1
EXHIBIT 10.34
HALLWOOD SPECIAL BONUS AGREEMENT
THIS AGREEMENT, entered into as of this 1st day of August, 1993, by
and between The Hallwood Group Incorporated, and all of the members of its
control group that now, or hereafter, participate in the Hallwood Group
Incorporated Tax Favored Savings Plan and its related trust (collectively, the
"Company" and "Plan", respectively), and those employees who, during the Plan
Year of reference are Highly-Compensated Eligible Employees of the Company
(individually and collectively, "HC Employee(s)").
WITNESSETH:
WHEREAS, each HC Employee has rendered, and continues to render
valuable services to Company, and
WHEREAS, unlike similarly situated persons who are Non-Highly
Compensated Eligible Employees, beginning with the Plan Year which begins
August 1, 1993, HC Employees will experience two reductions in their benefits
under the Plan, which are (i) no HC Employee will be entitled to receive the
discretionary matching contribution (if any) which the Company makes pursuant
to the provisions of the Plan, and (ii) by virtue of the entry into the Plan of
certain hourly hotel employees and the anticipated reduction in the average
contribution percentage of Non-Highly Compensated Eligible Employees, HC
Employees will experience a reduction in the percentage of their compensation
that they can contribute to the Plan on a pre-tax basis.
WHEREAS, the Company wishes to pay each HC Employee a special bonus to
compensate such employee for the reductions described in (i) and (ii) above, so
that they will, as nearly as possible, receive the same benefits as other
similarly situated Non-Highly Compensated Eligible Employees.
NOW THEREFORE, Be It And It Is Hereby Provided As Follows:
SECTION 1. AMOUNT OF BONUS.
Beginning with the Plan Year ending July 31, 1994, for each Plan Year
each HC Employee shall be entitled to a Bonus in an amount equal to the sum of
(a) plus (b):
(a) One Hundred Forty percent (140%) of the lesser of (i)
the maximum Percentage x Compensation, or (ii) the
Percentage Match x the Dollar Limitation, plus
(b) Forty percent (40%) of the lesser of (i) the Dollar
Limitation minus the product of Compensation x the
Current Percentage,
2
or (ii) the product of (1993 Percentage - Current
Percentage) x Compensation.
SECTION 2. DATE OF BONUS PAYMENTS.
Payment of the Bonus to each HC Employee shall be made on the same
date that the Company delivers the Matching Contributions for the corresponding
Plan Year to the Trustee.
SECTION 3. DEFINITIONS
Except as to terms which are defined herein, all capitalized terms
shall have the meaning set forth in the Plan at the time of reference.
"Bonus" shall mean, with respect to each HC Employee, the amount calculated in
Section 1.
"Current Percentage" shall mean the maximum percentage of Compensation which
could have been contributed by each Highly-Compensated Eligible Employee for
the Plan Year of reference (without regard to the 402(g) Code limit for such
Plan Year) under the terms of the Plan if each such Highly-Compensated Eligible
Employee contributed the same percentage of his or her Compensation.
"Dollar Limitation" shall mean the maximum amount which can be contributed by a
participant under Section 402(g) of the Code for the Plan Year of reference.
"HC Employee" shall mean each person who, during the Plan Year of reference, is
a Highly-Compensated Eligible Employee.
"Maximum Percentage" shall mean, for each Plan Year of reference, the
percentage of Compensation received in the form of a Matching Contributions by
the Non-Highly Compensated Eligible Employee with the greatest such percentage
for the Plan Year of reference.
"1993 Percentage" shall mean the maximum percentage of Compensation which could
have been contributed by each Highly-Compensated ELIGIBLE Employee for 1993
(without regard to the 402(g) Code limit of $8,728) under the terms of the Plan
if each such Highly-Compensated Employee contributed the same percentage of
his or her Compensation.
3
SECTION 4. SOURCE OF PAYMENTS.
Each and every Bonus payment shall be paid in cash from the general
funds of Company, and no special or separate fund shall be established and no
other segregation of assets shall be made to assure payment. No HC Employee
shall have any right, title, or interest whatever in or to any assets of the
Company. Nothing contained in this Agreement, and no action taken pursuant to
its provisions, shall create or be construed to create a trust of any kind, or
a fiduciary relationship, between Company and any HC Employee or any other
person.
SECTION 5. DECISIONS BY COMPANY AND CONSTRUCTION OF AGREEMENT.
(a) DECISIONS OF COMPANY. The Board, which shall have the right to
delegate such authority to an officer of Company, shall have general
responsibility of acting on behalf of Company in its administration and
interpretation of this Agreement. If the Board shall find that an HC Employee
is unable to care for her affairs because of illness or accident, then the
Board, if it so elects, may direct that any payment due HC Employee (unless a
prior claim therefor has been made by a duly appointed legal representative) or
any part thereof be paid or applied for the benefit of his or her spouse
("Spouse") or to an institution maintaining or having custody of Employee, or
to any other person deemed by the Board to be a proper recipient on behalf of
HC Employee, or any of them, in such manner and proportion as the Board may
deem proper. Any such payment shall be in complete discharge of the liability
of Company therefor.
(b) CONSTRUCTION OF AGREEMENT. The Board (or its appointee) shall
determine all questions arising in the interpretation and application of the
Agreement and, without limiting the generality of the foregoing, shall be
solely responsible for the construction and interpretation of its terms.
SECTION 6. FEDERAL INCOME TAX WITHHOLDING.
Company may withhold from any benefits payable under this Agreement
all Federal, State, City, or other taxes as shall be required pursuant to any
law or governmental regulation or ruling.
SECTION 7. SUCCESSORS; BINDING AGREEMENT.
(a) SUCCESSOR MUST ASSUME. Company will require any successor
(whether direct or indirect) to all or substantially all of the business and/or
assets of Company (including consolidated subsidiaries of Company) to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that Company would be required to perform it if no such succession had
taken place.
(b) AGREEMENT ENFORCEABLE AFTER HC EMPLOYEE'S DEATH. This
Agreement shall survive the expiration of HC Employee's employment relationship
with the Company, and further shall inure to the benefit of and be enforceable
by HC Employee's personal or legal representatives, executors,
4
administrators, successors, heirs, devisees and legatees. If HC Employee should
die while any amount is payable hereunder, such amount, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to HC Employee's Spouse, and if none, then to HC Employee's estate.
SECTION 8. GENERAL PROVISIONS.
(a) NO OBLIGATION TO CONTINUE EMPLOYMENT. This Agreement shall
not create, or expand in any way, a right in HC Employee to continue in the
employ of Company.
(b) NONASSIGNABILITY. Except as provided in Section 7(a), neither
this Agreement or any right or interest hereunder shall be assignable by HC
Employee or Company, or their successors, without the other's prior written
consent.
(c) NO ATTACHMENT. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to execution, attachment, levy, or similar process or assignment by operation
of law, and any attempt, voluntary or involuntary, to effect any such action
shall be null, void and of no effect.
(d) DELIVERY OF NOTICES. Any notice required to be given hereunder
shall be in writing and shall be deemed to have been duly given and received,
if given by hand, when a writing containing such notice is received by the
person to who addressed, or, if given by mail, two (2) business days after a
certified or registered letter containing such notice, with postage prepaid, is
deposited in the United States mails, addressed, if to Company, at its business
address, attention: Vice-President Finance, and if to HC Employee, at HC
Employee's residential address during his lifetime, and thereafter to Spouse's
residential address, as shown on the records of Company. Any such address may
be changed from time to time by serving notice to the other party as above
provided. A business day shall mean a day of the week which is not a Saturday
or Sunday or a holiday recognized by national banking associations.
SECTION 9. PAYMENT OF LEGAL FEES.
In the event of any action or preceding in which a party hereto seeks
to obtain or enforce any right or benefit hereunder, the prevailing party shall
have all of its reasonable legal fees and expenses paid by the other party.
Such payments shall be made within thirty (30) days after the later of (i) the
entry of a decision by the court, or the arbitrator, as the case may be, which
has become final and non-appealable and (ii) the prevailing party's request for
payment accompanied with such evidence of fees and expenses incurred as the
other party reasonably may require.
5
SECTION 10. MODIFICATION AND WAIVER
(a) AMENDMENT OF AGREEMENT. This Agreement may not be modified or
amended effective any earlier than the first day of the following Plan Year,
except as to each HC Employee by an instrument in writing signed during such HC
Employee's lifetime by HC Employee and Company, and subsequent to HC Employee's
death, signed by HC Employee's successor in interest and Company.
(b) WAIVER. No term or condition of this Agreement shall be deemed
to have been waived, nor shall there be any estoppel against the enforcement of
any provision of this Agreement, except by written instrument of the party
charged with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver
shall operate only as to the specific term or condition waived and shall not
constitute a waiver of such terms or condition for the future or as to any act
other than that specifically waived.
SECTION 11. SEVERABILITY.
If, for any reason, any provision of this Agreement is held invalid,
such invalidity shall not affect any other provisions of this Agreement not
held so invalid, and each such other provision shall to the full extent
consistent with law continue in full force and effect. If any provision of this
Agreement shall be held invalid in part, such invalidity shall in no way affect
the rest of such provision not held so invalid, and the rest of such provision,
together with all other provisions of this Agreement, shall to the full extent
consistent with law continue in full force and effect.
SECTION 12. HEADINGS, BOLD FACE.
The headings of Sections and subsections herein, and provisions which
are typed in bold face, are so included and so typed solely for convenience of
reference and shall not control the meaning or interpretation of any of the
provisions of this Agreement.
SECTION 13. GOVERNING LAW.
This Agreement has been executed and delivered in the State of Texas
and, to the full extent possible under applicable law, its validity,
interpretation, performance, and enforcement shall be governed by the laws of
said State.
SECTION 14. ARBITRATION.
6
Any controversy or claim arising out of or relating to this Agreement,
or breach thereof, shall be settled by arbitration in Dallas, Texas in
accordance with the Rules of the American Arbitration Association, and judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
SECTION 15. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute a
single Agreement.
IN WITNESS WHEREOF, each Employer has caused this Agreement to be
executed by an appropriate officer to evidence its agreement to be bound by its
terms, effective August 1, 1993.
THE HALLWOOD GROUP, INCORPORATED HALLWOOD REALTY CORPORATION
By: /s/ MELVIN J. MELLE By: /s/ JOHN G. TUTHILL
HALLWOOD HOTELS, INC. HALLWOOD MANAGEMENT COMPANY
By: /s/ MELVIN J. MELLE By: /s/ JOHN G. TUTHILL