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EXHIBIT 10.1
CHANGE IN CONTROL SEVERANCE AGREEMENT
This Change in Control Severance Agreement (as modified,
amended or restated from time to time in the manner provided
herein, this “ Agreement ”) is by and between
the individual employee named below (the “Employee
”) and SPAR Group, Inc. (the “ Company ”).
The Employee and the Company may be referred to individually as a
“ Party ” and collectively as the “
Parties ”.
In
consideration of past, present and future employment by the
Company, the mutual covenants below and other good and valuable
consideration (the receipt and adequacy of which are hereby
acknowledged), the Employee and Company hereby agree as
follows:
Section
1.
Introduction . The Employee is Chief Financial
Officer of the Company. The Employee and the Company have entered
into this Agreement in order to provide severance payments from the
Company to the Employee under certain circumstances if, pending or
following a Change in Control, the Employee leaves for Good Reason
or is terminated other than in a Termination For Cause (as such
terms are hereinafter defined). However, this Agreement is not
intended, and shall not be deemed or construed, to create any
employment term or period, and except as otherwise provided in any
other written agreement with the Employee, the Employee
acknowledges and agrees that the Employee’s employment is
“at will” and modifiable from time to time and
terminable at any time, for any reason or no reason, and without
notice or benefit of any kind.
Section
2. Certain
Definitions . Definitions shall be applicable equally to
the singular and plural forms of the terms defined, each use of a
neuter, masculine, feminine or plural pronoun shall be deemed to
refer to the form of pronoun appropriate to the circumstance, and
each other reference to or by gender shall include reference to
each other or neuter gender appropriate to the circumstance, in
each case as the context may permit or require. As used in this
Agreement, the following capitalized terms and non-capitalized
words and phrases shall have the meanings respectively assigned to
them:
(a) “
Authorized Representative ” shall mean any of
(i) the Board, (ii) the Chairman, or (iii) the
President.
(b) “
Beneficial Owner ” shall mean any person who
beneficially owns (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act), securities issued by the
referenced corporation or other entity, whether directly or
indirectly, and whether individually, jointly with any other
person(s) or otherwise.
(c) “
Board ” shall mean the Board of Directors of
the Company or (except for purposes of a Change in Control) the
applicable SPAR Affiliate.
(d) “
Chairman ” shall mean the Chairman of the
Company.
(e) “
Change in Control ” shall mean any of the
following:
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(i) |
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when any “person” or “group” (as
contemplated in Sections 3(a)(9) and 13(d)(3), respectively, of the
Securities Exchange Act), becomes a Beneficial Owner of a Majority
of Voting Securities issued by the Company, in each
case other than any acquisition of Company Securities (A) in
any transaction covered by and exempted under clause (iv) of this
definition, (B) by the Employee or any group of which the Employee
voluntarily is a member, (C) by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any SPAR
Affiliate or (D) by any corporation or other entity if, immediately
following such acquisition, the Beneficial Owners of a Majority of
Voting Securities of the acquirer (or its ultimate parent)
outstanding immediately after such event are either (1) the persons
who were the Beneficial Owners of all or substantially all of the
voting Company Securities immediately prior to such acquisition and
in substantially the same proportions as their ownership
immediately prior to such event, or (2) by Robert G. Brown and/or
William H. Bartels; |
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(ii) |
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when individuals who are members of the Board as of the date
hereof or who are added as hereinafter provided (the “
Incumbent Board ”) cease for any reason to constitute
at least a majority of the Board; provided , however
, that any individual becoming a director
subsequent |
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to the date hereof whose election, or nomination for election
by the Company’s stockholders, was approved by a vote of at
least a majority of the then Incumbent Board shall thereafter be
added (for the purposes hereof) as a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened solicitation of proxies or consents not by or on behalf
of at least a majority of the then Incumbent Board; |
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(iii) |
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when any individual shall become the Chairman or Chief
Executive Officer of the Company if such individual was not the
Chairman or Chief Executive Officer of the Company or any of its
subsidiaries as of January 1, 2007; |
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(iv) |
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any reorganization, merger or consolidation of the Company or
any of its subsidiaries, in each case other
than (A) any merger of any SPAR Affiliate (other than the Company)
into the Company or any of its subsidiaries as the surviving
entity, or (B) one in which all or substantially all of the
Beneficial Owners’ of the voting Company Securities
immediately prior to such event are, immediately following such
event, Beneficial Owners of a Majority of Voting Securities of
either the Company or the surviving entity of a merger with the
Company (or its ultimate parent), as the case may be, outstanding
immediately after such event and in substantially the same
proportions as their ownership immediately prior to such
event; |
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(v) |
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the approval by the Company’s Board or stockholders of a
plan of complete liquidation of the Company; or |
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(vi) |
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any sale or other disposition by the Company of all or
substantially all of its assets , in each case
other than (A) any assignment or pledge of all or substantially all
of the respective assets and properties of the Company and its
subsidiaries to one or more lenders as security for their
respective credit, indebtedness and guaranties, (B) any acquisition
by the Company or any of its subsidiaries of the assets of any SPAR
Affiliate (whether by assignment, merger, liquidation or
otherwise), or (C) any transaction in which all or substantially
all of the Beneficial Owners’ of the voting Company
Securities immediately prior to such event are, immediately
following such event, Beneficial Owners of a Majority of Voting
Securities of both the Company and the acquiring entity (or its
ultimate parent) outstanding immediately after such event and in
substantially the same proportions as their ownership immediately
prior to such event; or |
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(vii) |
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the Company is no longer a Reporting
Company; |
provided , however , that it shall not
constitute a Change in Control if and for so long as Robert G.
Brown retains effective control of the Company and shall continue
to be both the Chairman and Chief Executive Officer of the Company
and the Company remains a Reporting Company.
(f)
“ Company Securities ” shall mean any
securities issued by the Company, whether acquired directly from
the Company, in the marketplace or otherwise.
(g)
“ Good Reason ” shall mean the occurrence
of any of the following events:
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(i) |
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the failure to elect or appoint, or re-elect or re-appoint, the
Employee to, or removal or attempted removal of the Employee from,
his position as Chief Financial Officer of the Company (except in
connection with the proper termination of the Employee’s
employment by the Company by reason of death, disability or
Termination For Cause); |
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(ii) |
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the assignment to the Employee of any duties inconsistent with
the status of the Employee’s office and/or position with the
Company; |
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(iii) |
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any adverse change in the Employee’s title or in the
nature or scope of the Employee’s authorities, powers,
functions or duties of the position(s) with the Company or
applicable SPAR Affiliate; |
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(iv) |
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the willful delay by the Company or applicable SPAR Affiliate
for more than ten (10) business days in the payment to the
Employee, when due, of any part of his or her
compensation; |
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(v) |
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a reduction in the Employee’s salary or benefits (other
than a discretionary bonus); |
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(vi) |
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a failure by the Company to obtain the assumption of, and
agreement to perform, this Agreement by any successor to the
Company; |
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(vii) |
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a change in the location at which substantially all of the
Employee’s duties with the Company are to be performed from
the county and state in which the Employee is currently performing
substantially all of his or her duties (excluding those duties
performed at home or on the road); |
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(viii) |
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the Employee no longer reports directly to either the Board,
Chairman, President or Chief Executive Officer; or |
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(ix) |
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the Company is no longer a Reporting Company; |
provided , however , that the appointment
of a new Chief Executive Officer, or requiring the Employee to
report to or be supervised by the new Chief Executive Officer (in
whole or in part), shall not (without more) constitute Good
Reason.
(h)
“ Majority of Voting Securities ” shall
mean securities of the referenced person representing more than
fifty percent (50%) of the combined voting power of the referenced
person’s then outstanding securities having the right to vote
generally in the election of directors, managers or the
equivalent.
(i)
“ Protected Period ” shall mean the last
to expire of (A) the thirty-six month period commencing on the date
hereof, and (B) the twenty-four month period commencing on the date
of the relevant Change in Control. For the sake of clarity, a
Protected Period based on a Change in Control shall restart with
each new Change in Control during the Employee’s employment
with the Company (or their respective successors in any Change in
Control, as applicable).
(j)
“ Reporting Company ” shall mean a
company that both (i) is required to file periodic reports pursuant
to either Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, and (ii) has its shares of common stock listed on
a securities exchange or registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended.
(k)
“ Representative ” shall mean any
subsidiary or other affiliate of the referenced person or any
shareholder, partner, equity holder, member, director, officer,
manager, employee, consultant, agent, attorney, accountant,
financial advisor or other representative of the referenced person
or of any of its subsidiaries or other affiliates, in
each case other than the Employee.
(l)
“ Securities Exchange Act ” shall mean
the Securities Exchange Act of 1934, as amended, or any
corresponding or succeeding provisions of any applicable law
(including those of any state or foreign jurisdiction), and the
rules and regulations promulgated thereunder, in each
case as the same may have been and hereafter may be adopted,
supplemented, modified, amended, restated or replaced from time to
time.
(m)
“ SPAR Affiliate ” shall mean and
currently includes (without limitation) each of the Company’s
direct and indirect subsidiaries (including, without limitation,
SPAR Acquisition, Inc., SPAR Marketing, Inc., SPAR/Burgoyne Retail
Services, Inc., SPAR, Inc., SPAR Marketing Force, Inc., SPAR
Trademarks, Inc., SPAR Group International, Inc., SPAR/PIA Retail
Services, Inc., SPAR Technology Group, Inc., SPAR All Store
Marketing Services, Inc., SPAR Canada, Inc., SPAR Canada Company,
Retail Resources, Inc., Pivotal Field Services, Inc., PIA
Merchandising Co., Inc., Pacific Indoor Display Co. d/b/a Retail
Resources, Pivotal Sales Company, and PIA Merchandising Ltd.), the
Company’s affiliates (including, without limitation, SPAR
Marketing Services Inc., SPAR Management Services, Inc., and SPAR
InfoTech, Inc.), and each other entity under the control of or
common control with any of the foregoing entities, in
each case whether now existing or hereafter acquired,
organized or existing.
(n)
“ SPAR Group ” shall mean the Company and
all of the SPAR Affiliates.
(o)
“ Termination For Cause
” shall mean
any termination of the Employee for any of the following reasons:
(i) the Employee’s willful, negligent or repeated breach of,
or the Employee’s willful, negligent or repeated
nonperformance, misperformance or dereliction of any of his or her
duties and responsibilities under, (A) any employment agreement or
confidentiality agreement with the Company, (B) the directives of
the Board or any Authorized Representative, or (C) the
Company’s policies and procedures governing his or her
employment, in each case other than in connection
with any absence or diminished capacity due to illness, disability
or incapacity excused by (1) the policies and procedures of the
Company, (2)
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the terms of
his or her employment or (3) the action of the Board or any
Authorized Representative; (ii) the gross or repeated disparagement
by the Employee of the business or affairs of the Company, any SPAR
Affiliate or any of their Representatives that in the reasonable
judgment of the Company has adversely affected or would be
reasonably likely to adversely affect the operations or reputation
of any such person; (iii) any resume, application, report or other
information furnished to the Company by or on behalf of the
Employee shall be in any material respect untrue, incomplete or
otherwise misleading when made or deemed made; (iv) the Employee is
indicted for, charged with, admits or confesses to, pleads guilty
or no contest to, adversely settles respecting or is convicted of
(A) any willful dishonesty or fraud (whether or not related to the
Company or any SPAR Affiliate), (B) any theft or embezzlement by
the Employee of any asset or property of the Company, any SPAR
Affiliate or any of their respective Representatives, customers or
vendors, (C) any other misdemeanor involving moral turpitude, or
(D) any other felony; (vi) alcohol or drug abuse by the Employee;
or (v) any other event or circumstance that constitutes cause for
termination of an employee under applicable law and is not
described in another clause of this subsection.
Section
3.
Severance .
(a) Lump Sum
Payment. If the
Employee’s employment with the Company (or its applicable
successor in any Change in Control, as applicable) shall be
terminated pending or within the Protected Period following any
Change in Control by (i) the Company for any reason other than the
Employee’s death or permanent disability or a Termination For
Cause, or (ii) by the Employee for Good Reason (either of which
will be referred to as a “ Severance Termination
”), then the Company shall promptly (but not later than the
tenth business day following such Severance Termination) pay (or
cause aSPAR Affiliate to promptly pay) to the Employee severance
pay (in a lump sum) in an amount equal to the sum of:
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(i) |
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the Employee’s annual salary rate in effect immediately
prior to his cessation of such employment (or, if greater, at the
highest annual salary rate in effect at any time during the
one-year period preceding the date of such termination), times a
multiple (calculated to two decimal places) equal to the remainder
of (i) Protected Period ( i.e. , the number of months in the
Protected Period, minus (ii) the number of months (to two decimal
places, but not less than zero) by which the Severance Termination
date followed the effective date of the Change in Control;
and |
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(ii) |
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the maximum bonus that would have been paid or payable to the
Employee under the Company’s bonus proposal to the Employee
for the full year of the Severance Termination as if all
performance criteria had been fully satisfied, but in any event not
to exceed twenty-five percent (25%) of the Employee’s annual
salary rate referred to above. |
(b)
Vacation Days
. In addition and in
any event, promptly (but not later than the tenth business day)
following the date of any termination or resignation pending or
following a Change in Control, the Company shall pay (or cause a
SPAR Affiliate to pay) to the Employee an amount equal to his or
her accrued and unused vacation days, computed at the
Employee’s annual salary rate in effect immediately prior to
his cessation of such employment (or, if greater, at the highest
annual salary rate in effect at any time during the one-year period
preceding the date of such termination) and in accordance with the
applicable policy of the Company (or if changed pending or
following a Change in Control, in accordance with the immediately
preceding applicable policy of the Company).
(c)
Insurance.
In addition, during
the two-year period following the effective date of any Change in
Control, the Employee and his dependents shall continue to receive
the insurance benefits received during the preceding year as well
as any additional insurance benefits as may be provided to
executive officers or their dependents during such period in
accordance with the Company’s policies and practices. The
Employee’s required co-payments shall not exceed those
payable by the other executive officers of the SPAR
Group.
(d)
Stock Options.
Each stock option
granted to the Employee that has not, by its express terms, vested
shall be deemed to have vested on the date of any Severance
Termination, and shall thereafter be exercisable for the maximum
period of time allowed for exercise thereof under the terms of such
option, assuming that the Employee’s employment with the
Company had been terminated by the Company other than Termination
For Cause or by the Employee for Good Reason. An election by the
Employee to terminate his or her employment for Good Reason pending
or following a Change in Control shall be deemed to be a permitted
retirement (irrespective of age) of the Employee for the purpose of
interpreting the provisions of any of the Company’s employee
benefit plans, programs, or policies.
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