CHANGE-IN-CONTROL EXECUTIVE SEVERANCE AGREEMENT
This Change-in-Control Executive Severance Agreement (this "Agreement"), dated
and effective August 17, 2000, is between Ace Cash Express, Inc., a Texas
corporation (the "Company"), and Xxxxx X. Xxxxxxxx (the "Executive").
Statement of Purpose
The Company desires, for its continued success, to have the benefit of services
of experienced management personnel like the Executive. The Board of Directors
of the Company therefore believes that it is in the best interest of the Company
that, in the event of any prospective change in control of the Company, the
Executive be reasonably secure in her employment and position with the Company,
so that the Executive can exercise independent judgment as to the best interest
of the Company and its shareholders, without distraction by any personal
uncertainties or risks regarding the Executive's continued employment with the
Company created by the possibility of a change-in-control of the Company.
Therefore, the Company and the Executive are entering into this Agreement to
assure severance benefits to the Executive in connection with certain
terminations of employment upon or after a change in control of the Company.
Agreement
In consideration of the statements made in the Statement of Purpose and the
mutual agreements set forth below, the Company and the Executive agree as
follows:
1. Definitions and Interpretation. Various terms used in this Agreement
are defined in Exhibit A; each of the defined terms used in this
Agreement begins with a capital letter. Various interpretative matters
for this Agreement are also set forth in Exhibit A. Exhibit A is an
integral part of this Agreement and is incorporated in this Agreement
by reference.
2. Term of Agreement. This Agreement will continue in effect until the
earliest of the following:
(a) Any termination of the Executive's employment with the
Company before a Change in Control. (If the Executive is
employed by any Subsidiary, whether or not she is also
employed by the Company, any reference in this Agreement to
the Executive's employment by the Company shall be deemed to
include her employment by a Subsidiary.)
(b) 11:59 p.m. on June 30 following at least six months'
Notice of termination of this Agreement by either Party, if
that June 30 occurs before a Change in Control. (c) The
Company's performance of all of its obligations, and the
Executive's receipt of all of the payments and benefits to
which she is entitled, under this Agreement after a Severance
Payment Event.
3. Severance Benefits. Upon a Severance Payment Event, in addition to any
other severance or employment-termination compensation or benefits to
which the Executive may be entitled from the Company or any Subsidiary
under the terms of any Plan of which the Executive was a participant or
a beneficiary immediately before the Severance Payment Event, the
Company shall:
(a) Pay the Executive in cash, within five Business Days
after the Severance Payment Event, all of her Base Salary and
all other earned but unpaid cash compensation or entitlements
due to the Executive through (and including) the date of the
Severance Payment Event, including unused earned and accrued
vacation pay and unreimbursed reimbursable business expenses.
(b) Make the Severance Payment in cash in two equal
installments: (i) the first within five Business Days after
the Severance Payment Event, and (ii) the second (without
interest), subject to Section 4, no later than noon on the
first anniversary of the Severance Payment Event.
(c) Provide or arrange to provide the Executive (whether or
not under any Welfare Benefit Plan then maintained), at the
Company's sole expense and for the Benefit Continuation
Period, Welfare Benefits that are substantially the same the
Welfare Benefits provided to the Executive (and her
dependents and beneficiaries) immediately before the
Severance Payment Event, except that the Welfare Benefits to
which the Executive is entitled under this subsection (c)
will be reduced to the extent that comparable welfare
benefits are received by the Executive from an employer other
than the Company or any Subsidiary during the Benefit
Continuation Period. (The fact that the cost of the
participation by the Executive, or her dependents or
beneficiaries, in any Welfare Benefit Plan was paid
indirectly by the Company, as a reimbursement or a credit to
the Executive, before the Severance Payment Event does not
mean that the corresponding Welfare Benefits were not
"provided to the Executive" by the Company for the purpose of
this subsection (c).)
In addition, each Stock Award outstanding immediately before the
Severance Payment Event and not yet exercised or forfeited (as the case
may be) will accelerate and become fully vested, exercisable, or
nonforfeitable upon the Severance Payment Event, as though all
requisite time had passed to vest the Stock Award or cause it to become
exercisable or nonforfeitable.
4. Nondisclosure and Noncompetition. As an inducement to the Company to
enter into this Agreement, the Executive represents to and covenants
with or in favor of the Company as follows:
(a) The Executive has acquired and will acquire during her
employment with the Company knowledge or awareness of various
Trade Secrets. All of the Trade Secrets are valuable,
special, and unique assets of the Company, and the disclosure
of any of them, or their use in any manner, other than on
behalf of the Company would cause substantial injury, loss of
profits, and loss of goodwill to the Company.
(b) During her employment with the Company and at all times
thereafter, the Executive shall not, directly or indirectly,
disclose or disseminate any Trade Secret to any other Person
or lecture upon, publish articles concerning, or otherwise
use or employ any Trade Secret, except (in any case) to the
extent required in the course of her employment with the
Company or by applicable law, rule, or regulation (including
legal process). In addition, all Trade Secrets and materials
containing Trade Secrets prepared or compiled by the
Executive or furnished or made available to him during her
employment with the Company are the sole and exclusive
property of the Company, and none of those Trade Secrets or
materials containing Trade Secrets may be retained by the
Executive upon or following any termination of her employment
with the Company.
(c) If the Executive's employment with the Company terminates
(other than because of the Executive's death or Disability)
upon or before the termination of this Agreement, the
Executive shall not, at any time during the first year after
that termination of employment anywhere in the Restricted
Territory, directly or indirectly engage in any activity
which, or any activity for any enterprise or entity a
material part of the business of which, is competitive with
the business conducted, or proposed during her employment
with the Company to be conducted, by the Company. The
activity prohibited by the preceding sentence includes any
kind of ownership (other than ownership of securities of a
publicly held entity of which the Executive owns less than 1%
of a class of outstanding securities) in or of, or acting as
a director, officer, agent, employee, or consultant of or
for, any enterprise or entity referred to in the preceding
sentence.
(d) The Executive acknowledges and agrees that the
restrictions in this Section 4 are reasonable and not unduly
burdensome to him under the circumstances.
(e) The Executive's compliance with this Section 4 is a
condition to the second installment of the Severance Payment;
the Company may refuse to pay that second installment, and
that installment shall not be due to the Executive, if there
is any such noncompliance. The Company shall have the burden
of proof regarding any question of the Executive's compliance
or noncompliance with this Section 4.
5. Tax Limitation. If any payment or benefit received or to be received by
the Executive under this Agreement or any other of the Total Severance
Benefits would not be deductible, in whole or in part, by the Company
as a result of Section 280G of the Code, the payments and benefits
under this Agreement shall be reduced until no portion of the Total
Severance Benefits is nondeductible as a result of Section 280G of the
Code. For the purposes of this Section 5:
(a) Any portion of the Total Severance Benefits that the
Executive has effectively waived in writing before the date
on which that portion is received shall not be taken into
account in determining the limitation on the Total Severance
Benefits;
(b) any portion of the Total Severance Benefits that does not
constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code shall not be taken into
account in determining the limitation on the Total Severance
Benefits; and
(c) the value of any non-cash benefit or deferred payment
included in the Total Severance Benefits shall be determined
by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
6. Executive's Legal Expenses. The Company shall pay the Executive an
amount equal to the reasonable legal fees and other expenses incurred
in good faith by him in obtaining or retaining payments and benefits
under this Agreement, including all such fees and expenses (if any) in
enforcing, in good faith, any right or benefit provided by this
Agreement or in connection with the contest or defense of any tax audit
or proceeding by the Internal Revenue Service to the extent that
Section 4999 of the Code is alleged or claimed to apply to any payment
or benefit provided under this Agreement. The Company will be obligated
under the preceding sentence even if the Executive is not successful in
any enforcement claim or counterclaim by him, or in any such tax
contest or defense, so long as he acted in good faith. The Company
shall make any payment required by this Section 6 within five Business
Days after Notice from the Executive requesting payment and providing
such evidence of the incurrence of those fees and expenses as the
Company may reasonably request.
7. No Mitigation. If a Severance Payment Event occurs, the Executive need
not seek other employment or attempt in any way to reduce the amount of
any payments or benefits to the Executive by the Company under this
Agreement. Other than as stated in subsection (c) of Section 3 and in
subsection (e) of Section 4, the amount of the Severance Payment or any
other severance benefit provided or to be provided to the Executive by
the Company under Section 3 shall not be reduced by any compensation
earned by the Executive as the result of any other employment,
consulting relationship, or other business activity.
8. No Set-off. The Company's obligations under this Agreement are absolute
and unconditional, and not subject to any set-off, counterclaim,
recoupment, defense, or other right that the Company or any Subsidiary
may have against the Executive, except as stated in subsection (c) of
Section 3 and in subsection (e) of Section 4.
9. Tax Withholding. The Company shall withhold from any payments or
benefits under this Agreement (whether or not otherwise acknowledged
under this Agreement) all federal, state, local, or other taxes as may
be legally required to be withheld.
10. Employment Status. Nothing in this Agreement provides the Executive
with any continued employment with the Company or any Subsidiary or
shall interfere with the Company's right to terminate the Executive's
employment at any time and for any (or no) reason.
11. No Exclusivity. Nothing in this Agreement prevents or limits the
Executive's participation in any Plan for which the Executive may
qualify or shall impair any rights that the Executive may have under
any other contract or agreement with the Company or any Subsidiary,
except for any limitation resulting from Section 5.
12. Governing Law; Jurisdiction. All matters or issues relating to the
interpretation, construction, validity, and enforcement of this
Agreement shall be governed by the laws of Texas, without giving effect
to any choice-of-law principle that would cause the application of the
laws of any jurisdiction other than Texas. Jurisdiction and venue of
any action or proceeding relating to this Agreement or any Dispute (to
the extent arbitration is not required under Section 13) shall be
exclusively in Dallas County, Texas.
13. Arbitration. Except as provided in subsection (h) of this Section 13,
any Dispute must be resolved by binding arbitration in accordance with
the following:
(a) A Party may begin arbitration by filing a demand for
arbitration in accordance with the Arbitration Rules and
concurrently Notifying the other Party of that demand. If the
Parties are unable to agree upon a panel of three arbitrators
within ten days after the demand for arbitration was filed
(and do not agree to an extension of that ten-day period),
either Party may request the Dallas office of the American
Arbitration Association to appoint the arbitrator or
arbitrators necessary to complete the panel in accordance with
the Arbitration Rules. Each arbitrator so appointed shall be
deemed accepted by the Parties as part of the panel.
(b) The arbitration shall be conducted in the Dallas-Fort
Worth, Texas metropolitan area at a place and time agreed upon
by the Parties with the panel, or if the Parties cannot agree,
as designated by the panel. The panel may, however, call and
conduct hearings and meetings at such other places as the
Parties may agree or as the panel may, on the motion of one
Party, determine to be necessary to obtain significant
testimony or evidence.
(c) The panel may authorize any and all forms of discovery
upon a Party's showing of need that the requested discovery is
likely to lead to material evidence needed to resolve the
Dispute and is not excessive in scope, timing, or cost.
(d) The arbitration shall be subject to the Federal
Arbitration Act and conducted in accordance with the
Arbitration Rules to the extent that they do not conflict with
this Section 13. The Parties and the panel may, however, agree
to vary to provisions of this Section 13 or the matters
otherwise governed by the Arbitration Rules.
(e) The arbitration hearing shall be held within 30 days after
the appointment of the panel. The panel's final decision or
award shall be made within 30 days after the hearing. That
final decision or award shall be made by unanimous or majority
vote or consent of the arbitrators constituting the panel, and
shall be deemed issued at the place of arbitration. The
panel's final decision or award shall be based on this
Agreement and applicable law; the panel may not act according
to equity and conscience or apply the law merchant.
(f) The panel's final decision or award may include injunctive
relief in response to any actual or impending breach of this
Agreement or any other actual or impending action or omission
of a Party under or in connection with this Agreement.
(g) The panel's final decision or award shall be final and
binding upon the Parties, and judgment upon that decision or
award may be entered in any court having jurisdiction. The
Parties waive any right to apply or appeal to any court for
relief from the preceding sentence or from any decision of the
panel made before the final decision or award.
(h) Nothing in this Section 13 limits the right of either
Party to apply to a court having jurisdiction to (i) enforce
the agreement to arbitrate in accordance with this Section 13,
(ii) seek provisional or temporary injunctive relief, in
response to an actual or impending breach of the Agreement or
otherwise so as to avoid a irrevocable damage or maintain the
status quo, until a final arbitration decision or award is
rendered or the Dispute is otherwise resolved, or (iii)
challenge or vacate any final arbitration decision or award
that does not comply with this Section 13. In addition,
nothing in this Section 13 prohibits the Parties from
resolving any Dispute (in whole or in part) by agreement.
14. Company's Successor. In addition to any obligations imposed by law upon
any successor to the Company, the Company shall require any successor
to all or substantially all of the Company's business or assets
(whether direct or indirect and whether by purchase, reorganization,
merger, share exchange, consolidation, or otherwise) to expressly
assume and agree to perform the Company's obligations under this
Agreement to the same extent, and in the same manner, as the Company
would be required to perform if no such succession had occurred. This
Agreement shall be binding upon, and inure to the benefit of, any
successor to the Company.
15. Executive's Successor. This Agreement shall inure to the benefit of,
and be enforceable by, the Executive's personal or legal
representatives, administrators, successors, executors, heirs,
distributees, devisees, and legatees. If the Executive should die after
a Severance Payment Event, but before any payment or benefit to which
the Executive is entitled under this Agreement has been received by the
Executive, all payments or benefits to which the Executive would have
been entitled had she continued to live (other than any such Welfare
Benefits that, by their terms, terminate upon the Executive's death)
shall be made or provided in accordance with this Agreement to the
representatives, executors, or administrators of the Executive's
estate.
16. Restricted Assignment. Except as expressly provided in Sections 14 and
15, neither Party may assign, transfer, or delegate this Agreement or
any of its or her rights or obligations under this Agreement without
the prior written consent of the other Party. Any attempted assignment,
transfer, or delegation in violation of the preceding sentence shall be
void and of no effect.
17. Waiver and Amendment. No term or condition of this Agreement shall be
deemed waived other than by a writing signed by the Party against whom
or which enforcement of the waiver is sought. Without limiting the
generality of the preceding sentence, a Party's failure to insist upon
the other Party's strict compliance with any provision of this
Agreement or to assert any right that a Party may have under this
Agreement shall not be deemed a waiver of that provision or that right.
Any written waiver shall operate only as to the specific term or
condition waived under the specific circumstances and shall not
constitute a waiver of that term or condition for the future or a
waiver of any other term or condition. No amendment or modification of
this Agreement shall be deemed effective unless stated in a writing
signed by the Parties.
18. Entire Agreement. This Agreement contains the Parties' entire agreement
regarding the subject matter of this Agreement and supersedes all prior
agreements and understandings between them regarding that subject
matter. The Parties have made no agreements, representations, or
warranties regarding the subject matter of this Agreement that are not
set forth in this Agreement.
19. Notice. Each notice or other communication required or permitted under
this Agreement shall be in writing and transmitted, delivered, or sent
by personal delivery, prepaid courier or messenger service (whether
overnight or same-day), prepaid telecopy or facsimile, or prepaid
certified United States mail (with return receipt requested), addressed
(in any case) to the other Party at the address or number for that
Party set forth below that Party's signature on this Agreement, or at
such other address or number as the recipient has designated by Notice
to the other Party. Each notice or communication so transmitted,
delivered, or sent:
(a) in person, by courier or messenger service, or by
certified United States mail shall be deemed given, received,
and effective on the date delivered to or refused by the
intended recipient (with the return receipt, or the equivalent
record of the courier or messenger, being deemed conclusive
evidence of delivery or refusal), or
(b) by telecopy or facsimile shall be deemed given, received,
and effective on the date of actual receipt (with the
confirmation of transmission being deemed conclusive evidence
of receipt, except where the intended recipient has promptly
Notified the other Party that the transmission is illegible).
Nevertheless, if the date of delivery or transmission is not a Business
Day, or if the delivery or transmission is after 5:00 p.m. on a
Business Day, the notice or other communication shall be deemed given,
received, and effective on the next Business Day.
20. Severability. If any provision of this Agreement is or becomes invalid
or unenforceable, that provision (to the extent invalid or
unenforceable) shall be deemed amended or reformed to the extent
required to render it valid and enforceable, and the remainder of this
Agreement shall be unaffected and shall continue in effect.
21. Counterparts. This Agreement may be signed in counterparts, with the
same effect as if both Parties had signed the same document. All
counterparts shall be construed together to constitute one, and the
same, document.
The Parties have signed this Agreement to be effective as of the date set forth
in the first paragraph.
Company: Executive:
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ACE CASH EXPRESS, INC.
By: \s\ Xxx X. Xxxxxxxxx By: \s\ Xxxxx X. Xxxxxxxx
------------------------- ---------------------------
XXX X. XXXXXXXXX XXXXX X. XXXXXXXX
President
Address for Notice: Address for Notice:
0000 Xxxxxxxx Xxxxx _____________________
Xxxxx 000 _____________, Texas 7_______
Xxxxxx, Xxxxx 00000 Telecopy no. (972) ____-______
Telecopy no. (000) 000-0000
Attention: Chairman of the Board
EXHIBIT A
to
CHANGE-IN-CONTROL EXECUTIVE SEVERANCE AGREEMENT
DEFINED TERMS. In the Agreement, the following terms have the corresponding
meanings:
"Acquiring Person" means any Person (other than an Excluded Person) who or
which, alone or together with all Affiliates and Associates of that Person, is
the Beneficial Owner of 25% or more of the Voting Securities of the Company then
outstanding.
"Affiliate" and "Associate" have the respective meanings ascribed to them in
Rule 12b-2 under the Exchange Act.
"Agreement" means the Change-in-Control Executive Severance Agreement between
the Parties of which this Exhibit A is a part.
"Arbitration Rules" means the Rules for Commercial Arbitration of the American
Arbitration Association in effect at the time of an arbitration of a Dispute.
"Base Salary" means the Executive's annual salary, or base or fixed annual
compensation, of record from the Company or a Subsidiary that is her primary
employer, excluding any amount received or to be received under incentive
compensation Plans, whether or not deferred.
"Beneficial Owner" means beneficial owner as defined in Rule 13d-3 under the
Exchange Act. ("Beneficially Owns" has the correlative meaning.) Any calculation
of the number of Voting Securities outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding Voting
Securities of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) under the Exchange Act.
"Benefit Continuation Period" means 18 consecutive months after a Severance
Payment Event.
"Board" means the Board of Directors of the Company.
"Business Day" means any Monday through Friday, excluding any such day on which
banks are authorized to be closed in Texas.
"Cause" means:
(i) the Executive's willful failure to substantially perform her employment
duties to the Company, as such duties may exist from time to time, or
comply with the written policies of the Company (other than any such
failure resulting from Disability or the Executive's termination for
Good Reason) which continues for a reasonable time after a Notice to the
Executive from the Board that (A) identifies the manner in which the
Board believes that the Executive has not substantially performed the
Executive's duties or complied with written policies and (B) demands
substantial performance or compliance within a specified reasonable
time; or
(ii) the Executive's willful engaging in conduct (including any illegal
conduct) that is demonstrably and materially injurious to the Company or
any Subsidiary, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, by the Executive
shall be deemed "willful" unless done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that the Executive's act, or
failure to act, was in the best interest of the Company and its Subsidiaries.
For the purpose of clause (i) of this definition, a "reasonable time" shall be a
time period determined by the Board, acting in good faith, to be sufficient
under normal circumstances to correct the deficient performance or compliance
described in the Notice to the Executive.
"Change in Control" means the occurrence of any one or more of the following:
(i) Any Person becomes an Acquiring Person, except as the result of (A) any
acquisition of Voting Securities of the Company by the Company or (B)
any acquisition of Voting Securities of the Company directly from the
Company (as authorized by the Board).
(ii) Individuals who constitute the Incumbent Board cease for any reason to
constitute at least a majority of the Board; and for this purpose, any
individual who becomes a member of the Board after the date of this
Agreement whose election, or nomination for election by holders of the
Company's Voting Securities, was approved by the vote of at least a
majority of the individuals then constituting the Incumbent Board shall
be considered a member of the Incumbent Board (except that any such
individual whose initial election as director occurs as the result of an
actual or threatened election contest, within the meaning of Rule 14a-11
under the Exchange Act, or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board
shall not be so considered).
(iii) The consummation of a reorganization, merger, share exchange,
consolidation, or sale or disposition of all or substantially all of the
assets of the Company unless, in any case, the Persons who or which
Beneficially Own the Voting Securities of the Company immediately before
that transaction Beneficially Own, directly or indirectly, immediately
after the transaction, at least 75% of the Voting Securities of the
Company or any other corporation or other entity resulting from or
surviving the transaction (including a corporation or other entity
which, as the result of the transaction, owns all or substantially all
of Voting Securities of the Company or all or substantially all of the
Company's assets, either directly or indirectly through one or more
subsidiaries) in substantially the same proportion as their respective
ownership of the Voting Securities of the Company immediately before
that transaction.
(iv) The Company's shareholders approve a complete liquidation or dissolution
of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Company" means Ace Cash Express, Inc., a Texas corporation.
"Disability" means the Executive's inability, because of any physical or mental
illness or impairment, to substantially perform all of her employment duties to
the Company, on a full-time basis, for a period of at least 90 consecutive days,
as reasonably determined by the Board, based on advice from one or more
competent medical doctors selected by the Company or any of its insurers and
acceptable to the Executive or her legal representative.
"Dispute" means any dispute, disagreement, claim, or controversy arising in
connection with or relating to the Agreement or the validity, interpretation,
performance, breach, or termination of the Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time
to time.
"Excluded Person" means:
(i) the Executive or any group (within the meaning of Section 13(d)(3) of
the Exchange Act) of which the Executive is a member;
(ii) any Person that controls (as defined in Rule 12b-2 under the Exchange
Act) the Company as of the date of the Agreement or any group of which
any such Person is a member;
(iii) any employee-benefit plan, or related trust, sponsored or maintained by
the Company or any of its Subsidiaries, or any trustee or other
fiduciary thereof; or
(iv) any corporation or other entity owned directly or indirectly by the
shareholders of the Company in substantially the same proportions as
their ownership of the Voting Securities of the Company.
"Executive" means Xxxxx X. Xxxxxxxx.
"Good Reason" means:
(i) the assignment to the Executive of any duties inconsistent in any
material respect with the Executive's position (which, in this
definition, includes status, office, title, and reporting requirements),
duties, or responsibilities as an officer of the Company or any
Subsidiary, or any other material diminution in the Executive's
position, authority, duties, or responsibilities from those in effect as
of three months before a Change in Control, other than (in any case) an
isolated and inadvertent action not taken in bad faith that is remedied
by the Company promptly after Notice thereof to the Company by the
Executive;
(ii) the Company's requiring the Executive to be based at any office or
location farther than 50 miles from the Executive's office or principal
job location immediately before a Change in Control, except for required
business travel to an extent substantially consistent with the
Executive's travel obligations immediately before the Change in Control;
(iii) any failure to comply with and satisfy Section 14, if the Company's
successor has received at least ten days' prior written notice from the
Company or the Executive of the requirements of Section 14;
(iv) a material reduction in the Executive's Base Salary from the highest
amount in effect at any time within three months before a Change in
Control;
(v) the failure by the Company or any Subsidiary to continue in effect any
compensation Plan in which the Executive participates immediately before
the Change in Control that is material to the Executive's total
compensation, unless an equitable arrangement (embodied in an ongoing
substitute or alternative Plan or arrangement) has been made with
respect to that Plan, or the failure by the Company or any Subsidiary to
continue the Executive's participation in any such compensation Plan (or
in such substitute or alternative Plan or arrangement) on a basis not
materially less favorable to the Executive, both in terms of the amount
of benefits provided and the level of the Executive's participation
relative to other participants, than existed at any time within three
months before the Change in Control; or
(vi) the failure by the Company or any Subsidiary to continue to provide the
Executive with benefits similar in all material respects to those
enjoyed by the Executive under any Plan in which the Executive was
participating at any time within three months before the Change in
Control, the taking of action by the Company or any Subsidiary which
would directly or indirectly materially reduce any of such benefits or
deprive the Executive of any material fringe benefit enjoyed by the
Executive at any time three months before the Change in Control, or the
failure by the Company or any Subsidiary to provide the Executive with
the number of paid vacation days to which the Executive is entitled on
the basis of years of service with the Company and its Subsidiary in
accordance with the Company's or a Subsidiary's normal vacation policy
in effect at any time within three months before the Change in Control.
"Incumbent Board" means the members of the Board on the effective date of the
Agreement (subject, however, to clause (ii) of the definition of "Change in
Control").
"Notice" means a written communication complying with Section 19. ("Notify" has
the correlative meaning.)
"Parties" means, collectively, the Company and the Executive. ("Party" means
either the Company or the Executive.)
"Person" means any individual, firm, corporation, partnership, limited liability
company, trust, or other entity, including any successor (by merger or
otherwise) of such entity.
"Plan" means any bonus, incentive compensation, savings, retirement, stock
option, stock appreciation, stock ownership or purchase, pension, deferred
compensation, or Welfare Benefits plan, policy, practice, program, or
arrangement of (including any separate contract or agreement with) the Company
or any Subsidiary for its employees.
"Restricted Territory" means, collectively, Dallas County, Texas; each county
(or equivalent subdivision) of any state, district, or territory of the United
States of America as to which the Executive had supervisory responsibility for
the Company during her employment with the Company; and each county (or
equivalent territory) adjacent to any of the preceding counties (or equivalent
territories).
"Severance Payment" means an amount equal to two and one-half times the sum of:
(i) the Executive's highest Base Salary in effect at any time within three
months before the Change in Control;
(ii) the highest amount of the annual automobile allowance payable to the
Executive within three months before the Change in Control; and
(iii) an amount equal to the average of the annual bonuses or incentive cash
compensation paid or payable to the Executive by the Company and any
Subsidiary for the three fiscal years of the Company preceding the
fiscal year in which the Change in Control occurs, but in any event no
less than the Executive's targeted bonus or amount of incentive cash
compensation for the fiscal year in which the Change in Control occurs
(or if not yet determined for that fiscal year before the Change in
Control occurs, the Executive's targeted bonus or amount of incentive
compensation for the preceding fiscal year).
For clause (iii) of this definition: (a) if the Executive has not been employed
by the Company and a participant in a bonus or incentive cash compensation Plan
during the three completed fiscal years of the Company before the Change in
Control, the average of the annual bonuses or incentive cash compensation shall
be calculated over the completed fiscal years of the Company during which the
Executive was so employed and a participant in a bonus or incentive cash
compensation Plan; (b) the calculation of the average of the annual bonuses or
incentive cash compensation of the Executive shall include a fiscal year during
which the Executive was employed by the Company and a participant in a bonus or
incentive cash compensation Plan even if the Executive did not earn any bonus or
incentive cash compensation for that fiscal year; (c) the bonus or incentive
cash compensation paid or payable to the Executive for only part of a fiscal
year of the Company shall be annualized (on the same basis as the one on which
the bonus or compensation was prorated) for that fiscal year to calculate the
average; and (d) the "targeted" bonus or incentive cash compensation for the
fiscal year of the Company in which the Change in Control occurs shall be the
amount identified as a "target" by the Board (or its compensation committee that
administers the bonus or incentive cash compensation Plan) for the Executive, or
if no amount is identified as a "target," the "targeted" amount shall be the
amount of the bonus or incentive cash compensation that the Executive could earn
for that fiscal year if the business plan for the Company or the Executive, or
both, is satisfied (but not exceeded).
"Severance Payment Event" means the occurrence of a Change in Control coincident
with or followed, at any time before the end of the 24th month immediately
following the month in which the Change in Control occurred, by the termination
of the Executive's employment with the Company for any reason other than (a) by
the Executive without Good Reason, (b) by the Company because of Disability or
for Cause, or (c) by the death of the Executive. Any transfer of the Executive's
employment from the Company to a Subsidiary, from a Subsidiary to the Company,
or from one Subsidiary to another Subsidiary is not a termination of the
Executive's employment by the Company for purposes of the Agreement (though any
such transfer might, depending on the circumstances, constitute or result in a
termination of employment by the Executive for Good Reason).
"Stock Award" means a stock option, stock appreciation right, restricted stock
grant, performance share plan, or any other agreement in which the Executive
has, or will (by the passage of time only, not based on the Executive's
performance) have, (a) an interest in capital stock of the Company or a right to
obtain capital stock or an interest in capital stock of the Company, or (b) an
interest or right the economic value of which depends solely on the performance
of the capital stock of the Company.
"Subsidiary" means a corporation or other entity, whether incorporated or
unincorporated, of which at least a majority of the Voting Securities is owned,
directly or indirectly, by the Company.
"Total Severance Benefits" means the Severance Payment and all other payments
and benefits received or to be received by the Executive under the Agreement and
all payments and benefits (if any) to which the Executive may be entitled under
any Plan upon or as the result of a Change in Control or the termination of her
employment with the Company, or both.
"Trade Secrets" means any and all information and materials (in any medium) that
are proprietary to the Company or are treated as confidential by the Company as
part of or relating to all or any portion of the Company's business, including
information and materials about the products and services offered, or the needs
of customers served, by the Company; compilations of information, records and
specifications, processes, programs, and systems of the Company; research of or
for the Company; and methods of doing business of the Company.
"Voting Securities" means securities or other interests having by their terms
ordinary voting power to elect members of the board of directors of a
corporation or individuals serving similar functions for a noncorporate entity.
"Welfare Benefits" means medical, prescription, dental, disability, employee
life, group life, accidental death, and travel accident insurance (whether
funded by insurance policy or self-insured by the Company or any Subsidiary)
provided or arranged by the Company or any Subsidiary to be provided to its
employees.
"Welfare Benefit Plan" means any Plan that provides any Welfare Benefits.
INTERPRETIVE MATTERS. In the interpretation of the Agreement, except where the
context otherwise requires:
(a) "including" or "include" does not denote or imply any limitation;
(b) "or" has the inclusive meaning "and/or";
(c) the singular includes the plural, and visa a versa, and each gender
includes each of the others;
(d) captions or headings are only for reference and are not to be considered
in interpreting the Agreement;
(e) "Section" refers to a Section of the Agreement, unless otherwise stated
in the Agreement;
(f) "month" refers to a calendar month; and
(g) a reference to any statute, rule, or regulation 498370.10 includes any
amendment thereto or any statute, rule, or regulation enacted or
promulgated in replacement thereof.
