Document:

Exhibit 10.8

 

EMPLOYMENT
AGREEMENT

 

AGREEMENT  by and between Safety-Kleen Systems, Inc.,
a Wisconsin corporation (the “Company”), Safety-Kleen HoldCo., Inc. (“SK HoldCo”)
and Dennis McGill (the “Executive”), dated as of the 8th day of March, 2005, to
be effective as of April 4, 2005 (the “Effective Date”).

 

WHEREAS, the Company has determined that it is
in the best interests of the Company to employ the Executive as the Executive
Vice President and Chief Financial Officer of the Company and SK HoldCo, and Executive desires to serve the Company in
that capacity pursuant to the terms set forth herein.

 

NOW, THEREFORE, IT
IS HEREBY AGREED AS FOLLOWS:

 

1.             Employment Period.  The Company shall employ the Executive, and the Executive shall
serve the Company, on the terms and conditions set forth in this Agreement,
during the employment period which shall begin on the Effective Date and
continue for two years unless earlier terminated pursuant to the terms of this
Agreement (the “Employment Period”). This Agreement may be renewed, and the
Employment Period thereby extended if not previously terminated pursuant to the
terms hereof, by the Company upon the same terms and conditions as contained
herein, upon at least sixty (60) days written notice to Executive prior to the
end of the expiring term of the Employment Period.

 

2.             Position and Duties.  During the Employment Period, the
Executive shall serve as Executive Vice President and Chief Financial Officer
of the Company and SK  HoldCo and in substantially similar positions in
the subsidiaries and affiliates of the Company, with the duties, functions,
responsibilities and authority customarily associated with such positions.
During the Employment Period, the Executive will devote substantially all of
his attention and time to the business and affairs of the Company, excluding
any periods of vacation and sick leave to which Executive is entitled, and will
not engage in any other business activities that will unreasonably interfere
with the Executive’s employment pursuant to this Agreement.  During the Employment Period, Executive will
be based out of the Company’s offices in Plano, Texas, and the Executive’s
services shall be performed at such locations where the Company conducts
business throughout North America as the needs and exigencies of the business
of the Company from time to time reasonably require. Executive will relocate
from his current residence to the Plano, Texas area as soon as practical, but
in any event within 6 months of the Effective Date.  The Company will reimburse Executive for
reasonable commuting expenses for up to 6 months from the Effective Date.

 

3.             Compensation.

 

(a)           Salary.  From the Effective Date through the end
of the Employment Period, the Executive shall receive an annual base salary
(the “Salary”) of $ 350,000 payable in accordance with the Company’s normal
payroll practices for executives. Executive will receive an annual performance
review on or about each anniversary of the Effective Date, and may receive a
corresponding Salary increase at such time. Any new salary due to any such
increase will thereafter be deemed the “Salary” for purposes of this Agreement.

 

 

(b)           Annual
Bonus.  Executive will have an annual target Merit
Incentive Plan bonus (the “MIP Bonus”) percentage of 100% of his Salary (the “Bonus”).
The Bonus will be subject to the terms and conditions of the MIP Bonus program
approved by the SK HoldCo Board of Directors each year. Notwithstanding the
foregoing, the Company agrees that Executive’s 2005 minimum MIP Bonus shall be guaranteed
at $350,000.

 

(c)           Options. On or about the Effective Date, Executive shall
receive an award of 125,000 SK HoldCo common stock options (“Options”) with a
strike price equal to the fair market value of a share of common stock of SK HoldCo
as of the date of the grant.   The
Options will have a four year vesting period. The vesting period will start on
the Effective Date and 25% of the Options will thereafter vest on each
anniversary of the Effective Date during the Employment Period. Such Options will
be subject to SK HoldCo’s Stock Option Plan and the terms of any SK HoldCo
Stock Option Agreement, attached hereto and incorporated herein by reference

 

(d)           Other
Benefits.  During the Employment Period: (i) the
Executive shall be entitled to participate in the Company’s 401-k Plan,
applicable fringe benefit programs and other benefit plans, policies and
programs of the Company applicable to Executive as may be amended by the
Company from time to time; and (ii) the Executive shall be entitled to
four weeks of vacation, effective and vested immediately, and four weeks of
additional vacation effective and vested as of each anniversary of the
Effective Date during the Employment Period.

 

(e)           Programs,
Procedures and Policies.  Executive will comply with and be bound by
the Company’s applicable current and future programs, procedures, plans and
policies, as may be amended by the Company from time to time, except to the
extent such programs, procedures, plans or policies are contrary to the terms
and conditions of this Agreement.

 

4.             Termination of Employment.

 

(a)           Death
or Disability. In the event of the
Executive’s death during the Employment Period, the Executive’s employment with
the Company shall terminate automatically. In addition, the Company shall have the
right to terminate the Executive’s employment because of the Executive’s
Disability (as defined in the Company’s Long Term Disability Benefit Plan)
during the Employment Period. A termination of the Executive’s employment by
the Company for Disability shall be communicated to the Executive by written
notice, and shall be effective on the 5th day after receipt of such notice by
the Executive (the “Disability Effective Date”), unless the Executive returns
to full-time performance of the Executive’s duties before the Disability
Effective Date.

 

(b)           By
the Company.  In addition to termination for death or
Disability, the Company may terminate the Executive’s employment during the
Employment Period with Cause, after receipt of written notice to Executive and a
reasonable opportunity to cure, or without Cause.  For purposes of this Agreement, “Cause”
means:

 

(i)            the willful and continued failure by Executive
substantially to perform his duties with the Company (other than any such
failure resulting from Disability or other causes beyond Executive’s reasonable
control); or

 

2

 

(ii)           the willful engaging by Executive in conduct that is
demonstrably and materially injurious to the Company, monetarily or otherwise;
or

 

(iii)          the material failure of Executive to comply with the
terms and conditions of this Agreement. 

 

(c)           Voluntarily
by the Executive.  The Executive may voluntarily terminate his
employment at any time during the Employment Period by giving not less than 30 days
prior written notice thereof to the Company.

 

(d)           Date
of Termination.  The “Date of Termination” means the last day
of the Employment Period if not otherwise terminated early pursuant to any
provision of this Agreement (“End of the Term”), the date of the Executive’s
death, the Disability Effective Date, the date on which the termination of the
Executive’s employment by the Company with Cause or without Cause is effective,
or the date on which the voluntary termination of the Executive’s employment by
Executive is effective, as the case may be.

 

5.             Obligations of the Company on
Termination.

 

(a)           If the Executive’s employment is
terminated (i) due to the Company failing to renew this Agreement in
accordance with its terms at least sixty (60) days prior to the End of the
Term; (ii) by the Company for any reason other than the Executive’s death,
Disability or Cause, or (iii) due to Executive resigning because the
Company materially fails to comply with the terms and conditions of this
Agreement after notice from Executive and a reasonable opportunity to cure such
matter, the Company shall, upon execution by Executive of a general release
(which preserves Executive’s right to indemnification by the Company and
SK HoldCo for claims made against Executive), pay to the Executive within
10 days after the Date of Termination, a lump-sum cash amount equal to the sum
of any portion of the Salary and any other compensation earned for the period
up to the Date of Termination that has not yet been paid, the cash equivalent
of any accrued but unused vacation, and twelve month’s worth of Salary.  Further, (x) all unvested Options
granted to Executive by SK HoldCo that are scheduled to vest in the year after
the Date of Termination, will vest prorate for that year, (y)  the
MIP Bonus payment for the year in which the Date of Termination occurs, will be
payable to Executive when and as paid to other Company employees, and will be
calculated as if Executive remained employed with the Company the entire MIP
year (i.e., not prorated for length of employment in that MIP year), and (z) provided
Executive elects continued health insurance coverage through COBRA, the Company
will pay the monthly COBRA contributions for Executive and his family for health
insurance coverage, as may be amended from time to time, (less an amount equal
to the premium contribution paid by active Company employees) during such
twelve month period; provided, however, that if at any time Executive becomes
eligible for health insurance through subsequent employment or otherwise, the
Company’s health benefit obligations shall immediately cease, and the Company
shall have no further obligation to make COBRA contributions on Executive’s
behalf.

 

(b)           Cause; Voluntary Termination.
If the Executive’s employment is terminated (i) due to the Executive’s
death or Disability, (ii) for Cause by the Company, or (iii) by the
Executive voluntarily during the Employment Period, the Company shall pay the
Executive, 

 

3

 

within 10 days after the Date of
Termination, a lump-sum cash amount equal to the sum of any portion of the
Salary and any other compensation earned for the period up to the Date of
Termination that has not yet been paid, plus the cash equivalent of any accrued
but unused vacation.

 

(c)           In
addition to the payments and benefits to which the Executive or the Executive’s
estate may be entitled under Sections 5(a) and (b) above and Section 5(d) below,
the Executive shall be entitled to receive any vested or other benefits to
which he may be entitled pursuant to the terms and conditions of the Company’s
401-k Plan and any Company Life, Disability or Health Insurance Plan in which
he may participate, and any other amounts due under this Agreement.

 

(d)           Change in Control.      If
Executive’s employment ends due to any of the items listed in Section 5(a) after
or in anticipation of a Change in Control (as defined below), instead of the
amounts in Section 5(a), the Company shall, upon execution by Executive of
the Company’s settlement agreement and general release, pay to the Executive
within 10 days after the Date of Termination, a lump-sum cash amount equal to
the sum of any portion of the Salary and any other compensation earned for the
period up to the Date of Termination that has not yet been paid, the cash equivalent
of any accrued but unused vacation, and 24 month’s Salary. Further, (a) all
unvested Options granted to Executive by SK HoldCo will fully vest upon such
Date of Termination, (b) the MIP Bonus payment for the year in which the
Date of Termination occurs, will be payable to Executive on a prorata basis
when and as paid to other Company employees, and (c) provided Executive
elects continued health insurance coverage through COBRA, the Company will pay
Executive’s monthly COBRA contributions for health insurance coverage, as may
be amended from time to time, (less an amount equal to the premium contribution
paid by active Company employees) during such year period; provided, however,
that if at any time Executive becomes eligible for health insurance through
subsequent employment or otherwise, the Company’s health benefit obligations
shall immediately cease, and the Company shall have no further obligation to
make COBRA contributions on Executive’s behalf. A “Change of Control” for
purposes of this Agreement means the sale, monetization or other disposition of
all or substantially all (greater than 50%) of the assets of the Company or SK
HoldCo, or if a “person” or “group” (within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as in effect from time to
time) becomes the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as in effect from time to time), directly or
indirectly, of more than 66 2/3 % of the common stock of SK HoldCo having the right
to vote for the election of members of the SK HoldCo Board of Directors (but
shall not include any initial or secondary public offering of SK HoldCo stock
under the 1933 Securities Act, as in effect from time to time). If Executive’s
employment ends due to any of the items listed in Section 5(a) within
six (6) months prior to a Change of Control, it will be deemed to be “in
anticipation of a Change of Control” for purposes of this paragraph.

 

6.             Confidentiality and
Noncompetition. Executive agrees to execute,
comply with and be bound by the Non-disclosure, Non-solicitation and
Non-competition Agreement attached hereto as Exhibit “A” and incorporated
herein by reference. Executive will treat the terms of this Agreement as
strictly confidential, and will not disclose the same to any Company employees
other than those involved in the preparation and negotiation of this Agreement.

 

4

 

7.             Successors.      (a) This Agreement is personal to the Executive and, without the prior
written consent of the Company, shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive’s legal
representatives.

 

(b) 
This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and assigns. The Company shall not assign this Agreement
without the prior written consent of the Executive, which consent shall not be
unreasonably withheld.

 

8.             Miscellaneous. (a) The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified except by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

 

(b)           All
notices and other communications under this Agreement shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:

 

	
  If to the Executive:

  	
   

  	
  Dennis McGill

  
	
   

  	
   

  	
  [Address on file with the Company]

  
	
   

  	
   

  	
   

  
	
  If to the Company or SK HoldCo:

  	
   

  	
  Safety-Kleen Systems, Inc.

  
	
   

  	
   

  	
  5400 Legacy Drive,

  
	
   

  	
   

  	
  Cluster II, Building 3

  
	
   

  	
   

  	
  Plano, Texas 75024

  
	
   

  	
   

  	
  Attention: Chief Executive Officer

  

 

or to such other address as either
party furnishes to the other in writing in accordance with this paragraph (b) of
Section 8. Notices and communications shall be effective when actually
received by the addressee.

 

(c)           The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement. If any provision of this Agreement
shall be held invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and
enforceable and continue in full force and effect to the fullest extent
consistent with law.

 

(d)           Notwithstanding any other provision
of this Agreement, the Company may withhold from amounts payable under this
Agreement all federal, state, local and foreign taxes that are required to be
withheld by applicable laws or regulations.

 

(e)           The Executive’s or the Company’s
failure to insist upon strict compliance with any provision of, or to assert
any right under, this Agreement shall not be deemed to be a waiver of such
provision or right or of any other provision of or right under this Agreement.

 

(f)            The Executive and the Company
acknowledge that this Agreement supersedes any other agreement, whether written
or oral, between them concerning the subject matter 

 

5

 

hereof, including any prior
employment agreement, severance agreement or plan, and change of control
agreement or plan.

 

(g)           This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware without
reference to principles of conflict of laws.

 

(h)           This Agreement may be executed in
several counterparts, each of which shall be deemed an original and said
counterparts shall constitute but one and the same instrument.

 

IN WITNESS WHEREOF, the Executive
has hereunto set the Executive’s hand, and the Company and SK HoldCo have
caused this Agreement to be executed in their names on their behalf, all as of
the day and year first above written.

 

 

	
   

  	
   /s/ Dennis McGill

  
	
   

  	
  Dennis McGill, Executive

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SAFETY-KLEEN
  SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  T.R. Tunnell

  
	
   

  	
   

  	
  T.R. Tunnell

  
	
   

  	
   

  	
  Executive Vice
  President and General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SAFETY-KLEEN
  HOLDCO., INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  T.R. Tunnell

  
	
   

  	
   

  	
  T.R. Tunnell

  
	
   

  	
   

  	
  Executive Vice
  President and General Counsel

  

 

6

 

	
  

  	
   

  	
  Frederick J. Florjancic, Jr. 

  President and Chief   

  Executive Officer   

  
	
   

  	
   

  
	
   

  	
  November 30, 2006

  

 

Dennis McGill

Executive Vice President and CFO

Safety-Kleen Systems, Inc.

5400 Legacy Drive

Plano, TX 75024

 

Re:          Amendment to Employment Agreement
dated March 8, 2005, as amended (the “Employment Agreement”)

 

Dear Dennis,

 

The purpose of this letter
is to confirm the decision of the Human Resource and Compensation Committee to
amend certain provisions of the Employment Agreement as follows:

 

A.                                   The “Employment Period” under the
Employment Agreement is extended until December 31, 2009.

 

B.                                     Section 3(b) of the Employment
Agreement is amended in its entirety as follows effective as of January 1,
2007 (for clarification, this amendment does not modify the Executive’s annual
bonus applicable to the 2006 MIP Plan year):

 

	
  3.

  	
  Compensation.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ...

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Annual Bonus. Executive will have an annual
  bonus as a percentage of Salary (the “Bonus”) as follows:

  
					

 

	
  Plan

  	
   

  	
  Plan +

  	
   

  	
  Plan ++

  
	
        67%      

  	
   

  	
        133%      

  	
   

  	
        200%      

  

 

	
  The Bonus will be subject to
  the terms and conditions of the annual bonus program approved by the SK
  Holdco Board of Directors each year. 

  

 

SAFETY-KLEEN
HOLDCO, INC.

5400
LEGACY DRIVE, CII B3          PLANO, TX
75024          972-265-2000

 

 

	
  

  	
   

  	
  Frederick J. Florjancic, Jr. 

  President and Chief   

  Executive Officer   

  

 

All other terms and
conditions of the Employment Agreement as amended shall remain in full force
and effect.   Please acknowledge your
agreement with these amendments by signing in the space provided below.

 

Sincerely,

 

 

	
    /s/ Frederick
  J. Florjancic, Jr.

  	
   

  
	
  Frederick J.
  Florjancic, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
    /s/ Dennis Mcgill

  	
   

  
	
  Dennis McGill

  	
   

  

 

SAFETY-KLEEN
HOLDCO, INC.

5400
LEGACY DRIVE, CII B3          PLANO, TX
75024          972-265-2000

 

 

	
  

  	
   

  	
  T. R. Tunnell 

  Executive Vice President, 

  Secretary & General Counsel  

  
	
   

  	
   

  
	
   

  	
  June 22, 2006

  

 

Dennis McGill

Executive Vice President and Chief Financial Officer

Safety-Kleen Systems, Inc.

5400 Legacy Drive

Plano, TX 75024

 

Re:          Amendment to Employment Agreement
dated March 8, 2005 (the “Employment Agreement”)

 

Dear Dennis,

 

As you know, the Human
Resource and Compensation Committee at its meeting on March 20, 2006
agreed to amend the definition of “Change of Control” in the Safety-Kleen
Equity Plan to include a change of beneficial ownership of the company of more
than 50% of the common stock.  I have
attached a copy of the Amended Plan for your information.

 

The purpose of this
letter is to confirm that, in order to conform your Employment Agreement to the
amended Equity Plan, Section 5(d) of the Employment Agreement is
amended by adding the following to the end of such paragraph:

 

Notwithstanding
the foregoing, if the definition of “Change of Control” in the Company’s Equity
Plan (as amended from time to time) is more favorable to the Executive, then
such definition shall be controlling for purposes of this Agreement.

 

All other terms and
conditions of the Employment Agreement shall remain in full force and
effect.   Please acknowledge this change
by signing in the space provided below.

 

Sincerely,

 

 

	
  /s/  T.R. Tunnell

  	
   

  
	
  T. R. Tunnell

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
    /s/ Dennis
  McGill

  	
   

  
	
  Dennis McGill

  	
   

  

 

SAFETY-KLEEN
HOLDCO, INC.

5400
LEGACY DRIVE, CII B3          PLANO, TX
75024          972-265-2000Exhibit
10.9

 

EMPLOYMENT AGREEMENT

 

AGREEMENT by and
between Safety-Kleen Systems, Inc., a Wisconsin corporation (the “Company”),
and T. R. Tunnell (the “Executive”), dated as of the 4th day of October,
2004 (the “Effective Date”).

 

WHEREAS, the Company
has determined that it is in the best interests of the Company to employ the
Executive as the Executive Vice President, General Counsel & Corporate
Secretary of the Company and Safety-Kleen Holdco, Inc. (“SK Holdco”), and
Executive desires to serve the Company in that capacity pursuant to the terms
set forth herein.

 

NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1.             Employment
Period.   The Company shall employ the Executive, and
the Executive shall serve the Company, on the terms and conditions set forth in
this Agreement, during the employment period which shall begin on the Effective
Date and continue for two years unless earlier terminated pursuant to the terms
of this Agreement (the “Employment Period”). This Agreement may be renewed, and
the Employment Period thereby extended if not previously terminated pursuant to
the terms hereof, by the Company upon the same terms and conditions as
contained herein, upon at least sixty (60) days written notice to Executive
prior to the end of the expiring term of the Employment Period.

 

2.             Position
and Duties.   During the Employment
Period, the Executive shall serve as Executive Vice President, General Counsel &
Corporate Secretary of the Company and SK Holdco and in appropriate positions
in the subsidiaries and affiliates of the Company, with the duties, functions,
responsibilities and authority customarily associated with such positions.
During the Employment Period, the Executive will devote substantially all of
his attention and time to the business and affairs of the Company, excluding
any periods of vacation and sick leave to which Executive is entitled, and will
not engage in any other business activities that will unreasonably interfere
with the Executive’s employment pursuant to this Agreement.  During the Employment Period, Executive will
be based out of the Company’s offices in Plano, Texas, and the Executive’s
services shall be performed at such locations where the Company conducts
business throughout North America as the needs and exigencies of the business
of the Company from time to time reasonably require. However, Executive will
not be required by the Company to relocate from his current residence in the
Dallas, Texas area.

 

3.             Compensation.

 

(a)            Salary.    From the Effective Date through the end of
the Employment Period, the Executive shall receive an annual base salary (the “Salary”)
of $225,000, payable in accordance with the Company’s normal payroll practices
for executives. Executive will receive an annual performance review on or about
each anniversary of the Effective Date, and may receive a corresponding Salary
increase at such time. Any new salary due to any such increase will thereafter
be deemed the “Salary” for purposes of this Agreement.

 

(b)           Annual
Bonus.  Executive will have an annual
target bonus percentage of 100% 

 

 

of his Salary
(the “Bonus”). The Bonus will be subject to the terms and conditions of the
annual bonus program approved by the SK Holdco Board of Directors each year.

 

(c)           Options.
On or about the Effective Date, Executive shall receive an award of 100,000 SK
Holdco common stock options (“Options”) with a strike price of $6 per share.   The
Options will have a four year vesting period. The vesting period will start on
the Effective Date and 25% of the Options will thereafter vest on each
anniversary of the Effective Date during the Employment Period. Such Options
will be subject to SK Holdco’s Stock Option Plan and the terms of any SK Holdco
Stock Option Agreement, attached hereto and incorporated herein by reference.

 

(d)           Other
Benefits.  During the Employment
Period: (i) the Executive shall be entitled to participate in the Company’s
401-k Plan, applicable fringe benefit programs and other benefit plans,
policies and programs of the Company applicable to Executive as may be amended
by the Company from time to time; and (ii) the Executive shall be entitled
to four weeks of vacation, effective and vested immediately, and four weeks of
additional vacation effective and vested as of each anniversary of the
Effective Date during the Employment Period.

 

(e)           Programs,
Procedures and Policies.  Executive
will comply with and be bound by the Company’s applicable current and future
programs, procedures, plans and policies, as may be amended by the Company from
time to time, except to the extent such programs, procedures, plans or policies
are contrary to the terms and conditions of this Agreement.

 

4.             Termination
of Employment.

 

(a)           Death
or Disability. In the event of the Executive’s death during the Employment
Period, the Executive’s employment with the Company shall terminate
automatically. In addition, the Company shall have the right to terminate the
Executive’s employment because of the Executive’s Disability (as defined in the
Company’s Long Term Disability Benefit Plan) during the Employment Period. A
termination of the Executive’s employment by the Company for Disability shall
be communicated to the Executive by written notice, and shall be effective on
the 5th day after receipt of such notice by the Executive (the “Disability
Effective Date”), unless the Executive returns to full-time performance of the
Executive’s duties before the Disability Effective Date.

 

(b)           By
the Company.  In addition to
termination for death or Disability, the Company may terminate the Executive’s
employment during the Employment Period with Cause or without Cause. For
purposes of this Agreement, “Cause” means:

 

(i)                                  the
willful and continued failure by Executive substantially to perform his duties
with the Company (other than any such failure resulting from Disability or
other causes beyond Executive’s reasonable control); or

 

(ii)                               the
willful engaging by Executive in conduct that is demonstrably and materially
injurious to the Company, monetarily or otherwise; or

 

2

 

(iii)                              the
material failure of Executive to comply with the terms and conditions of this
Agreement; in each case (i, ii, and iii) above after notice and a reasonable
opportunity to cure such matter.

 

(c)           Voluntarily
by the Executive.  The Executive may
voluntarily terminate his employment at any time during the Employment Period
by giving not less than 60 days prior written notice thereof to the Company.

 

(d)           Date
of Termination.  The “Date of
Termination” means the last day of the Employment Period if not otherwise
terminated early pursuant to any provision of this Agreement (“End of the Term”),
the date of the Executive’s death, the Disability Effective Date, the date on
which the termination of the Executive’s employment by the Company with Cause or
without Cause is effective, or the date on which the voluntary termination of
the Executive’s employment by Executive is effective, as the case may be.

 

5.            Obligations
of the Company on Termination. (a) If the Executive’s employment is
terminated (i) due to the Company failing to renew this Agreement in
accordance with its terms at least sixty (60) days prior to the End of the
Term; (ii) by the Company for any reason other than the Executive’s death,
Disability or Cause, or (iii) due to Executive resigning because the
Company materially fails to comply with the terms and conditions of this
Agreement after notice from Executive and a reasonable opportunity to cure such
matter, the Company shall, upon execution by Executive of the Company’s
settlement agreement and general release, pay to the Executive within 10 days
after the Date of Termination, a lump-sum cash amount equal to the sum of any
portion of the Salary and any other compensation earned for the period up to
the Date of Termination that has not yet been paid, the cash equivalent of any
accrued but unused vacation, and one year’s worth of Salary.  Further, (a) all unvested Options granted
to Executive by SK Holdco that are scheduled to vest in the year after the Date
of Termination, will vest prorata for that year, (b) the Management
Incentive Plan (“MIP”) Bonus payment for the year in which the Date of
Termination occurs, will be payable to Executive when and as paid to other
Company employees, and will be calculated as if Executive remained employed
with the Company the entire MIP year (i.e., not prorated for length of
employment in that MIP year), and (c) provided Executive elects continued
health insurance coverage through COBRA, the Company will pay Executive’s
monthly COBRA contributions for health insurance coverage, as may be amended from
time to time, (less an amount equal to the premium contribution paid by active
Company employees) during such one year period; provided, however, that if at
any time Executive becomes eligible for health insurance through subsequent
employment or otherwise, the Company’s health benefit obligations shall
immediately cease, and the Company shall have no further obligation to make
COBRA contributions on Executive’s behalf.

 

(b)          Cause;
Voluntary Termination. If the Executive’s employment is terminated (i) due
to the Executive’s death or Disability, (ii) for Cause by the Company, or (iii) by
the Executive voluntarily during the Employment Period, the Company shall pay
the Executive, within 10 days after the Date of Termination, a lump-sum cash
amount equal to the sum of any portion of the Salary and any other compensation
earned for the period up to the Date of Termination that has not yet been paid,
plus the cash equivalent of any accrued but unused vacation.

 

3

 

(c)          In
addition to the payments and benefits to which the Executive or the Executive’s
estate may be entitled under Sections 5(a) and (b) above and Section 5(d) below,
the Executive shall be entitled to receive any vested or other benefits to
which he may be entitled pursuant to the terms and conditions of the Company’s
401-k Plan and any Company Life, Disability or Health Insurance Plan in which
he may participate, and any other amounts due under this Agreement.

 

(d)           Change in Control.    If
Executive’s employment ends due to any of the items listed in Section 5(a) after
or in anticipation of a Change in Control (as defined below), instead of the
amounts in Section 5(a), the Company shall, upon execution by Executive of
the Company’s settlement agreement and general release, pay to the Executive
within 10 days after the Date of Termination, a lump-sum cash amount equal to
the sum of any portion of the Salary and any other compensation earned for the
period up to the Date of Termination that has not yet been paid, the cash
equivalent of any accrued but unused vacation, and two years’ Salary. Further, (a) all
unvested Options granted to Executive by SK Holdco will fully vest upon such
Date of Termination, (b) the MIP Bonus payment for the year in which the
Date of Termination occurs, will be payable to Executive on a prorata basis
when and as paid to other Company employees, and (c) provided Executive
elects continued health insurance coverage through COBRA, the Company will pay
Executive’s monthly COBRA contributions for health insurance coverage, as may
be amended from time to time, (less an amount equal to the premium contribution
paid by active Company employees) during such year period; provided, however,
that if at any time Executive becomes eligible for health insurance through
subsequent employment or otherwise, the Company’s health benefit obligations
shall immediately cease, and the Company shall have no further obligation to
make COBRA contributions on Executive’s behalf. A “Change of Control” for
purposes of this Agreement means the sale, monetization or other disposition of
all or substantially all (greater than 50%) of the assets of the Company or SK
Holdco, or if a “person” or “group” (within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as in effect from time to
time) becomes the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as in effect from time to time), directly or
indirectly, of more than 66 2/3 % of the common stock of SK Holdco having the
right to vote for the election of members of the SK Holdco Board of Directors
(but shall not include any initial or secondary public offering of SK Holdco
stock under the 1933 Securities Act, as in effect from time to time). If
Executive’s employment ends due to any of the items listed in Section 5(a) within
six (6) months prior to a Change of Control, it will be deemed to be “in
anticipation of a Change of Control” for purposes of this paragraph.

 

6.             Confidentiality
and Noncompetition. Executive agrees to execute, comply with and be bound
by the Non-disclosure, Non-solicitation and Non-competition Agreement attached
hereto as Exhibit “A” and incorporated herein by reference. Executive will
treat the terms of this Agreement as strictly confidential, and will not
disclose the same to any Company employees.

 

7.             Successors.    (a) This
Agreement is personal to the Executive and, without the prior written consent
of the Company, shall not be assignable by the Executive otherwise than

 

4

 

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.

 

(b)           This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns. The Company shall not assign this Agreement without the
prior written consent of the Executive, which consent shall not be unreasonably
withheld.

 

8.             Miscellaneous.
(a) The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or
modified except by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

 

(b)           All
notices and other communications under this Agreement shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:                          T. R. Tunnell

[Address on file with the Company]

 

If to the Company:                          Safety-Kleen Systems, Inc.

5400 Legacy Drive,

Cluster II, Building 3

Plano, Texas 75024

Attention: Chief Executive Officer

 

or to such other address as either party furnishes to the other in
writing in accordance with this paragraph (b) of Section 8. Notices
and communications shall be effective when actually received by the addressee.

 

(c)           The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. If any
provision of this Agreement shall be held invalid or unenforceable in part, the
remaining portion of such provision, together with all other provisions of this
Agreement, shall remain valid and enforceable and continue in full force and
effect to the fullest extent consistent with law.

 

(d)           Notwithstanding any
other provision of this Agreement, the Company may withhold from amounts
payable under this Agreement all federal, state, local and foreign taxes that
are required to be withheld by applicable laws or regulations.

 

(e)           The
Executive’s or the Company’s failure to insist upon strict compliance with any
provision of, or to assert any right under, this Agreement shall not be deemed
to be a waiver of such provision or right or of any other provision of or right
under this Agreement.

 

(f)            The Executive and
the Company acknowledge that this Agreement supersedes any other agreement,
whether written or oral, between them concerning the subject matter hereof,
including any prior employment agreement, severance agreement or plan, and
change of control agreement or plan.

 

5

 

 

 

(g)           This
Agreement may be executed in several counterparts, each of which shall be
deemed an original and said counterparts shall constitute but one and the same
instrument.

 

IN WITNESS WHEREOF, the Executive has
hereunto set the Executive’s hand, and the Company has caused this Agreement to
be executed in its name on its behalf, all as of the day and year first above
written.

 

 

	
   

  	
    /s/
  T. R. Tunnell

  
	
   

  	
  T. R.
  Tunnell, Executive

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SAFETY-KLEEN
  SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Frederick J. Florjancic, Jr.

  
	
   

  	
   

  	
  Frederick J.
  Florjancic, Jr.

  
	
   

  	
   

  	
  Chief Executive
  Officer and President

  

 

6

 

	
  

  	
   

  	
  Frederick J.
  Florjancic, Jr.

  President and Chief

  Executive Officer

  

 

November 30, 2006

 

T.R. Tunnell

Executive Vice
President and General Counsel

Safety-Kleen
Systems, Inc.

5400 Legacy
Drive

Plano, TX
75024

 

Re:                               Amendment to Employment
Agreement dated October 4, 2004, as amended (the “Employment Agreement”)

 

Dear T.R.,

 

The purpose of this letter is to confirm the decision of the Human
Resource and Compensation Committee to amend certain provisions of the
Employment Agreement as follows:

 

A.                                   The “Employment
Period” as defined in the Employment Agreement is extended until December 31,
2009;

 

B.                                     Executive’s “Salary”
as defined in the Employment Agreement is increased to $255,000 effective as of
the date of this letter; and

 

C.                                     Section 3(b) of
the Employment Agreement is amended in its entirety as follows effective as of January 1,
2007 (for clarification, this amendment does not modify the Executive’s annual
bonus applicable to the 2006 MIP Plan year):

 

3.             Compensation.

 

..................

 

(b)          Annual
Bonus.  Executive will have an annual
bonus as a percentage of Salary (the “Bonus”) as follows:

 

	
  Plan

  	
   

  	
  Plan +

  	
   

  	
  Plan ++

  	
   

  
	
  67

  	
  %

  	
  133

  	
  %

  	
  200

  	
  %

  

 

The Bonus will be subject to the terms and
conditions of the annual bonus program approved by the SK Holdco Board of
Directors each year.

 

SAFETY-KLEEN HOLDCO, INC.

5400 LEGACY DRIVE, CII B3        PLANO,
TX 75024        972-265-2000

 

 

All other terms and conditions of the Employment Agreement as amended
shall remain in full force and effect.  
Please acknowledge your agreement with these amendments by signing in
the space provided below.

 

Sincerely,

 

 

	
    /s/ Frederick J. Florjancic, Jr.

  	
   

  
	
  Frederick J. Florjancic, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/   T.R. Tunnell

  	
   

  
	
  T. R. Tunnell

  	
   

  

 

 

	
  

  	
   

  	
  Frederick J. Florjancic, Jr.  

  President and Chief 

  Executive Officer

  

 

November 1,
2006

 

T.R. Tunnell

Executive Vice President and
General Counsel

Safety-Kleen Systems, Inc.

5400 Legacy Drive

Plano, TX 75024

 

	
  Re:

  	
   

  	
  Employment
  Agreement dated October 4, 2004 as extended by Letter Agreement of
  July 19, 2006 (the “Employment Agreement”)

  

 

Dear
T.R.,

 

This
letter will confirm our discussions regarding your Employment Agreement.  As we have discussed, your Employment
Agreement was for an initial term of 2 years. 
In July 2006, the HRCC agreed to extend the term of your Employment
Agreement through the end of 2006.  This
extension was entered into in order to give the HRCC sufficient time to
evaluate and recommend to the Board general changes and/or enhancements to the
employment agreements for the executive officers of the Company going-forward.

 

The
HRCC has still not completed that evaluation, but they have committed to me to
have the analysis and recommendations completed within 30 days.  As you are aware, your Employment Agreement
provides that it may be renewed by the Company upon at least 60 days advance
notice prior to the expiration of the term. 
The minimum 60 days notice period under your amended Employment
Agreement expires on November 2, 2006. 
Consequently, I have requested that you agree to a one-time waiver of
the 60 days notice provision, and also agree that the notice period for
purposes of this contact renewal only, may be least 30 days.

 

All
other terms and conditions of the Employment Agreement as amended shall remain
in full force and effect.   Please
acknowledge your agreement by signing in the space provided below.

 

 

Sincerely,

 

 

	
    /s/
  Frederick J. Florjancic, Jr.

  	
   

  	
   

  
	
  Frederick
  J. Florjancic, Jr.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Acknowledged
  and Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
    /s/
  T.R. Tunnell

  	
   

  	
  Date:

  	
    11/01/06

  
	
  T.
  R. Tunnell

  	
   

  	
   

  

 

SAFETY-KLEEN
HOLDCO, INC.

5400 LEGACY DRIVE, CII B3         
PLANO, TX 75024         
972-265-2000

 

 

	
  

  	
   

  	
  Frederick J. Florjancic, Jr.  

  President and Chief 

  Executive Officer

  

 

July 19, 2006

 

T.R. Tunnell

Executive Vice
President and General Counsel

Safety-Kleen
Systems, Inc.

5400 Legacy
Drive

Plano, TX
75024

 

Re:                               Amendment to Employment
Agreement dated October 4, 2004 (the “Employment Agreement”)

 

Dear T.R.,

 

This letter will confirm the decision of the Human Resource and
Compensation Committee to extend the Employment Period under the Employment
Agreement until December 31, 2006.

 

All other terms and conditions of the Employment Agreement as amended
shall remain in full force and effect.  
Please acknowledge your agreement to this extension by signing in the
space provided below.

 

Sincerely,

 

 

	
     /s/ Frederick J. Florjancic, Jr.

  	
   

  
	
  Frederick J. Florjancic, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/   T.R. Tunnell

  	
   

  
	
  T. R. Tunnell

  	
   

  
	
   

  	
   

  
	
   

  	
  June 22, 2006

  

 

T.R. Tunnell

Executive Vice President and General Counsel

 

SAFETY-KLEEN
HOLDCO, INC.

5400 LEGACY DRIVE, CII B3         
PLANO, TX 75024         
972-265-2000

 

 

	
  

  	
   

  	
  Frederick J. Florjancic, Jr.  

  President and Chief 

  Executive Officer

  

 

Safety-Kleen Systems, Inc.

5400 Legacy
Drive

Plano, TX
75024

 

Re:                               Amendment to Employment
Agreement dated March 8, 2005 (the “Employment Agreement”)

 

Dear T.R.,

 

As you know, the Human Resource and Compensation Committee at its
meeting on March 20, 2006 agreed to amend the definition of “Change of
Control” in the Safety-Kleen Equity Plan to include a change of beneficial
ownership of the company of more than 50% of the common stock.  I have attached a copy of the Amended Plan
for your information.

 

The  purpose  of  this  letter  is  to  confirm  that,  in  order  to  conform  your  Employment  Agreement  to  the  amended  Equity  Plan,  Section  5(d)  of  the  Employment  Agreement  is  amended  by  adding  the  following  to  the  end  of  such  paragraph:

 

Notwithstanding the foregoing, if the
definition of “Change of Control” in the Company’s Equity Plan (as amended from
time to time) is more favorable to the Executive, then such definition shall be
controlling for purposes of this Agreement.

 

All other terms and conditions of the Employment Agreement shall remain
in full force and effect.   Please
acknowledge this change by signing in the space provided below.

 

Sincerely,

 

 

	
     /s/ Frederick J. Florjancic, Jr.

  	
   

  
	
  Frederick J. Florjancic, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/   T.R. Tunnell

  	
   

  
	
  T. R. Tunnell

  	
   

  

 

SAFETY-KLEEN
HOLDCO, INC.

5400 LEGACY DRIVE, CII B3         
PLANO, TX 75024         
972-265-2000

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