First Amendment To Severance Agreement
Exhibit 10.5
WHEREAS, Xxxxxxxx Petroleum Corporation (the “Company”) and Xxxxx X. Xxxxx (the
“Executive”) have entered into that certain Severance Agreement dated effective as of December 12,
2006 (the “Agreement”); and
WHEREAS, the parties desire to amend the Agreement as provided herein;
NOW, THEREFORE, for good and valuable consideration, which the parties hereby acknowledge, the
Agreement is amended by adding thereto the following:
5. Parachute Tax Gross-up. In the event the Executive receives any payments or
benefits (“Payments”), whether or not under this Agreement and without regard to whether his
employment terminates, that are subject to the tax imposed by section 4999 of the Internal
Revenue Code of 1986, as amended (or any similar tax) (“Excise Tax”), but excluding the
Additional Payment, the Company shall pay the Executive an additional lump sum amount
(“Additional Payment”) in cash equal to the amount of Excise Tax and any interest or
penalties incurred therewith on such Payments, less all taxes required to be withheld by the
Company with respect to such Additional Payment. The parties agree and acknowledge that the
Additional Payment is not intended to include a tax gross-up amount with respect to the
income, excise and other taxes on the Additional Payment.
All determinations of, and relating to, whether any Payment will be subject to the
Excise Tax and the amount of any Additional Payment shall be made by a nationally recognized
certified public accounting firm, selected by the Company with the consent of the Executive,
that does not serve as an accountant or auditor for either the Company or any person
effecting the “change of control” (the “Accounting Firm”). The Accounting Firm will provide
detailed supporting calculations to the Company and the Executive within five business days
of the receipt of notice from the Company requesting a calculation hereunder. The
Additional Payment will be made by the Company to the Executive as soon as practical
following the Accounting Firm’s determination of the Additional Payment and in no event
later than three business days after receipt of the calculation of the Additional Payment
amount from the Accounting Firm. All fees and expenses of the Accounting Firm will be paid
by the Company. Any subsequent increase in the Excise Tax as a result of a settlement or
otherwise with the IRS shall be handled in a similar manner as provided above with respect
to the initial determination.
6. Determination of Compensation. As used in this Agreement, the phrase “current
annual rate of total compensation” means the sum of (i) the employee’s rate of annual base
salary as in effect immediately prior to the Change of Control or his termination of
employment, whichever is greater, (ii) the annual cash bonus last awarded to the employee
immediately prior to the Change of Control or the most recent annual cash bonus awarded,
whichever is greater, and (iii) the value of the annual Company
Exhibit 10.5
equity awards received by the employee in the 12-month period preceding the Change of
Control or in the 12-month period preceding his termination of employment, whichever period
has the greater value of equity awards. In regards to cash bonuses and/or equity awards
received pursuant to items (ii) and (iii) above, for purposes of this calculation, any
special or one time cash bonuses or equity awards shall be excluded. In determining the
value of an equity award for this purpose, the value of a phantom stock or restricted stock
grant shall be equal to the number of phantom stock units or shares of stock, as the case
may be, multiplied by the reported closing price per share of the stock on the date of grant
of the award. The value of a stock option or stock appreciation rights grant shall be the
Black-Scholes value of such award on its date of grant, utilizing the same input parameters
as utilized by the Company in determining the proper expenses to record for such grant as
required by FAS 123R, as verified by the Accounting Firm. No other items of compensation
shall be considered for this purpose.
IN WITNESS WHEREOF, the undersigned have executed this First Amendment, effective for all
purposes as of April 11, 2007.
| XXXXXXXX PETROLEUM CORPORATION |
||||
| By: | /s/ Xxxxxx X. Xxxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxxx | |||
| Title: | Vice Chairman & CEO | |||
| /s/ Xxxxx X. Xxxxx | ||||
| Xxxxx X. Xxxxx | ||||
