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EXHIBIT 10.36
____________, 19__
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Dear _________:
GAINSCO Service Corp. (the "Company") considers it essential to the best
interests of its stockholders to xxxxxx the continuous employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company, although no such change is
now contemplated.
In order to induce you to remain in the employ of the Company and in
consideration of your agreement set forth in Subsection 2(ii) hereof, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement ("Agreement") in the event your employment with the Company is
terminated subsequent to a "change in control of the Company" (as defined in
Section 2 hereof) under the circumstances described below.
1. Term of Agreement. This Agreement shall commence on its effective date
and shall continue in effect through December 31, 19__; provided, however, that
commencing on January 1, 19__ and each January thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than the September 30 preceding each such January 1, the Company shall
have given notice that it does not wish to extend this Agreement; provided,
further, if a change in control of the Company shall have occurred during the
original or extended term of this Agreement, this Agreement shall continue in
effect for the later of (i) the original or extended term or (ii) a period of
twenty-four (24) months beyond the month in which such change in control
occurred. Notwithstanding the foregoing, in no event shall the term of this
Agreement extend beyond the date that you attain sixty-five years of age.
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2. Change in Control. (i) No benefits shall be payable hereunder unless
there shall have been a change in control of the Company, as set forth below.
For purposes of this Agreement, a "change in control of the Company" shall be
deemed to have occurred if (A) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities; or (B)
during any period of two consecutive years (not including any period prior to
the execution of this Agreement), individuals who at the beginning of such
period constitute the Board and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clauses (A), (C) or (D) of this Subsection)
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or (C) the shareholders
of the Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
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 75% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (D) the
shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(ii) For purposes of this Agreement, a "potential change in control
of the Company" shall be deemed to have occurred if (A) the Company enters into
an agreement, the consummation of which would result in the occurrence of a
change in control of the Company, (B) any person (including the Company)
publicly announces an intention to take or to consider taking actions which if
consummated would constitute a change in control of the Company; (C) any person,
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, who is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 10% or more of
the combined voting power of the Company's then outstanding securities,
increases his beneficial ownership of such securities by 5% or more of the
combined voting power of the Company's then outstanding securities on the date
hereof; or (D) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a potential change in control of the Company has occurred. You
agree that, subject to the terms and conditions of this Agreement, in the event
of a potential change in control of the Company, you will remain in the employ
of the Company until the earliest of (i) a date
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which is six (6) months from the occurrence of such potential change in control
of the Company, (ii) the termination by you of your employment by reason of
Disability or Retirement as defined in Subsection 3(i), or (iii) the occurrence
of a change in control of the Company.
3. Termination Following Change in Control. If any of the events
described in Subsection 2(i) hereof constituting a change in control of the
Company shall have occurred, you shall be entitled to the benefits provided in
Subsection 4(iii) hereof upon the subsequent termination of your employment
during the term of this Agreement unless such termination is (A) because of your
death, Disability or Retirement, (B) by the Company for Cause, or (C) by you
other than for Good Reason.
(i) Disability; Retirement. If, as a result of your incapacity due
to physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for a period of six (6) consecutive
months, and within thirty (30) days after written notice of termination is given
you shall not have returned to the full-time performance of your duties, your
employment may be terminated for "Disability." Termination by the Company or you
of your employment based on "Retirement" shall mean termination with your
consent in accordance with the Company's Pension Plan (as hereafter defined)
including early retirement, generally applicable to its salaried employees,
provided, however, that termination based on "Retirement" shall not include
retirement in conjunction with termination by you for Good Reason.
(ii) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (A) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance of a Notice of Termination, by
you for Good Reason as defined in Subsections 3(iv) and 3(iii), respectively)
after a written demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties, or (B) the
willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best interest of the
Company. Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of conduct
set forth above in clauses (A) or (B) of the first sentence of this Subsection
and specifying the particulars thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your employment
for Good
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Reason. For purposes of this Agreement, "Good Reason" shall mean, without your
express written consent, the occurrence after a change in control of the Company
of any of the following circumstances unless, in the case of paragraphs (A),
(E), (F), (G) or (H), such circumstances are fully corrected prior to the Date
of Termination specified in the Notice of Termination, as defined in Subsections
3(v) and 3(iv), respectively, given in respect thereof:
(A) the assignment to you of any duties inconsistent with your
present status as Vice President of the Company (or such other title or
titles as you may be holding immediately prior to the change in control of
the Company) or a substantial adverse alteration in the nature or status of
your responsibilities from those in effect immediately prior to the change
in control of the Company;
(B) a reduction by the Company in your annual base salary as in
effect on the date of the change in control of the Company;
(C) the relocation of the Company's principal executive offices to a
location outside of Fort Worth, Texas (or, if different, the metropolitan
area in which such offices are located immediately prior to the change in
control of the Company) or the Company's requiring you to be based anywhere
other than the Company's principal executive offices except for required
travel on the Company's business to an extent substantially consistent with
your present business travel obligations;
(D) the failure by the Company, without your consent, to pay to you
any portion of your current compensation, or to pay to you any portion of
an installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such compensation
is due;
(E) except as provided below, the failure by the Company to continue
in effect any compensation plan in which you participate immediately prior
to the change in control of the Company which is material to your total
compensation, including but not limited to the Company's 1995 Stock Option
Plan and the Executive Incentive Compensation Plan or any substitute or
additional plans adopted prior to the change in control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the failure by the
Company to continue your participation therein (or in such substitute or
additional plans) on a basis not materially less favorable, both in terms
of the amount of benefits provided and the level of your participation
relative to other participants, as existed at the time of the change in
control;
(F) except as provided below, the failure of GAINSCO, Inc. to
continue to provide you with benefits substantially similar to those
enjoyed by you under the Company's Profit Sharing Plan and Trust of
GAINSCO, Inc. (the "Pension Plan") or under any of the
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Company's other deferred compensation plans, life insurance, medical,
health and accident, or disability plans in which you were participating at
the time of the change in control of the Company, the taking of any action
by the Company which would directly or indirectly materially reduce any of
such benefits or deprive you of any material fringe benefit enjoyed by you
at the time of the change in control of the Company, or the failure by the
Company to provide you with the number of paid vacation days to which you
are entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy for officers in effect
at the time of the change in control of the Company;
(G) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 5 hereof; or
(H) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Subsection (iv) below (and, if applicable, the requirements of Subsection
(ii) above); for purposes of this Agreement, no such purported termination
shall be effective.
Your right to terminate your employment pursuant to this Subsection shall not be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder. You may not terminate
your employment for Good Reason pursuant to paragraphs (E) or (F) on account of
the discontinuance of any plan or benefit (without an equitable substitution)
which is part of a uniform, non-discriminatory, Company-wide reduction in
benefits.
(iv) Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 6 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(v) Date of Termination, Etc. "Date of Termination" shall mean (A)
if your employment is terminated for Disability, thirty (30) days after Notice
of Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30) day period), and
(B) if your employment is terminated pursuant to Subsection (ii) or (iii) above
or for any other reason (other than Disability), the date specified in the
Notice of Termination (which, in the case of a termination pursuant to
Subsection (ii) above shall not be less than thirty (30) days, and in the case
of a termination pursuant to Subsection (iii) above shall not be less than
fifteen (15) nor more than sixty (60) days, respectively, from the date such
Notice of Termination is given); provided that if within fifteen (15) days after
any Notice of Termination is given, or, if later, prior
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to the Date of Termination (as determined without regard to this proviso), the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected); provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, base
salary) and continue you as a participant in all compensation, benefit and
insurance plans in which you were participating whether or not specifically
referenced in this Agreement when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with this Subsection.
Amounts paid under this Subsection are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce any other amounts
due under this Agreement, except as provided in Subsection 4(iii)(B) below.
4. Compensation Upon Termination or During Disability. Following a change
in control of the Company, as defined by Subsection 2(i), upon termination of
your employment or during a period of Disability you shall be entitled to the
following benefits:
(i) During any period that you fail to perform your full-time duties
with the Company as a result of incapacity due to physical or mental illness,
you shall continue to receive your salary at the rate in effect at the
commencement of such period, together with all other compensation and benefits
payable to you during such period, until this Agreement is terminated pursuant
to Section 3(i) hereof. Thereafter, or in the event your employment shall be
terminated by the Company or by you for Retirement, or by reason of your death,
your benefits shall be determined under the Company's retirement, insurance and
other compensation plans and programs then in effect in accordance with the
terms of such programs.
(ii) If your employment shall be terminated by the Company for Cause
or by you other than for Good Reason, Disability, death or Retirement, the
Company shall pay you your full base salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation or benefit plan of the
Company at the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(iii) If your employment by the Company shall be terminated (a) by the
Company other than for Cause, Retirement or Disability or (b) by you for Good
Reason, then you shall be entitled to the benefits provided below:
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(A) the Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of Termination is
given, plus all other amounts to which you are entitled under any
compensation plan of the Company, at the time such payments are due, except
as otherwise provided below; and
(B) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as severance
pay to you a lump sum cash severance payment in an amount equal to two
times your "base amount" (within the meaning of section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")), provided, however,
that such severance payment shall be no less than 1.25 times the amount
reported on your Form W-2 statement issued by the Company with respect to
the year preceding that in which the Date of Termination occurs.
Notwithstanding any other provision of this Agreement, in the event that
any payment or benefit received or to be received by you in connection with
a change in control or the termination of your employment (whether payable
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, its successors, any person whose actions result
in a change in control or any person affiliated with (or which, as a result
of the completion of the transactions causing a change in control, will
become affiliated) the Company or such person within the meaning of section
1504 of the Code) (all such payments and benefits being hereinafter called
the "Severance Payments") would not be deductible (in whole or in part), by
the Company, an affiliate or any person making such payment or providing
such benefit as a result of section 280G of the Code, then, to the extent
necessary to make such portion of the Severance Payments deductible (and
after taking into account any reduction in the Severance Payments provided
by reason of section 280G of the Code in such other plan, arrangement or
agreement), (A) the cash Severance Payments shall first be reduced (if
necessary, to zero), and (B) all other non-cash Severance Payments shall
next be reduced. For purposes of this limitation (i) no portion of the
Severance Payments the receipt or enjoyment of which you shall have
effectively waived in writing prior to the Date of Termination shall be
taken into account, (ii) no portion of the Severance Payments shall be
taken into account which in the opinion of tax counsel selected by the
Company's independent auditors and reasonably acceptable to you does not
constitute a "parachute payment" within the meaning of section 280G(b)(2)
of the Code, including by reason of section 280G(b)(4)(A) of the Code,
(iii) the Severance Payments shall be reduced only to the extent necessary
so that the Severance Payments (other than those referred to in clauses (i)
or (ii)) in their entirety constitute reasonable compensation for services
actually rendered within the meaning of section 280G(b)(4)(B) of the Code
or are otherwise not subject to disallowance as deductions, in the opinion
of tax counsel referred to in clause (ii); and (iv) the value of any
non-cash benefit or any deferred payment or benefit included in the
Severance Payments shall be determined by the Company's independent
auditors in accordance with the principles of sections 280G(d)(3) and (4)
of the Code.
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(C) the payment provided for in paragraph (B) above, shall be made
not later than the fifth day following the Date of Termination, provided,
however, that if the amount of such payment cannot be finally determined on
or before such day, the Company shall pay to you on such day an estimate,
as determined in good faith by the Company, of the minimum amount of such
payment and shall pay the remainder of such payment (together with interest
at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the
amount thereof can be determined but in no event later the thirtieth day
after the Date of Termination. In the event that the amount of the
estimated payment exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to you, payable on
the fifth day after demand by the Company (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code).
(D) the Company also shall pay to you all legal fees and expenses
incurred by you as a result of such termination (including all such legal
fees and legal expenses, if any, incurred in contesting or disputing any
such termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder). Such payments shall
be made at the later of the times specified in paragraph (C) above, or
within five (5) days after your request for payment accompanied with such
evidence of fees and expenses incurred as the Company reasonably may
require.
(iv) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise.
(v) In addition to all other amounts payable to you under this
Section 4, you shall be entitled to receive all benefits payable to you, at the
respective time or times such payments are due, under the Pension Plan[s], and
any other plan or agreement relating to retirement benefits.
5. Successors; Binding Agreement. (i) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle you to compensation from the
Company in the same amount and on the same terms as you would be entitled to
hereunder if you terminate your employment for Good Reason following a change in
control of the Company, except that for purposes of implementing the foregoing,
the date
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on which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder if you had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with terms of this Agreement to your devisee, legatee or other designee or, if
there is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage pre-paid, addressed as
follows:
If to the Company:
GAINSCO Service Corp.
Attn: President
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
If to you:
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or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be duly authorized to act on
the Company's behalf. No waiver by either party hereto at any time of any breach
by the other party hereto of, or non-compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver
of similar of dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this
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Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Texas. All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder shall
be paid net of any applicable withholding required under federal, state or local
law. The obligations of the Company under Subsections 4(i), 4(ii), 4(iii)(D) and
4(v) shall survive the expiration of the term of this Agreement.
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled, at the Company's expense, exclusively by
arbitration in Tarrant County, Texas in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that you
shall be entitled to seek specific performance of your right to be paid until
the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly signed and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
GAINSCO Service Corp.
By:
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Agreed to effective the ____
day of _____________, ______
____________________________
GUARANTEE
GAINSCO, INC., a Texas corporation, unconditionally guarantees payment and
performance in full of all obligations of GAINSCO Service Corp. ("Service
Corp.") under the above and foregoing change in control agreement (the "Change
in Control Agreement") between Service Corp. and _______________ and any
renewals or extensions thereof whether or not the terms of the Change in Control
Agreement are modified.
This guarantee is a continuing guarantee and may not be revoked by the
guarantor without the written consent of _______________ and shall expire only
when the Change in Control Agreement and all renewals or extensions of it have
terminated.
GAINSCO, INC.
By:
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