Exhibit 10.1
COMPENSATION AGREEMENT
BY AND BETWEEN
THE TRANSFERORS
AND
XXXXXXX X. XXXXXX, XX.
COMPENSATION AGREEMENT
This COMPENSATION AGREEMENT ("Agreement") is made and entered into by and
among the Debtors and the Non-Debtor Affiliates who are parties to the
Liquidating Trust Agreement, as transferors (the "Transferors"), and Xxxxxxx X.
Xxxxxx, Xx. (the "Liquidating Trustee"), as of the "Effective Date" as defined
in the Joint Liquidating Plan of Reorganization of the Debtors under Chapter 11
of the Bankruptcy Code filed by Baptist Foundation of Arizona et al. on
September 25, 2000 with the United States Bankruptcy Court for the District of
Arizona (such date, the "Effective Date").
RECITALS
A. On November 9, 1999, Baptist Foundation of Arizona and certain of its
subsidiaries and affiliates (the "Debtors") filed voluntary petitions for relief
under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code")
in the United States Bankruptcy Court for the District of Arizona (the
"Bankruptcy Court"). The Chapter 11 cases are being jointly administered under
Case No. 99-13275-PHX-GBN (the "Chapter 11 Cases").
B. On September 25, 2000, the Debtors and the standing committees filed the
Plan with the Bankruptcy Court. The Plan provides for the creation of the Trust
which will (i) receive from the Debtors and Non-Debtor Affiliates all of their
respective Assets transferred pursuant to the Plan, (ii) hold the Assets of the
Debtors and Non-Debtor Affiliates (except as may otherwise be provided under the
Plan) in trust for the benefit of all Beneficiaries and (iii) oversee and direct
the liquidation of the Trust Assets held by it and by the Platform Subsidiaries
for the benefit of the Beneficiaries pursuant to the terms of the Plan and that
certain Liquidating Trust Agreement, dated as of the Effective Date (the "Trust
Agreement") by and among the Debtors, the Non-Debtor Affiliates, the members of
the Liquidating Trust Board and the Liquidating Trustee. Unless otherwise
expressly defined herein, all capitalized terms shall have the meanings ascribed
thereto in the Trust Agreement.
C. The primary purpose of the Trust is to (i) oversee and direct the
liquidation the Trust Assets for the benefit of the Beneficiaries in accordance
with Treasury Regulation Section 301.7701-4(d) and (ii) distribute any proceeds
of the Trust Assets received by the Trust to the Beneficiaries.
D. The Bankruptcy Court has approved the retention of Xxxxxxx X. Xxxxxx,
Xx. as the trustee for the Trust, and this Agreement sets forth the compensation
payable to Xxxxxxx X. Xxxxxx, Xx. in his capacity as trustee for the Trust and
memorializes Xxxxxxx X. Xxxxxx Xx.'s acceptance to serve as the Liquidating
Trustee.
ARTICLE I
DUTIES AND TERM
1.1 DUTIES. The Liquidating Trustee will be subject in all respects to the
provisions of the Liquidating Trust Agreement, dated as of the date hereof (the
"Trust Agreement") by and among the Transferors, the Liquidating Trustee and the
members of the Liquidating Trust Board. The Liquidating Trustee will have the
duties set forth in the Trust Agreement. Generally, the Liquidating Trustee will
be responsible for the liquidation of the Trust Assets in a cost-effective
manner in a reasonable time, with due regard for the risk that undue haste may
minimize the liquidation proceeds of a particular Trust Asset.
1.2 TERM. Subject to the provisions of Section 4.01 of the Trust Agreement,
the authority of the Liquidating Trustee will be effective as of the Effective
Date and will remain and continue in full force and effect until all of the
Assets are liquidated in accordance with the Plan, the Net Distributable Cash
has been completely distributed in accordance with the provisions of the Plan,
all tax returns and any other filings or reports have been filed with the
appropriate state or federal regulatory authorities, and the Order closing the
Chapter 11 Cases is a Final Order. The Liquidating Trustee shall serve as
trustee of the Trust until removed (by death, resignation, termination or
otherwise) pursuant to the Trust Agreement.
ARTICLE II
COMPENSATION
For all services rendered by Liquidating Trustee under this Agreement, the
Trust shall compensate Liquidating Trustee as follows:
2.1 COMPENSATION. The Liquidating Trustee will be compensated at a minimum
hourly rate of Two Hundred Ninety Five Dollars ($295) per hour, which will be
subject to periodic upward adjustment by the Board (the "Compensation"). The
Liquidating Trustee will not be compensated for his travel time to and from
Phoenix unless he is actually working on matters pertaining to the Trust during
that travel time. The Liquidating Trustee shall be paid by the Trust within
fifteen (15) days of providing an invoice to the Liquidating Trust Board
detailing the number of hours for which the Liquidating Trustee has provided
services for the Trust, if the Liquidating Trust Board has not objected to the
payment of such invoice within 10 calendar days after the submission of such
invoice by the Liquidating Trustee. If the Liquidating Trust Board objects to
the payment of any such invoice, the portion of the invoice which the
Liquidating Trust Board does not object to shall be paid within fifteen (15)
days of the date on which the Liquidating Trustee submitted such invoice.
2.2 PERFORMANCE BONUS. The Liquidating Trustee shall be entitled to a bonus
(the "Bonus") based on the net recovery paid to the Creditors as follows: (i) if
Net Recoveries are between Zero Dollars ($0) and One Hundred Twenty Five Million
Dollars ($125,000,000), there will be no bonus, (ii) if Net Recoveries are
between One Hundred Twenty Five Million Dollars ($125,000,000) and Two Hundred
Fifty Million Dollars ($250,000,000), the bonus will be one quarter of one
percent (.25%) of Net Recoveries, (iii) if Net Recoveries are between Two
2
Hundred Fifty Million Dollars ($250,000,000) and Five Hundred Million Dollars
($500,000,000), the bonus will be one half of one percent (.50%) of the Net
Recoveries, (iv) if Net Recoveries are Five Hundred Million Dollars
($500,000,000) or greater, the bonus will be three fourths of one percent (.75%)
of the Net Recoveries. "Net Recoveries" means the aggregate of all distributions
by the Trust to the Holders of Claims in Class 3A, Class 3B and Class 5 from the
liquidation of Assets and the prosecution and/or settlement of the Litigation
Claims. The aggregate amount of Compensation and Travel Expenses paid to the
Liquidating Trustee will be deducted from the Bonus (such net amount, the
"Performance Bonus").
2.3 EXPENSES. All reasonable out of pocket expenses incurred by the
Liquidating Trustee for airfare between Dallas, Texas and Phoenix, Arizona (the
"Travel Expenses"), will be reimbursable as an expense of the Trust. All
reasonable out of pocket expenses incurred by the Liquidating Trustee and
relating to the Liquidating Trustee's performance of his duties hereunder and
under the Trust Agreement and which are not Travel Expenses (the "Reimbursable
Expenses"), will be reimbursable as an expense of the Trust.
2.4 INSURANCE. The Trust shall provide coverage to the Liquidating Trustee
under a liability insurance policy, in form and substance substantially similar
to a directors' and officers' liability insurance policy, which shall insure the
Liquidating Trustee against any liability for any action or omission of the
Liquidating Trustee in the performance of his duties hereunder, except any
action or omission which is the result of willful misconduct on the part of the
Liquidating Trustee.
ARTICLE III
COMPENSATION UPON TERMINATION
3.1 RESIGNATION, REMOVAL FOR CAUSE, DEATH. If the Liquidating Trustee's
duties hereunder and under the Trust Agreement are terminated in accordance with
the Trust Agreement due to resignation, removal for Cause or death, in addition
to any other rights or benefits specifically provided for herein, the Trust
shall be obligated to provide compensation to the Liquidating Trustee, as
follows:
(a) ACCRUED COMPENSATION. The Trust shall pay the Liquidating Trustee
(or his estate or beneficiaries) any Compensation which has accrued but not been
paid as of the termination date (the "ACCRUED COMPENSATION").
(b) ACCRUED PERFORMANCE BONUS. The Trust shall pay the Liquidating
Trustee (or his estate or beneficiaries) any Performance Bonus which has accrued
but not been paid as of the termination date (the "ACCRUED PERFORMANCE BONUS"),
which Accrued Performance Bonus shall be calculated after taking into account
any Accrued Compensation to be paid to the Liquidating Trustee pursuant to
Section 3.1(a) and any Travel Expenses to be paid to the Liquidating Trustee
pursuant to Section 3.1(c).
3
(c) ACCRUED EXPENSES. The Trust shall reimburse the Liquidating
Trustee (or his estate or beneficiaries) for Travel Expenses and Reimbursable
Expenses incurred by him prior to the date of termination.
3.2 REMOVAL. If the Liquidating Trustee's duties hereunder and under the
Trust Agreement are terminated in accordance with the Trust Agreement due to a
decision by the Liquidating Trust Board to remove the Liquidating Trustee for
any reason other than for Cause, in addition to any other rights or benefits
specifically provided for herein, the Trust shall be obligated to provide
compensation to the Liquidating Trustee, as follows:
(a) ACCRUED COMPENSATION. The Trust shall pay the Liquidating Trustee
(or his estate or beneficiaries) any Accrued Compensation.
(b) ACCRUED PERFORMANCE BONUS. The Trust shall pay the Liquidating
Trustee (or his estate or beneficiaries) any Accrued Performance Bonus, which
Accrued Performance Bonus shall be calculated after taking into account any
Accrued Compensation to be paid to the Liquidating Trustee pursuant to Section
3.2(a) and any Travel Expenses to be paid to the Liquidating Trustee pursuant to
Section 3.2(c).
(c) ACCRUED REIMBURSABLE EXPENSES. The Trust shall reimburse the
Liquidating Trustee (or his estate or beneficiaries) for Travel Expenses
incurred by him prior to the date of termination (the "ACCRUED TRAVEL Expenses")
and for Reimbursable Expenses incurred by him prior to the date of termination
(the "ACCRUED REIMBURSABLE EXPENSES").
(d) SEVERANCE PAYMENT.
(i) NET RECOVERIES LESS THAN $125,000,000. If Net Recoveries as
of the date of termination are less than $125,000,000, then the Trust shall (a)
pay the Liquidating Trustee $250,000 and (b) pay the Liquidating Trustee an
amount equal to (1) the Performance Bonus, if any, calculated as of the
Distribution Date immediately subsequent to the Liquidating Trustee's removal,
minus (2) the sum of the Accrued Compensation and the Accrued Travel Expenses
paid to the Liquidating Trustee.
(ii) NET RECOVERIES OF $125,000,000 UP TO $250,000,000. If Net
Recoveries as of the date of termination are equal to or greater than
$125,000,000 but less than $250,000,000, then the Trust shall (a) pay the
Liquidating Trustee $150,000 and (b) pay the Liquidating Trustee an amount equal
to (1) the Performance Bonus, calculated as of the Distribution Date immediately
subsequent to the Liquidating Trustee's removal, minus (2) the sum of the
Accrued Compensation, the Accrued Performance Bonus and the Accrued Travel
Expenses paid to the Liquidating Trustee.
(iii) NET RECOVERIES OF $250,000,000 UP TO $500,000,000. If Net
Recoveries as of the date of termination are equal to or greater than
$250,000,000 but less than $500,000,000, then the Trust shall (a) pay the
Liquidating Trustee $75,000 and (b) pay the Liquidating Trustee an amount equal
to (1) the Performance Bonus, calculated as of the Distribution Date immediately
subsequent to the Liquidating Trustee's removal, minus (2) the sum of the
Accrued Compensation, the Accrued Performance Bonus and the Accrued Travel
Expenses paid to the Liquidating Trustee.
4
(iv) NET RECOVERIES OF $500,000,000 OR MORE. If Net Recoveries as
of the date of termination are equal to or greater than $500,000,000, then the
Trust shall only pay the Liquidating Trustee the amounts set forth in paragraphs
(a), (b) and (c) of this Section 3.2.
ARTICLE IV
RESTRICTIVE COVENANTS
4.1 CONFIDENTIALITY.
(a) Upon termination of this Agreement for any reason, the Liquidating
Trustee covenants and agrees to hold in strictest confidence, and not disclose
to any person without the express written consent of the Trust, any and all of
the Trust's Proprietary Information, except as such disclosure may be required
by law. This covenant and agreement shall survive this Agreement and continue to
be binding upon the Liquidating Trustee after the expiration or termination of
this Agreement, whether by passage of time or otherwise, so long as such
information and data shall remain Proprietary Information.
(b) Upon termination of this Agreement for any reason, the Liquidating
Trustee shall immediately turn over to the Trust any "Proprietary Information,"
as defined in subparagraph (c) below. The Liquidating Trustee shall have no
right to retain any copies of any material qualifying as Proprietary Information
for any reason whatsoever after termination of his duties hereunder without the
express written consent of the Trust.
(c) For purposes of this Agreement, "PROPRIETARY INFORMATION" means
and includes the following: the identity of the parties which have transacted
business with the Trust or its affiliates; any written, typed or printed lists,
or other materials identifying the parties which have transacted business with
the Trust or its affiliates; any financial or other information supplied the
parties which have conducted business with the Trust or its affiliates; any and
all data or information involving the Trust, its affiliates, programs, methods,
or contacts employed by the Trust or its affiliates; any lists, documents,
manuals, records, forms, or other material used by the Trust or its affiliates;
and any other secret or confidential information concerning the Trust's or its
affiliates' affairs. The terms "list," "document" or other equivalents, as used
in this paragraph, are not limited to a physical writing or compilation but also
include any and all information whatsoever regarding the subject matter of the
"list" or "document," whether or not such compilation has been reduced to
writing. "Proprietary Information" shall not include any information which: (i)
is or becomes publicly available through no act or failure of the Liquidating
Trustee; (ii) was or is rightfully learned by the Liquidating Trustee from a
source other than the Trust before being received from the Trust; or (iii)
becomes independently available to the Liquidating Trustee as a matter of right
from a third party. If only a portion of the Proprietary Information is or
becomes publicly available, then only that portion shall not be Proprietary
Information hereunder.
4.2 REMEDIES. The Liquidating Trustee acknowledges that the remedy at law
for any breach or threatened breach of Section 4.1 will be inadequate and,
accordingly, that the Trust shall, in addition to all other available remedies
(including without limitation, seeking such damages as it can show it has
5
sustained by reason of such breach), be entitled to injunctive relief or
specific performance.
ARTICLE V
MISCELLANEOUS
5.1 DEFINITIONS. Any capitalized terms used herein, but not otherwise
defined herein shall have the meanings set forth in the Trust Agreement. In
addition, the following terms shall have the following meanings:
(a) "ACCRUED COMPENSATION" - as defined in Section 3.1(a).
(b) "ACCRUED PERFORMANCE BONUS" - as defined in Section 3.1(b).
(c) "ACCRUED REIMBURSABLE EXPENSES" - as defined in Section 3.2(c).
(d) "ACCRUED TRAVEL EXPENSES" - as defined in Section 3.2(c).
(e) "BONUS" - as defined in Section 2.2.
(f) "CAUSE" shall have the meaning assigned thereto in the Trust
Agreement.
(g) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(h) "COMPENSATION" - as defined in Section 2.1.
(i) "PERFORMANCE BONUS" - as defined in Section 2.2.
(j) "PROPRIETY INFORMATION" - as defined in Section 4.1.
(k) "REIMBURSABLE EXPENSES" - as defined in Section 2.3.
(l) "TRAVEL EXPENSES" - as defined in Section 2.3.
5.2 INCORPORATION OF TRUST AGREEMENT. The Trust Agreement is hereby
incorporated into this Agreement and made a part hereof by this reference;
PROVIDED, HOWEVER, that in the event of any conflict between the terms of the
Trust Agreement and this Agreement, the terms of the Trust Agreement will
control and govern.
5.3 NO RECOURSE. Except as provided in the Plan and the Trust Agreement, no
recourse shall ever be had, directly or indirectly, against the Liquidating
Trustee, by legal or equitable proceedings, or by virtue of any statute or
otherwise, nor upon any promise, contract, instrument, undertaking, obligation,
covenant or agreement whatsoever executed by the Liquidating Trustee under the
Plan, the Trust Agreement, or by reason of the creation of any indebtedness by
the Liquidating Trustee under the Plan or the Trust Agreement for any purpose
authorized by the Plan or the Trust Agreement, it being expressly understood and
agreed that all such liabilities, covenants and agreements shall be enforceable
only against and be satisfied only out of the Trust Assets or such part thereof
6
as shall under the terms of any such agreement be liable therefor or shall be
evidence only of a right of payment out of the Trust Assets.
5.4 INDEMNIFICATION. From and after the Effective Date, the Trust will
indemnify and hold harmless the Liquidating Trustee from against any and all
liabilities (fixed or contingent), obligations, losses, claims, actions, suits,
costs, damages, expenses (including legal fees and expenses), disbursements,
amounts paid in settlement, judgments, fines of any kind and nature whatsoever
(each, an "Indemnity Claim") which may at any time be made, assessed, imposed
on, asserted against or otherwise incurred by the Liquidating Trustee in
connection with, relating to, or arising out of, this Agreement or the
Liquidating Trustee's actions or omissions while performing his duties under
this Agreement, EXCEPT FOR the Liquidating Trustee's acts or omissions
constituting willful misconduct, as finally determined by a court of competent
jurisdiction. In each instance where there is an Indemnity Claim or potential
Indemnity Claim for which the Liquidating Trustee is or may be entitled to seek
indemnification, the Liquidating Trustee must notify the Trust in writing of
such Indemnity Claim and shall furnish to the Trust copies of all notices,
service of process, pleadings and other pertinent written communications from
the party asserting such Indemnity Claim. The Trust will promptly advance any
legal fees and expenses incurred by the Liquidating Trustee and reimburse any
Indemnity Claim. If the Liquidating Trustee's actions or omissions are found to
constitute willful misconduct, as finally determined by a court of competent
jurisdiction, any funds transferred by the Trust to the Liquidating Trustee in
connection with the related Indemnity Claim shall be promptly reimbursed. The
Liquidating Trustee may in his sole discretion retain his choice of legal
counsel in connection with any Indemnity Claim.
5.5 LIMITED LIABILITY. The Liquidating Trustee shall not be liable for any
act he may do or omit to do while acting in good faith and in the exercise of
its reasonable judgment, and the fact that such act or omission was advised by
an authorized attorney for the Liquidating Trustee or the Trust, shall be
evidence of such good faith and reasonable judgment; nor shall the Liquidating
Trustee be liable in any event, except to the extent determined to be the result
of his own gross negligence or willful fraud or willful misconduct. The
Liquidating Trustee shall not be personally liable with respect to any
liabilities or obligations of the Trust or any liabilities or obligations
relating to the Trust Assets, including, without limitation, those arising under
the Trust Agreement or with respect to the Trust or the Trust Assets.
5.6 SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding upon any
successor to the Trust and shall inure to the benefit of and be enforceable by
the Liquidating Trustee's personal or legal representatives, beneficiaries,
designees, executors, administrators, heirs, distributees, devisees and
legatees.
5.7 MODIFICATION; NO WAIVER. This Agreement may not be modified or amended
except by an instrument in writing signed by the Liquidating Trust Board, on
behalf of the Trust, and the Liquidating Trustee. No term or condition of this
Agreement shall be deemed to have been waived, nor shall there be any estoppel
against the enforcement of any provision of this Agreement, except by written
instrument by the party charged with such waiver or estoppel. No such written
waiver shall be deemed a continuing waiver unless specifically stated therein,
and each such waiver shall operate only as to the specific term or condition
waived and shall not constitute a waiver of such term or condition for the
future or as to any other term or condition.
7
5.8 SEVERABILITY. The covenants and agreements contained herein are
separate and severable and the invalidity or unenforceability of any one or more
of such covenants or agreements, if not material to the arrangement that is the
basis for this Agreement, shall not affect the validity or enforceability of any
other covenant or agreement contained herein. If, in any judicial proceedings, a
court shall refuse to enforce one or more of the covenants or agreements
contained herein because the duration thereof is too long, or the scope thereof
is too broad, it is expressly agreed between the parties hereto that such
duration or scope shall be deemed reduced to the extent necessary to permit the
enforcement of such covenants or agreements.
5.9 NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, to the parties hereto at
the following addresses:
If to the Transferors, to them at:
c/o BFA Liquidation Trust
0000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Liquidating Trust Board
With a copy to:
BFA Liquidation Trust
0000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Chairman of the Liquidating Trust Board
If to the Liquidating Trustee, to him at:
Xxxxxxx X. Xxxxxx, Xx.
c/o Patton Xxxxx L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
5.10 ASSIGNMENT. This Agreement and any rights hereunder shall not be
assignable to either party without the prior written consent of the other party.
5.11 ENTIRE UNDERSTANDING. This Agreement constitutes the entire
understanding between the parties hereto and no agreement, representation,
warranty or covenant has been made by either party except as expressly set forth
herein.
5.12 LIQUIDATING TRUSTEE'S REPRESENTATIONS. The Liquidating Trustee
represents and warrants that neither the execution and delivery of this
Agreement nor the performance of his duties hereunder violates the provisions of
any other agreement to which he is a party or by which he is bound.
8
5.13 SURVIVORSHIP. Unless specifically stated to the contrary in this
Agreement, the rights and obligations of the Liquidating Trustee and the Trust
set forth herein shall continue beyond the term of this Agreement, including,
but not by way of limitation, the Trust's obligations under Sections 5.4 and
5.5, and the Trust's rights under Article IV.
5.14 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed for all purposes by the laws of the State of Arizona applicable to
contracts executed and wholly performed within such state.
9
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
TRANSFERORS
By: The Restructuring Committee of
Baptist Foundation of Arizona,
on behalf of the Transferors
By: /s/ Xxxx Xxxxxxx
------------------------------------
Name: Xxxx Xxxxxxx
Member of Committee
LIQUIDATING TRUSTEE
/s/ Xxxxxxx X. Xxxxxx, Xx.
----------------------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
10
