American Home Shield 2008 Annual Report Download - page 152

Table of Contents
Potential Payments upon Termination or Change in Control
Change in Control Severance Agreements
To secure the continued service of our executives and to ensure their dedication and objectivity in the event of a change in control or threatened change
in control, we previously entered into change in control severance agreements with some of our executives, including Messrs. Spainhour, Martin, Brackett,
Isakson and Sutton and Ms. Goettel. Each executive who is a party to a change in control severance agreement agreed that in the event of an attempted change
in control the executive would not voluntarily resign until the attempt ends or 90 days after a change in control occurs.
A change in control means:
an acquisition by a person or group of 25% or more of our common stock (other than an acquisition from or by the company or by a company
benefit plan);
a change in a majority of our Board;
consummation of a reorganization, merger or consolidation or sale of substantially all of our assets (unless stockholders receive 60% or more of
the stock of the resulting company); or
a liquidation or dissolution of the Company.
As previously described, a change in control of the Company occurred on July 24, 2007, with the consummation of the Merger. Therefore, a termination
of the employment of Mr. Spainhour, Martin, Brackett or Isakson under certain circumstances within two years following that date will trigger payments
under that officer's change in control severance agreement. Payments to Mr. Sutton and Ms. Goettel under their change in control severance agreements were
made in connection with their respective terminations of employment, as described below under the heading "Named Executive Officers No Longer
Employed by the Company."
Upon a termination by the Company for cause, by the executive without good reason, or upon death or disability, we have no obligation to pay any
prospective amounts or provide any benefits under these agreements. Our obligations will consist of those obligations accrued at the date of termination,
including payment of earned salary, reimbursement of expenses and obligations which may otherwise be payable in the event of death or disability. Under
these agreements, "cause" means a material breach by the executive of the duties and responsibilities of the executive which do not differ in any material
respect from his duties and responsibilities during the 90-day period immediately prior to a Change in Control (other than as a result of incapacity due to
physical or mental illness) which is demonstrably willful and deliberate on the executive's part, which is committed in bad faith or without reasonable belief
that such breach is in the best interests of the Company and which is not remedied in a reasonable period of time after receipt of written notice from the
Company specifying such breach and period of time; or the commission by the executive of a felony or misdemeanor involving any act of fraud,
embezzlement or dishonesty or any other intentional misconduct by the executive that materially and adversely affects the business affairs or reputation of the
Company or an affiliated company. "Good reason" means a material reduction in position, duties or responsibilities, a transfer of the executive's home office
by more than 40 miles, a reduction in salary, a failure to maintain substantially comparable benefit or compensation plans or to provide benefits substantially
comparable to other peer employees, or a failure by the Company to require a successor to assume our obligations under the agreement. The definition of
"good reason" was amended pursuant to the Participation Agreements as further discussed below.
148
•
•
•
•