TRANSITIONAL COMPENSATION AGREEMENT
THIS AGREEMENT, made this 9th day of October, 1998, by and between XXXXXX
X. XXXXXX (the "Executive") and BRC HOLDINGS, INC., a Delaware corporation
(the "Company").
WITNESSETH:
WHEREAS, the Executive is presently employed as an executive of the
Company; and
WHEREAS, the Company considers the retention of a sound management team to
be essential to protecting and enhancing the interest of the Company and its
Stockholders; and
WHEREAS, the Company wishes to have the benefit of the Executive's full
time and attention to the affairs of the Company, particularly during any period
in which the Company is considering material corporate transactions involving
its equity securities, mergers with other companies which may result in a change
of control, or other circumstances that might cause a diversion of the
Executive's attention;
WHEREAS, the Company has proposed this Agreement as a means of reducing any
uncertainty that Executive may be subject to; and
WHEREAS, the Executive wishes to obtain the benefits offered by this
Agreement and to be subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
convenants hereinafter set forth, the parties do hereby agree as follows:
1. STAY BONUS AND TRANSITIONAL COMPENSATION. In the event that
Executive shall continue to be employed by the Company on the last day of the
sixth calendar month following a "change of control," as such term is
hereinafter defined, he shall be entitled to receive as a "stay bonus" a lump
sum cash payment equal to $150,000 not later than the tenth day thereafter.
In addition, the Executive shall be eligible to receive "transitional
compensation," in the amounts and at the times described in Paragraph 3, in
the event that:
(a) his employment with the Company is terminated within 18 months of
a "change in control," as such term is hereinafter defined; and
(b) the Executive's termination of employment is not on account of:
(i) retirement on or after reaching age 65;
(ii) the Executive's death;
(iii) termination by the Company following a conviction of the
Executive of a felony involving moral turpitude or a determination by
the Board of Directors that the Executive has continued to engage,
following notice from the
Board, in misconduct or dereliction of duty which is detrimental in
a material way to the business of the Company or its subsidiaries; or
(iv) the Executive's voluntary resignation following a change
of control; PROVIDED that a resignation shall not be considered to be
voluntary for the purposes of this Agreement if it occurs if the
Executive terminates his employment more than sixty days following a
change of control and following: (A) a substantial diminution in
Executive's duties with the Company from the duties existing
immediately prior to any change of control; (B) a reduction by the
Company in the Executive's annual base salary in effect on the date of
a change of control or as in effect thereafter if such annual base
salary has been increased and such increase was approved prior to the
change of control; (C) a substantial reduction by the Company in the
overall value of employee-related benefits provided to the Executive
from those in effect on the date of a change in control or as in
effect thereafter if such benefits have been increased and that
increase was approved prior to the change of control; (D) a failure to
continue in effect any incentive compensation plan in effect
immediately prior to the change in control, or a reduction in
Executive's participation or entitlement with regard thereto, unless
the Executive is afforded an opportunity of reasonably equivalent
value; (E) a significant reduction in the Executive's perquisites and
other benefits enjoyed immediately prior to a change of control; (F)
relocation of Executive's principle place of employment to a place
more than fifty miles from the Executive's principle place of
employment as of the change of control; (G) any material breach by the
Company of any provision of this Agreement or of any incentive
compensation, stock option or similar benefit plan of the Company in
which Executive then participates or is eligible to participate; or
(H) conduct by the Company, against Executive's volition, which could
cause the Executive to commit, on his own behalf or as an officer of
the Company, a fraudulent act or which could expose the Executive to
civil or criminal liability or to sanction by any professional
licensing body or self-regulatory organization.
2. CHANGE IN CONTROL. For the purposes of this Agreement, a "change in
control" shall be deemed to have occurred if prior to May 1, 1999:
(a) any "person" (as that term is used in Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934) (the "Exchange Act"), other than
the Company, becomes the beneficial owner, within the meaning of Rule 13d-3
under the Exchange Act of securities of the Company representing more than
fifty percent of the voting power of all of the then outstanding voting
securities of the Company;
(b) persons who, at the beginning of any twelve consecutive month
period, constitute the Board of Directors of the Company cease, at the end
of such period, to constitute at least a majority thereof, unless the
nomination of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such period;
2.
(c) any consolidation or merger of the Company in which the Company
is not the continuing or surviving corporation or pursuant to which shares
of the Common Stock of the Company would be converted into cash, securities
or other property, other than a merger of the Company in which the holders
of the Common Stock of the Company immediately prior to the merger have
the same proportionate ownership of common stock of the surviving
corporation immediately after such merger or which would result in voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least fifty percent (50%)
of the total voting power represented by the voting securities of the
Company or such surviving entity immediately following the consolidation
or merger in question;
(d) any sale, lease, exchange or other transfer (in one transaction
or a series of transactions) of all, or substantially all, of the assets of
the Company;
(e) approval by the Company's stockholders of any plan or proposal
for the liquidation or dissolution of the Company or the sale, lease,
exchange or other transfer (in one transaction or a series of transactions)
of assets of the Company in a transaction approved by stockholders of the
Company;
(f) any change in control of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A as in effect on the date hereof, promulgated under the
Exchange Act.
3. AMOUNT AND PAYMENT OF TRANSITIONAL COMPENSATION. In the event the
Executive is eligible for transitional compensation pursuant to the provisions
of Paragraph 1 hereof, he shall be entitled to receive the following:
(a) a lump sum cash payment, payable within 10 days after the date of
Executive's termination, in an amount equal to $300,000 if the
termination is effective prior to the passage of six calendar months
following a Change of Control for any reason other than a voluntary
termination by Executive described in paragraph 1(b)(iv)(A) and $150,000
in any other termination giving rise to transitional compensation.
(b) outplacement services at a qualified agency selected by the
Executive (not to exceed $25,000);
(c) continuation of coverage under the Company's group medical, group
life, and group long-term disability plans, if any, and under any policy or
policies of "split dollar" life insurance maintained by the Company, until
the earliest to occur of:
(i) the expiration of 24 months from the date on which his
employment terminates; or
(ii) the date on which he obtains comparable coverage provided
by a new employer.
3.
4. NO FUNDING OF TRANSITIONAL COMPENSATION. Nothing herein contained
shall require or be deemed to require the Company to segregate, earmark, or
otherwise set aside any funds or assets to provide for any payments required to
be made hereunder, and the Executive's right to transitional compensation
hereunder shall be solely that of a general, unsecured creditor of the Company.
5. NO AMENDMENT OF OTHER AGREEMENTS. This Agreement is not intended to
amend or modify the provisions of any other agreement or arrangement between the
Company and the Executive. Without limiting the generality of the foregoing,
notwithstanding any change of control or other transaction, the terms and
conditions of the Company's various stock option plans and any applicable award
agreements thereunder shall control with respect to the vesting of any options
or other awards thereunder then held by the Executive. No provision of this
Agreement shall restrict the Company's ability to amend any agreement to which
it is a party, any stock option or benefit plan established by it or any of the
provisions of its Certificate of Incorporation or By-laws.
6. DEDUCTION AND WITHHOLDING. All benefits payable to or on behalf of
the Executive pursuant to this Agreement shall be subject to such deductions and
withholding as may be agreed to by the Executive or required by applicable law.
7. DEATH. In the event of the Executive's death, any amount or benefit
payable or distribute to him pursuant to paragraphs 3 or 9 shall be paid to the
beneficiary designated by such Executive for such purpose in the last written
instrument received by the party prior to the Executive's death, if any, and
otherwise to the Executive's estate.
8. SETOFF. The right of Executive to receive benefits under this
Agreement shall be absolute and, except as specifically provided herein, shall
not be subject to any setoff, counterclaim, recoupment, defense, duty to
mitigate or other rights the Company may have. Notwithstanding anything herein
to the contrary, benefits to Executive accruing under this Agreement shall be
offset by the amount of any severance benefits otherwise payable to Executive
under any Company plan or policy applicable to employees of the Company
generally.
9. EXECUTIVE'S INDEMNITY. It shall be a continuing obligation of the
Company to provide the Executive the benefits of the indemnities provided by the
Company's Certificate of Incorporation, by-laws, any agreements between the
Company and the Executive providing for indemnity, and Executive's rights under
applicable law (collectively, the "Indemnity Rights"), as such Indemnity Rights
exist prior to any change of control. To the extent that the Executive's
Indemnity Rights under the Company's Certificate of Incorporation or By-laws
or under any agreement between the Company and the Executive shall be reduced
following a change of control (including any reduction resulting from the
termination of Executive's employment with the Company), the Indemnity Rights
existing prior to such change or modification shall be deemed contractual in
nature and due and owing to the Executive pursuant to this Section 9 and
shall survive any change of control or termination of Executive's employment
with the Company indefinitely. The provisions of this Section 9 shall inure
to the benefit of the Executive's personal or legal representatives,
executives, administrators, successors, heirs, distributees, divisees and
legatees.
4.
10. NO OBLIGATION TO MITIGATE DAMAGES. The Executive shall have no
obligation to seek other employment or take any other action in an effort to
mitigate damages.
11. OTHER BENEFITS. Except to the extent otherwise specifically provided
herein, the benefits provided under this Agreement shall be in addition to, and
not in derogation or diminution of, any benefits that the Executive may be
entitled to receive under any other plan or program now or hereafter maintained
by the Company or by any of its subsidiaries.
12. CONTINUED EMPLOYMENT. This Agreement is not a contract of employment.
Nothing expressed or implied herein shall create any right or duty of continued
employment of the Executive by the Company. The Company reserves all rights to
terminate the Executive's employment at any time with or without cause.
13. SUCCESSORS.
(a) The Company will require any successor or successors (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to
all or any substantially part of the business and/or assets of the Company
and its subsidiaries, taken as a whole, to expressly assume and agree to
perform the Company's obligations under this Agreement in the same manner
and to the same extent that the Company would be required to perform them
if no such succession had taken place unless, in the opinion of legal
counsel to the Executive, such obligations have been assumed by the
successor as a matter of law. No assumption of the Company's obligations
shall relieve the Company of such obligations. Failure of the Company to
obtain such agreement prior to the effectiveness of any such succession
(unless the foregoing opinion is rendered to the Executive) shall entitle
the Executive to terminate his employment and to receive the payments
provided for in Paragraphs 3 and 9 above. As used in the Agreement, the
"Company" shall mean the Company, as presently constituted, and any
successor to its business and/or assets which executes and delivers the
agreement provide for in this Paragraph 16 or which otherwise becomes bound
by all the terms and provisions of this Agreement as a matter of law.
(b) If the Executive dies while any amounts are payable to him
pursuant to Paragraphs 3 or 9 of the Agreement, this Agreement shall inure
to the benefit of, and shall be enforceable by the Executive's legal
representative or other successors in interest, but shall not otherwise
be assignable or transferable.
14. GENERAL PROVISIONS.
(a) NOTICES. Any notices referred to herein shall be in writing and
shall be sufficient if delivered in person or sent by U.S. registered or
certified mail to the Executive at his address on file with the Company, or
to the Company at 0000 Xxxx Xxxxxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000,
Attn: President.
(b) MODIFICATION, AMENDMENT, WAIVER. No modification or amendment of
any provision of this Agreement shall be effective unless approved in
writing by both
5.
parties. Either party's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or
any other provision hereof.
(c) ENFORCEABILITY. The validity, interpretation, construction and
enforceability of this Agreement shall be governed by the laws of the State
of Texas. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
(d) HEADINGS. The headings and paragraph designations of this
Agreement are included solely for convenience of reference and shall in no
event by construed to affect or modify any provisions of this Agreement.
(e) GENDER AND NUMBER. In this Agreement where the context admits,
words in any gender shall include the other genders, words in the plural
shall include the singular, and words in the singular shall include the
plural.
(f) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same documents.
15. TERMINATION OF EMPLOYMENT PRIOR TO CHANGE IN CONTROL. This Agreement
shall terminate if the Executive's employment with the Company is terminated,
either voluntarily or involuntarily, for any reason prior to a change in control
of the Company.
IN WITNESS WHEREOF, the Company has caused its duly authorized officers to
execute this Agreement and the Executive has executed this Agreement as of the
date set forth above.
BRC HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxxx
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Its: Chairman
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/s/ Xxxxxx X. Xxxxxx
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(Executive)
6.
