of the 12-month
period immediately before the Effective Date. During the Post-Change
Period, the Guaranteed Base Salary shall be reviewed at least annually and
shall be increased at any time and from time to time as shall be
substantially consistent with increases in base salary awarded to other
peer executives of the Company. Any increase in Guaranteed Base Salary
shall not limit or reduce any other obligation of the Company to the
Executive under this Agreement. After any such increase, the Guaranteed
Base Salary shall not be reduced and the term "Guaranteed Base Salary"
shall thereafter refer to the increased amount.
b. Target Bonus. During the Post-Change Period, the Company shall
pay or cause to be paid to the Executive a bonus (the "Guaranteed Bonus")
for each Performance Period which ends during the Post-Change Period.
"Performance Period" means each period of time designated in accordance
with any bonus arrangement ("Bonus Plan") which is based upon performance
and approved by the Board or any committee of the Board. The Guaranteed
Bonus shall be at least equal to the greatest of:
(1) the On Plan Bonus, which shall mean the cash bonus which the
Executive would accrue under any Bonus Plan for the Performance Period for
which the Guaranteed Bonus is awarded ("Current Performance Period") as if
the performance achieved 100% of plan established pursuant to such Bonus
Plan and the maximum level of the discretionary portion is achieved;
(2) the Actual Bonus, which shall mean the cash bonus which
Executive would accrue under any Bonus Plan for the Current Performance
Period if the performance during the Current Performance Period were
measured by actual performance; provided, however, that for purposes of
Section Article V of this Agreement, the Actual Bonus for the Performance
Period in which the Termination Date occurred (the "Termination Performance
Period") shall not be less than the cash bonus which the Executive would
accrue under any Bonus Plan if performance during that Termination
Performance Period were measured by the actual performance during the
Termination Performance Period before the Termination Date projected to the
last day of such Performance Period and the maximum level of the
discretionary portion is achieved; and
(3) the Historical Bonus, which shall mean the bonus that the
Executive accrued in the last Performance Period that ended before the
Post-Change Period; provided, however, that for purposes of Article V of
this Agreement, the
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Historical Bonus for the Performance Period in which the Termination Date
occurred shall not be less than the cash bonus that the Executive accrued
in the last Performance Period that ended before the Termination Date.
c. Incentive, Savings and Retirement Plans. In addition to
Guaranteed Base Salary and Guaranteed Bonus payable as provided in this
Section, the Executive shall be entitled to participate during the Post-
Change Period in all incentive (including long-term incentives), savings
and retirement Plans applicable to other peer executives of the Company,
but in no event shall such Plans provide the Executive with incentive
(including long-term incentives), savings and retirement benefits which, in
any case, are less favorable, in the aggregate, than the most favorable of
those provided by the Company to the Executive or to peer executives under
such Plans as in effect at any time during the 90-day period immediately
before the Effective Date.
d. Welfare Benefit Plans. During the Post-Change Period, the
Executive and the Executive's family shall be eligible to participate in,
and receive all benefits under, welfare benefit Plans provided by the
Company (including, without limitation, medical, prescription, dental,
disability, salary continuance, individual life, group life, dependent
life, accidental death and travel accident insurance Plans) and applicable
to other peer executives of the Company and their families, but in no event
shall such Plans provide benefits which in any case are less favorable, in
the aggregate, than the most favorable of those provided to the Executive
or to peer executives under such Plans as in effect at any time during the
90-day period immediately before the Effective Date.
e. Fringe Benefits. During the Post-Change Period, the Executive
shall be entitled to fringe benefits and other executive perquisites in
accordance with the most favorable Plans applicable to peer executives of
the Company, but in no event shall such Plans provide fringe benefits and
other executive perquisites which in any case are less favorable, in the
aggregate, than the most favorable of those provided by the Company to the
Executive or to peer executives under such Plans in effect at any time
during the 90-day period immediately before the Effective Date.
f. Expenses. During the Post-Change Period, the Executive shall be
entitled to prompt reimbursement of all reasonable employment-related
expenses incurred by the Executive upon the Company's receipt of
accountings in accordance with the most favorable Policies applicable to
peer executives of the Company, but in no event shall such Policies be less
favorable, in the aggregate, than the most favorable of those provided by
the Company to the Executive or to peer executives under such Policies in
effect at any time during the 90-day period immediately before the
Effective Date.
g. Office and Support Staff. During the Post-Change Period, the
Executive 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 in
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accordance with the most favorable Policies applicable to peer executives
of the Company, but in no event shall such Policies be less favorable, in
the aggregate, than the most favorable of those provided by the Company to
the Executive or to peer executives under such Policies in effect at any
time during the 90-day period immediately before the Effective Date.
h. Vacation. During the Post-Change Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable Policies
applicable to peer executives of the Company, but in no event shall such
Policies be less favorable, in the aggregate, than the most favorable of
those provided by the Company to the Executive or to peer executives under
such Policies in effect at any time during the 90-day period immediately
before the Effective Date.
3.3 Stock Options.
In addition to the other benefits provided in this Section, on the
Effective Date, the Executive shall become fully vested in any and all
outstanding stock options granted to Executive for shares of common stock
of the Company or to the extent that such options are not vested, shall
receive a lump-sum cash payment equal to the spread of all non-vested,
forfeited options as of the date such options are forfeited.
3.4 Excess/Supplemental Plans.
In addition to the other benefits provided in this Section, on the
Effective Date, the Company shall pay to Executive an amount equal to the
value (determined using the actuarial assumptions then applied by the
Pension Benefit Guaranty Corporation for determining immediate annuity
present values) of the Executive's accrued benefits under (1) the Safety-
Kleen Corp. Excess Benefit Plan, (2) the Safety-Kleen Supplemental
Executive Retirement Plan, or (3) any such successor plan or other
nonqualified unfunded retirement Plan as may be in effect as of (or as may
have been in effect at any time during the 90-day period immediately
before) the Effective Date (the "Excess/Supplemental Plans").
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability.
a. During the Post-Change Period, the Company may terminate the
Executive's employment upon the Executive's Disability (as defined in
Section 4.1(b) by giving the Executive or his legal representative, as
applicable, (1) written notice in accordance with Section 12.7 of the
Company's intention to terminate the Executive's employment pursuant to
this Section and (2) a certification of the Executive's Disability by a
physician selected by the Company or its insurers and reasonably acceptable
to the Executive or the Executive's legal representative. The
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Executive's employment shall terminate effective on the 30th day (the
"Disability Effective Date") after the Executive's receipt of such notice
unless, before the Disability Effective Date, the Executive shall have
resumed the full-time performance of the Executive's duties.
b. "Disability" means any medically determinable physical or mental
impairment that has lasted for a continuous period of not less than six
months and can be expected to be permanent or of indefinite duration, and
that renders the Executive unable to perform the essential functions
required under this Agreement with or without reasonable accomodation.
4.2 Death. The Executive's employment shall terminate automatically upon
the Executive's death during the Post-Change Period.
4.3 Cause.
a. During the Post-Change Period, the Company may terminate the
Executive's employment for Cause.
b. "Cause" means any of the following: (i) commission by the
Executive of any felony which includes as an element of the crime a
premeditated intention to commit the act, (ii) Executive's inability to
perform his duties due to habitual alcohol or drug addiction, (iii) serious
misconduct involving dishonesty in the course of Executive's employment, or
(iv) the Executive's habitual neglect of his duties; except that Cause
shall not mean:
(1) bad judgment or negligence other than habitual neglect of
duty;
(2) any act or omission believed by the Executive in good faith
to have been in or not opposed to the interest of the Company (without
intent of the Executive to gain, directly or indirectly, a profit to which
the Executive was not legally entitled);
(3) any act or omission with respect to which a determination
could properly have been made by the Board that the Executive met the
applicable standard of conduct for indemnification or reimbursement under
the Company's by-laws, any applicable indemnification agreement, or
applicable law, in each case in effect at the time of such act or omission;
or
(4) any act or omission with respect to which notice of
termination of employment of the Executive is given more than 12 months
after the earliest date on which any member of the Board, not a party to
the act or omission, knew or should have known of such act or omission.
c. Any termination of the Executive's employment by the Company for
Cause shall be communicated to the Executive by Notice of Termination.
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4.4 Good Reason.
a. During the Post-Change Period, the Executive may terminate his or
her employment for Good Reason.
b. "Good Reason" means any of the following:
(1) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including offices,
titles, reporting requirements or responsibilities), authority or
duties as contemplated by Section 3.1(a)(1), or any other action by
the Company which results in a diminution or other material adverse
change in such position, authority or duties;
(2) any failure by the Company to comply with any of the
provisions of Article III;
(3) the Company's requiring the Executive to be based at any
office or location other than the location described in Section
3.1(a)(2);
(4) any other material adverse change to the terms and
conditions of the Executive's employment; or
(5) any purported termination by the Company of the Executive's
employment other than as expressly permitted by this Agreement (any
such purported termination shall not be effective for any other
purpose under this Agreement).
Any reasonable determination of "Good Reason" made in good faith by the
Executive shall be conclusive.
c. Any termination of employment by the Executive for Good Reason
shall be communicated to the Company by Notice of Termination. A passage
of time prior to delivery of Notice of Termination or a failure by the
Executive to include in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of
the Executive under this Agreement or preclude the Executive from asserting
such fact or circumstance in enforcing rights under this Agreement.
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ARTICLE V.
OBLIGATIONS OF THE COMPANY UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Company Other Than for
Cause or Disability. If, during the Post-Change Period, the Company shall
terminate Executive's employment other than for Cause or Disability, or if the
Executive shall terminate employment for Good Reason, the Company shall
immediately pay the Executive, in addition to all vested rights arising from the
Executive's employment as specified in Article III, a cash amount equal to the
sum of the following amounts:
a. to the extent not previously paid, the Guaranteed Base Salary and
any accrued vacation pay through the Termination Date;
b. the difference between (1) the product of (A) the Guaranteed
Bonus, multiplied by (B) a fraction, the numerator of which is the number
of days in the Termination Performance Period which elapsed before the
Termination Date, and the denominator of which is the total number of days
in the Termination Performance Period, and (2) the amount of any Guaranteed
Bonus paid to the Executive with respect to the Termination Performance
Period;
c. all amounts previously deferred by or an accrual to the benefit
of the Executive under any nonqualified deferred compensation or pension
plan, together with any accrued earnings thereon, and not yet paid by the
Company;
d. an amount equal to the product of (1) three (3.0) multiplied by
(2) the sum of (A) Guaranteed Base Salary and (B) the Guaranteed Bonus;
e. an amount equal to the sum of the value of the unvested portion
of the Executive's accounts or accrued benefits under any qualified plan
maintained by the Company as of the Termination Date;
f. the difference between (1) an amount equal to the value
(determined using the actuarial assumptions then applied by the Pension
Benefit Guaranty Corporation for determining immediate annuity present
values) of the Executive's accrued benefits under the Excess/Supplemental
Plans (as defined in Section 3.4) calculated as though the Executive (A)
continued to accrue benefits under the Excess/Supplemental Plans for a
period of three years after the Termination Date, and (B) received
compensation during each year of such three-year period equal to the sum of
the Guaranteed Base Salary and the highest Guaranteed Bonus paid (or
payable) to the Executive in the two years preceding the Termination Date,
and (C) if Executive is at least age fifty-five (55) and has least ten (10)
years of service with the Company, Executive were three (3) years older
than his age at the Termination Date and (2) the amount actually previously
paid by the Company to Executive pursuant to Section 3.4; and
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g. pay on behalf of Executive all fees and costs charged by the
outplacement firm selected by the Executive to provide outplacement
services or at the election of the Executive, cash equal to the fees and
expenses such outplacement firm would charge.
Until the third anniversary of the Termination Date or such later date as any
Plan of the Company may specify, the Company shall continue to provide to the
Executive and the Executive's family welfare benefits (including, without
limitation, medical, prescription, dental, disability, salary continuance,
individual life, group life, accidental death and travel accident insurance
plans and programs), fringe benefits and other executive perquisites which are
at least as favorable as the most favorable Plans of the Company applicable to
the Executive and other peer executives and their families as of the Termination
Date, but which are in no event less favorable than the most favorable Plans of
the Company applicable to the Executive and other peer executives and their
families during the 90-day period immediately before the Effective Date. The
cost of such welfare benefits shall not exceed the cost of such benefits to the
Executive immediately before the Termination Date or, if less, the Effective
Date. Notwithstanding the foregoing, if the Executive is covered under any
medical, life, or disability insurance plan(s) provided by a subsequent
employer, then the amount of coverage required to be provided by the Employer
hereunder shall be reduced by the amount of coverage provided by the subsequent
employer's medical, life, or disability insurance plan(s). The Executive's
rights under this Section shall be in addition to, and not in lieu of, any post-
termination continuation coverage or conversion rights the Executive may have
pursuant to applicable law, including without limitation continuation coverage
required by Section 4980 of the Code.
5.2 If by the Company for Cause. If the Company terminates the
Executive's employment for Cause during the Post-Change Period, this Agreement
shall terminate without further obligation by the Company to the Executive,
other than the obligation immediately to pay the Executive in cash the
Executive's Guaranteed Base Salary through the Termination Date, plus the amount
of any compensation previously deferred by the Executive, plus any accrued
vacation pay, in each case to the extent not previously paid.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good Reason,
Disability or death, this Agreement shall terminate without further obligations
by the Company, other than the obligation immediately to pay the Executive in
cash all amounts specified in clauses (a), (b) and (c) of the first sentence of
Section 5.1 (such amounts collectively, the "Accrued Obligations").
5.4 If by the Company for Disability. If the Company terminates the
Executive's employment by reason of the Executive's Disability during the Post-
Change Period, this Agreement shall terminate without further obligations to the
Executive, other than
(a) the Company's obligation immediately to pay the Executive in cash
all Accrued Obligations, and
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(b) the Executive's right after the Disability Effective Date to
receive disability and other benefits at least equal to the greater of (1)
those provided under the most favorable disability Plans applicable to
disabled peer executives of the Company in effect immediately before the
Termination Date or (2) those provided under the most favorable disability
Plans of the Company in effect at any time during the 90-day period
immediately before the Effective Date.
5.5 If upon Death. If the Executive's employment is terminated by reason
of the Executive's death during the Post-Change Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than the obligation immediately to pay the
Executive's estate or beneficiary in cash all Accrued Obligations. Despite
anything in this Agreement to the contrary, the Executive's family shall be
entitled to receive benefits at least equal to the most favorable benefits
provided by the Company to the surviving families of peer executives of the
Company under such Plans, but in no event shall such Plans provide benefits
which in each case are less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive under such Plans in effect at
any time during the 90-day period immediately before the Effective Date.
ARTICLE VI.
NON-EXCLUSIVITY OF RIGHTS
6.1 Waiver of Other Severance Rights. To the extent that payments are
made to the Executive pursuant to Section 5.1, the Executive hereby waives the
right to receive severance payments under any other Plan or agreement of the
Company.
6.2 Other Rights. Except as provided in Section 6.1, this Agreement shall
not prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other Plans, provided by the Company or any of its
Subsidiaries and for which the Executive may qualify, nor shall this Agreement
limit or otherwise affect such rights as the Executive may have under any other
agreements with the Company or any of its Subsidiaries. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any Plan of the Company or any of its Subsidiaries and any other payment or
benefit required by law at or after the Termination Date shall be payable in
accordance with such Plan or applicable law except as expressly modified by this
Agreement.
ARTICLE VII.
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Company's independent auditors, which determinations shall be
certified to by such auditors and set forth in a written certificate
("Certificate") delivered to the Executive) that
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any benefit received or deemed received by the Executive from the Company
pursuant to this Agreement or otherwise (collectively, the "Payments") is or
will become subject to any excise tax under Section 4999 of the Code or any
similar tax payable under any United States federal, state, local or other law
(such excise tax and all such similar taxes collectively, "Excise Taxes"), then
the Company shall, immediately after such determination, pay the Executive an
amount (the "Gross-up Payment") equal to the product of
(a) the amount of such Excise Taxes
multiplied by
(b) the Gross-up Multiple (as defined in Section 7.4).
The Gross-up Payment is intended to compensate the Executive for the Excise
Taxes and any federal, state, local or other income or excise taxes or other
taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Company may at any time request the preparation and
delivery to the Executive of a Certificate. The Company shall, in addition to
complying with Section 7.2, cause all determinations and certifications under
the Article to be made as soon as reasonably possible and in adequate time to
permit the Executive to prepare and file the Executive's individual tax returns
on a timely basis.
7.2 Determination by the Executive.
a. If the Company shall fail to deliver a Certificate to the
Executive (and to pay to the Executive the amount of the Gross-up Payment,
if any) within 14 days after receipt from the Executive of a written
request for a Certificate, or if at any time following receipt of a
Certificate the Executive disputes the amount of the Gross-up Payment set
forth therein, the Executive may elect to demand the payment of the amount
which the Executive, in accordance with an opinion of counsel to the
Executive ("Executive Counsel Opinion"), determines to be the Gross-up
Payment. Any such demand by the Executive shall be made by delivery to the
Company of a written notice which specifies the Gross-up Payment determined
by the Executive and an Executive Counsel Opinion regarding such Gross-up
Payment (such written notice and opinion collectively, the "Executive's
Determination"). Within 14 days after delivery of the Executive's
Determination to the Company, the Company shall either (1) pay the
Executive the Gross-up Payment set forth in the Executive's Determination
(less the portion of such amount, if any, previously paid to the Executive
by the Company) or (2) deliver to the Executive a Certificate specifying
the Gross-up Payment determined by the Company's independent auditors,
together with an opinion of the Company's counsel ("Company Counsel
Opinion"), and pay the Executive the Gross-up Payment specified in such
Certificate. If for any reason the Company fails to comply with clause (2)
of the preceding sentence, the Gross-up
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Payment specified in the Executive's Determination shall be controlling for
all purposes.
b. If the Executive does not make a request for, and the Company
does not deliver to the Executive, a Certificate, the Company shall, for
purposes of Section 7.3, be deemed to have determined that no Gross-up
Payment is due.
7.3 Additional Gross-up Amounts. If, despite the initial conclusion of
the Company and/or the Executive that certain Payments are neither subject to
Excise Taxes nor to be counted in determining whether other Payments are subject
to Excise Taxes (any such item, a "Non-Parachute Item"), it is later determined
(pursuant to the subsequently-enacted provisions of the Code, final regulations
or published rulings of the IRS, final judgment of a court of competent
jurisdiction or the Company's independent auditors that any of the Non-Parachute
Items are subject to Excise Taxes, or are to be counted in determining whether
any Payments are subject to Excise Taxes, with the result that the amount of
Excise Taxes payable by the Executive is greater than the amount determined by
the Company or the Executive pursuant to Section 7.1 or 7.2, as applicable, then
the Company shall pay the Executive an amount (which shall also be deemed a
Gross-up Payment) equal to the product of
(a) the sum of (1) such additional Excise Taxes and (2) any interest,
fines, penalties, expenses or other costs incurred by the Executive as a
result of having taken a position in accordance with a determination made
pursuant to Section 7.1
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal a fraction, the
numerator of which is one (1.0), and the denominator of which is one (1.0) minus
the sum, expressed as a decimal fraction, of the rates of all federal, state,
local and other income and other taxes and any Excise Taxes applicable to the
Gross-up Payment; provided that, if such sum exceeds 0.75, it shall be deemed
equal to 0.75 for purposes of this computation. (If different rates of tax are
applicable to various portions of a Gross-up Payment, the weighted average of
such rates shall be used.)
7.5 Opinion of Counsel. "Executive Counsel Opinion" means a legal opinion
of nationally recognized executive compensation counsel that there is a
reasonable basis to support a conclusion that the Gross-up Payment determined by
the Executive has been calculated in accord with this Article and applicable
law. "Company Counsel Opinion" means a legal opinion of nationally recognized
executive compensation counsel that (a) there is a reasonable basis to support a
conclusion that the Gross-up Payment set forth of the Certificate of Company's
independent auditors has been calculated in accord with this Article and
applicable law, and (b) there is no reasonable basis for the calculation of the
Gross-up Payment determined by the Executive.
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7.6 Amount Increased or Contested. The Executive shall notify the Company
in writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by the Company of a Gross-up Payment.
Such notice shall include the nature of such claim and the date on which such
claim is due to be paid. The Executive shall give such notice as soon as
practicable, but no later than 10 business days, after the Executive first
obtains actual knowledge of such claim; provided, however, that any failure to
give or delay in giving such notice shall affect the Company's obligations under
this Article only if and to the extent that such failure results in actual
prejudice to the Company. The Executive shall not pay such claim less than 30
days after the Executive gives such notice to the Company (or, if sooner, the
date on which payment of such claim is due). If the Company notifies the
Executive in writing before the expiration of such period that it desires to
contest such claim, the Executive shall:
a. give the Company any information that it reasonably requests
relating to such claim,
b. take such action in connection with contesting such claim as the
Company reasonably requests 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,
c. cooperate with the Company in good faith to contest such claim,
and
d. permit the Company to participate in any proceedings relating to
such claim;
provided, however, that 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 Executive harmless, on an
after-tax basis, for any Excise Tax or income tax, including related interest
and penalties, imposed as a result of such representation and payment of costs
and expenses. Without limiting the foregoing, the Company shall control all
proceedings in connection with such contest and, at its sole option, may pursue
or forego 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 Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner. The Executive agrees to
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; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify the Executive, on an after-tax basis, for any Excise Tax or income
tax, including related interest or penalties, imposed with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. The Company's control of the contest shall be limited to
issues with
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respect to which a Gross-up Payment would be payable. The Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
IRS or other taxing authority.
7.7 Refunds. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 7.6, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 7.6) promptly pay 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 Executive
of an amount advanced by the Company pursuant to Section 7.6, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such determination before 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. Any contest of a denial of
refund shall be controlled by Section 7.6.
ARTICLE VIII.
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
a. If the Executive incurs legal, accounting and other fees or other
expenses in a good faith effort to obtain benefits under this Agreement
(including, without limitation, the fees and other expenses of the
Executive's legal counsel and the accounting and other fees and expenses in
connection with the delivery of the Opinion referred to in Article VII),
regardless of whether the Executive ultimately prevails, the Company shall
reimburse the Executive on a monthly basis upon the written request for
such fees and expenses to the extent not reimbursed under the Company's
officers and directors liability insurance policy, if any. The existence
of any controlling case or regulatory law which is directly inconsistent
with the position taken by the Executive shall be evidence that the
Executive did not act in good faith.
b. Reimbursement of legal fees and expenses shall be made monthly
upon the written submission of a request for reimbursement together with
evidence that such fees and expenses are due and payable or were paid by
the Executive. If the Company shall have reimbursed the Executive for
legal fees and expenses and it is later determined that the Executive was
not acting in good faith, all amounts paid on behalf of, or reimbursed to,
the Executive shall be promptly refunded to the Company.
8.2 Interest. If the Company does not pay any amount due to the Executive
under this Agreement within three days after such amount became due and owing,
interest shall
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accrue on such amount from the date it became due and owing until the date of
payment at a annual rate equal to two percent (2.0%) above the base commercial
lending rate announced by The Northern Trust Company in effect from time to time
during the period of such nonpayment.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off by Company. The Executive's right to receive when due the
payments and other benefits provided for under this Agreement is absolute,
unconditional and subject to no set-off, counterclaim or legal or equitable
defense. Time is of the essence in the performance by the Company of its
obligations under this Agreement. Any claim which the Company may have against
the Executive, whether for a breach of this Agreement or otherwise, shall be
brought in a separate action or proceeding and not as part of any action or
proceeding brought by the Executive to enforce any rights against the Company
under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to mitigate the
amounts payable by the Company under this Agreement by seeking new employment
following termination. Except as specifically otherwise provided in this
Agreement, 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 the Executive as the result of the Executive's
employment by another employer.
ARTICLE X.
CONFIDENTIALITY AND NONCOMPETITION
10.1 Confidentiality. Executive acknowledges that it is the policy of the
Company and its subsidiaries to maintain as secret and confidential all valuable
and unique information and techniques acquired, developed or used by the Company
and its subsidiaries relating to their business, operations, employees and
customers, which gives the Company and its subsidiaries a competitive advantage
in the businesses in which the Company and its subsidiaries are engaged
("Confidential Information"). Executive recognizes that all such Confidential
Information is the sole and exclusive property of the Company and its
subsidiaries, and that disclosure of Confidential Information would cause damage
to the Company and its subsidiaries. Executive agrees that, except as required
by the duties of his employment with the Company and/or its subsidiaries and
except in connection with enforcing the Executive's rights under this Agreement
or if compelled by a court or governmental agency, he will not, without the
consent of the Company, disseminate or otherwise disclose any Confidential
Information obtained during his employment with the Company and/or its
subsidiaries for so long as such information is valuable and unique.
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10.2 Noncompetition/Nonsolicitation.
a. Executive agrees that, during the period of his employment with
the Company and/or its subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive will not at any time directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or
consulting or other services in connection with any Prohibited Business as
defined in Section 10.2(d).
b. Executive agrees that, during the period of his employment with
the Company and/or its subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not make any financial investment, whether in the form of
equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 10.2(b) shall, however,
restrict Executive from making any investment in any company whose stock is
listed on a national securities exchange or actively traded in the over-
the-counter market; provided that (1) such investment does not give
Executive the right or ability to control or influence the policy decisions
of any Prohibited Business, and (2) such investment does not create a
conflict of interest between Executive's duties hereunder and Executive's
interest in such investment.
c. Executive agrees that, during the period of his employment with
the Company and/or its subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not (1) employ any employee of the Company and/or its
subsidiaries or (2) interfere with the Company's or any of its
subsidiaries' relationship with, or endeavor to entice away from the
Company and/or its subsidiaries any person, firm, corporation, or other
business organization who or which at any time (whether before or after the
date of Executive's termination of employment), was an employee, customer,
vendor or supplier of, or maintained a business relationship with, any
business of the Company and/or its subsidiaries which was conducted at any
time during the period commencing one year prior to the termination of
employment.
d. For the purpose of this Section 10.2, "Prohibited Business" shall
be defined as any entity and any branch, office or operation thereof, which
is a direct and material competitor of the Company wherever the Company
does business, in the United States or abroad.
10.3 Remedy. Executive and the Company specifically agree that, in the
event that Executive shall breach his obligations under this Article X, the
Company and its subsidiaries will suffer irreparable injury and no adequate
remedy for such breach, and shall be entitled to injunctive relief therefor, and
in particular, without limiting the generality of the foregoing, the Company
shall not be precluded from pursuing any and all remedies it may have at law or
in equity for breach of such obligations; provided, however, that such breach
shall not in any manner or degree whatsoever limit, reduce or otherwise affect
the
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obligations of the Company under this Agreement, and in no event shall an
asserted breach of the Executive's obligations under this Article X constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 No Assignability. This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
11.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Any successor to the business
and/or assets of the Company which assumes or agrees to perform this Agreement
by operation of law, contract, or otherwise shall be jointly and severally
liable with the Company under this Agreement as if such successor were the
Company.
11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid in a lump sum to the beneficiary designated in writing by the
Executive, or if none is so designated, to the Executive's estate.
11.4 Non-alienation 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, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other
portions of this Agreement are declared by any court or governmental authority
to be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
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11.6 Amendments. Except as provided in Sections 2.2 and 11.14 hereof,
this Agreement shall not be altered, amended or modified except by written
instrument executed by the Company and Executive.
11.7 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
----------------------------
----------------------------
----------------------------
If to the Company:
Safety-Kleen Corp.
One Brinckman Way
Elgin, Illinois 60123
Attention: Chief Executive Officer
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
11.9 Governing Law. 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.
11.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
11.11 Tax Withholding. The Company may withhold from any amounts payable
under this Agreement any federal, state or local taxes that are required to be
withheld pursuant to any applicable law or regulation.
11.12 No Waiver. The Executive's failure to insist upon strict compliance
with any provision of this Agreement shall not be deemed a waiver of such
provision or any other provision of this Agreement. A waiver of any provision
of this Agreement shall not be deemed a waiver of any other provision, and any
waiver of any default in any such provision shall not be deemed a waiver of any
later default thereof or of any other provision.
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11.13 Entire Agreement. This Agreement contains the entire understanding
of the Company and the Executive with respect to its subject matter.
11.14 Cancellation. The Company may, at any time prior to a Change in
Control, unilaterally cancel this Agreement on behalf of all parties hereto by
notifying the Executive of such cancellation in writing at least twelve (12)
months prior to the effective date of the cancellation, provided however that no
such notice may be given after an Imminent Change of Control Date.
IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.
________________________________________
SAFETY-KLEEN CORP.
By: ____________________________________
Title:
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