Change of Control Plan for Senior Management - Hollywood Entertainment Corp.
CHANGE OF CONTROL PLAN FOR SENIOR MANAGEMENT
A. Vesting of stock options
1. Executive Vice Presidents, the President and the Chief Executive Officers
-Unvested options will vest 100% upon a Change of Control
2. Senior Vice Presidents
-Unvested options will vest 50% upon Change of Control
B. Severance Payments
Senior Vice Presidents, Executive Vice Presidents, the President and the Chief
Executive Officer shall receive 2 years of base pay together with bonus and
medical premiums if within 2 years of the Change of Control the (i) officer's
employment is terminated for any reason, other than for Cause (as defined
herein) or (ii) the officer resigns for Good Reason (as defined herein).
C. Officers Loans
Outstanding loans from the Company to Executive Vice Presidents,
the President and the Chief Executive Officer shall be forgiven upon a Change
of Control.
D. Definitions
"Change of Control" shall mean: (Subject to revisions by Company's outside
counsel)
(1) The shareholders of Company approve of the following:
("Approved Transactions"):
(i) Any merger or statutory plan of exchange involving Company
("Merger") in which Company is not the continuing or surviving corporation or
pursuant to which Common Stock would be converted into cash, securities or
other property, other than a Merger involving Company in which the holders of
Common Stock immediately prior to the Merger have the same proportionate
ownership of Common Stock of the surviving corporation after the Merger; or
(ii) Any sale, lease, exchange, or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of
Company or the adoption of any plan or proposal for liquidation or dissolution;
(2) A tender or exchange offer is made for Common
Stock (or securities convertible into Common Stock) and such offer results in a
portion of those securities being purchased and the offeror after the
consummation of the offer is the beneficial owner (as determined pursuant to
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), directly or indirectly, of securities representing at least 20 percent
of the voting power of outstanding securities of Company;
(3) Company receives a report on Schedule 13D of the
Exchange Act reporting the beneficial ownership by any person of securities
representing 20 percent or more of the voting power of outstanding securities
of Company, except that if such receipt shall occur during a tender offer or
exchange offer described in (2) above, a Chang of Control shall not take place
until the conclusion of such offer; or
(4) During any period of 12 months or less,
individuals who at the beginning of such period constituted a majority of the
Board of Directors cease for any reason to constitute a majority thereof unless
the nomination or election of such new directors (each an "Approved Director")
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period or who are Approved
Directors.
"Cause" shall mean termination from the Company because of (1) the
officer's conviction for, or guilty plea to, a felony or a crime involving
moral turpitude; (2) the officer's commission of an act of substantial personal
dishonesty which is monetarily injurious to the Company in connection with his
employment by the Company; (3) the officer's willful and repeated failure,
after written notice, to follow the written policies of the Company as
established by the board of directors of the Company, and as applicable to all
employees of the Company.
"Good Reason" shall mean the resignation of the officer after (1)
notice in writing is given to him/her of his or her relocation, without the
officer's consent, to a place of business more than 25 miles outside of the
Wilsonville, Oregon area, (2) the actual relocation of offices for the Company
more than 25 miles outside of Wilsonville, Oregon, (3) a reduction in the
officer's base pay, or (4) a substantial alteration occurs in the nature or
status of the officer's responsibilities from those in effect on the date of
the Change of Control, disregarding changes in title.