EMPLOYMENT AND NONCOMPETITION AGREEMENT
Exhibit 10.9
THIS AGREEMENT is made and effective this 28th day of December, 2006 between SCI Executive
Services, Inc., a Delaware corporation (the “Company”), and Xxxxxx X. Xxxxxx, III (the “Employee”):
ARTICLE I
EMPLOYMENT
EMPLOYMENT
1.1 Employment Term. The Company agrees to employ the Employee and the Employee agrees
to accept such employment, in accordance with the terms and conditions of this Agreement, for the
period beginning on the date of this Agreement and ending as of the close of business on December
31, 2007 (such period together with all extensions thereof are referred to hereinafter as the
“Employment Term”); provided, however, that commencing on January 1, 2008, and on each January 1
thereafter (each such date shall be hereinafter referred to as a “Renewal Date”), the Employment
Term shall be extended so as to terminate one year from such Renewal Date if (i) the Company
notifies the Employee in writing of such extension at least thirty days prior to such Renewal Date
and (ii) the Employee has not previously given the Company written notice that the Employment Term
shall not be so extended. In the event that the Company gives the Employee written notice at any
time of its intention not to renew the Employment Term, then the Employment Term shall terminate on
December 31 of the year in which such notice of non-renewal is given and shall not thereafter be
further extended. If the Company fails to notify the Employee at least thirty days prior to a
Renewal Date either of its intention to extend the Employment Term as provided above or its
intention not to so extend the Employment Term, then the Employment Term shall not be extended and
shall terminate as of the day prior to such Renewal Date.
1.2 Duties. The Employee shall serve the Company in an executive or managerial
capacity and shall hold such title as may be authorized from time to time by the Board of Directors
of Service Corporation International (“SCI”). The Employee shall have the duties, powers and
authority consistent therewith and such other powers as are delegated to him in writing from time
to time by the Board of Directors of SCI. If the Employee is elected to any office or other
position with the Company during the term of this Agreement, the Employee will serve in such
capacity or capacities without further compensation unless the Compensation Committee (the
“Compensation Committee”) of the Board of Directors of SCI authorizes additional compensation. The
Employee’s title and duties may be changed from time to time at the discretion of the Company. The
Employee also agrees to perform, without additional compensation, such other services for the
Company and for any subsidiary or affiliated corporations of the Company or for any partnerships in
which the Company has an interest, as the Company shall from time to time specify. The term
“Company” as used hereinafter shall be deemed to include and refer to subsidiaries and affiliated
corporations and partnerships. Employee agrees and acknowledges that he owes, and will comply with,
a fiduciary duty of loyalty, fidelity and 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.
1.3 Extent of Service. During the Employment Term, the Employee shall devote his full
time, attention and energy to the business of the Company, and, except as may be specifically
permitted by the Company, shall not be engaged in any other business activity during the term of
this Agreement. The foregoing shall not be construed as preventing the Employee from making passive
investments in other businesses or enterprises, provided, however, that such investments will not:
(1) require services on the part of the Employee which would in any way impair the performance of
his duties under this Agreement, or (2) in any manner significantly interfere with Employee’s
responsibilities as an Employee of the Company in accordance with this Agreement.
1.4 Compensation.
(a) Salary. The Company shall pay to the Employee a salary at the rate in effect for
Employee at the date of this Agreement. Such salary is to be payable in installments in accordance
with the payroll policies of the Company in effect from time to time during the term of this
Agreement. The Company may (but is not required to) make such upward adjustments to the Employee’s
salary as it deems appropriate from time to time.
(b) Incentive Compensation. In addition to the above salary, the Employee shall be
eligible annually for incentive compensation at the discretion of the Compensation Committee.
(c) Other Benefits. The Employee shall be reimbursed in accordance with the Company’s
normal expense reimbursement policy for all of the actual and reasonable costs and expenses accrued
by Employee in the performance of his or her services and duties hereunder, including but not
limited to, travel and entertainment expenses. The Employee shall be entitled to participate in all
insurance, stock options, retirement plans and other benefit plans or programs as may be from time
to time specifically adopted and approved by the Company for its employees, in accordance with the
eligibility requirements and any other terms and conditions of such plans. It is understood and
agreed between the parties hereto that the Company reserves the right, at its sole discretion, to
modify, amend or terminate such plans, programs or benefits at any time.
1.5 Termination.
(a) Death. If the Employee dies during the term of this Agreement and while in the
employ of the Company, this Agreement shall automatically terminate and the Company shall have no
further obligation to the Employee or his estate except that (i) the Company shall continue to pay
the Employee’s estate the Employee’s salary in installments through the end of the Employment Term
which was in effect immediately prior to Employee’s death, and (ii) the Company shall pay the
Employee’s estate any applicable Pro Rated Bonus (defined hereinbelow).
(b) Disability. If during the term of this Agreement, the Employee shall be prevented
from performing his duties hereunder by reason of disability, then the Company, on 30 days’ prior
notice to the Employee, may terminate Employee’s employment under this Agreement. For purposes of
this Agreement, the Employee shall be deemed to have become disabled when the Company, upon the
advice of a qualified physician, shall have determined that the Employee has become physically or
mentally incapable (excluding infrequent and temporary absences due to
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ordinary illness) of performing his duties under this Agreement. In the event of a termination
pursuant to this paragraph 1.5(b), the Company shall be relieved of all of its obligations under
this Agreement, except that the Company shall pay to the Employee (or his estate, in the event of
his subsequent death), (i) the Employee’s salary in installments through the end of the Employment
Term which was in effect immediately prior to Employee’s disability, and (ii) any applicable Pro
Rated Bonus. Before making any termination decision pursuant to this Section 1.5(b), the Company
shall determine whether there is any reasonable accommodation (within the meaning of the Americans
With Disabilities Act) which would enable the Employee to perform the essential functions of the
Employee’s position under this Agreement despite the existence of any such disability. If such a
reasonable accommodation is possible, the Company shall make that accommodation and shall not
terminate the Employee’s employment hereunder during the Employment Term based on such disability.
(c) Certain Discharges. Prior to the end of the Employment Term, the Company may
discharge the Employee for Cause and terminate Employee’s employment hereunder without notice and
without any further liability hereunder to Employee or his estate. For purposes of this Agreement,
“Cause” shall mean a determination by the Company that Employee: (i) has been convicted of a crime
involving moral turpitude; (ii) has regularly failed or refused to follow policies or directives
established by the Company or the Board of Directors of SCI; (iii) has willfully and persistently
failed to attend to his duties; (iv) has committed acts amounting to gross negligence or willful
misconduct to the detriment of the Company or its affiliates; (v) has violated any of his
obligations under Articles II or III of this Agreement; or (vi) has otherwise breached any of the
terms or provisions of this Agreement.
(d) Without Cause. Prior to the end of the Employment Term, the employment of the
Employee with the Company may be terminated by the Company other than for Cause, death or
disability. If such event occurs prior to a Change of Control (defined hereinbelow), the Company
shall have no further obligation to Employee or his estate except that the Company shall pay or
provide to the Employee (or his estate, in the event of his subsequent death), (i) the Employee’s
salary as in effect immediately prior to Employee’s termination in installments for a period ending
two years from such date of termination, provided that the Company at its sole option may prepay
all or any portion of such payments at any time, (ii) any applicable Pro Rated Bonus and (iii)
continuation of Employee’s Group Health and Dental coverage and Exec-U-Care program (including
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 (“Cobra”) to the extent
applicable) for a period of twenty-four months beginning the month following such date of
termination, with Employee paying such amount of premiums as would have been applicable if Employee
had remained an employee of the Company.
(e) Voluntary Termination by Employee. If during the term of this Agreement, the
Employee voluntarily terminates his employment with the Company prior to any Change of Control, the
Company shall be relieved of all of its obligations under this Agreement, except that the Company
shall pay the Employee (or his estate, in the event of his subsequent death) (i) the Employee’s
salary through the date of Employee’s termination, and (ii) any incentive compensation under
Section 1.4(b) determined by the Compensation Committee for any fiscal period ended prior to the
date of Employee’s termination which had not been paid at the time of his termination. All such
payments to the Employee or his estate shall be made in the same
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manner and at the same times as the Employee’s salary or incentive compensation would have been
paid to the Employee had he not terminated his employment.
(f) Change of Control. If (i) a Change of Control occurs during the Employment Term
and (ii) within twenty four months after such Change of Control the Employee’s employment is (x)
terminated by the Company other than for Cause, death or disability, or (y) terminated by Employee
after an occurrence of any Good Reason (except under circumstances which would be grounds for
termination of Employee by the Company for Cause), then the Company shall be relieved of all of its
obligations under this Agreement, except that the Company shall pay or provide the Employee (or his
estate, in the event of his subsequent death) the following amounts:
(1) Three, multiplied by the sum of Employee’s most recently set Target Bonus plus his
annual salary in effect immediately prior to the Change of Control, which amount will be paid in a
lump sum in cash within 30 days after the Employee’s date of termination; and
(2) Partial Bonus, to be paid within 30 days after the Employee’s date of termination;
and
(3) Continuation of Employee’s Group Health and Dental coverage and Exec-U-Care program
(including pursuant to COBRA to the extent applicable) for a period of thirty-six months beginning
the month following such date of termination, with Employee paying such amount of
premiums as would have been applicable if Employee had remained an employee of the Company.
In addition, Company shall pay to Employee an amount that, on an after-tax basis (including
federal income, employment, excise and social security taxes, state and local income and employment
taxes, and any other applicable taxes), equals any excise tax that is determined to be payable by
Employee pursuant to Section 4999 (or any successor provision) of the Internal Revenue Code of
1986, as amended (and any interest or penalties related to the imposition of such excise tax) at
any time, by reason of both entitlements under this Agreement (including any and all payments under
this Section 1.5(f)) and entitlements outside of this Agreement that are described in Section
280G(b)(2)(A)(i) of the Code (or any successor provision) with reference to Company. For purposes
of this paragraph, Employee shall be deemed to pay federal, state and local income taxes at the
highest marginal rate of taxation. Such amount will be made payable by Company or its successor
within thirty (30) days after Employee delivers a written request for reimbursement accompanied by
a statement from a nationally recognized legal, consulting or accounting firm as may be agreed to
by the parties setting forth the amount owed pursuant to this paragraph. Company shall pay all fees
and costs incurred by Employee related to the preparation, delivery and resolution of such written
request for reimbursement.
The obligations of the Company under this Section 1.5(f) shall remain in effect for
twenty-four months after any Change of Control that occurs during the Employment Term
notwithstanding the fact that such twenty four month period may extend beyond the expiration of the
Employment Term.
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(g) Post Employment Term Matters. In the event the Employment Term terminates because
it is not extended or renewed pursuant to Section 1.1, then the Company shall be relieved of all of
its obligations under this Agreement and Employee will thereafter be an employee “at will” of the
Company.
ARTICLE II
INFORMATION
INFORMATION
2.1 Nondisclosure of Information. The Employee acknowledges that in the course of his
employment by the Company he will receive certain trade secrets, which may include, but are not
limited to, programs, lists of acquisition or disposition prospects and knowledge of acquisition
strategy, financial information and reports, lists of customers or potential customers and other
confidential information and knowledge concerning the business of the Company (hereinafter
collectively referred to as “Information”) which the Company desires to protect. The Employee
understands that the Information is confidential and agrees not to reveal the Information to anyone
outside the Company so long as the confidential or secret nature of the Information shall continue,
unless compelled to do so by any federal or state regulatory agency or by a court order. If
Employee becomes aware that disclosure of any Information is being sought by such an agency or
through a court order, Employee will immediately notify the Company. The Employee further agrees
that he will at no time use the Information in competing with the Company. Upon termination of
Employee’s employment with the Company, the Employee shall surrender to the Company all papers,
documents, writings and other property produced by him or coming into his possession by or through
his employment or relating to the Information, and the Employee agrees that all such materials are
and will at all times remain the property of the Company and to the extent the Employee has any
rights therein, he hereby irrevocably assigns such rights to the Company.
2.2 Disclosure of Information, Ideas, Concepts, Improvements, Discoveries and
Inventions. As part of the Employee’s fiduciary duties to the Company, Employee agrees that
during his employment by the Company, and for a period of six months after the termination of the
employment relationship for any reason, 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 subsidiaries or affiliates, irrespective of whether Employee
utilized the Company’s time or facilities and irrespective of whether such information, idea,
concept, improvement, discovery or invention was conceived, developed, discovered or acquired by
the 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
business activities, and the like.
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2.3 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 and which relate to the Company’s business, products or services
(including but not limited to 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 organization 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 described in Section 2.3 (a) above, 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 and thereafter, Employee shall assist the Company
and its nominees 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, 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, drawing,
maps, architectural renditions, models, manuals, brochures or the like) relating to the Company’s
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 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 instructional text, then the work shall be considered to be work made for
hire and the Company shall be considered 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 the work and all rights of copyright therein. Both during the period of Employee’s employment by
the Company and thereafter,
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Employee agrees to assist the Company and its nominee, at any time, in 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 nominees and the execution of all lawful oaths and applications for registration of
copyright in the United States and foreign countries.
ARTICLE III
NONCOMPETITION
NONCOMPETITION
3.1 Noncompetition. During the Employment Term (and for a period of one or two years
thereafter if the Company exercises its options under Section 3.2 hereof), Employee shall not,
acting alone or in conjunction with others, directly or indirectly, in any market in which the
Company or any of its affiliated companies conducts business, work for or engage in any business in
competition with the business conducted by the Company or any of its affiliated companies, 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. In the event that a court should determine that any restriction herein is
unenforceable, the parties hereto agree that the obligations under this paragraph shall be
enforceable for the maximum term and maximum geographical area allowable by law.
3.2 Extension. The Company shall have the option to extend Employee’s obligations
under Section 3.1 for one additional year (the “First Extension Term”) beyond the end of the
Employment Term. If the Company exercises such option, it shall be required to pay Employee an
amount equal to one year’s salary, based on Employee’s salary rate as of the date his employment
with the Company ceased (the “Noncompetition Payment”). Such Noncompetition Payment shall be made
in 12 equal monthly installments (each installment being an amount equal to 1/12th of such annual
salary) commencing on the date which is thirty (30) days after the last day of the Employment Term.
Subsequent payments shall be made on the same day of each succeeding month until 12 payments have
been made. If the Employee breaches his noncompetition obligations, the Company shall be entitled
to cease making such monthly payments. The purpose of this paragraph is to make the noncompetition
obligation of the 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 the Employee breaches his post-employment noncompetition
obligation. If the Employee breaches his post-employment noncompetition obligation, the Company
shall be entitled to all of its remedies at law or in equity for damages and injunctive relief. The
Company may exercise the option conferred by this paragraph at any time within 30 days after the
last day of the Employment Term by mailing written notice of such exercise to Employee.
If the Company exercises its option to extend Employee’s obligations as set forth in the
preceding paragraph, then the Company shall have the option to extend Employee’s obligations under
Section 3.1 for one additional year (the “Second Extension Term”) beyond the end of the First
Extension Term. If the Company exercises its option to extend Employee’s obligations for the Second
Extension Term, the rights and obligations of the parties set forth in the preceding
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paragraph shall be applicable during the Second Extension Term. The Company may exercise the option
conferred by this paragraph at any time within 30 days after the last day of the First Extension
Term by mailing written notice of such exercise to Employee.
3.3 Termination For Cause or Termination By Employee. Notwithstanding anything to the
contrary in this Agreement, in the event that Employee’s employment hereunder is terminated for
Cause pursuant to Section 1.5 (c) hereof, or in the event Employee voluntarily terminates the
employment relationship for any reason other than a material breach of this Agreement by the
Company, the noncompetition obligations of Employee described in Section 3.1 above shall
automatically continue for a period of two years from the date the employment relationship ceases,
and the Company shall not be required to (i) make any payments to Employee in consideration for
such obligations, or (ii) provide any notice to Employee. Notwithstanding the foregoing this
Section 3.3 shall not be applicable in the event Employee voluntarily terminates the employment
relationship for Good Reason within twenty four months after a Change of Control that occurs during
the Employment Term; provided however, the first clause of this sentence shall be null and void if
such termination referenced therein occurs under circumstances which would be grounds for
termination of Employee by the Company for Cause.
3.4 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
Term and for five (5) year(s) thereafter, he shall not at any time, directly or indirectly for the
benefit or any other party than the Company or any of its affiliated companies, (a) induce, entice,
or solicit any employee of the Company or any of its affiliated companies to leave his employment,
or (b) contact, communicate or solicit any customer of the Company or any of its affiliated
companies derived from any customer list, customer lead, mail, printed matter or other information
secured from the Company or any of its affiliated companies or their present or past employees, or
(c) in any other manner use any customer lists or customer leads, mail, telephone numbers, printed
material or material of the Company or any of its affiliated companies relating thereto.
3.5 Acknowledgement. Employee acknowledges that Employee’s compliance with the
provisions of this Article III is necessary to protect the existing goodwill and other proprietary
rights of the Company, as well as all goodwill and relationships that may be acquired or enhanced
during the course of Employee’s employment with the Company, and all confidential information which
may come into existence or to which Employee may have access during his employment with the
Company. Employee further acknowledges that Employee will become familiar with certain of the
Company’s affairs, operations, customers and confidential information and data by means of his
employment with the Company, and that failure to comply with the provisions of this Article III
will result in irreparable and continuing damage to the Company for which there will be no adequate
remedy at law. The Company shall be entitled to all of its remedies at law or in equity for damages
and injunctive relief in the event of any violation of this Article III by Employee.
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ARTICLE IV
MISCELLANEOUS
MISCELLANEOUS
4.1 Notices. All notices, requests, consents and other communications under this
Agreement shall be in writing and shall be deemed to have been delivered on the date personally
delivered or on the date mailed, postage prepaid, by certified mail, return receipt requested, or
telegraphed and confirmed if addressed to the respective parties as follows:
If to the Employee:
If to the Company:
General Counsel
c/o SCI Executive Services, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Legal Department
c/o SCI Executive Services, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Legal Department
Either party hereto may designate a different address by providing written notice of such new
address to the other party hereto.
4.2 Entire Agreement. This Agreement replaces and merges all previous agreements and
discussions relating to the same or similar subject matters between Employee and the Company (or
any of its affiliates) and constitutes the entire agreement between the Employee and the Company
(and any of its affiliates) with respect to the subject matter of this Agreement. Any existing
employment agreement between the Employee and the Company (or any of its affiliates) is hereby
terminated, effective immediately. This Agreement may not be modified in any respect by any verbal
statement, representation or agreement made by an employee, officer, or representative of the
Company or by any written agreement unless signed by an officer of the Company who is expressly
authorized by the Company to execute such document.
4.3 Specific Performance. The Employee acknowledges that a remedy at law for any
breach of Article II or III of this Agreement will be inadequate, agrees that the Company shall be
entitled to specific performance and injunctive and other equitable relief in case of any such
breach or attempted breach, and further agrees to waive any requirement for the securing or posting
of any bond in connection with the obtaining of any such injunctive or any other equitable relief.
4.4 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid or unenforceable under applicable law, such
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provision shall be ineffective to the extent of such prohibition, invalidity or unenforceability
without invalidating the remainder of such provision or the remaining provisions of this Agreement.
4.5 Assignment. This Agreement may not be assigned by the Employee. Neither the
Employee, his spouse, nor his estate shall have any right to commute, encumber or dispose of any
right to receive payments hereunder, it being understood that such payments and the right thereto
are nonassignable and nontransferable. This Agreement may be assigned by the Company.
4.6 Binding Effect. Subject to the provisions of Section 4.5 of this Agreement, this
Agreement shall be binding upon and inure to the benefit of the parties hereto, the Employee’s
heirs and personal representatives, and the successors and assigns of the Company.
4.7 Captions. The section and paragraph headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
4.8 Governing Law. This Agreement shall be construed and enforced in accordance with,
and governed by, the laws of Texas.
4.9 Counterparts. This Agreement may be executed in multiple original counterparts,
each of which shall be deemed an original, but all of which together shall constitute the same
instrument.
4.10 Survival of Certain Obligations. Employee’s obligations under Articles II and III
hereof shall survive any termination of Employee’s employment hereunder.
4.11 Waiver. The waiver by either party of any right hereunder or of any breach of
this Agreement shall not operate as or be construed to be an amendment of this Agreement or a
waiver of any future right or breach.
4.12 Gender. All references to the masculine pronoun herein are used for convenience
and ease of reading only and are intended and apply to the feminine gender as well.
4.13 Dispute Resolution.
(a) Employee and the Company agree that, except for the matters identified in Section 4.13(b)
below, all disputes relating to any aspects of Employee’s employment with the Company shall be
resolved by binding arbitration. This includes, but is not limited to, any claims against the
Company, its affiliates or their officers, directors, employees, or agents for breach of contract,
wrongful discharge, discrimination, harassment, defamation, misrepresentation, and emotional
distress, as well as any disputes pertaining to the meaning or effect of this Agreement.
(b) It is expressly agreed that this Section 4.13 shall not govern claims for workers’
compensation or unemployment benefits, or any claim by the Company against Employee which is based
on fraud, theft or other dishonest conduct of Employee.
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(c) Any claim which either party has against the other must be presented in writing by the
claiming party to the other within one year of the date the claiming party knew or should have
known of the facts giving rise to the claim. Otherwise, the claim shall be deemed waived and
forever barred even if there is a federal or state statute of limitations which would have given
more time to pursue the claim.
(d) Each party may retain legal counsel and shall pay its own costs and attorneys’ fees,
regardless of the outcome of the arbitration. Each party shall pay one-half of the compensation to
be paid to the arbitrators, as well as one-half of any other costs relating to the administration
of the arbitration proceeding (for example, room rental, court reporter, etc.).
(e) An arbitrator shall be selected by mutual agreement of the parties. If the parties are
unable to agree on a single arbitrator, each party shall select one arbitrator, and the two
arbitrators so selected shall select a third arbitrator. The three arbitrators so selected will
then hear and decide the matter. All arbitrators must be attorneys, judges or retired judges who
are licensed to practice law in the state where the Employee is or most recently was employed by
the Company. The arbitration proceedings shall be conducted within the county in which Employee is
or most recently was employed by the Company or at another mutually agreeable location.
(f) Except as otherwise provided herein, the arbitration proceedings shall be conducted in
accordance with the statutes, rules or regulations governing arbitration in the state in which
Employee is or most recently was employed by the Company. In the absence of such statutes, rules or
regulations, the arbitration proceedings shall be conducted in accordance with the employment
arbitration rules of the American Arbitration Association (“AAA”); provided however, that the
foregoing reference to the AAA rules shall not be deemed to require any filing with that
organization, nor any direct involvement of that organization. In the event of any inconsistency
between this Agreement and the statutes, rules or regulations to be applied pursuant to this
paragraph, the terms of this Agreement shall apply.
(g) The arbitrator shall issue a written award, which shall contain, at a minimum, the names
of the parties, a summary of the issues in controversy, and a description of the award issued. Upon
motion to a court of competent jurisdiction, either party may obtain a judgment or decree in
conformity with the arbitration award, and said award shall be enforced as any other judgment or
decree.
(h) In resolving claims governed by this Section 4.13, the arbitrator shall apply the laws of
the state in which Employee is or most recently was employed by the Company, and/or federal law, if
applicable.
(i) Employee and the Company agree and acknowledge that any arbitration proceedings between
them, and the outcome of such proceedings, shall be kept strictly confidential; provided however,
that the Company may disclose such information to the extent required by law and to its employees,
agents and professional advisors who have a legitimate need to know such information, and the
Employee may disclose such information (1) to the extent required by law, (2) to the extent that
the Employee is required to disclose same to professional persons assisting
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Employee in preparing tax returns; and (3) to Employee’s legal counsel.
4.14 Certain Definitions. The following defined terms used in this Agreement shall
have the meanings indicated:
Change of Control. “Change of Control” means the happening of any of the following
events:
(a) 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 SCI (the “Outstanding SCI
Common Stock”) or (B) the combined voting power of the then outstanding voting securities of SCI
entitled to vote generally in the election of directors (the “Outstanding SCI Voting Securities”);
provided, however, that the following acquisitions shall not constitute a Change of Control under
this subsection (a): (i) any acquisition directly from SCI (excluding an acquisition by virtue of
the exercise of a conversion privilege), (ii) any acquisition by SCI, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by SCI or any corporation
controlled by SCI, or (iv) 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 (c) of this definition of “Change of Control”
are satisfied; or
(b) Individuals who, as of the effective date hereof, constitute the Board of Directors of SCI
(the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of
Directors of SCI; provided, however, that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by SCI’s shareholders, was approved by (A) a vote
of at least a majority of the directors then comprising the Incumbent Board, or (B) a vote of at
least a majority of the directors then comprising the Executive Committee of the Board of Directors
of SCI 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 (b), 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 SCI; or
(c) Approval by the shareholders of SCI 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 SCI Common Stock and
Outstanding SCI Voting Securities immediately prior to such reorganization, merger or
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consolidation in substantially the same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding SCI Common Stock and Outstanding SCI
Voting Securities, as the case may be, (B) no Person (excluding SCI, any employee benefit plan (or
related trust) of SCI 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 SCI Common Stock or
Outstanding SCI 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
(d) Approval by the shareholders of SCI of (A) a complete liquidation or dissolution of SCI or
(B) the sale or other disposition of all or substantially all of the assets of SCI other than to a
corporation, with respect to which following such sale or other disposition, (i) 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 the beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding SCI Common Stock and Outstanding SCI 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 SCI Common Stock and Outstanding SCI
Voting Securities, as the case may be, (ii) no Person (excluding SCI and any employee benefit plan
(or related trust) of SCI 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 SCI
Common Stock or Outstanding SCI 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 (iii) 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 SCI
providing for such sale or other disposition of assets of SCI.
Good Reason. “Good Reason” shall mean the occurrence of any of the following after a
Change of Control:
(a) The Company requires the Employee to be relocated to such an extent that the Internal
Revenue Service requirements for a deductible relocation (currently 50 miles) are satisfied;
(b) The Company materially reduces the responsibilities, authority or accountability of
Employee from the same in effect immediately prior to the Change of Control;
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(c) The Company reduces the base salary, Target Bonus or other compensation program
participation of Employee; or
(d) The Company materially reduces the aggregate benefits of Employee.
Partial Bonus. “Partial Bonus” shall mean a bonus equal to the product of (i)
Employee’s most recently set Target Bonus, and (ii) a fraction, the denominator of which is 365 and
the numerator of which is the number of days in the fiscal year being considered through the date
of the termination of Employee’s employment.
Pro Rated Bonus. “Pro Rated Bonus” shall mean, a bonus equal to the product of (i) the
bonus Employee did not receive but would have received under Section 1.4(b) if he had remained an
employee through the end of the Employment Term, it being understood that the amount of such bonus
Employee would have received shall be determined by reference to the average amount of bonus
actually awarded to other officers who were at the same or comparable level of responsibility as
Employee immediately prior to his termination, and (ii) a fraction, the denominator of which is 365
and the numerator of which is the number of days in the fiscal year being considered through the
date of death, determination of disability or notice of termination of employment, whichever is
applicable. In the event that a majority of SCI officers do not receive a bonus for the fiscal year
being considered, then the Pro Rated Bonus shall not be applicable and Employee shall not be
entitled to a Pro Rated Bonus. The Pro Rated Bonus, if any, payable to Employee shall be paid
within 90 days after the date that bonuses, if any, are awarded for a majority of SCI officers for
the year being considered.
Target Bonus. “Target Bonus” shall mean the percentage of salary or level of bonus for
Employee which is set by the Compensation Committee at the beginning of each year as an incentive
goal to be achieved (it being understood that the actual bonus eventually earned could be lesser or
greater than the Target Bonus).
4.15 Section 409A.
(a) Notwithstanding the applicable provisions of this Agreement regarding timing of
distribution of payments, the following special rules shall apply in order for this Agreement to
comply with Internal Revenue Code Section 409A: (i) to the extent any distribution is to a
“specified employee” (as defined under IRC §409A) and to the extent such applicable provisions of
IRC §409A require a delay of such distributions by a six month period after the date of such
Employee’s separation of service with the Company, the provisions of this Agreement shall be
construed and interpreted as requiring a six month delay in the commencement of such distributions
thereunder, and (ii) in the event there are any installment payments under this Agreement that are
required to be delayed by a six month period in order to comply with IRC §409A, the monthly
installments that would have been paid during such six month delay shall be accumulated and paid to
the Employee in a single lump sum within five business days after the end of such six month delay,
and (iii) the Company shall not have the discretion to prepay any installment payments otherwise
provided under this Agreement.
(b) To the extent of any compliance issues under Internal Revenue Code Section 409A, the
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Agreement shall be construed in such a manner so as to comply with the requirements of such
provision so as to avoid any adverse tax consequences to the Employee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.
| “COMPANY”
SCI Executive Services, Inc. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Xxxxxx X. Xxxxxx | ||||
| Vice President | ||||
| “EMPLOYEE” |
||||
| By: | /s/ Xxxxxx X. Xxxxxx, III | |||
| Xxxxxx X. Xxxxxx, III | ||||
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