UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 18, 2005
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Capital Southwest Corporation
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(Exact Name of Registrant as Specified in Charter)
Texas
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(State or Other Jurisdiction of Incorporation)
811-1056 75-1072796
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(Commission File Number) (IRS Employer Identification No.)
12900 Preston Road, Suite 700, Dallas, Texas 75230
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(Address of Principal Executive Offices) (Zip Code)
(972) 233-8242
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On July 18, 2005, the board of directors of Capital Southwest Corporation
("CSC") approved and Capital Southwest Management Corporation (the "Company"), a
subsidiary of CSC, entered into a severance pay agreement with each of William
M. Ashbaugh, Patrick F. Hamner, Susan K. Hodgson and Jeffrey G. Peterson,
officers of the Company. The following summary is qualified in its entirety by
the full text of the severance pay agreements, which are attached hereto as
Exhibits 10.1, 10.2, 10.3 and 10.4, and are incorporated herein by reference.
Under these agreements, the Company will provide the covered individuals with
termination benefits if their employment is terminated during the two-year
period immediately following a Change of Control either (a) by the Company for
no reason or for any reason other than as the result of the employee's willful
misconduct or gross negligence in the performance of his or her duties, or for
any act of dishonesty of the employee; or (b) by the employee as the result of,
and within thirty days following, a significant reduction of his or her job
responsibilities or a reduction of his or her base salary as in effect
immediately prior to the Change in Control, or because of a move of his or her
job location by more than 50 miles.
The termination benefits under these agreements are as follows:
o A lump sum payment equal to the employee's annual base salary and
o if the employee has completed at least five years of service with the
Company (whether or not continuous) as of the Change in Control, an
additional amount equal to the employee's monthly base salary multiplied by
the number of whole 12-month periods of service in excess of five years
completed during his total period of service, whether or not continuous,
with the Company as of the Change in Control.
The amount payable under each agreement will not exceed the lesser of two times
the compensation received from the Company during the twelve-month period
immediately preceding the employee's termination of service or twenty-four
multiplied by the employee's monthly base salary.
A "Change in Control" is defined in the agreements as the first to occur of any
of the following:
(a) the effective date of any transaction or series of transactions (other
than a transaction to which only CSC and one or more of its
subsidiaries are parties) pursuant to which CSC becomes a subsidiary
of another corporation or is merged or consolidated with or into
another corporation, or substantially all of the assets of CSC are
sold to or acquired by another person, corporation or group of
associated persons acting in concert;
(b) the effective date of any transaction or series of transactions (other
than a transaction to which only CSC or the Company and one or more
subsidiaries of CSC or the Company are parties) pursuant to which the
Company or its parent company becomes a subsidiary of another
corporation or is merged or consolidated with or into another
corporation, or substantially all of the assets or more than 50% of
the outstanding voting stock of the Company or its parent company are
sold to or acquired by another person, corporation or group of
associated persons acting in concert;
(c) the date upon which any person, corporation or group of associated
persons acting in concert, excluding any persons who have then owned
more than 10% of the voting stock of CSC for a continuous period of at
least ten (10) years, becomes a direct or indirect beneficial owner of
shares of stock of CSC representing an aggregate of more than 25% of
the votes then entitled to be cast at an election of Directors of CSC;
or
(d) the date upon which the persons who were members of the Board of
Directors of CSC as of July 18, 2005 (the "Original Directors") cease
to constitute a majority of the Board of Directors; provided, however
that any new director whose nomination or selection has been approved
by the affirmative vote of at least three of the Original Directors
then in office shall also be deemed an Original Director.
Item 9.01 Financial Statements and Exhibits
Exhibit No. Title
- ----------- -----
10.1 Severance Pay Agreement with William M. Ashbaugh, dated July
18, 2005.
10.2 Severance Pay Agreement with Patrick F. Hamner dated July
18, 2005.
10.3 Severance Pay Agreement with Susan K. Hodgson, dated July
18, 2005.
10.4 Severance Pay Agreement with Jeffrey G. Peterson, dated July
18, 2005.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 18, 2005
CAPITAL SOUTHWEST CORPORATION
By: /s/ William R. Thomas
-----------------------------------
William R. Thomas
President and Chairman of the Board
INDEX TO EXHIBITS
Exhibit No. Title
- ----------- -----
10.1 Severance Pay Agreement with William M. Ashbaugh, dated July
18, 2005.
10.2 Severance Pay Agreement with Patrick F. Hamner dated July
18, 2005.
10.3 Severance Pay Agreement with Susan K. Hodgson, dated July
18, 2005.
10.4 Severance Pay Agreement with Jeffrey G. Peterson, dated July
18, 2005.
Exhibit 10.1
SEVERANCE PAY AGREEMENT
THIS SEVERANCE PAY AGREEMENT ("Agreement") is executed and effective as
of the 18th day of July, 2005, by and between Capital Southwest Management
Corporation, a Nevada corporation (the "Company"), and William M. Ashbaugh (the
"Employee").
WITNESSETH:
WHEREAS, the Employee is an officer of the Company and has made and is
expected to continue to make contributions to the profitability and growth of
the Company; and
WHEREAS, the Company desires to induce its officers to remain in the
employment of the Company and to assure itself of both present and future
continuity of management in the event of any actual or threatened change in
control of the Company or of Capital Southwest Corporation ("CSC"); and
WHEREAS, the Employee desires to remain in the employment of the
Company;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
AGREEMENT
Section 1: Operation of Agreement. This Agreement shall be effective
immediately upon its execution, but its provisions shall not be operative unless
and until a Change in Control as defined in Section 2 hereof has occurred. The
provisions of the Agreement shall not be operative and shall not apply to any
termination of employment for any reason prior to a Change in Control.
Section 2: Change in Control. For purposes of this Agreement, Change in
Control means the first to occur of any of the following:
(a) the effective date of any transaction or series of
transactions (other than a transaction to which only CSC and
one or more of its subsidiaries are parties) pursuant to which
CSC becomes a subsidiary of another corporation or is merged
or consolidated with or into another corporation, or
substantially all of the assets of CSC are sold to or acquired
by another person, corporation or group of associated persons
acting in concert;
(b) the effective date of any transaction or series of
transactions (other than a transaction to which only CSC or
the Company and one or more subsidiaries of CSC or the Company
are parties) pursuant to which the Company or its parent
company becomes a subsidiary of another corporation or is
merged or consolidated with or into another corporation, or
substantially all of the assets or more than 50% of the
outstanding voting stock of the Company or its parent company
are sold to or acquired by another person, corporation or
group of associated persons acting in concert;
(c) the date upon which any person, corporation or group of
associated persons acting in concert, excluding any persons
who have then owned more than 10% of the voting stock of CSC
for a continuous period of at least ten (10) years, becomes a
direct or indirect beneficial owner of shares of stock of CSC
representing an aggregate of more than 25% of the votes then
entitled to be cast at an election of Directors of CSC; or
(d) the date upon which the persons who were members of the Board
of Directors of CSC as of the date first above written (the
"Original Directors"), cease to constitute a majority of the
Board of Directors; provided, however that any new Director
whose nomination or selection has been approved by the
affirmative vote of at least three of the Original Directors
then in office shall also be deemed an Original Director.
Section 3: Severance Pay Upon Termination by Company Without Cause or
by Employee for Cause. If, during the two-year period immediately following a
Change in Control, the Employee's employment with the Company is terminated
either:
(a) by the Company for no reason or for any reason other than as
the result of the Employee's willful misconduct or gross
negligence in the performance of his duties, or for any act of
dishonesty of the Employee, including, but not limited to,
theft of or other unauthorized personal use of Company funds
or other property or the acceptance of unauthorized gratuities
or other remuneration from Company suppliers or potential
suppliers; or
(b) by the Employee as the result of, and within thirty days
following, a significant reduction by the Company of his job
responsibilities with the Company or a reduction by the
Company of his base salary from the Company as in effect
immediately prior to the Change in Control, or because of a
move of his job location by more than 50 miles;
then, subject to the limitation contained in the next sentences, the Company
shall pay to the Employee, within thirty days after the effective date of his
termination, an amount equal to the sum of (i) his annual base salary and (ii)
if the Employee has completed a period of service with the Company of at least
five years (whether or not continuous) as of the Change in Control, an
additional amount equal to his monthly base salary multiplied by the number of
whole 12-month periods of service in excess of five years completed during his
total period of service, whether or not continuous, with the Company as of the
Change in Control. The amount payable under this Agreement shall not exceed an
amount equal to the lesser of (i) two times the compensation the Employee
received from the Company (or any other entity for which service is considered
in this Section 3) during the twelve-month period immediately preceding his
termination of service, or (ii) twenty-four multiplied by his monthly base
salary. For purposes of this Section 3, an Employee's base salary shall be the
amount payable to the Employee during the month immediately preceding the Change
of Control and the Employee's annual base salary shall be his monthly base
salary multiplied by twelve. Both annual base salary and monthly base salary
shall include earned commissions but shall be determined without regard to any
overtime pay or bonuses. If applicable to the determination of the amount
payable hereunder, an Employee's period of service with the Company shall be
deemed to include all service, whether or not continuous, with Capital Southwest
Corporation and any subsidiary corporation of which it directly or indirectly
owns the majority interest. The Company may withhold from such payment any
federal, state, city, county or other taxes.
Section 4: No Severance Pay Upon Other Termination. Upon any
termination of the Employee's employment with the Company other than a
termination specified in Section 3 hereof, the sole obligation of the Company to
the Employee shall be to pay to him the amount of compensation he has accrued
through the effective date of the termination.
Section 5: Entire Obligation. Payment to the Employee pursuant to
Section 3 or 4 of this Agreement shall constitute the entire obligation of the
Company to the Employee and full settlement of any claim under law or equity
that the Employee might otherwise assert against the Company or any of its
employees, officers or directors on account of the Employee's termination.
Section 6: Non-competition Agreement. Notwithstanding the facts and
circumstances which entitle the Employee to severance pay under Section 3 of the
Agreement, the Employee shall remain subject to and bound by any non-competition
agreement he may have entered into with the Company that is in effect as of the
date of his termination of employment.
Section 7: No Obligation to Continue Employment. This Agreement is not
an employment contract and does not create any obligation on the part of the
Company to continue to employ the Employee following a Change in Control or in
the absence of a Change in Control.
Section 8: Term of Agreement. This Agreement shall terminate and no
longer be effective on the earlier of (i) July 18, 2025 or such later date as
may be established by the Company or (ii) the date upon which the Employee
ceases to be an employee of the Company; provided, however, if a Change in
Control occurs prior to the date of termination of this Agreement, this
Agreement shall continue to be effective until the date two years following the
Change in Control.
Section 9: Assignment, Successors in Interest. This Agreement, being
personal to the Employee, may not be assigned by him. The terms and conditions
of the Agreement shall inure to the benefit of and be binding upon the
successors and assigns (whether direct or indirect, by purchase, merger or
otherwise) to all or substantially all of the business or assets of the Company,
and the heirs, executors and personal representatives of the Employee.
Section 10: Waiver. Failure to insist upon strict compliance with any
of the terms, covenants or conditions of this Agreement shall not be deemed a
waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
Section 11: Attorney's Fees. If the Employee is determined by a court
of competent jurisdiction to be entitled to severance pay under Section 3
hereof, he shall be entitled to reasonable attorney's fees and court costs
associated with any legal action brought by him to enforce his rights under this
Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned
as of the date first above written.
CAPITAL SOUTHWEST MANAGEMENT CORPORATION
By: /s/ William R. Thomas
----------------------
William R. Thomas (Company)
/s/ William M. Ashbaugh
------------------------
William M. Ashbaugh (Employee)
Exhibit 10.2
SEVERANCE PAY AGREEMENT
THIS SEVERANCE PAY AGREEMENT ("Agreement") is executed and effective as
of the 18th day of July, 2005, by and between Capital Southwest Management
Corporation, a Nevada corporation (the "Company"), and Patrick F. Hamner (the
"Employee").
WITNESSETH:
WHEREAS, the Employee is an officer of the Company and has made and is
expected to continue to make contributions to the profitability and growth of
the Company; and
WHEREAS, the Company desires to induce its officers to remain in the
employment of the Company and to assure itself of both present and future
continuity of management in the event of any actual or threatened change in
control of the Company or of Capital Southwest Corporation ("CSC"); and
WHEREAS, the Employee desires to remain in the employment of the
Company;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
AGREEMENT
Section 1: Operation of Agreement. This Agreement shall be effective
immediately upon its execution, but its provisions shall not be operative unless
and until a Change in Control as defined in Section 2 hereof has occurred. The
provisions of the Agreement shall not be operative and shall not apply to any
termination of employment for any reason prior to a Change in Control.
Section 2: Change in Control. For purposes of this Agreement, Change in
Control means the first to occur of any of the following:
(a) the effective date of any transaction or series of
transactions (other than a transaction to which only CSC and
one or more of its subsidiaries are parties) pursuant to which
CSC becomes a subsidiary of another corporation or is merged
or consolidated with or into another corporation, or
substantially all of the assets of CSC are sold to or acquired
by another person, corporation or group of associated persons
acting in concert;
(b) the effective date of any transaction or series of
transactions (other than a transaction to which only CSC or
the Company and one or more subsidiaries of CSC or the Company
are parties) pursuant to which the Company or its parent
company becomes a subsidiary of another corporation or is
merged or consolidated with or into another corporation, or
substantially all of the assets or more than 50% of the
outstanding voting stock of the Company or its parent company
are sold to or acquired by another person, corporation or
group of associated persons acting in concert;
(c) the date upon which any person, corporation or group of
associated persons acting in concert, excluding any persons
who have then owned more than 10% of the voting stock of CSC
for a continuous period of at least ten (10) years, becomes a
direct or indirect beneficial owner of shares of stock of CSC
representing an aggregate of more than 25% of the votes then
entitled to be cast at an election of Directors of CSC; or
(d) the date upon which the persons who were members of the Board
of Directors of CSC as of the date first above written (the
"Original Directors"), cease to constitute a majority of the
Board of Directors; provided, however that any new Director
whose nomination or selection has been approved by the
affirmative vote of at least three of the Original Directors
then in office shall also be deemed an Original Director.
Section 3: Severance Pay Upon Termination by Company Without Cause or
by Employee for Cause. If, during the two-year period immediately following a
Change in Control, the Employee's employment with the Company is terminated
either:
(a) by the Company for no reason or for any reason other than as
the result of the Employee's willful misconduct or gross
negligence in the performance of his duties, or for any act of
dishonesty of the Employee, including, but not limited to,
theft of or other unauthorized personal use of Company funds
or other property or the acceptance of unauthorized gratuities
or other remuneration from Company suppliers or potential
suppliers; or
(b) by the Employee as the result of, and within thirty days
following, a significant reduction by the Company of his job
responsibilities with the Company or a reduction by the
Company of his base salary from the Company as in effect
immediately prior to the Change in Control, or because of a
move of his job location by more than 50 miles;
then, subject to the limitation contained in the next sentences, the Company
shall pay to the Employee, within thirty days after the effective date of his
termination, an amount equal to the sum of (i) his annual base salary and (ii)
if the Employee has completed a period of service with the Company of at least
five years (whether or not continuous) as of the Change in Control, an
additional amount equal to his monthly base salary multiplied by the number of
whole 12-month periods of service in excess of five years completed during his
total period of service, whether or not continuous, with the Company as of the
Change in Control. The amount payable under this Agreement shall not exceed an
amount equal to the lesser of (i) two times the compensation the Employee
received from the Company (or any other entity for which service is considered
in this Section 3) during the twelve-month period immediately preceding his
termination of service, or (ii) twenty-four multiplied by his monthly base
salary. For purposes of this Section 3, an Employee's base salary shall be the
amount payable to the Employee during the month immediately preceding the Change
of Control and the Employee's annual base salary shall be his monthly base
salary multiplied by twelve. Both annual base salary and monthly base salary
shall include earned commissions but shall be determined without regard to any
overtime pay or bonuses. If applicable to the determination of the amount
payable hereunder, an Employee's period of service with the Company shall be
deemed to include all service, whether or not continuous, with Capital Southwest
Corporation and any subsidiary corporation of which it directly or indirectly
owns the majority interest. The Company may withhold from such payment any
federal, state, city, county or other taxes.
Section 4: No Severance Pay Upon Other Termination. Upon any
termination of the Employee's employment with the Company other than a
termination specified in Section 3 hereof, the sole obligation of the Company to
the Employee shall be to pay to him the amount of compensation he has accrued
through the effective date of the termination.
Section 5: Entire Obligation. Payment to the Employee pursuant to
Section 3 or 4 of this Agreement shall constitute the entire obligation of the
Company to the Employee and full settlement of any claim under law or equity
that the Employee might otherwise assert against the Company or any of its
employees, officers or directors on account of the Employee's termination.
Section 6: Non-competition Agreement. Notwithstanding the facts and
circumstances which entitle the Employee to severance pay under Section 3 of the
Agreement, the Employee shall remain subject to and bound by any non-competition
agreement he may have entered into with the Company that is in effect as of the
date of his termination of employment.
Section 7: No Obligation to Continue Employment. This Agreement is not
an employment contract and does not create any obligation on the part of the
Company to continue to employ the Employee following a Change in Control or in
the absence of a Change in Control.
Section 8: Term of Agreement. This Agreement shall terminate and no
longer be effective on the earlier of (i) July 18, 2025 or such later date as
may be established by the Company or (ii) the date upon which the Employee
ceases to be an employee of the Company; provided, however, if a Change in
Control occurs prior to the date of termination of this Agreement, this
Agreement shall continue to be effective until the date two years following the
Change in Control.
Section 9: Assignment, Successors in Interest. This Agreement, being
personal to the Employee, may not be assigned by him. The terms and conditions
of the Agreement shall inure to the benefit of and be binding upon the
successors and assigns (whether direct or indirect, by purchase, merger or
otherwise) to all or substantially all of the business or assets of the Company,
and the heirs, executors and personal representatives of the Employee.
Section 10: Waiver. Failure to insist upon strict compliance with any
of the terms, covenants or conditions of this Agreement shall not be deemed a
waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
Section 11: Attorney's Fees. If the Employee is determined by a court
of competent jurisdiction to be entitled to severance pay under Section 3
hereof, he shall be entitled to reasonable attorney's fees and court costs
associated with any legal action brought by him to enforce his rights under this
Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned
as of the date first above written.
CAPITAL SOUTHWEST MANAGEMENT CORPORATION
By: /s/ William R. Thomas
----------------------
William R. Thomas (Company)
/s/ Patrick F. Hamner
----------------------
Patrick F. Hamner (Employee)
Exhibit 10.3
SEVERANCE PAY AGREEMENT
THIS SEVERANCE PAY AGREEMENT ("Agreement") is executed and effective as
of the 18th day of July, 2005, by and between Capital Southwest Management
Corporation, a Nevada corporation (the "Company"), and Susan K. Hodgson (the
"Employee").
WITNESSETH:
WHEREAS, the Employee is an officer of the Company and has made and is
expected to continue to make contributions to the profitability and growth of
the Company; and
WHEREAS, the Company desires to induce its officers to remain in the
employment of the Company and to assure itself of both present and future
continuity of management in the event of any actual or threatened change in
control of the Company or of Capital Southwest Corporation ("CSC"); and
WHEREAS, the Employee desires to remain in the employment of the
Company;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
AGREEMENT
Section 1: Operation of Agreement. This Agreement shall be effective
immediately upon its execution, but its provisions shall not be operative unless
and until a Change in Control as defined in Section 2 hereof has occurred. The
provisions of the Agreement shall not be operative and shall not apply to any
termination of employment for any reason prior to a Change in Control.
Section 2: Change in Control. For purposes of this Agreement, Change in
Control means the first to occur of any of the following:
(a) the effective date of any transaction or series of
transactions (other than a transaction to which only CSC and
one or more of its subsidiaries are parties) pursuant to which
CSC becomes a subsidiary of another corporation or is merged
or consolidated with or into another corporation, or
substantially all of the assets of CSC are sold to or acquired
by another person, corporation or group of associated persons
acting in concert;
(b) the effective date of any transaction or series of
transactions (other than a transaction to which only CSC or
the Company and one or more subsidiaries of CSC or the Company
are parties) pursuant to which the Company or its parent
company becomes a subsidiary of another corporation or is
merged or consolidated with or into another corporation, or
substantially all of the assets or more than 50% of the
outstanding voting stock of the Company or its parent company
are sold to or acquired by another person, corporation or
group of associated persons acting in concert;
(c) the date upon which any person, corporation or group of
associated persons acting in concert, excluding any persons
who have then owned more than 10% of the voting stock of CSC
for a continuous period of at least ten (10) years, becomes a
direct or indirect beneficial owner of shares of stock of CSC
representing an aggregate of more than 25% of the votes then
entitled to be cast at an election of Directors of CSC; or
(d) the date upon which the persons who were members of the Board
of Directors of CSC as of the date first above written (the
"Original Directors"), cease to constitute a majority of the
Board of Directors; provided, however that any new Director
whose nomination or selection has been approved by the
affirmative vote of at least three of the Original Directors
then in office shall also be deemed an Original Director.
Section 3: Severance Pay Upon Termination by Company Without Cause or
by Employee for Cause. If, during the two-year period immediately following a
Change in Control, the Employee's employment with the Company is terminated
either:
(a) by the Company for no reason or for any reason other than as
the result of the Employee's willful misconduct or gross
negligence in the performance of his duties, or for any act of
dishonesty of the Employee, including, but not limited to,
theft of or other unauthorized personal use of Company funds
or other property or the acceptance of unauthorized gratuities
or other remuneration from Company suppliers or potential
suppliers; or
(b) by the Employee as the result of, and within thirty days
following, a significant reduction by the Company of his job
responsibilities with the Company or a reduction by the
Company of his base salary from the Company as in effect
immediately prior to the Change in Control, or because of a
move of his job location by more than 50 miles;
then, subject to the limitation contained in the next sentences, the Company
shall pay to the Employee, within thirty days after the effective date of his
termination, an amount equal to the sum of (i) his annual base salary and (ii)
if the Employee has completed a period of service with the Company of at least
five years (whether or not continuous) as of the Change in Control, an
additional amount equal to his monthly base salary multiplied by the number of
whole 12-month periods of service in excess of five years completed during his
total period of service, whether or not continuous, with the Company as of the
Change in Control. The amount payable under this Agreement shall not exceed an
amount equal to the lesser of (i) two times the compensation the Employee
received from the Company (or any other entity for which service is considered
in this Section 3) during the twelve-month period immediately preceding his
termination of service, or (ii) twenty-four multiplied by his monthly base
salary. For purposes of this Section 3, an Employee's base salary shall be the
amount payable to the Employee during the month immediately preceding the Change
of Control and the Employee's annual base salary shall be his monthly base
salary multiplied by twelve. Both annual base salary and monthly base salary
shall include earned commissions but shall be determined without regard to any
overtime pay or bonuses. If applicable to the determination of the amount
payable hereunder, an Employee's period of service with the Company shall be
deemed to include all service, whether or not continuous, with Capital Southwest
Corporation and any subsidiary corporation of which it directly or indirectly
owns the majority interest. The Company may withhold from such payment any
federal, state, city, county or other taxes.
Section 4: No Severance Pay Upon Other Termination. Upon any
termination of the Employee's employment with the Company other than a
termination specified in Section 3 hereof, the sole obligation of the Company to
the Employee shall be to pay to him the amount of compensation he has accrued
through the effective date of the termination.
Section 5: Entire Obligation. Payment to the Employee pursuant to
Section 3 or 4 of this Agreement shall constitute the entire obligation of the
Company to the Employee and full settlement of any claim under law or equity
that the Employee might otherwise assert against the Company or any of its
employees, officers or directors on account of the Employee's termination.
Section 6: Non-competition Agreement. Notwithstanding the facts and
circumstances which entitle the Employee to severance pay under Section 3 of the
Agreement, the Employee shall remain subject to and bound by any non-competition
agreement he may have entered into with the Company that is in effect as of the
date of his termination of employment.
Section 7: No Obligation to Continue Employment. This Agreement is not
an employment contract and does not create any obligation on the part of the
Company to continue to employ the Employee following a Change in Control or in
the absence of a Change in Control.
Section 8: Term of Agreement. This Agreement shall terminate and no
longer be effective on the earlier of (i) July 18, 2025 or such later date as
may be established by the Company or (ii) the date upon which the Employee
ceases to be an employee of the Company; provided, however, if a Change in
Control occurs prior to the date of termination of this Agreement, this
Agreement shall continue to be effective until the date two years following the
Change in Control.
Section 9: Assignment, Successors in Interest. This Agreement, being
personal to the Employee, may not be assigned by him. The terms and conditions
of the Agreement shall inure to the benefit of and be binding upon the
successors and assigns (whether direct or indirect, by purchase, merger or
otherwise) to all or substantially all of the business or assets of the Company,
and the heirs, executors and personal representatives of the Employee.
Section 10: Waiver. Failure to insist upon strict compliance with any
of the terms, covenants or conditions of this Agreement shall not be deemed a
waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
Section 11: Attorney's Fees. If the Employee is determined by a court
of competent jurisdiction to be entitled to severance pay under Section 3
hereof, he shall be entitled to reasonable attorney's fees and court costs
associated with any legal action brought by him to enforce his rights under this
Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned
as of the date first above written.
CAPITAL SOUTHWEST MANAGEMENT CORPORATION
By: /s/ William R. Thomas
----------------------
William R. Thomas (Company)
/s/ Susan K. Hodgson
---------------------
Susan K. Hodgson (Employee)
Exhibit 10.4
SEVERANCE PAY AGREEMENT
THIS SEVERANCE PAY AGREEMENT ("Agreement") is executed and effective as
of the 18th day of July, 2005, by and between Capital Southwest Management
Corporation, a Nevada corporation (the "Company"), and Jeffrey G. Peterson (the
"Employee").
WITNESSETH:
WHEREAS, the Employee is an officer of the Company and has made and is
expected to continue to make contributions to the profitability and growth of
the Company; and
WHEREAS, the Company desires to induce its officers to remain in the
employment of the Company and to assure itself of both present and future
continuity of management in the event of any actual or threatened change in
control of the Company or of Capital Southwest Corporation ("CSC"); and
WHEREAS, the Employee desires to remain in the employment of the
Company;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
AGREEMENT
Section 1: Operation of Agreement. This Agreement shall be effective
immediately upon its execution, but its provisions shall not be operative unless
and until a Change in Control as defined in Section 2 hereof has occurred. The
provisions of the Agreement shall not be operative and shall not apply to any
termination of employment for any reason prior to a Change in Control.
Section 2: Change in Control. For purposes of this Agreement, Change in
Control means the first to occur of any of the following:
(a) the effective date of any transaction or series of
transactions (other than a transaction to which only CSC and
one or more of its subsidiaries are parties) pursuant to which
CSC becomes a subsidiary of another corporation or is merged
or consolidated with or into another corporation, or
substantially all of the assets of CSC are sold to or acquired
by another person, corporation or group of associated persons
acting in concert;
(b) the effective date of any transaction or series of
transactions (other than a transaction to which only CSC or
the Company and one or more subsidiaries of CSC or the Company
are parties) pursuant to which the Company or its parent
company becomes a subsidiary of another corporation or is
merged or consolidated with or into another corporation, or
substantially all of the assets or more than 50% of the
outstanding voting stock of the Company or its parent company
are sold to or acquired by another person, corporation or
group of associated persons acting in concert;
(c) the date upon which any person, corporation or group of
associated persons acting in concert, excluding any persons
who have then owned more than 10% of the voting stock of CSC
for a continuous period of at least ten (10) years, becomes a
direct or indirect beneficial owner of shares of stock of CSC
representing an aggregate of more than 25% of the votes then
entitled to be cast at an election of Directors of CSC; or
(d) the date upon which the persons who were members of the Board
of Directors of CSC as of the date first above written (the
"Original Directors"), cease to constitute a majority of the
Board of Directors; provided, however that any new Director
whose nomination or selection has been approved by the
affirmative vote of at least three of the Original Directors
then in office shall also be deemed an Original Director.
Section 3: Severance Pay Upon Termination by Company Without Cause or
by Employee for Cause. If, during the two-year period immediately following a
Change in Control, the Employee's employment with the Company is terminated
either:
(a) by the Company for no reason or for any reason other than as
the result of the Employee's willful misconduct or gross
negligence in the performance of his duties, or for any act of
dishonesty of the Employee, including, but not limited to,
theft of or other unauthorized personal use of Company funds
or other property or the acceptance of unauthorized gratuities
or other remuneration from Company suppliers or potential
suppliers; or
(b) by the Employee as the result of, and within thirty days
following, a significant reduction by the Company of his job
responsibilities with the Company or a reduction by the
Company of his base salary from the Company as in effect
immediately prior to the Change in Control, or because of a
move of his job location by more than 50 miles;
then, subject to the limitation contained in the next sentences, the Company
shall pay to the Employee, within thirty days after the effective date of his
termination, an amount equal to the sum of (i) his annual base salary and (ii)
if the Employee has completed a period of service with the Company of at least
five years (whether or not continuous) as of the Change in Control, an
additional amount equal to his monthly base salary multiplied by the number of
whole 12-month periods of service in excess of five years completed during his
total period of service, whether or not continuous, with the Company as of the
Change in Control. The amount payable under this Agreement shall not exceed an
amount equal to the lesser of (i) two times the compensation the Employee
received from the Company (or any other entity for which service is considered
in this Section 3) during the twelve-month period immediately preceding his
termination of service, or (ii) twenty-four multiplied by his monthly base
salary. For purposes of this Section 3, an Employee's base salary shall be the
amount payable to the Employee during the month immediately preceding the Change
of Control and the Employee's annual base salary shall be his monthly base
salary multiplied by twelve. Both annual base salary and monthly base salary
shall include earned commissions but shall be determined without regard to any
overtime pay or bonuses. If applicable to the determination of the amount
payable hereunder, an Employee's period of service with the Company shall be
deemed to include all service, whether or not continuous, with Capital Southwest
Corporation and any subsidiary corporation of which it directly or indirectly
owns the majority interest. The Company may withhold from such payment any
federal, state, city, county or other taxes.
Section 4: No Severance Pay Upon Other Termination. Upon any
termination of the Employee's employment with the Company other than a
termination specified in Section 3 hereof, the sole obligation of the Company to
the Employee shall be to pay to him the amount of compensation he has accrued
through the effective date of the termination.
Section 5: Entire Obligation. Payment to the Employee pursuant to
Section 3 or 4 of this Agreement shall constitute the entire obligation of the
Company to the Employee and full settlement of any claim under law or equity
that the Employee might otherwise assert against the Company or any of its
employees, officers or directors on account of the Employee's termination.
Section 6: Non-competition Agreement. Notwithstanding the facts and
circumstances which entitle the Employee to severance pay under Section 3 of the
Agreement, the Employee shall remain subject to and bound by any non-competition
agreement he may have entered into with the Company that is in effect as of the
date of his termination of employment.
Section 7: No Obligation to Continue Employment. This Agreement is not
an employment contract and does not create any obligation on the part of the
Company to continue to employ the Employee following a Change in Control or in
the absence of a Change in Control.
Section 8: Term of Agreement. This Agreement shall terminate and no
longer be effective on the earlier of (i) July 18, 2025 or such later date as
may be established by the Company or (ii) the date upon which the Employee
ceases to be an employee of the Company; provided, however, if a Change in
Control occurs prior to the date of termination of this Agreement, this
Agreement shall continue to be effective until the date two years following the
Change in Control.
Section 9: Assignment, Successors in Interest. This Agreement, being
personal to the Employee, may not be assigned by him. The terms and conditions
of the Agreement shall inure to the benefit of and be binding upon the
successors and assigns (whether direct or indirect, by purchase, merger or
otherwise) to all or substantially all of the business or assets of the Company,
and the heirs, executors and personal representatives of the Employee.
Section 10: Waiver. Failure to insist upon strict compliance with any
of the terms, covenants or conditions of this Agreement shall not be deemed a
waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
Section 11: Attorney's Fees. If the Employee is determined by a court
of competent jurisdiction to be entitled to severance pay under Section 3
hereof, he shall be entitled to reasonable attorney's fees and court costs
associated with any legal action brought by him to enforce his rights under this
Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned
as of the date first above written.
CAPITAL SOUTHWEST MANAGEMENT CORPORATION
By: /s/ William R. Thomas
----------------------
William R. Thomas (Company)
/s/ Jeffrey G. Peterson
-----------------------
Jeffrey G. Peterson (Employee)