Document:

EX-10.1

 Exhibit 10.1 

Execution Version 
 CONSENT AND
WAIVER AGREEMENT 
 dated as of 

February 16, 2021 

among 
 International
Paper Company 
 Graphic Packaging Holding Company 

GPI Holding III, LLC, 

and 
 Graphic Packaging
International Partners, LLC 
  

 Table of Contents 

 

							
	 	 	 	  	Page	 
		 	Article 1	  			
		 	Redemption AND SALE	  			
			
	1.1	 	Redemption and Sale	  	 	1	 
	1.2	 	Tax Matters	  	 	2	 
	1.3	 	Closing	  	 	3	 
	1.4	 	Closing Conditions	  	 	3	 
			
		 	Article 2	  			
		 	Representations and Warranties of IP	  			
			
	2.1	 	Existence; Power and Authority	  	 	4	 
	2.2	 	Authorization	  	 	4	 
	2.3	 	No Conflicts	  	 	4	 
	2.4	 	Title	  	 	4	 
			
		 	Article 3	  			
		 	Representations and Warranties of the Parent Parties	  			
			
	3.1	 	Existence; Power and Authority	  	 	4	 
	3.2	 	Authorization	  	 	5	 
	3.3	 	No Conflicts	  	 	5	 
	3.4	 	Sufficient Funds	  	 	5	 
			
		 	Article 4 Miscellaneous	  			
			
	4.1	 	Termination	  	 	5	 
	4.2	 	Further Assurances	  	 	5	 
	4.3	 	Expenses	  	 	5	 
	4.4	 	Survival	  	 	5	 
	4.5	 	Amendments and Waivers	  	 	5	 
	4.6	 	Assignment; Binding Agreement	  	 	5	 
	4.7	 	No Third Party Beneficiaries	  	 	5	 
	4.8	 	Entire Agreement	  	 	6	 
	4.9	 	Severability	  	 	6	 
	4.10	 	Counterparts	  	 	6	 
	4.11	 	Governing Law; Waiver of Jury Trial; Jurisdiction; Specific Performance	  	 	6	 
	4.12	 	Notices	  	 	6	 
	4.13	 	Interpretation	  	 	7	 

  
 i 

 CONSENT AND WAIVER AGREEMENT 

This Consent and Waiver Agreement, dated as of February 16, 2021 (this “Agreement”), is made by and among Graphic
Packaging International Partners, LLC (f/k/a Gazelle Newco LLC), a Delaware limited liability company (the “Company”), Graphic Packaging Holding Company, a Delaware corporation (“Parent”), GPI Holding III, LLC, a
Delaware limited liability company and wholly owned indirect subsidiary of Parent (“Gazelle Holdco” and, together with the Company and Parent, the “Parent Parties” ), and International Paper Company, a New York
corporation (“IP” and, together with the Parent Parties, the “Parties”). Capitalized terms used but not defined herein have the meanings given to such terms in the Exchange Agreement (as defined below). 

WHEREAS, Parent, the Company, Gazelle Holdco and IP are party to the Exchange Agreement, dated January 1, 2018 (the
“Exchange Agreement”); 
 WHEREAS, Gazelle Holdco and IP are members of the Company and together with Parent are
party to the Amended and Restated Limited Liability Company Agreement of the Company, dated as of January 1, 2018 (the “Operating Agreement”); 

WHEREAS, Parent, the Company, Gazelle Holdco and IP are party to the Tax Receivable Agreement, dated as of January 1, 2018 (the
“Tax Receivable Agreement”); 
 WHEREAS, pursuant to the Exchange Agreement and as set forth in this Agreement, IP
will deliver a Notice of Exchange to exchange a number of Common Units to be determined as set forth below (the “Units”); 

WHEREAS, IP and the Parent Parties have entered into this Agreement to provide for the redemption by the Company (the
“Redemption”) of the Cash Settled Units (as defined below) and the sale and transfer (the “Sale”) of the Stock Settled Units (as defined below) to Gazelle Holdco. 

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 
 Article 1 

REDEMPTION AND SALE 
 1.1
Redemption and Sale. 
 (a) On the terms and subject to the conditions set forth in this Agreement, at the Closing (as defined below),
IP shall sell and transfer to the Company, and the Company shall redeem from IP, a number of Units equal to (i) $150.0 million divided by (ii) the Redemption Price (rounded down to the nearest whole Unit, the “Cash
Settled Units”). The price to be paid by the Company for each Cash Settled Unit (the “Redemption Price”) shall be equal to the final weighted average price per share to be paid to IP by J.P. Morgan Securities LLC or any
other securities broker or dealer, after deducting all discounts and commissions, in connection with the resale of the Deliverable Common Stock delivered hereby. In addition, immediately thereafter at the Closing, IP shall sell and transfer to
Gazelle Holdco FIFTEEN MILLION THREE HUNDRED SEVEN THOUSAND (15,307,000) Units (the “Stock Settled Units”), and Gazelle Holdco shall deliver to IP an equivalent number of shares of Deliverable Common Stock. 

 (b) The Parties acknowledge and agree that the Redemption and the Sale each constitutes a
separate Exchange for purposes of the Exchange Agreement and that this Agreement shall constitute a Notice of Exchange and Call Election Notice for purposes of the Exchange Agreement. 

(c) Notwithstanding anything to the contrary in the Operating Agreement, the Parties hereto agree that the Redemption shall not constitute a
Distribution (as defined in the Operating Agreement) under Section 4.01 of the Operating Agreement that is not in accordance with each Member’s Percentage Interest (as defined in the Operating Agreement) to the extent necessary to permit
the Redemption. 
 (d) Notwithstanding anything to the contrary in the Exchange Agreement, the Parties hereby agree to waive the requirement
in Section 2.02(e) of the Exchange Agreement that Parent contribute Deliverable Common Stock to the Company or that Gazelle Holdco contribute cash for a Cash Exchange Payment to the Company to the extent necessary to permit the Redemption. 

(e) Notwithstanding the terms of the Exchange Agreement or the Operating Agreement (collectively, the “Transaction
Agreements”), the Parties hereby agree that the Transaction Agreements are hereby waived and amended solely to the extent necessary to permit the Notice of Exchange as set forth herein and the Redemption and Sale. For the avoidance of
doubt, IP shall not be permitted to exercise its right to Exchange Common Units for Common Stock pursuant to Section 2.01 of the Exchange Agreement until the 180th consecutive day following the Closing Date. 

1.2 Tax Matters. 
 (a) The
Parties agree that that they will report the Redemption for U.S. federal and all applicable state income tax purposes consistent with its form and as a distribution from the Company to IP governed by Section 731 of the Internal Revenue Code of
1986, as amended (the “Code”). The Parties further agree that they will report the Redemption as not giving rise to any taxable income or gain to IP, except to the extent the amount of the Redemption distribution exceeds IP’s
adjusted tax basis in all of its Common Units. 
 (b) The Parties agree that if, at any point in time subsequent to the Redemption, IP
recognizes gain under Section 731 of the Code (other than in connection with an actual Exchange), such gain (up to the amount of the negative tax capital account resulting from the Redemption) will be treated as recognized in connection with an
Exchange under the Exchange Agreement for purposes of the Tax Receivable Agreement. In such event, the Basis Adjustment (as defined in the Tax Receivable Agreement) for purposes of determining the amount payable to IP pursuant to the Tax Receivable
Agreement will be based upon the additional amortizable and depreciable tax basis that will generate deductions allocable to Gazelle Holdco. The Parties will cooperate in good faith to agree, as soon as practicable, as to the amount of the IP
negative tax capital account resulting from the Redemption. 

  
 2 

 (c) The Parties agree that they will report the Sale for U.S. federal and all applicable
state income tax purposes consistent with its form and as a taxable sale of the Stock Settled Units by IP to Gazelle Holdco. 
 1.3
Closing. 
 (a) The closing of the Redemption (the “Redemption Closing”) shall be held on the third business day
following the date hereof, subject to the satisfaction or waiver of the conditions set forth in Section 1.4 below. At the Redemption Closing: 

(i) IP shall deliver or cause to be delivered to the Company all right, title and interest in and to the Cash Settled Units,
free and clear of all liens, claims, security interests and other encumbrances, together with all documentation reasonably necessary to transfer to the Company such right, title and interest. 

(ii) The Company shall pay to IP an amount equal to (A) the number of Cash Settled Units to be repurchased
multiplied by (B) the Redemption Price in immediately available funds by wire transfer to an account in accordance with the instructions provided by IP to the Company no later than one business days prior to the Closing. 

(b) Notwithstanding Section 2.02(e) of the Exchange Agreement, the closing of the Sale (the “Sale Closing”) shall take
place immediately following the Redemption Closing (the date on which the Redemption Closing and the Sale Closing actually occurs is referred to herein as the “Closing Date”). At the Sale Closing, 

(i) IP shall deliver or cause to be delivered to Gazelle Holdco all right, title and interest in and to the Stock Settled
Units, free and clear of all liens, claims, security interests and other encumbrances, together with all documentation reasonably necessary to transfer to the Company such right, title and interest. 

(ii) The Company shall deliver to IP a number of shares of Deliverable Common Stock equal to the number of Stock Settled Units
in accordance with the instructions provided by IP to the Company no later than one business days prior to the Closing Date. 
 (c) IP agrees
to pay all stamp, stock transfer and similar duties, if any, in connection with the Redemption and the Sale. 
 1.4 Closing
Conditions. 
 (a) The obligations of the Company and Gazelle Holdco to complete the Redemption and the Sale, as applicable, on the
Closing Date are subject to the satisfaction or waiver of the condition that each representation and warranty made by IP in Article 2 below shall be true and correct on and as of the Closing Date as though made as of the Closing Date. 

  
 3 

 (b) The obligation of IP to sell the Cash Settled Units to the Company and the Stock Settled
Units to Gazelle Holdco on the Closing Date is subject to the satisfaction or waiver of the condition that each representation and warranty made by the Parent Parties in Article 3 below shall be true and correct on and as of the Closing Date as
though made as of the Closing Date. 
 Article 2 

REPRESENTATIONS AND WARRANTIES OF IP 

IP hereby makes the following representations and warranties to the Company: 

2.1 Existence; Power and Authority. IP has been duly incorporated and is validly existing as a New York corporation, with full power and
authority to execute and perform its obligations under this Agreement; and all action required to be taken for due and proper authorization, execution and delivery by it of this Agreement and the consummation of the transaction contemplated hereby
has been duly and validly taken. 
 2.2 Authorization. This Agreement has been duly authorized, executed and delivered by or on behalf
of IP. 
 2.3 No Conflicts. The execution and delivery by IP of, and the performance by IP of its obligations under, this Agreement
and the consummation by IP of the transactions contemplated hereby, or the fulfillment by IP of such terms will not result in a breach of any of the terms or provisions of, or constitute a default under, any instrument, agreement or order to which
IP is a party or by which IP is bound or infringe any law, regulation, order, rule, decree or statute applicable to IP and are not contrary to the provisions of the constitutional documents of IP. 

2.4 Title. IP has, and on the Closing Date will have, valid title to, or a valid “security entitlement” within the meaning of Section 8-501 of the New York Uniform Commercial Code in respect of, the Units free and clear of all security interests, claims, liens, equities or other encumbrances and the legal right and power, and all
authorization and approval required by law, to enter into this Agreement and to sell, transfer and deliver the Units or a security entitlement in respect of such Units. 

Article 3 

REPRESENTATIONS AND WARRANTIES OF THE PARENT PARTIES 

The Parent Parties hereby make the following representations and warranties to IP: 

3.1 Existence; Power and Authority. Each Parent Party has been duly incorporated or organized, is validly existing and in good standing
under the laws of its respective jurisdiction of incorporation or organization, has the corporate or other power and authority to execute and perform its obligations under this Agreement; and all action required to be taken for due and proper
authorization, execution and delivery by it of this Agreement and the consummation of the transaction contemplated hereby has been duly and validly taken. 

  
 4 

 3.2 Authorization. This Agreement has been duly authorized, executed and delivered by
or on behalf of the Parent Parties. The shares of Deliverable Common Stock to be delivered at the Sale Closing have been duly authorized and upon delivery will be validly issued, fully paid and non-assessable.
Parent has a sufficient number of authorized and unissued shares of Common Stock to deliver the shares of Deliverable Common Stock for the Stock Settled Units. 

3.3 No Conflicts. The execution and delivery by the Parent Parties of, and the performance by the Parent Parties of its obligations
under, this Agreement and the consummation by the Parent Parties of the transactions contemplated hereby, or the fulfillment by the Parent Parties of such terms will not result in a breach of any of the terms or provisions of, or constitute a
default under, any instrument, agreement or order to which any Parent Party is a party or by which any Parent Party is bound or infringe any law, regulation, order, rule, decree or statute applicable to any Parent Party and are not contrary to the
provisions of the constitutional documents of any Parent Party. 
 3.4 Sufficient Funds. The Company will have, as of the Closing
Date, access to legally available funds sufficient to consummate the Redemption. 
 Article 4 

MISCELLANEOUS 
 4.1
Termination. This Agreement may be terminated prior to the Closing by mutual written consent of each Parent Party and IP. 
 4.2
Further Assurances. Each party hereto agrees to execute and deliver, or cause to be executed and delivered, such agreements, instruments and other documents, and take such other actions consistent with the terms of this Agreement, as the
other party may reasonably require from time to time in order to carry out the purposes of this Agreement. 
 4.3 Expenses. Each party
agrees to pay its own costs and expenses associated with this Agreement and the transactions contemplated hereby. 
 4.4 Survival. All
representations and warranties contained herein or made in writing by any party in connection herewith shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated thereby. 

4.5 Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only by
written agreement executed by the parties hereto. 
 4.6 Assignment; Binding Agreement. This Agreement and the rights and obligations
arising hereunder shall inure to the benefit of and be binding upon the parties hereto, and neither party may assign any of its rights or delegate any of its obligations hereunder without the express written consent of the other party. 

4.7 No Third Party Beneficiaries. Nothing in this Agreement shall convey any rights upon any person or entity which is not a party or a
successor or permitted assignee of a party to this Agreement. 

  
 5 

 4.8 Entire Agreement. This Agreement, the Exchange Agreement, the Operating Agreement
and the Tax Receivables Agreement constitute the sole and entire agreement among the parties with respect to the subject matter of this Agreement, and supersedes all prior representations, agreements and understandings, written or oral, with respect
to the subject matter hereof. To the extent this Agreement conflicts with the Exchange Agreement, the Operating Agreement or the Tax Receivables Agreement, this Agreement shall control. 

4.9 Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. To the extent that any such provision is so held to be invalid, illegal or unenforceable, the parties shall
in good faith use commercially reasonable efforts to find and effect an alternative means to achieve the same or substantially the same result as that contemplated by such provision. 

4.10 Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be deemed an original (including
signatures delivered via facsimile or electronic mail) with the same effect as if the signatures thereto and hereto were upon the same instrument. The parties hereto may deliver this Agreement by facsimile or by electronic mail and each party shall
be permitted to rely on the signatures so transmitted to the same extent and effect as if they were original signatures. 
 4.11 Governing
Law; Waiver of Jury Trial; Jurisdiction; Specific Performance.. Section 4.05 of the Exchange Agreement is hereby incorporated by reference, mutatis mutandis. 

4.12 Notices. All notices, requests, claims, demands and other communications to be given or delivered under or by the provisions of
this Agreement shall be in writing and shall be deemed given only (i) when delivered personally to the recipient, (ii) one Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid); provided
that confirmation of delivery is received, (iii) when sent if sent by e-mail transmission, so long as a receipt of such e-mail is requested and received by non-automated response or (iv) five days after being mailed to the recipient by certified or registered mail (return receipt requested and postage prepaid). Such notices, demands and other communications shall
be sent to the parties at the following addresses (or at such address for a party as will be specified by like notice): 
 (a) if to Parent,
the Company or Gazelle Holdco to: 
 Graphic Packaging Holding Company 

1500 Riveredge Parkway NW, Suite 100, 9th Floor 

Atlanta, GA. 30328 
 Attention:
Lauren Tashma 
 E-Mail: lauren.tashma@graphicpkg.com 

  
 6 

 with a copy to (which shall not constitute notice): 

Alston & Bird LLP 
 One
Atlantic Center 
 1201 West Peachtree Street 

Atlanta, GA 30309 
 Attention:
William Scott Ortwein 
          Justin R. Howard 

Email: scott.ortwein@alston.com 

    justin.howard@alston.com 

(b) if to IP, to: 
 International
Paper Company 
 6420 Poplar Avenue 

Memphis, TN 38197 
 Attention:
General Counsel 
 Email: sharon.ryan@ipaper.com 

with a copy to (which shall not constitute notice): 

Debevoise & Plimpton LLP 

919 Third Avenue 
 New York, NY
10022 
 Attention: Eric T. Juergens 

Email: etjuergens@debevoise.com 
 Any party to
this Agreement may notify any other party of any changes to the address or any of the other details specified in this paragraph; provided that such notification shall only be effective on the date specified in such notice or five Business Days after
the notice is given, whichever is later. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such rejection, refusal
or inability to deliver. 
 4.13 Interpretation. The headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. 
 [Signature Page Follows] 

  
 7 

 In witness whereof, the parties have caused this Consent and Waiver Agreement to be executed
and delivered as of the date first above written. 
  

			
	INTERNATIONAL PAPER COMPANY
		
	By:	 	 /s/ Timothy S. Nicholls

	Name:	 	Timothy S. Nicholls
	Title:	 	 Senior Vice President and Chief
 Financial
Officer

 [Signature Page to Consent and Waiver Agreement] 

 
			
	GRAPHIC PACKAGING INTERNATIONAL PARTNERS, LLC
		
	By:	 	GPI Holding III, LLC, its managing member
		
	By:	 	 /s/ Stephen R. Scherger

	Name:	 	Stephen R. Scherger
	Title:	 	 Executive Vice President and Chief
 Financial
Officer

	
	GRAPHIC PACKAGING HOLDING COMPANY
		
	By:	 	 /s/ Stephen R. Scherger

	Name:	 	Stephen R. Scherger
	Title:	 	 Executive Vice President and Chief
 Financial
Officer

	
	GPI HOLDING III, LLC
		
	By:	 	 /s/ Stephen R. Scherger

	Name:	 	Stephen R. Scherger
	Title:	 	 Executive Vice President and Chief
 Financial
Officer

 [Signature Page to Consent and Waiver Agreement]ex_226591.htm

Exhibit 10.1

 

 

CHANGE OF CONTROL SEVERANCE AGREEMENT

 

This Change of Control Severance Agreement ("Agreement") between SPAR Group, Inc. a Delaware corporation (the "Corporation"), and Mike Matacunas (the "Executive") is made and entered into effective as of January 26, 2021 (the "Effective Date"). The Executive and the Corporation may be referred to individually as a "Party" and collectively as the "Parties". Certain Tax Provisions applicable to this Agreement are set forth in Annex A are part of and incorporated by reference into this Agreement as if fully set forth herein.

 

WHEREAS, the Executive has been hired to be the Chief Executive Officer and President and a key executive of the Corporation pursuant to the Offer Letter dated January 24, 2021, and signed by the Executive on January 26, 2021; and

 

WHEREAS, it is in the best interest of the Corporation and its stockholders if the Executive can approach material business decisions objectively and without concern for his personal situation; and

 

WHEREAS, the Corporation recognizes that the possibility of a Change of Control (as defined below) of the Corporation may result in the early departure of the Executive to the detriment of the Corporation and its stockholders; and

 

WHEREAS, the Board of Directors of the Corporation (the "Board") enters into this Agreement in order to help retain and motivate the Executive and to help ensure continuity of the business; and

 

THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Corporation, and Executive agree as follows:

 

1.     Term of Agreement.

 

	
			(a)

				
			The term of this Agreement ("Term") shall commence on the Effective Date and shall continue in effect through the third anniversary of the Effective Date; provided, however, commencing on the first day following the Effective Date and on each day thereafter, the Term of this Agreement shall automatically be extended for one additional day unless the Board shall give written notice to Executive that the Term shall cease to be so extended in which event the Agreement shall terminate on the third anniversary of the date such notice is given.

			

 

	
			(b)

				
			Notwithstanding anything in this Agreement to the contrary, if a Change of Control occurs during the Term of this Agreement, the Term shall automatically be extended for the 24-month period following the date of the Change of Control.

			

 

	
			(c)

				
			Termination of this Agreement shall not alter or impair any rights of Executive arising hereunder on or before such termination.

			

 

	
			(d)

				
			Notwithstanding, and without in any way contradicting, limiting or modifying, the potential severance and other benefits under this Agreement, the Executive acknowledges and agrees that the Executive's employment is "at will" and may be modified from time to time and terminated at any time by the Corporation in its discretion, for any reason or no reason, and without notice or benefit of any kind, other than any benefit expressly provided under the circumstances pursuant to this Agreement.

			

 

2.     Certain Definitions.

 

	
			(a)

				
			"Bonus" shall mean an amount equal to the highest annual cash bonus paid or payable to Executive by the Corporation during the two-year period prior to Executive's termination of employment.

			

 

	
			(b)

				
			"Cause" shall mean (i) the willful and continued failure by Executive to substantially perform Executive's duties with the Corporation (other than any such failure resulting from Executive's incapacity due to physical or mental illness), (ii) Executive's commission of one or more acts that constitute a felony, (iii) Executive willfully engages in gross misconduct materially and demonstrably injurious to the Corporation, or (iv) one or more significant acts of dishonesty as regards the Corporation or any affiliate.  For purposes of clause (i) of this definition, no act, or failure to act, on Executive's part shall be deemed 'willful' unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executive's act, or failure to act, was in the best interest of the Corporation.  The determination of whether Cause exists must be made by a resolution duly adopted by the affirmative vote of not less than 75% of the entire membership of the Board at a meeting of the Board that was called for the purpose of considering such termination (after reasonable notice to Executive and an opportunity for Executive, together with Executive's counsel, to be heard before the Board and, if possible, to cure the breach that was the alleged basis for Cause) finding that, in the good faith opinion of the Board, Executive was guilty of conduct and specifying the particulars thereof in detail.

			

 

-1-

 

 

 

	
			(c)

				
			Change of Control

			

 

	 	
			(i)

				
			"Change of Control" shall mean the occurrence of any of the following:

			

 

	 	
			(A)

				
			any "person" (as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 25% or more of the combined voting power of the Corporation's then outstanding securities;

			

 

	 	
			(B)

				
			during any period of two consecutive years (not including any period prior to the effective date of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Corporation to effect a transaction described in clause (i), (iii) or (v) of this Change of Control definition and excluding any individual whose initial assumption of office occurs as a result of either (a) an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act), or (b) an actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board) whose election by the Board or nomination for election by the Corporation's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof;

			

 

	 	
			(C)

				
			the consummation of a merger or consolidation of the Corporation with any other corporation, other than a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 75% of the combined voting power of the voting securities of the Corporation (or such surviving entity or parent entity, as the case may be) outstanding immediately after such merger or consolidation;

			

 

	 	
			(D)

				
			the stockholders of the Corporation approve a plan of complete liquidation of the Corporation; or

			

 

	 	
			(E)

				
			the sale or disposition by the Corporation of all or substantially all of the assets of the Corporation.

			

 

	 	
			(ii)

				
			More than one Change in Control may occur hereunder, and if more than one Change in Control has occurred, any reference to Change in Control shall mean the then most recent Change in Control preceding the Executive's Severance Date (as hereinafter defined).

			

 

	 	
			(iii)

				
			A change in control will not be deemed to occur from any of the following:

			

 

	 	
			(A)

				
			the creation of a voting trust or other lockup of shares of Robert G. Brown or William H. Bartels that reduces their individual or combined voting rights;

			

 

	 	
			(B)

				
			any sale or other reduction in the SGRP shares of Robert G. Brown or William H. Bartels unless a new majority control group results or a new group in combination with one or the other creates a majority control group;

			

 

	Mike Matacunas -- CICSA	SPAR Group, Inc.

 

-2-

 

 

 

	 	
			(C)

				
			any sale or transfer of the Corporation's assets or business to or merger with any company that Robert G. Brown or William H. Bartels control;

			

 

	 	
			(D)

				
			Any issuance of SGRP shares to an independent investor if the new investor has less than 50% of the voting securities of SGRP after the new shares are issued.

			

 

	
			(d)

				
			"Code" shall mean the Internal Revenue Code of 1986, as amended.

			

 

	
			(e)

				
			"Good Reason" shall mean:

			

 

	 	
			(i)

				
			a Change in Control occurs and the Corporation is no longer an independent company (i.e., it becomes a subsidiary or division of another entity);

			

 

	 	
			(ii)

				
			a reduction in Executive's authority, duties, titles, status or responsibilities or the assignment to Executive of duties or responsibilities inconsistent in any respect from those of Executive, but excluding any action or omission by the Corporation that is isolated, insubstantial and inadvertent and which was not taken in bad faith by the Corporation and is remedied by the Corporation promptly after receipt of notice thereof given by Executive;

			

 

	 	
			(iii)

				
			any reduction in Executive's annual rate of base salary or any failure by the Corporation to continue in effect any material incentive compensation plan or arrangement (unless replacement plans providing Executive with substantially similar benefits are adopted) or the taking of any action by the Corporation that would adversely affect Executive's participation in any such plan or arrangement or reduce Executive's incentive compensation opportunities under such plan or arrangement, as the case may be;

			

 

	 	
			(iv)

				
			the Corporation fails to obtain a written agreement from any successor or assigns of the Corporation or its assets to assume and perform this Agreement;

			

 

	 	
			(v)

				
			the relocation of the Corporation's principal executive offices by more than 35 miles from where such offices were located immediately prior to the Change of Control or the Corporation requires Executive, without Executive's written consent, to be based at any office other than the Corporation's office at which the Executive was based prior to the Change in Control, except for travel reasonably required in the performance of Executive's duties and reasonably consistent with Executive's travel prior to the Change of Control; or

			

 

	 	
			(vi)

				
			the Corporation fails to nominate Executive for election to the Board on an annual basis:

			

 

Unless Executive terminates his employment on or within 90 days following an act or omission to act by the Corporation constituting a Good Reason hereunder, and coincident or prior to such termination give the Corporation written notice as to the nature of the Good Reason event, Executive's continued employment after such 90th day shall constitute Executive's consent to, and a waiver of Executive's rights with respect to, such act or failure to act.  Executive's right to terminate Executive's employment for Good Reason shall not be affected by Executive's incapacity due to physical or mental illness.  Executive's determination that an act or failure to act constitutes Good Reason shall be presumed to be valid unless such determination is deemed by an arbitrator to be unreasonable and not to have been made in good faith by Executive.

 

	
			(f)

				
			"Protected Period" shall mean the Term or the 24-month period beginning on the effective date of a Change of Control, whichever is then in effect.

			

 

	
			(g)

				
			"Severance Date" shall mean the effective date on which the Executive's employment by the Corporation terminates.

			

 

	
			(h)

				
			"Termination Base Salary" shall mean Executive's annual base salary with the Corporation at the rate in effect immediately prior to the Change of Control or, if a greater amount, Executive's annual base salary at the rate in effect at any time thereafter.

			

 

3.     Release, Confidentiality and Non-Solicitation and Resignations Agreement.

 

	
			(a)

				
			As a condition precedent to the payment of any benefits under this Agreement in the event of a Severance Termination (as defined below), the Corporation may in its discretion require (within the ten business day period described below) the execution and delivery by the Executive of any one or more of a Release, Confidentiality Agreement (if not already executed and delivered) and Resignation (as such terms are defined below); provided, however, that each Release, Confidentiality Agreement and Resignation shall expressly exclude and reserve, and shall not in any way affect, the Executive's rights under this Agreement and any other severance agreement and rights to indemnification (including advancement and defense) under the Corporation's By-Laws and insurance policies and under applicable law.

			

 

	Mike Matacunas -- CICSA	SPAR Group, Inc.

 

-3-

 

 

 

	
			(b)

				
			No Release, Confidentiality Agreement or Resignation shall be required unless the Corporation gives (by hand or overnight delivery with a copy by email) to the Executive the requested Release and/or Resignation signed by the Corporation within the ten business day period following the date of such Severance Termination (the "Severance Termination Date").

			

 

	
			(c)

				
			"Release" shall mean a mutual release agreement between the Executive and the Corporation (on behalf of all of all SGRP Companies) dated and effective as of the Severance Termination Date in form and substance mutually and reasonably acceptable to the Parties.

			

 

	
			(d)

				
			"Confidentiality Agreement" shall mean the Confidentiality and Non-Solicitation Agreement between the Executive and the Corporation (with, among other things, a five-year period of confidentiality and a three-year period of non-solicitation following termination, but without any non-compete) executed by the Executive and dated and effective as of the date hereof, which shall survive and continue in full force and effect following any Severance Termination.

			

 

	
			(e)

				
			"Resignation" shall mean a confirmatory resignation letter from the Executive for each applicable Subsidiary of SGRP dated and effective as of the date of the Severance Termination Date (as defined below) in form and substance mutually and reasonably acceptable (and the parties agree that the subsidiary forms used in previous departures are reasonably acceptable).

			

 

4.     Severance Benefits.

 

	
			(a)

				
			Without in any way contradicting, limiting or modifying the "at will" nature of the Employee's employment, if (i) Executive terminates his employment with the Corporation during the Term for a Good Reason event or (ii) the Corporation terminates Executive's employment during the Term other than (A) for Cause or (B) due to Executive's inability to perform the primary duties of his position for at least 180 consecutive days due to a physical or mental impairment (each of which will be referred to as a "Severance Termination"), the provisions of this Section shall apply and the benefits provided by this Section shall be in lieu of any and all other severance or similar termination benefits that might otherwise apply (which other benefits are hereby waived by the Executive in the event such Severance Termination benefits apply), subject to the Corporation's receipt of the documents required in Section 3 above, Executive shall receive the following compensation and benefits from the Corporation, subject to deferral as and to the extent provided in Annex A hereto:

			

 

	
			(b)

				
			Within twenty business days of the date of his Severance Termination the Corporation shall pay to Executive in a lump sum, in cash, an amount equal to two times the sum of Executive's (i) Termination Base Salary and (ii) Bonus.

			

 

	
			(c)

				
			Notwithstanding anything in any Corporation employee stock incentive plan or any grant agreement to the contrary, as of the date of Executive's termination of employment (i) all granted restricted shares of Corporation stock and all restricted unit awards with respect to common units of Corporation stock of Executive shall become 100% vested and all restrictions thereon shall lapse and the Corporation shall, subject to Annex A hereto, promptly deliver to Executive unrestricted shares of Corporation stock and common units and (ii) each outstanding Corporation stock option of Executive shall become 100% exercisable and shall remain exercisable for the remainder of such option's term or three years, whichever is less and (iii) all 401k contributions shall become 100% vested and all restrictions thereon shall lapse.

			

 

	
			(d)

				
			For the 24-month period beginning on the date of his termination of employment (the "Continuation Period"), the Corporation shall continue to provide Executive and Executive's eligible family members with medical, vision and dental health benefits at least equal to those which would have been provided to Executive if Executive's employment had not been terminated or, if more favorable to Executive, as in effect generally at any time during such period and provided it can do so on a nontaxable basis under the Code; further provided Executive pays a monthly premium for such coverage equal to the monthly premium charged to active employees in general for similar coverage.  Notwithstanding the foregoing, if Executive becomes eligible to receive medical, vision and dental benefits under another employer's group welfare plans during this Continuation Period, the Corporation's obligations under this Section C shall be reduced to the extent comparable benefits are actually received by Executive during such period, and any such benefits actually received by Executive shall be promptly reported by Executive to the Corporation.  In the event the provision of Corporation medical, vision and dental plans to Executive under this Section would be taxable under Code Section 105, then within twenty business days of the date of his termination of employment the Corporation will provide Executive with a lump sum payment in such amount that, after all taxes on that amount, shall be equal to the cost to Executive of Executive's obtaining such coverage from another source for Executive and Executive's eligible family members.  The lump sum shall be determined on a present value basis using the interest rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code on the date of termination.

			

 

	Mike Matacunas -- CICSA	SPAR Group, Inc.

 

-4-

 

 

 

	
			(e)

				
			Throughout the term of the Continuation Period or until Executive begins other full-time employment with a new employer, whichever occurs first, Executive shall be entitled to receive outplacement services, paid by the Corporation, with a nationally prominent executive outplacement service firm selected by the Corporation and reasonably acceptable to Executive.

			

 

	
			(f)

				
			If Executive's employment with the Corporation terminates prior to, but within six months of, the date on which a Change of Control occurs, and it is reasonably demonstrated by Executive that such termination of employment was (i) by the Corporation in connection with or in anticipation of the Change of Control or (ii) by Executive under circumstances which would have constituted Good Reason if the circumstances arose on or after the Change of Control, then for all purposes of this Agreement the Change of Control shall be deemed to have occurred, and the Protected Period shall be deemed to have commenced, on the date immediately prior to the date of such termination of Executive's employment.

			

 

	
			(g)

				
			The Corporation may withhold from any amounts or benefits payable under this Agreement all such taxes as it shall be required to withhold pursuant to any applicable law or regulation.

			

 

	
			(h)

				
			Any payment not timely made by the Corporation under this Agreement shall bear interest at the highest non-usurious rate permitted by applicable law.

			

 

5.     Tax Gross Up Provisions.

 

If any payment made, or benefit provided, to or on behalf of Executive pursuant to this Agreement ("Payments") results in Executive being subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (or any successor or similar provision) ("4999 Excise Tax"), then, subject to Annex A hereto, the Corporation shall pay the Executive an additional amount (the "4999 Gross-Up Payment") such that the net amount retained by the Executive after deduction of the 4999 Excise Tax and any interest charges or penalties in respect of the imposition of such excise tax (but not any federal, state or local income tax, or employment tax) on the Payments, and any federal, state and local income tax, employment tax, and excise tax upon the payment provided for by this Section 4(a), shall be equal to the Payments as if the 4999 Excise Tax was not applicable to the Payments. The Corporation shall, subject to Annex A hereto, pay the 4999 Gross-Up Payment, if any, no earlier than the first day of the seventh month following the month in which Executive incurs a separation from service with the Corporation and no later than the end of the calendar year following the year in which the Executive remits the Section 4999 Excise Tax to the Internal Revenue Service

 

6.     No Mitigation.

 

Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise nor, except as provided in Sections 3C and D, shall the amount of any payment or benefit provided for in this Agreement be reduced as the result of employment by another employer or self-employment, by offset against any amount claimed to be owed by Executive to the Corporation or otherwise, except that any severance payments or benefits that Executive is entitled to receive pursuant to a Corporation severance plan or program for employees in general shall reduce the amount of payments and benefits otherwise payable or to be provided to Executive under this Agreement.

 

	Mike Matacunas -- CICSA	SPAR Group, Inc.

 

-5-

 

 

 

7.     Successor Agreement.

 

The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to assume expressly in writing prior to the effective date of such succession and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform if no succession had taken place.  Failure of the successor to so assume as provided herein shall constitute a breach of this Agreement and entitle Executive to the payments and benefits hereunder as if triggered by a termination of Executive by the Corporation other than for Cause on the date of such succession.

 

8.     Indemnity.

 

In any situation where under applicable law the Corporation has the power to indemnify, advance expenses to and defend Executive in respect of any judgments, fines, settlements, loss, cost or expense (including attorneys' fees) of any nature related to or arising out of Executive's activities as an agent, employee, officer or director of the Corporation or in any other capacity on behalf of or at the request of the Corporation, then the Corporation shall promptly on written request, fully indemnify Executive, advance expenses (including attorney's fees) to Executive and defend Executive to the fullest extent permitted by applicable law, including but not limited to making such findings and determinations and taking any and all such actions as the Corporation may, under applicable law, be permitted to have the discretion to take so as to effectuate such indemnification, advancement or defense.  Such agreement by the Corporation shall not be deemed to impair any other obligation of the Corporation respecting Executive's indemnification or defense otherwise arising out of this or any other agreement or promise of the Corporation under any statute.

 

9.     Notices.

 

All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed, in either case, to the Corporation's headquarters or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notices and communications shall be effective when actually received by the addressee.

 

10.     Arbitration.

 

Any dispute about the validity, interpretation, effect or alleged violation of this Agreement (an 'arbitrable dispute') must be submitted to confidential arbitration in Auburn Hills, Michigan.  Arbitration shall take place before an experienced employment arbitrator licensed to practice law in such state and selected in accordance with the Model Employment Arbitration Procedures of the American Arbitration Association.  Arbitration shall be the exclusive remedy of any arbitrable dispute.  The Corporation shall bear all fees, costs and expenses of arbitration, including its own, those of the arbitrator and those of Executive unless the arbitrator provides otherwise with respect to the fees, costs and expenses of Executive; in no event shall Executive be chargeable with the fees, costs and expenses of the Corporation or the arbitrator.  Should any party to this Agreement pursue any arbitrable dispute by any method other than arbitration, the other party shall be entitled to recover from the party initiating the use of such method all damages, costs, expenses and attorneys' fees incurred as a result of the use of such method.  Notwithstanding anything herein to the contrary, nothing in this Agreement shall purport to waive or in any way limit the right of any party to seek to enforce any judgment or decision on an arbitrable dispute in a court of competent jurisdiction.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts in Detroit, Michigan, for the purposes of any proceeding arising out of this Agreement.

 

11.     Governing Law.

 

This Agreement will be governed by and construed in accordance with the laws of the State of Michigan without regard to conflicts of law principles of Michigan that would defer to the law of any other jurisdiction.

 

	Mike Matacunas -- CICSA	SPAR Group, Inc.

 

-6-

 

 

 

12.     Entire Agreement.

 

This Agreement (including Annex A hereto) is an integration of the parties' agreement and no agreement or representatives, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

 

13.     Severability.

 

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

14.     Counterparts; Amendment and Waivers.

 

This Agreement or any supplement, modification or amendment to or restatement of this Agreement may have been executed in two or more counterpart copies of the entire document or of signature pages to the document, each of which may have been executed by one or more of the signatories hereto or thereto and delivered by mail, courier, telecopy or other electronic or physical means, but all of which, when taken together, shall constitute a single agreement binding upon all of its signatories. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and such member of the Board as may be specifically authorized by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or in compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

In Witness Whereof, the Parties hereto have executed and delivered this Agreement intending to be legally bound by it and for it to be effective as of the Effective Date.

 

 

 

	
			EMPLOYER:

				
			Executive:

			
	
			SPAR Group, Inc.

				
			 

			 

			Mike Matacunas 

			
	
			By:

				 
	
			Arthur H. Baer, Chairman of the Board

				 
	 	 
	
			Employer's Current Address:

				
			Executive's Current Address:

			
	 	 
	
			1910 Opdyke Court, Auburn Hills, MI 48326

				
			 

			 

			1468 Five Hill Trail

			
	
			ATTN: Human Resources Department

				
			Virginia Beach, VA 23452

			
	 	 
	
			Dated as of: January 26, 2021

				
			Dated as of: January 26, 2021

			

 

 

 

 

 

 

 

 

 

 

	Mike Matacunas -- CICSA	SPAR Group, Inc.

 

-7-

 

 

 

Annex A

 

 

Certain Tax Provisions

 

ANNEX A TO CHANGE OF CONTROL SEVERANCE AGREEMENT BETWEEN SPAR GROUP, INC., AND MIKE MATACUNAS

 

This Annex A is incorporated into, and is part of, the Change of Control Severance Agreement entered into between SPAR Group, Inc. and Mike Matacunas (the "Agreement"). Capitalized terms used and not otherwise defined in this Annex shall have the meanings respectively assigned to them in the Agreement. The Agreement is subject to and shall be governed by the following:

 

1.        Tax Gross Up Provisions.

 

(a)     4999 Gross-Up. If any payment made, or benefit provided, to or on behalf of Executive pursuant to this Agreement ("Payments") results in Executive being subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (or any successor or similar provision) ("4999 Excise Tax"), then the Corporation shall pay the Executive an additional amount (the "4999 Gross-Up Payment") such that the net amount retained by the Executive after deduction of the 4999 Excise Tax and any interest charges or penalties in respect of the imposition of such excise tax (but not any federal, state or local income tax, or employment tax) on the Payments, and any federal, state and local income tax, employment tax, and excise tax upon the payment provided for by this Section 1(a), shall be equal to the Payments as if the 4999 Excise Tax was not applicable to the Payments. The Corporation shall pay the 4999 Gross-Up Payment, if any, as soon as practicable after such 4999 Gross-Up Payment can be determined, if any, but no earlier than the first day of the seventh month following the month in which Executive incurs a separation from service with the Corporation and no later than the end of the calendar year following the year in which the Executive remits the Section 4999 Excise Tax to the Internal Revenue Service

 

(b)     409A Gross-Up. If any Payments (or any acceleration of any Payments) are determined to be subject to the interest charges and taxes imposed by Section 409A(a)(1)(B) of the Code, or any interest charges or penalties with respect to such taxes (such taxes, together with any such interest charges and penalties, are collectively referred to as the "Section 409A Tax"), then the Corporation shall pay Executive an additional amount (the "409A Gross-Up Payment") such that the net amount retained by the Executive after deduction of the 409A Tax and any interest charges or penalties in respect of the imposition of such excise tax (but not any federal, state or local income tax, or employment tax) on the Payments, and any federal, state and local income tax, employment tax, and excise tax upon the payment provided for by this Section 1(b), shall be equal to the Payments as if the 409A Tax was not applicable to the Payments. The Corporation shall pay the 409A Gross-Up Payment, if any, as soon as practicable after such 409A Gross-Up Payment can be determined, if any, but no earlier than the first day of the seventh month following the month in which Executive incurs a separation from service with the Corporation, and no later than the end of the calendar year following the year in which the Executive remits the Section 409A Tax to the Internal Revenue Service; further provided Executive must provide the Corporation with a written request for reimbursement thereof (accompanied by proof of taxes owed or paid) in order to receive the 409A Gross-Up Payment.

 

(c)     For purposes of determining the amount of the 4999 Gross-Up Payment and the 409A Gross-Up Payment pursuant to this Section 1 (and Section 5 in the Agreement), if any, the Executive shall be deemed to pay federal income tax and employment taxes at the highest marginal rate of federal income and employment taxation in the calendar year in which the applicable gross-up payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's domicile for income tax purposes on the date the applicable gross-up payment is made, net of the maximum reduction in federal income taxes that may be obtained from the deduction of such state and local taxes, if any. All determinations under this Section 1 shall be made by the Corporation's certified public accountants.

 

2.        Code Section 409A and Payment Timing.

 

Notwithstanding anything to the contrary herein or in the Agreement, the following additional rules shall apply to payments under the Agreement:

 

(a)     Any payments made: (i) within 2-1⁄2 months of the end of the Corporation's taxable year containing the date of Executive's involuntary (or Good Reason) termination; or (ii) within 2-1⁄2 months of Executive's taxable year containing the date of involuntary (or Good Reason) termination shall be exempt from Code Section 409A. Payments subject to subparagraphs (i) or (ii) shall be treated and shall be deemed to be an entitlement to a separate payment within the meaning of Code Section 409A and the regulations thereunder.

 

	Mike Matacunas -- CICSA	SPAR Group, Inc.

 

-8-

 

 

 

(b)     To the extent payments under the Agreement are not exempt from Code Section 409A under subparagraph (a) above, any payments made in the first six months following Executive's termination of employment that are equal to or less than the lesser of the amounts described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and (2) shall be exempt from Code Section 409A. Payments subject to this subparagraph (b) shall be treated and shall be deemed to be an entitlement to a separate payment within the meaning of Code Section 409A and the regulations thereunder.

 

(c)     To the extent payments under this Agreement are not exempt from Code Section 409A under subparagraphs (b) or (c) above, any payments made equal to or less than the applicable dollar amount under Code Section 402(g)(1)(B) for the year of severance from employment shall be exempt from Code Section 409A in accordance with Treasury Regulation Section 1.409A-1(b)(9)(v)(D). Payments subject to this subparagraph (c) shall be treated and shall be deemed to be an entitlement to a separate payment within the meaning of Code Section 409A of the Code and the regulations thereunder.

 

(d)     To the extent payments under this Agreement are not exempt from Code Section 409A under subparagraphs (a), (b), or (c) above, and to the extent Executive is a "specified employee" (as defined below), amounts payable to Executive due to his severance from employment (as defined below) shall begin no sooner than six months after Executive's severance from employment (other than for Death); provided, however, that any payments not made during the six-month period described in this subsection due to the six-month delay period required under Treasury Regulation Section 1.409A-3(i)(2) shall be made in a single lump sum as soon as administratively practicable after the expiration of such six-month period, and the balance of all other payments required under this Agreement shall be made as otherwise scheduled in this Agreement.

 

(e)     For purposes of this Annex A, Section 2, and the Agreement, any reference to severance of employment or termination of employment shall mean a "separation from service" as defined in Treasury Regulation Section 1.409A-1(h). For purposes of the Agreement and this Annex, the term "specified employee" shall have the meaning set forth in Treasury Regulation Section 1.409A-1(i).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	Mike Matacunas -- CICSA	SPAR Group, Inc.

 

-9-

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