Document:

Exhibit 10.7

 

FORM OF AMENDMENT AGREEMENT TO THE TECHNICAL
ASSISTANCE AGREEMENT

 

AMENDMENT AGREEMENT (HEREINAFTER THE “AGREEMENT”) TO THE TECHNICAL
ASSISTANCE AND TECHNOLOGICAL TRANSFER AGREEMENT (HEREINAFTER THE “TECHNICAL
ASSISTANCE AGREEMENT”) DATED AS OF JUNE 14, 2000 ENTERED INTO BY GRUPO
AEROPORTUARIO DEL CENTRO NORTE, S.A. DE C.V. (HEREINAFTER THE “CONTROLLING
COMPANY”), SERVICIOS AEROPORTUARIOS DEL CENTRO NORTE, S.A. DE C.V.
(HEREINAFTER THE “SERVICES COMPANY”), AEROPUERTO DE ACAPULCO, S.A. DE
C.V., AEROPUERTO DE CHIHUAHUA, S.A. DE C.V., AEROPUERTO DE CIUDAD JUAREZ, S.A.
DE C.V., AEROPUERTO DE CULIACÁN, S.A. DE C.V., AEROPUERTO DE DURANGO, S.A. DE
C.V., AEROPUERTO DE MAZATLÁN, S.A. DE C.V., AEROPUERTO DE MONTERREY, S.A. DE
C.V., AEROPUERTO DE REYNOSA, S.A. DE C.V., AEROPUERTO DE TAMPICO, S.A. DE C.V.,
AEROPUERTO DE TORREON, S.A. DE C.V., AEROPUERTO DE SAN LUIS POTOSÍ, S.A. DE
C.V., AEROPUERTO DE ZACATECAS, S.A. DE C.V., AND AEROPUERTO DE ZIHUATANEJO,
S.A. DE C.V. (JOINTLY HEREINAFTER THE “CONCESSIONAIRE COMPANIES”) AND BY
THE OTHER SIDE OPERADORA MEXICANA DE AEROPUERTOS, S.A. DE C.V. (NOW SERVICIOS
DE TECNOLOGÍA AEROPORTUARIA, S.A. DE C.V.) (HEREINAFTER “STRATEGIC
PARTNER”), CONSTRUCTORAS ICA, S.A. DE C.V. (NOW AEROINVEST, S.A. DE C.V.)
(HEREINAFTER “AEROINVEST”), AND AÉROPORTS DE PARIS (NOW AÉROPORTS DE
PARIS MANAGEMENT, S.A. (HEREINAFTER “ADPM”) (HEREINAFTER “PARTNERS OF
THE STRATEGIC PARTNER”), AS DEBTORS IN TERMS OF 1.2 OF THE PARTICIPATION
AGREEMENT PURSUANT TO THE FOLLOWING DEFINITIONS, PRECEDENTS, REPRESENTATIONS
AND CLAUSES.

 

DEFINITIONS

 

Capitalized terms defined
and used in this Agreement shall have the meaning assigned to such terms
herein, or otherwise, in the Technical Assistance Agreement.

 

PRECEDENTS

 

1.               On June 14, 2000, the parties executed the
Technical Assistance Agreement, with the purpose of establishing the rights and
obligations of the Strategic Partner, in relation with its participation in the
administration of the Assigned Airports and the Grupo Aeroportuario jointly, by
the execution of Technical Assistance, Information transfer and Technical
Knowledge by the Strategic Partner for the Administration of the Assigned
Airports.

 

2.               In virtue that (i) Nafin has the intention
of carrying out the Public Offering of the representative shares of the capital
stock of the Controlling Company of 

 

 

its property (the “Nafin Shares”) in the Securities Market in
Mexico and abroad (the “Public Offer”) pursuant to clause 3.4.5.
of the Participation Agreement, (ii) to carry out the Public Offer, it is
necessary to follow the Securities Market Law and other general dispositions
issued by the National Banking and Securities Commission, including those
related to the existence, integrations, and functioning of social organs of the
Controlling Company, and (iii) as a result of the total modification of
the Controlling Company’s By-laws, approved by the Ordinary and Extraordinary
General Shareholder’s Meeting of the Controlling Company dated as of October 2,
2006, reflecting, among other things, the required modifications in accordance
with the Securities Market Law, it is necessary to modify certain clauses of
the Participation Agreement, with the purpose of making both agreements
consistent with the terms of the amended by-laws of the Controlling Company and
the Securities Market Law.

 

3.               With the purpose of making more efficient the
handling of the cash flows between the Controlling Company and the airports,
redistribute the risks and liabilities in accordance with the different
business segments, and with the guidelines and implementation of a favorable
dividends policy to the shareholders’ profit, it is necessary (i) to
modify the corporate and administrative composition of the companies that
integrate the Controlling Company, and in order to restructure of the non-regulated
operations and income, and (ii) in consequence modify certain clauses of
the Technical Assistance Agreement (the “Corporate and Administrative
Restructure”).

 

4.               On August 11, 2006, a Board Meeting of the
Controlling Company was held, in
which, were approved, all necessary acts regarding the implementation of the
Public Offering and the Corporate and Administrative Restructure, were approved.

 

RECITALS

 

I.                               The Controlling Company, through its representative, hereby represents
that:

 

1.               It is a business Company duly organized under
the laws of Mexico as evidenced in public deed number 44,355, dated May 28,
1998, granted before Mr. Emiliano Zubiría Maqueo, Notary Public number 25
of the Federal District, the first certified copy of the public instrument has
been duly registered in the Public Registry of Commerce of the Federal District
on June 25, 1998, under the mercantile folio number 238749.

 

2.               It recognizes that on June 14, 2000 the
Technical Assistance Agreement was executed.

 

3.               It recognizes the need to modify the Technical
Assistance Agreement among other things, in order to (i) make it
consistent with the terms of the 

 

 

Controlling Company’s by-laws, and (ii) be able to implement the
Corporate and Administrative Restructure.

 

4.               With the entering, following and execution of
this Agreement, does not violate or fail to fulfill (i) law, regulation or
any other legal provision or (ii) its by-laws or any other agreement that
it is part of.

 

5.               Its representative is duly authorized to
execute this Agreement on its behalf, as evidenced in public deed number
10,485, dated as of February 6, 2003, granted before Mr. Jesús
Salazar Venegas, Notary Public number 63 of Monterrey, Nuevo León, the first
certified copy of the public instrument has been duly registered in the Public
Registry of Commerce of Monterrey, Nuevo León on January 27, 2004, under
the mercantile folio number 238,749.

 

II.                           Each of the Concession Companies, represents
that, it was duly organized as represented in the Participation Agreement and
that its representatives are duly authorized to execute this Agreement.

 

III.                       The Strategic Partner, through its
representative, hereby represents that:

 

1.               It recognizes that on June 14, 2000 the
Technical Assistance Agreement was executed.

 

2.               It recognizes the need to modify the Technical
Assistance Agreement among other things, in order to (i) make it
consistent with the terms of the Controlling Company by-laws, and (ii) be
able to implement the Corporate and Administrative Restructure.

 

3.               With the entering, following and execution of
this Agreement, does not violate or fail to fulfill (i) law, regulation or
any other legal provision or (ii) its by-laws or any other agreement that
it is part of.

 

4.               Its representative is duly authorized to
execute this Agreement on its behalf, as evidenced in public deed number 991,
dated December 20, 2005, granted before Notary Public number 29 of
Monterrey, Nuevo León.

 

IV.                       The Partners of the Strategic Partner, through its representative,
hereby represents that:

 

1.               Each one recognizes the need to modify the
Technical Assistance Agreement among other things, in order to (i) make it
consistent with the terms of the Controlling Company by-laws, and (ii) be
able to implement the Corporate and Administrative Restructure.

 

2.               With the entering, following and execution of
this Agreement, does not violate or fail to fulfill (i) law, regulation or
any other legal provision or (ii) its by-laws or any other agreement that
it is part of.

 

 

3.               Its representatives are duly authorized to
execute this Agreement and that those powers have not been revoke or limited in
any way as evidenced in:

 

(a)                                           Public deed number 69,898, dated July 25,
2003, granted before Mr. Jorge Alfredo Domínguez Martínez, Notary Public number
140 of the Federal District, duly registered in the Public Registry of Commerce
of the Federal District on September 20, 2003, under the mercantile folio
number 309414, where the power of attorney of the legal representative of
Aeroinvest is granted; and

 

(b)                                          Public deed number 112,480, dated December 20,
2005, granted before Mr. Cecilio González Márquez, Notary Public number.
151 of the Federal District, where the power of attorney of the legal representative
of ADPM is granted.

 

Based
on the foregoing, the parties hereto execute this Agreement in accordance with
the following:

 

CLAUSES

 

FIRST.                                                      With respect to the Corporate and
Administrative Restructure, the parties agreed by the celebration of this
Agreement to modify in the section of definitions the term “Technical
Assistance”, as well as any reference to such term in the Technical Assistance
Agreement, to be stated as follows:

 

“Technical Assistance.- training and assistance will be granted by the
Strategic Partner for the better administration of each Assigned Airport in
benefit of the Holding Company, the Service Rendering Company and each of the
concessionaries hereby necessary for the adequate operation, administration and
planning of each Assigned Airport, including all the necessary assistance
concerning the Controlling Company’s Public Offering of capital stock within
the terms stipulated in Exhibit ”1” of this Agreement.”

 

SECOND.                                       With respect to the Controlling Company by-laws
and Securities Market Law, the parties agreed to modify in the definitions section the
term “Acquisitions and Agreements Committee” for the term “Company Practices
Committee”, as well as any reference to such term in the Technical Assistance
Agreement.

 

THIRD.                                                    With respect to the Controlling Company by-laws
and Securities Market Law, the parties agreed to modify the first paragraph of Section 2.1
of the Technical Assistance Agreement to be stated as follows:

 

“2.1                          Participation in the
Administration: The Strategic Partner will be obligated to assign to the
Controlling Company, according with the Controlling Company By-laws and the
Stock Exchange Law, to any person that has the characteristics listed below, so
they can be a part of the administration of such Controlling Company, in the 

 

 

understanding
that such person will be hired by the Services Company as an employee, once any
previous labor relation is over (in the understanding that the Service Company
may not require such petition to the Strategic Partner, as long as it is not
against the dispositions of the Controlling Company By-laws and the Stock
Exchange Law). In order to accomplish the above-mentioned, members of the Board
of Directors of the Controlling Company designated by the Strategic Partner,
shall have the right, within the 10 (ten) following days as of the date in
which the Strategic Partner
receives from the Federal Government the second share package in accordance to section 2.5
of the Purchase Agreement, of (i) propose to the Board of Directors of the
Controlling Company the name of the candidate or candidates to be appointed as
General Directors, (ii) propose the removal of the General Director of the
Controlling Company, (iii) appoint and remove half of the persons in the
first level of administration reporting to the General Director, in accordance with
the administrative chart attached to this Agreement as Exhibit “2” or in
accordance to any administrative chart to be approved by the majority of the
votes of the members of the Board of Directors of the Controlling Company. The executives
proposed or appointed, as the case may be, by directors appointed by the
Strategic Partner shall fulfill the following characteristics, in the
understanding that the Controlling Company, through its Auditing Committee
Delegate, may excuse any of such requirements, as long as it does not breaches
the by-laws of the Controlling Company and of the Securities Market Law.

 

...(the rest of section 2.1 from 2.1.1 remains as in the original
Agreement.)

 

FOURTH.                                        With respect to the Corporate and
Administrative Restructure the parties agree to modify sections 1.1, 2.2.1. of
the Technical Assistance Agreement to be stated as follows:

 

Section 1.1

 

“1.1 The purpose of this Agreement is to
establish the rights and obligations of the Strategic Partner regarding its
participation in the administration of the Controlling Company, by means of
granting Technical Assistance and Technical Data and Knowledge transfer of the
Strategic Partner in favor of the Controlling Company and from this to the
Assigned Airports.”

 

Section 2.2.1.

 

“2.2.1
Services over the Operation in General.- The Controlling Company and the
Services Company, shall supervise, direct and control the operations of the
Assigned Airports, as well as the administration, maintenance and promotion of
the services rendered in each of such Assigned Airports, by their own means or
through third parties (the “Administration of the Assigned Airports”),
and the Strategic Partner shall 

 

 

render
the technical assistance and necessary information to the Controlling Company
or the Services Company to carry out such activity in accordance to this
Agreement in favor of the Assigned Airports.”

 

FIFTH.                   The parties agree that the modifications to the
Technical Assistance Agreement referred to in the Second and Third Clauses of
this Agreement are subject to the condition subsequent that (i) the
National Banking and Securities Commission grant the authorization for the registration of Series ”B” shares,
representative of the capital stock of the Company in the National Securities Registry
and the current Special Section of such registry; or (ii) the public
offer of such shares is issued in México through the Mexican Stock Exchange
and, as the case may be, in the United States of America and any other country
abroad in terms presented by the President in item III of the Agenda, in either
case, no later than March 31, 2007.

 

SIXTH.      Except for the amendments to the Technical Assistance Agreement
established in this Agreement, the Technical Assistance Agreement remains in
full force, in the understanding that any provisions of the Technical Assistance
Agreement not amended herein will maintain their validity and legal scopes. The
parties acknowledge that the amendments established in this Agreement do not
constitute novation of Technical Assistance Agreement.

 

SEVENTH.                                  This Agreement shall be governed by and
construed in accordance with the federal laws of the United Mexican States and
the parties to this Agreement hereby expressly and irrevocably submit to the
jurisdiction of the competent courts of Mexico City, Federal District, waiving
the right to any other jurisdiction to which they may be entitled by reason of
their present or future domicile or otherwise.

 

In witness whereof, and being the parties aware of the validity
and legal scopes of this Agreement, this Agreement is executed on November     ,
2006.

 

[The rest of the page was intentionally left blank]

 

 

[Signature
Page]

 

Amendment
Agreement to the Technical Assistance Agreement dated as of November   ,
2006.

 

 

Grupo
Aeroportuario del

Centro
Norte, S.A. de C.V.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Por: [Rubén López Barrera]

  	
   

  
	
   

  	
  Legal Representative

  	
   

  

 

 

[Signature
Page]

 

Amendment
Agreement to the Technical Assistance Agreement dated as of November   ,
2006.

 

Servicios Aeroportuarios del Centro Norte, S.A. de C.V.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  By: [Rubén López Barrera]

  	
   

  
	
   

  	
  Legal Representative

  	
   

  

 

 

[Signature
Page]

 

Amendment
Agreement to the Technical Assistance Agreement dated as of November   ,
2006.

 

 

	
  Aeropuerto de Ciudad Juárez, S.A. de C.V.

  	
   

  	
  Aeropuerto de Culiacán, S.A. de C.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: [Rubén López Barrera]

  Legal Representative

  	
   

  	
  By: [Rubén López Barrera]

  Legal Representative

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Aeropuerto de Acapulco, S.A. de C.V.

  	
   

  	
  Aeropuerto de Durango, S.A. de C.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: [Rubén López Barrera]

  Legal Representative

  	
   

  	
  By: [Rubén López Barrera]

  Legal Representative

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Aeropuerto de Mazatlán, S.A. de C.V.

  	
   

  	
  Aeropuerto de Monterrey, S.A. de C.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: [Rubén López Barrera]

  Legal Representative

  	
   

  	
  By: [Rubén López Barrera]

  Legal Representative

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Aeropuerto de Reynosa, S.A. de C.V.

  	
   

  	
  Aeropuerto de Tampico, S.A. de C.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: [Rubén López Barrera]

  Legal Representative

  	
   

  	
  By: [Rubén López Barrera]

  Legal Representative

  

 

 

[Signature
Page]

 

Amendment
Agreement to the Technical Assistance Agreement dated as of November   ,
2006.

 

 

	
  Aeropuerto de Torreón, S.A. de C.V.

  	
   

  	
  Aeropuerto de San Luis

  Potosí, S.A. de C.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: [Rubén López Barrera]

  Legal Representative

  	
   

  	
  By: [Rubén López Barrera]

  Legal Representative

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Aeropuerto de Zacatecas, S.A. de C.V.

  	
   

  	
  Aeropuerto de Zihuatanejo, S.A. de 

  
	
   

  	
   

  	
  C.V.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:[ Rubén López Barrera]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Legal Representative

  	
   

  	
   

  	
   

  	
  By: [Rubén López Barrera]

  Legal Representative

  	
   

  

 

 

	
   

  	
  Aeropuerto de Chihuahua, S.A. de C.V.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: [Rubén López Barrera]

  	
   

  
	
   

  	
  Legal Representative

  	
   

  
					

 

 

[Signature
Page]

 

Amendment
Agreement to the Technical Assistance Agreement dated as of November   ,
2006.

 

Servicios de Tecnología

Aeroportuaria, S.A. de C.V.

 

	
   

  	
   

  	
   

  
	
   

  	
  Por: [Luis Zarate Rocha]

  	
   

  
	
   

  	
  Legal Representative

  	
   

  

 

 

[Signature
Page]

 

Amendment
Agreement to the Technical Assistance Agreement dated as of November   ,
2006.

 

Aeroinvest, S.A. de C.V.

 

	
   

  	
   

  	
   

  
	
   

  	
  By: [Alonso Quintana Kawage]

  	
   

  
	
   

  	
  Legal Representative

  	
   

  

 

 

Version I

 

[Signature
Page]

 

Amendment
Agreement to the Technical Assistance Agreement dated as of November   ,
2006.

 

Aéroports de Paris Management, S.A.

 

	
   

  	
   

  	
   

  
	
   

  	
  By: [Nicolás Claude]

  	
   

  
	
   

  	
  Legal RepresentativeNovember 15, 2006

 

Mr. Ernest J. Mrozek

P.O. Box 382728

Germantown, TN 38183-2728

 

Dear Ernie:

 

Reference is hereby made to your Employment Agreement (the “Agreement”) dated as of January 1, 2004 by and between you and The ServiceMaster Company (“ServiceMaster”).  As you know, the Agreement expires on December 31, 2006.  The Agreement also sets forth the obligations of ServiceMaster and your rights in the event of your termination of employment.  The purpose of this letter is to set forth, in consideration of your continuing employment with ServiceMaster, the obligations of ServiceMaster and your rights in the event of your termination of employment on or prior to December 31, 2008.  

 

In the event that your employment is terminated (i) during the period beginning on and including January 1, 2007 and ending on and including December 31, 2007 by ServiceMaster without Cause or by you for Good Reason or (ii) during the period beginning on and including January 1, 2008 and ending on and including December 31, 2008 by ServiceMaster without Cause or by you for any reason (including for Good Reason or by reason of retirement), but excluding by reason of death or Disability, then ServiceMaster shall pay to you, within the time period set forth below, after the effective date of your date of termination (“Date of Termination”), as compensation for services rendered to ServiceMaster and its affiliated companies, a lump sum cash amount equal to the sum of subsections (1)-(4) below and, in addition, the amount determined under subsection (5) below, in each case subject to any applicable
payroll or other taxes required to be withheld:

(1)  Your full annual base salary through the Date of Termination, to the extent not previously paid (but after giving effect to any amounts that would be deferred pursuant to the ServiceMaster deferred compensation plan); plus

(2)        two (2) times your highest annual base salary in effect during the two-year period commencing January 1, 2007; plus

(3)        two (2) times your annual bonus at an annual target payout equal to 100% of your highest annual base salary in effect during the two-year period commencing January 1, 2007; plus

	
            (4)  
 	
            reimbursement of all your proper and reasonable expenses incurred by you in the performance of your duties in accordance with the policies of ServiceMaster; plus
 
	
            (5)
 	
            any restriction period applicable to shares of ServiceMaster restricted stock and restricted stock units held by you as of November 15, 2006 will lapse, and all such shares shall vest, as of the close of business on the Date of Termination;
 

 

 

 

 

provided, that you understand and agree that any amount payable and any restricted stock that vests pursuant to subsection (2), (3) or (5) by reason of a termination by you of your employment shall be conditioned upon you giving written notice as set forth below not less than 45 days prior to the Date of Termination.  The amounts payable pursuant to this paragraph and the immediately following paragraph shall be paid within 15 days after the Date of Termination; provided, however, that any payments that ServiceMaster determines constitute the payment of “nonqualified deferred compensation,” within the meaning Section 409A of the Internal Revenue Code of 1986 shall be paid on the six-month anniversary of your separation from service, within the meaning of Section 409A.

In the event that your employment is terminated (i) during the period beginning on and including January 1, 2007 and ending on and including December 31, 2007 by ServiceMaster for Cause or by you without Good Reason or by reason of retirement, death or Disability or (ii) during the period beginning on and including January 1, 2008 and ending on and including December 31, 2008 by ServiceMaster for Cause or by reason of your death or Disability, then ServiceMaster shall pay to you (or your executors, legal representatives or administrators in the event of your death) within the time period set forth in the immediately preceding paragraph, as compensation for services rendered to ServiceMaster and its affiliated companies, a lump sum cash amount (subject to any applicable payroll or other taxes required to be withheld) equal to the sum of:

(1)  your full annual base salary through the Date of Termination or date of death, to the extent not previously paid (but after giving effect to any amounts that would be deferred pursuant to the ServiceMaster deferred compensation plan); plus

(2)  reimbursement of all your proper and reasonable expenses incurred by you in the performance of your duties in accordance with the policies of ServiceMaster.   

In the event that your employment hereunder is terminated (i) during the period beginning on and including January 1, 2007 and ending on and including December 31, 2007 by ServiceMaster without Cause or by you for Good Reason or (ii) during the period beginning on and including January 1, 2008 and ending on and including December 31, 2008 by ServiceMaster without Cause or by you for any reason (including for Good Reason or by reason of retirement), but excluding by reason of death or Disability, then for a period of two years commencing on the Date of Termination, ServiceMaster and its subsidiaries shall continue to provide all benefits, as then generally made available to executive officers, with respect to you and your dependents.  After the expiration of such two-year period, you shall be entitled to continue your medical and other coverages as set forth under Federal law (COBRA).

Any amount paid pursuant to the above shall be paid in lieu of any other amount of severance relating to salary or bonus continuation to be received by you upon your termination of employment under any severance plan, policy or arrangement of ServiceMaster or its affiliated companies; provided, that if a Change in Control of ServiceMaster occurs and (2) your Change in Control Severance Agreement with ServiceMaster is in effect on the date of the Change in Control, this letter agreement shall be terminated and superseded by the Change in Control Severance Agreement, as such agreement may be amended, modified or superseded from time to time.

 

2

 

 

 

So long as you are employed by ServiceMaster and you maintain a residence in each of the Chicago metropolitan area and the Memphis metropolitan area, ServiceMaster shall reimburse you, for each night for which the performance of your duties results in your staying overnight at your  residence in the Memphis metropolitan area, the amount of $150 per night.

 

From and after the date hereof and through and including December 31, 2009 (or, if earlier, the date that is one year after the Date of Termination), you shall not do any of the following, directly or indirectly, without the prior written consent of ServiceMaster: 

 (1)  directly or indirectly (whether as owner, stockholder, director, officer, employee, principal, agent, consultant, independent contractor, partner or otherwise), in North America or any other geographic area in which ServiceMaster is then conducting business, own, manage, operate, control, participate in, perform services for, or otherwise carry on, a business similar to or competitive with the business conducted by ServiceMaster or any subsidiary of ServiceMaster; or

 (2)  directly or indirectly attempt to induce any employee of ServiceMaster to terminate or abandon his or her employment for any purpose whatsoever or any attempt directly or indirectly to solicit the trade or business of any current or prospective customer, supplier or partner of ServiceMaster; or

 (3)  directly or indirectly engage in any activity which is contrary, inimical or harmful to the interests of ServiceMaster, including but not limited to (i) violations of ServiceMaster policies, (ii) disclosure or misuse of any confidential information or trade secrets of ServiceMaster or a subsidiary of ServiceMaster, (iii) participation in any activity not approved by the Board  which could reasonably be foreseen as contributing to or resulting in a Change in Control and (iv) conduct related to employment for which either criminal or civil penalties may be sought.

As used in this letter agreement, the following terms shall have the respective meanings set forth below:

 

 “Cause” means:  (1) a material breach by you of your duties and responsibilities (other than as a result of incapacity due to physical or mental illness) which is demonstrably willful and deliberate on your part, which is committed in bad faith or without reasonable belief that such breach is in the best interests of ServiceMaster and which is not remedied within 30 days after receipt of written notice from ServiceMaster specifying such breach; or (2) the commission by you of a felony or misdemeanor involving any act of fraud, embezzlement or dishonesty or any other intentional misconduct by you that substantially and adversely affects the business affairs or reputation of ServiceMaster or an affiliated company. 

“Change in Control” shall have the meaning set forth in your Change in Control Severance Agreement; provided, that in the event such definition shall be modified or revised in such agreement, then the definition of Change in Control for purposes of this letter agreement shall be so modified or revised. 

 

3

 

 

 

“Disability” means your absence from your duties with ServiceMaster or its affiliated companies on a full-time basis for at least 180 consecutive days as a result of your incapacity due to physical or mental illness.

“Good Reason” means, without your written consent, the occurrence of any of the following events:  (1) any of (i) the reduction in any material respect in  your position(s), authorities or responsibilities with ServiceMaster; provided, that so long as the management of the financial accounting, internal audit, investor relations, tax and treasury functions continues to report to you directly or indirectly, it shall not constitute Good Reason if there is a change in your position(s), authorities or responsibilities with respect to the management of the financial accounting, internal audit, investor relations, tax and treasury functions; (ii) an adverse change in your reporting relationships, or (iii) any failure to re-elect you to an executive officer position with ServiceMaster; (2) (i) a reduction in
your base salary as in effect as of November 15, 2006, or as the same may be increased from time to time thereafter, (ii) with respect to the annual equity-based compensation award made by ServiceMaster, a reduction in your target annual value attributed to such equity-based compensation award from the target value attributed to your 2006 award made on February 14, 2006, or (iii) or a target annual bonus in either 2007 or 2008 that is less than an annual target payout equal to 75% of your 2007 base salary, or as the same may be increased from time to time thereafter; provided, that it shall not constitute Good Reason if any reduction is approved by the Compensation and Leadership Development Committee and the percentage reduction is equal to or less than the corresponding percentage reduction in compensation or target compensation of all or a majority of other executive officers of ServiceMaster; or (3) the failure of ServiceMaster to (i)
provide you and your dependents benefits substantially comparable to the plans, practices, programs and policies of ServiceMaster and its subsidiaries in effect for you on January 1, 2007, (ii) provide fringe benefits substantially comparable to the plans, practices, programs and policies of ServiceMaster and its subsidiaries in effect for you on November 15, 2006, (iii) provide an office, together with secretarial and other assistance, substantially comparable to that provided to you by ServiceMaster on November 15, 2006, or (iv) provide you with four weeks annual paid vacation.

For purposes of this Agreement, an isolated, insubstantial and inadvertent action taken in good faith and which is remedied by ServiceMaster after receipt of written notice thereof given by you shall not constitute Good Reason.

This letter agreement shall inure to the benefit of and be enforceable by ServiceMaster and its successors and assigns and by you and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  This letter agreement shall not be terminated by any merger or consolidation of ServiceMaster whereby ServiceMaster is or is not the surviving or resulting corporation or as a result of any transfer of all or substantially all of the assets of ServiceMaster.  In the event of any such merger, consolidation or transfer of assets, the provisions of this letter agreement shall be binding upon the surviving or resulting corporation or the person or entity to which such assets are transferred.  

All notices and other communications required or permitted under this letter agreement shall be in writing and shall be deemed to have been duly given when delivered or five days after deposit in the United States mail, postage prepaid, addressed (a) if to you, to Ernest J. Mrozek, P.O. Box 382728, Germantown, TN 38183-2728, and if to ServiceMaster, to The ServiceMaster Company, 

 

4

 

 

860 Ridge Lake Blvd., Memphis Tennessee 38120, attention General Counsel, or (b) to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

Except as otherwise specified herein, this letter agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or between the parties, written or oral, which may have related in any manner to the subject matter hereof.

No provision of this letter agreement may be modified or waived unless such modification or waiver is agreed to in writing and signed by you and by the Chairman and Chief Executive Officer of ServiceMaster or any successor under this letter agreement.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  Failure by you or ServiceMaster to insist upon strict compliance with any provision of this Agreement or to assert any right which you or ServiceMaster may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. 

The interpretation, construction and performance of this letter agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Illinois without regard to the principle of conflicts of laws.  The invalidity or enforceability of any provision of this letter agreement shall not affect the validity or enforceability of any of the other provisions of this letter agreement, which other provisions shall remain in full force and effect.

Sincerely, 

 

	
            THE SERVICEMASTER COMPANY     
 

 

 

 

	
            By:
 	
            /s/  J. Patrick Spainhour
 
	
            Name:
 	
            J. Patrick Spainhour
 
	
             
 	
            Chairman and Chief Executive Officer
 

 

 

If you are in agreement with the above, please sign and date below.

 

	
            By:
 	
            /s/  Ernest J. Mrozek
 
	
            Name:
 	
            Ernest J. Mrozek
 
	
             
 	
            Chairman and Chief Executive Officer
 

 

 

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