SENIOR EXECUTIVE CHANGE OF CONTROL AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE I. - PURPOSES 1
ARTICLE II. - CERTAIN DEFINITIONS 1
ARTICLE III. - POST-CHANGE PERIOD PROTECTIONS 4
ARTICLE IV. - TERMINATION OF EMPLOYMENT 9
ARTICLE V. - OBLIGATIONS OF THE COMPANY UPON TERMINATION 11
ARTICLE VI. - NON-EXCLUSIVITY OF RIGHTS 15
ARTICLE VII. - CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 15
ARTICLE VIII. - EXPENSES AND INTEREST 20
ARTICLE IX. - NO SET-OFF OR MITIGATION 21
ARTICLE X. - CONFIDENTIALITY AND NON-COMPETITION 22
ARTICLE XI. - MISCELLANEOUS 24
SAFETY-KLEEN
SENIOR EXECUTIVE SEVERANCE PLAN
THIS PLAN dated as of September 8, 2000, is offered by SAFETY- KLEEN CORP., a
Delaware corporation having its principal place of business in Columbia, South
Carolina (the "Company"), and SAFETY-KLEEN SERVICES, INC., a Delaware
corporation having its principal place of business in Columbia, South Carolina
and a wholly owned subsidiary of the Company ("Services") to [Letter_Name]
("Executive"), a resident of [st].
The Company, Services and the Executive agree that this Plan supersedes any
prior agreement between any of them which specifically provides benefits upon a
change in control of the Company or Services, and further agree that, if
benefits become payable to the Executive pursuant to Article V hereof, such
benefits will be in lieu of any other severance or termination benefits to which
the Executive otherwise would be entitled under any other severance or
termination plan, policy or arrangement of the Company or Services.
ARTICLE I.
PURPOSES
The Company and Services have determined that it is in the best interests of the
Company and of Services, to assure that the Company and Services will have the
continued service of the Executive, despite the possibility or occurrence of a
change of control of the Company or Services. The Company and Services believe
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 Services, 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.
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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 both the Company and Services give 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: 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 the sale, monetization or other disposition of
all or substantially all of the assets of the Company or Services. A
"Plan of Reorganization" from Bankruptcy and the subsequent emergence
from bankruptcy protection alone does not constitute a "Change of
Control" for purposes of this Agreement unless that event also includes
the disposition of all or substantially all of the assets of the Company
or Services. Because such circumstances are difficult to anticipate when
the Company is going through a major re-structuring, the Chairman & CEO,
with the approval of the Board of Directors of the Company will make a
good faith determination of when a "Change of Control" has occurred and
will notify the participants of that determination. In all matters
concerning the determination of a "Change of Control", the decision of
the Chairman & CEO of the Company will be final and binding on all
participants of this Plan.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
2.8 "Disability" -- see Section 4.1(b).
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 or Services 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
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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 "Employer" means whichever of the Company or Services is the primary
common-law employer of the Executive at the relevant time.
2.11 "Good Reason" -- see Section 4.4(b).
2.12 "Gross-up Payment" -- see Section 7.1.
2.13 "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 as defined in Section 2.6, 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 as defined in Section 2.6, and in case of either (a) or
(b) such proposal or offer remains effective and unrevoked.
2.14 "IRS" means the Internal Revenue Service.
2.15 "1934 Act" means the Securities Exchange Act of 1934.
2.16 "Notice of Termination" means a written notice given in accordance with
Section 11.7 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.
2.17 "Plans" means plans, programs, policies or practices of the Company and
Services.
2.18 "Policies" means policies, practices or procedures of the Company and
Services.
2.19 "Post-Change Period" means the period commencing on the Effective Date
and ending on the third anniversary of such date.
2.20 "SEC" means the Securities and Exchange Commission.
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2.2 "Section" means, unless the context otherwise requires, a section of this
Agreement.
2.22 "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.
2.23 "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 or Services 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 defined in
Section 4.1), as the case may be.
2.24 "Termination Performance Period" - see Section 3.2(b)(2).
2.25 "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 with
the Company and Services, (in the case of a Change of Control
involving the Company) or with Services (in the case of a Change
of Control involving Services) (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
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entitled), the Executive agrees to devote the Executive's full
attention and time to the business and affairs of the Company and
Services 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 or Services 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 and Services 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.
3.2 Compensation.
a. Base Salary. During the Post-Change Period, the Company and
Services 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 or Services' (as
applicable to the Executive) 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 and Services 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 and
Services. Any increase in Guaranteed Base Salary shall not limit
or reduce any other obligation of the Company and Services 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.
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b. Target Bonus. During the Post-Change Period, the Company and
Services 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
of the Company or Services ("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 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 greatest bonus
that the Executive accrued under any Bonus Plan in the last
three (3) Performance Periods that ended before the
Post-Change Period; provided, however, that for purposes of
Article V of this Agreement, the 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.
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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 and Services, but in no event shall such
Plans provide the Executive with incentive (including long-term
incentives), savings and retirement benefits which are less
favorable, in the aggregate, than the most favorable of those
provided by the Company or Services 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 and Services (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 Services
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 and Services, 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 and Services 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 or Services' (as applicable) receipt of accountings in
accordance with the most favorable Policies
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applicable to peer executives of the Company and Services, but in
no event shall such Policies be less favorable, in the aggregate,
than the most favorable of those provided by the Company and
Services 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 accordance with the most
favorable Policies applicable to peer executives of the Company
and Services, but in no event shall such Policies be less
favorable, in the aggregate, than the most favorable of those
provided by the Company and Services 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 and
Services, but in no event shall such Policies be less favorable,
in the aggregate, than the most favorable of those provided by the
Company and Services 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 Employer shall pay to the Executive a
lump-sum cash payment equal to the spread (fair market value over
exercise price) of all outstanding options granted to the Executive for
shares of common stock of the Company whether vested or not vested on the
Effective Date. Whichever of the Company and Services is not the
Employer, shall be jointly and severally liable for the obligation of the
Employer under this Section 3.3.
3.4 Excess/Supplemental Plans. In addition to the other benefits provided in
this Section, on the Effective Date, the Employer shall pay to Executive
an amount equal to the value (determined using (i) the interest rate
published by the PBGC, as of the calendar month immediately prior to the
Effective Date, for the specific purpose of determining the present value
of lump sum benefits as discussed in 29 C.F.R. 4044 and (ii) the UP 84
Mortality Table) of the Executive's accrued benefits under (1) the
Safety-Kleen Supplemental Executive Retirement Plan, or (2) any such
successor plan or other nonqualified
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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"), irrespective of whether
or not Executive is vested therein, and without any reduction for early
retirement, early payout and social security benefits, and taking into
account for benefit accrual purposes, the Executive's entire period of
service with the Company and its affiliates as reflected on the Company's
Human Resources database. Whichever of the Company and Services is not
the Employer, shall be jointly and severally liable for the obligation of
the Employer under this Section 3.3.
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability.
a. During the Post-Change Period, the Employer 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 11.7 of the Employer'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 Employer or its insurers and reasonably acceptable
to the Executive or the Executive's legal representative. The
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 accommodation.
4.2 Death. The Executive's employment shall terminate automatically upon the
Executive's death during the Post-Change Period. However, in the event of
Executive's death following a termination event, Executive's family will
be eligible to continue all welfare benefits plans for the period covered
by the Executive's original termination event.
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4.3 Cause.
a. During the Post-Change Period, the Employer may terminate the
Executive's employment for "Cause."
b. "Cause" means any of the following: (i) conviction of the
Executive of, or the Executive's pleading guilty or nolo
contendere to, any felony or misdemeanor involving moral
turpitude, (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 gross negligence other than habitual
neglect of duty; or
(2) any act or omission reasonably believed by the Executive in
good faith to have been in or not opposed to the interest
of the Company and Services (without intent of the
Executive to gain, directly or indirectly, a profit to
which the Executive was not legally entitled);
c. Any termination of the Executive's employment by the Employer for
Cause shall be communicated to the Executive by a Notice of
Termination.
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 or
Services which results in a material diminution on or other
material adverse change in such position, authority or
duties;
(2) any material failure by the Company or Services to comply
with any of the provisions of Article III;
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(3) the Company's or Services' requiring the Executive to be
based at any office or location other than the location
described in Section 3.1(a)(2); or
(4) any other material adverse change to the terms and
conditions of the Executive's employment;
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 Employer by a Notice of Termination.
Following receipt of such Notice of Termination, the Company or
Services shall have a reasonable opportunity to cure. A passage of
time prior to delivery of a 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.
ARTICLE V.
OBLIGATIONS OF THE EMPLOYER UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Employer Other Than for
Cause or Disability. If, during the Post-Change Period, the Employer
shall terminate Executive's employment other than for Cause or
Disability, or if the Executive shall terminate employment for Good
Reason, the Employer 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
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Bonus previously 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 or Services;
d. an amount equal to the product of (1) three (3) multiplied by (2)
the sum of (A) the 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 or Services, as of the Termination
Date;
f. if the Company or Services maintains any cash-based long term
incentive bonus plan or arrangement, an amount in satisfaction of
the Company's or Services (as applicable) obligation to the
Executive under such plan or arrangement equal to the amount which
would be payable to the Executive if (i) the Company or Services
(as applicable) attained target performance over the entire
performance period and (ii) the Executive had remained employed
during the entire performance period;
g. 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 (taking into account for benefit
accrual purposes the Executive's entire period of service with the
Company and its affiliates as reflected on the Company's Human
Resources database) 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 three
years preceding the Termination Date, and (C) if Executive has at
least ten (10) years of service with the Company or is 55 years of
age or older, Executive were three (3) years older than his age at
the Termination Date and (2) the amount actually previously paid
to Executive pursuant to Section 3.4; provided however, that the
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amount computed under this paragraph shall not be reduced for
early retirement, early payout and social security benefits;
further provided, however, that such amount shall be paid
irrespective of whether Executive is vested in any of the Excess/
Supplemental Plans; and
h. pay Executive outplacement services, to a maximum of $25,000.
Until the third anniversary of the Termination Date or such later
date as any Plan of the Company or Services may specify, the
Employer shall continue to provide to the Executive and shall
provide to 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 and Services applicable
to 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 and Services
applicable to the Executive and other peer executives and their
families during the 90-day period immediately before the Effective
Date. The cost to the Executive 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 secondary to the
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 4980B of the
Code and Section 601 et. seq. of the Employee Retirement Income
Security Act of 1974, as amended.
5.2 If by the Employer for "Cause." If the Employer terminates the
Executive's employment for "Cause" during the Post-Change Period, this
Agreement shall terminate without further obligation by the Employer to
the Executive, other than the obligation immediately to pay the Executive
in cash the Executive's Guaranteed Base Salary
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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 Post-Change Period other than for Good Reason, Disability or Death. This
Agreement shall terminate without further obligations by the Employer,
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 Employer for Disability. If the Employer 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 Employer's obligation immediately to pay the Executive in cash
all Accrued Obligations, and
(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 peer executives of the Company or Services in
effect immediately before the Termination Date or (2) those
provided under the most favorable disability Plans of the Company
and Services 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 of the
Employer immediately to pay the Executive's estate or beneficiary in cash
all Accrued Obligations. Despite anything in this Agreement to the
contrary, in the event of Executive's death during the Post-Change
Period, the Executive's family shall be entitled to receive for a period
of two years following the death, benefits under the Company's welfare
benefit plans in effect at the time of Executive's death, with all the
same family coverages, co-payments and premiums amounts as other active
executives of the Company at similar position levels to the Executive.
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5.6 Joint and Several Obligation. Whichever of the Company and Services is
not the Employer shall be jointly and severally liable for the
obligations of the Employer under this Article V.
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 or Services.
6.2 Other Rights. Except as provided in Section 6.1 and in the second
paragraph of this Agreement, 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 EMPLOYER
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Employer'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 any benefit
received or deemed received by the Executive from the Company or Services
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 Employer 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
15
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 Employer may at any time request the preparation and
delivery to the Executive of a Certificate. The Employer 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 Employer 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 Employer 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 Employer, the Employer 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 Employer) or (2) deliver to the Executive a
Certificate specifying the Gross-up Payment determined by the
Employer's independent auditors, together with an opinion of the
Employer's counsel (" Employer Counsel Opinion"), and pay the
Executive the Gross-up Payment specified in such Certificate. If
for any reason the Employer fails to comply with clause (2) of the
preceding sentence, the Gross-up Payment specified in the
Executive's Determination shall be controlling for all purposes.
16
b. If the Executive does not make a request for, and the Employer
does not deliver to the Executive, a Certificate, the Employer
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
Employer 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 Employer'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 Employer or the Executive pursuant to Section 7.1 or 7.2, as
applicable, then the Employer 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. (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. "Employer Counsel Opinion"
17
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 Employer'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.
7.6 Amount Increased or Contested. The Executive shall notify the Employer in
writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by the Employer 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 Employer's obligations under this Article only if and to the
extent that such failure results in actual prejudice to the Employer. The
Executive shall not pay such claim less than 30 days after the Executive
gives such notice to the Employer (or, if sooner, the date on which
payment of such claim is due). If the Employer notifies the Executive in
writing before the expiration of such period that it desires to contest
such claim, the Executive shall:
a. give the Employer any information that it reasonably requests
relating to such claim,
b. take such action in connection with contesting such claim as
the Employer 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
Employer,
c. cooperate with the Employer in good faith to contest such
claim,
and
d. permit the Employer to participate in any proceedings relating
to such claim; provided, however, that the Employer 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
18
tax, including related interest and penalties, imposed as a result
of such representation and payment of costs and expenses. Without
limiting the foregoing, the Employer 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 xxx 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 Employer shall determine;
provided, however, that if the Employer directs the Executive to
pay such claim and xxx for a refund, the Employer 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 Employer's control of
the contest shall be limited to issues with 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 Employer pursuant to Section 7.6, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall
(subject to the Employer's complying with the requirements of Section
7.6) promptly pay the Employer 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
Employer 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 Employer 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.
19
7.8 Joint and Several Obligation. Whichever of the Company and Services is
not the Employer shall be jointly and severally liable for the
obligations of the Employer under this Article VII. In the event of any
assertion of liability under this Section 7.8 against whichever of the
Company or Services is not the Employer, the party against which such
liability is asserted shall succeed to all of the rights and obligations
of the Employer under Article VII.
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 Employer 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 and Services' officers and directors
liability insurance policy, if any. The existence of any
controlling case or controlling 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 Employer 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 Employer.
8.2 Interest. If the Employer does not pay any amount due to the Executive
under this Agreement within three days after such amount became due and
owing, interest shall 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
20
lending rate announced by The Bank of America in effect from time to time
during the period of such nonpayment.
8.3 Joint and Several Obligation. Whichever of the Company and Services is
not the Employer shall be jointly and severally liable for the
obligations of the Employer under this Article VIII. The right of refund
referred to in the last sentence of Section 8.1 b. shall inure to
whichever of the Company or Services originally paid the reimbursement to
the Executive.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off by Company or Services. 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 and Services of their obligations under this Agreement. Any claim
which the Company or Services 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 or Services
under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to mitigate the
amounts payable by the Company or Services 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
21
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.
10.2 Non-competition/ Non-solicitation.
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
22
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 and/ or its Subsidiaries wherever
the Company and/ or its Subsidiaries does business, in the
United States or abroad.
10.2 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 obligations of
the Company and Services 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 and Services 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.
23
11.2 Successors. This Agreement shall inure to the benefit of and be binding
upon the Company, Services and their respective successors and assigns.
The Company and Services will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of their respective businesses or assets to assume
expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company or Services, as applicable, would be
required to perform it if no such succession had taken place. Any
successor to the business and/or assets of the Company or Services which
assumes or agrees to perform this Agreement by operation of law,
contract, or otherwise shall be jointly and severally liable with the
Company and Services under this Agreement as if such successor were the
Company or Services, as applicable.
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.
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, Services 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
24
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
[Letter_Name]
[addr1]
[addr2]
[city],[st][postal]
If to the Company:
Safety-Kleen Services, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Sr. Vice President, Administration
If to Services:
Safety-Kleen Services, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Sr. Vice President, Administration
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 South Carolina 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 and Services 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.
25
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.
11.13 Entire Agreement. This Agreement contains the entire understanding of
the Company and Services and the Executive with respect to its subject
matter.
11.14 Cancellation. The Company and Services may, at any time prior to a Change
in Control, unilaterally cancel this Agreement on behalf of all parties
hereto by both of them (and not only one of them) 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, Services and the Company have executed this
Agreement as of the date first above written.
--------------------------------------------------
EXECUTIVE date
SAFETY-KLEEN CORP.
By:
-----------------------------------------------
Xxxxx X. Xxxxxx, Xx. date
Chairman / Chief Executive Officer
SAFETY-KLEEN CORP.
By:
------------------------------------------------
Xxxxxx X. Xxxxx date
President / Chief Operating Office
26
