EXHIBIT 10.13
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as
of November 13, 1996 by and between Monterey Resources, Inc., a Delaware
corporation ("Company"), and X. Xxxxxx Whaling ("Employee").
WHEREAS, the Company employs Employee and desires to continue such
employment relationship and Employee desires to continue such employment;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, and agreements contained herein, and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs Employee, and Employee
hereby accepts employment by the Company, on the terms and conditions set forth
in this Agreement.
2. Term of Employment. Subject to the provisions for earlier
termination provided in the Agreement, the term of this Agreement (the "Term")
shall commence on the effective date of this Agreement as stated above and
shall terminate on December 31, 1999; provided, however, commencing on January
1, 1998 and on each January 1 thereafter, the term of this Agreement shall
automatically be extended one additional year unless, not later than September
30 of the preceding year, the Board of Directors of the Company (the "Board")
shall give written notice to Employee that the Term of the Agreement shall
cease to be so extended; provided, further, that if a Change in Control, as
defined in Section 6, shall have occurred during the original or extended Term
of this Agreement, the Term shall continue in effect for a period of not less
than 36 months beyond the date of such Change in Control. In no event,
however, shall the Term of this Agreement extend beyond the end of the calendar
month in which Employee's 65th birthday occurs. Notwithstanding any provision
of this Agreement to the contrary, termination of this Agreement shall not
alter or impair any rights of Employee (or Employee's estate or beneficiaries)
that have arisen under this Agreement prior to such termination.
3. Employee's Duties. During the Term of this Agreement,
Employee shall serve as the Chief Executive Officer of the Company, with such
customary duties and responsibilities as may from time to time be assigned to
him by the Board, provided that such duties are at all times consistent with
the duties of such position.
Employee agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Company and, to the extent
necessary to discharge the duties and responsibilities assigned to Employee
hereunder, to use reasonable best efforts to perform faithfully and efficiently
such duties and responsibilities.
4. Base Compensation. For services rendered by Employee under
this Agreement, the Company shall pay to Employee a base salary ("Base
Compensation") of $325,000 per annum payable in accordance with the
Company's customary payroll practice for its executive officers. The amount of
Base Compensation shall be reviewed periodically and may be increased to
reflect inflation or such other adjustments as the Board may deem appropriate
but Base Compensation, as increased, may not be decreased thereafter.
5. Additional Benefits. In addition to the Base Compensation
provided for in Section 4 herein, Employee shall be entitled to receive all
fringe benefits and perquisites offered by the Company to its executive
officers, including, without limitation, participation in the Company's Annual
Incentive Compensation Plan and other incentive plans offered generally to key
employees, the various employee benefit plans or programs provided to the
employees of the Company in general, subject to the regular eligibility
requirements with respect to each of such benefit plans or programs, and such
other benefits or prerequisites as may be approved by the Board during the Term
of this Agreement. Nothing in this paragraph shall be deemed to prohibit the
Company from making any changes in any of the plans, programs or benefits
described in this Section 5, provided the change similarly affects all
executives of the Company similarly situated.
6. Change of Control.
For purposes of this Agreement, a "Change in Control" shall mean the
occurrence of one of the following events:
(i) 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 Santa Fe Energy
Resources, Inc. ("SFER") or any affiliate, or any corporation owned,
directly or indirectly, by the stockholders of SFER in substantially
the same proportions as their ownership of stock of SFER, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly of securities of SFER
representing 25% or more of the combined voting power of SFER's then
outstanding securities;
(ii) during any period of two consecutive years (not
including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board
of Directors of SFER, and any new director (other than a director
designated by a person who has entered into an agreement with SFER to
effect a transaction described in clause (i), (iii) or (iv) of this
Section) whose election by the Board of Directors of SFER or
nomination for election by SFER'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 (hereinafter
referred to as "Continuing Directors"), cease for any reason to
constitute at least a majority thereof;
-2-
(iii) the stockholders of SFER approve a merger or
consolidation of SFER with any other corporation, other than (a) a
merger or consolidation which would result in the voting securities of
SFER outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 65% of the combined
voting power of the voting securities of SFER (or such surviving
entity) outstanding immediately after such merger or consolidation or
(b) a merger or consolidation effected to implement a recapitalization
of SFER (or similar transaction) in which no "person" (as hereinabove
defined) acquires more than 25% of the combined voting power of SFER's
then outstanding securities; or
(iv) the stockholders of SFER approve a plan of complete
liquidation of SFER or an agreement for the sale or disposition by
SFER of all or substantially all of SFER's assets. For purposes of
this clause (iv), the term "the sale or disposition by SFER of all or
substantially all of SFER's assets" shall mean a sale or other
disposition transaction or series of related transactions involving
assets of SFER or of any direct or indirect subsidiary of SFER
(including the stock of any direct or indirect subsidiary of SFER) in
which the value of the assets or stock being sold or otherwise
disposed of (as measured by the purchase price being paid therefor or
by such other method as the Board of Directors of SFER determines is
appropriate in a case where there is no readily ascertainable purchase
price) constitutes more than two-thirds of the "fair market value of
SFER" (as hereinafter defined). For purposes of the preceding
sentence, the "fair market value of SFER" shall be the aggregate
market value of SFER's outstanding common stock (on a fully diluted
basis) plus the aggregate market value of SFER's other outstanding
equity securities. The aggregate market value of SFER's common stock
shall be determined by multiplying the number of shares of SFER's
common stock (on a fully diluted basis) outstanding on the date of the
execution and delivery of a definitive agreement with respect to the
transaction or series of related transactions (the "Transaction Date")
by the average closing price for SFER's common stock for the ten
trading days immediately preceding the Transaction Date. The
aggregate market value of any other equity securities of SFER shall be
determined in a manner similar to that prescribed in the immediately
preceding sentence for determining the aggregate market value of
SFER's common stock or by such other method as the Board of Directors
of SFER shall determine is appropriate.
(v) If SFER ceases to own 80% of the combined voting
power of the then outstanding voting securities of the Company, the
term "Company" shall be substituted for SFER as used in this
definition of "Change in Control;" provided, however, as long as SFER
owns 35% or more of the combined voting power of the voting securities
of the Company, the above "Change in Control" definition shall be
applied separately with respect to SFER and with respect to the
Company as substituted for SFER in the definition, and a Change in
Control with respect to either SFER or the Company in such situation
shall be a Change in Control for purposes of this Plan.
Notwithstanding anything herein to the contrary, a distribution by
SFER to its stockholders of its interest in such voting securities of
the Company shall not constitute a Change in Control.
-3-
7. Termination. This Agreement may be terminated prior to the
end of its Term as set forth below.
(a) Resignation. Employee may resign, including by
reason of retirement, his position at any time. In the event of such
resignation, except in the case of resignation for Good Reason (as
defined below) on or following a Change in Control, Employee shall not
be entitled to further compensation pursuant to this Agreement.
(b) Death. If Employee's employment is terminated due to
his death, this Agreement shall terminate and the Company shall have
no obligations to Employee or his legal representatives with respect
to this Agreement other than the payment of any Base Compensation and
vacation pay which had accrued hereunder at the date of Employee's
death.
(c) Discharge.
(i) The Company may terminate this Agreement and
Employee's employment for any reason deemed sufficient by the
Company upon notice as provided in Section 10. However, in
the event that Employee's employment is terminated during the
Term by the Company on or following a Change in Control and
for any reason other than his Misconduct (as defined in
Section 7(c)(ii) below) or Disability (as defined in Section
7(d)(i) below), then, subject to Sections 7(h) and (i): (A)
the Company shall pay in a lump sum in cash to Employee,
within 15 days of the Date of Termination, an amount equal to
the sum of (1) three times Employee's Base Compensation, and
(2) the maximum incentive award payable to Employee under the
Company's Annual Incentive Compensation Plan for such year in
lieu of any payment thereunder, assuming for purposes hereof
that all performance objectives for such year had been met at
the maximum level and that Employee is entitled to a full
award thereunder; (B) for the 36-month period after such Date
of Termination, the Company shall provide or arrange to
provide Employee (and Employee's dependents) with life,
disability, accident and group health insurance benefits
substantially similar to those which Employee (and Employee's
dependents) were receiving immediately prior to the Notice of
Termination, with the Employee charged a monthly premium(s)
for such coverage(s) that does not exceed the premium(s)
charged to an active employee for comparable coverage(s);
benefits otherwise receivable by Employee pursuant to this
clause (B) shall be reduced to the extent comparable benefits
are actually received by Employee (and Employee's dependents)
during the 36-month period following Employee's termination,
and any such benefits actually received by Employee shall be
reported to the Company (To the extent coverage and/or
benefits received under a self-insured health plan of the
Company are taxable to Employee, the Company shall make
Employee "whole" on a net after tax basis); (C) within 15 days
of the Date of Termination or, if later, the first date on
which such payment would not subject Employee to suit under
-4-
Section 16(b) of the Securities Exchange Act of 1934, if
applicable, the Company shall pay to Employee in cancellation
of all outstanding stock-based awards that were granted to
Employee after the Change in Control and which are not vested
on the Date of Termination (collectively, "Awards"), a lump
sum amount in cash equal to the sum of the value (with respect
to an option or stock appreciation right, the "spread"; and
with respect to restricted stock or phantom stock, the value
of an unrestricted share) of all such nonvested Awards,
calculated, where applicable, as if all corporate performance
goals had been achieved (thus warranting full value of the
Award); and (D) the Company shall provide to Employee
outplacement services by a nationally recognized firm.
(ii) Notwithstanding the foregoing provisions of
this Section 7, in the event Employee is terminated because of
Misconduct, the Company shall have no compensation obligations
pursuant to this Agreement after the Date of Termination. As
used herein, "Misconduct" means (a) the willful and continued
failure by Employee to substantially perform his duties with
the Company (other than any such failure resulting from
Employee's incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a
Notice of Termination by Employee for Good Reason), after a
written demand for substantial performance is delivered to
Employee by the Board, which demand specifically identifies
the manner in which the Board believes that Employee has not
substantially performed his duties, or (b) the willful
engaging by Employee in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise.
For purposes hereof, no act, or failure to act, on Employee's
part shall be deemed "willful" unless done, or omitted to be
done, by Employee not in good faith and without reasonable
belief that Employee's action or omission was in the best
interest of the Company. Notwithstanding the foregoing,
Employee shall not be deemed to have been terminated for
Misconduct unless and until there shall have been delivered to
Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and
held for such purpose (after reasonable notice to Employee and
an opportunity for Employee, together with Employee's counsel,
to be heard before the Board), finding that in the good faith
opinion of the Board Employee was guilty of conduct set forth
above and specifying the particulars thereof in detail.
(d) Disability.
(i) If Employee shall have been absent from the
full-time performance of Employee's duties with the Company
for six consecutive months as a result of Employee's
incapacity due to physical or mental illness, as determined by
Employee's physician, and within 30 days after written Notice
of Termination is given by the Company Employee shall not have
returned to the full-time performance of Employee's duties,
Employee's employment may be terminated by the Company
-5-
for "Disability" and Employee shall not be entitled to further
compensation pursuant to this Agreement.
(ii) If Employee fails during any period during
the Term to perform Employee's full-time duties with the
Company as a result of incapacity due to physical or mental
illness, as determined by Employee's physician, Employee shall
continue to receive his Base Compensation, together with all
compensation payable to Employee under the Company's Long Term
Disability Plan or other similar plan during such period until
this Agreement is terminated.
(e) Resignation for Good Reason. In the event of a
Change in Control, Employee shall be entitled to terminate his
employment for Good Reason as defined herein. If Employee terminates
his employment for Good Reason, Employee shall be entitled to the
compensation and benefits provided in Paragraph 7(c)(i) hereof. "Good
Reason" shall mean (1) the material breach of any of the Company's
obligations under this Agreement without Employee's express written
consent or (2) the occurrence of any of the following circumstances
without Employee's express written consent unless such breach or
circumstances are fully corrected prior to the Date of Termination
specified in the Notice of Termination pursuant to Subsections 7(e)
and 7(f), respectively, given in respect thereof:
(i) the assignment to Employee of any duties
inconsistent with the position in the Company that Employee
held immediately prior to the Change in Control, or a
significant adverse alteration in the nature or status of
Employee's office, title, responsibilities, including
reporting responsibilities, or the conditions of Employee's
employment from those in effect immediately prior to such
Change in Control or a failure to reelect Employee as Chairman
of the Board;
(ii) a reduction in Employee's Base Compensation;
(iii) the failure by the Company to pay to Employee
any portion of Employee's current compensation or to pay to
Employee any portion of an installment of deferred
compensation under any deferred compensation program of the
Company within seven days of the date such compensation is
due;
(iv) the failure by the Company to continue in
effect any compensation plan in which Employee participates
immediately prior to a Change in Control that is material to
Employee's total compensation unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has
been made with respect to such plan, or the failure by the
Company to continue Employee's participation therein (or in
such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits
provided and the level of Employee's participation relative to
other participants, as existed at the time of the Change in
Control;
-6-
(v) the failure by the Company to continue to
provide Employee with benefits substantially similar to those
enjoyed by Employee under any of the Company's life insurance,
medical, health and accident, or disability plans in which
Employee was participating at the time of the Change in
Control; the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits
or deprive Employee of any material fringe benefit enjoyed by
Employee at the time of the Change in Control, or the failure
by the Company to provide Employee with the number of paid
vacation days to which Employee is entitled on the basis of
years of service with the Company (and its predecessors) in
accordance with the Company's normal vacation policy in effect
at the time of the Change in Control;
(vi) the failure of the Company to obtain a
satisfactory agreement from any successor to assume and agree
to perform this Agreement, as contemplated in Section 12
hereof;
(vii) the relocation of the Company's principal
executive offices to a location outside the greater
Bakersfield, California area, or the Company's requiring
Employee to relocate anywhere other than the location of the
Company's principal executive offices, except for required
travel on the Company's business to an extent substantially
consistent with Employee's business travel obligations
immediately prior to the change in control of the Company;
(viii) the amendment, modification or repeal of any
provision of the Certificate of Incorporation, or the Bylaws
of the Company which was in effect immediately prior to such
Change in Control, if such amendment, modification or repeal
would materially adversely effect Employee's right to
indemnification by the Company; or
(ix) any purported termination of Employee's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Subsection (f)
hereof, which purported termination shall not be effective for
purposes of this Agreement.
Notwithstanding anything in this Agreement to the contrary, if
Employee's employment with the Company terminates prior to, but within
six months of, the date on which a Change in Control occurs and it is
reasonably demonstrated by Employee that such termination of
employment was (i) by the Company in connection with or anticipation
of the Change in Control or (ii) by Employee under circumstances which
would have constituted Good Reason if the circumstances arose on or
after the Change in Control, then, for purposes of this Agreement,
Employee shall be deemed to have continued employment with the Company
until the date of the Change in Control and then terminated his
employment on such date for Good Reason.
-7-
Employee's right to terminate his employment pursuant to this
subsection shall not be affected by his incapacity due to physical or
mental illness. Employee's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
(f) Notice of Termination. On and after a Change in
Control, any purported termination of Employee's employment by the
Company or by Employee shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 10
hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall set forth in reasonable detail the
reason for termination of Employee's employment, or in the case of
resignation for Good Reason, said notice must specify in reasonable
detail the basis for such resignation. No purported termination which
is not effected pursuant to this Section 7(f) shall be effective.
(g) Date of Termination, Etc. "Date of Termination"
shall mean the date specified in the Notice of Termination. Either
party may, within 15 days after any Notice of Termination is given,
provide notice to the other party pursuant to Section 10 hereof that a
dispute exists concerning the termination. Notwithstanding the
pendency of any such dispute, the Company will continue to pay
Employee his full compensation in effect when the notice giving rise
to the dispute was given (including, but not limited to, Base
Compensation) and continue Employee as a participant in all
compensation, benefit and insurance plans in which Employee was
participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with Section 16
hereof, but in no event past the expiration date of this Agreement.
(h) Mitigation. Employee shall not be required to
mitigate the amount of any payment provided for in this Section 7 by
seeking other employment or otherwise, nor shall the amount of any
payment or benefit provided for in this Agreement be reduced by any
compensation earned by Employee as a result of employment by another
employer, self-employment earnings, by retirement benefits, by offset
against any amount claimed to be owing by Employee to the Company, or
otherwise, except that any severance amounts otherwise payable to
Employee pursuant to a Company severance plan or policy for employees
in general shall reduce the amount otherwise payable pursuant to
Section 7(c)(i).
(i) Gross-Up of Parachute Payments.
(1) To provide Employee with adequate protection
in connection with his ongoing employment with the Company,
this Agreement provides Employee with various benefits in the
event of termination of Employee's employment with the
Company. If Employee's employment is terminated following a
"change in control" of the Company, within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), a portion of those benefits could be
characterized as "excess parachute payments" within the
meaning of Section 280G of the Code.
-8-
The parties hereto acknowledge that the protections set forth
herein are important, and it is agreed that Employee should
not have to bear the burden of any excise tax that might be
levied under Section 4999 of the Code, in the event that a
portion of the benefits payable to Employee pursuant to this
Agreement are treated as an excess parachute payment. The
parties, therefore, have agreed as set forth herein.
(2) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution by the Company or any other person to or for the
benefit of Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional
payments required hereunder (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by Employee with respect to
such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred
to as the "Excise Tax"), then the Company shall pay an
additional payment (a "Gross-Up Payment") in an amount such
that after payment by Employee of all taxes (including any
interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, Employee retains
an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(3) Subject to the provisions of subparagraph (4)
below, all determinations required to be made hereunder,
including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by
an independent public accounting firm with a national
reputation that is selected by Employee (the "Accounting
Firm") which shall provide detailed supporting calculations
both to the Company and to Employee within 15 business days
after the receipt of notice from Employee that there has been
a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group
effecting the change in control of the Company, Employee shall
appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm
shall then be referred to as the Accounting Firm hereunder).
All fees and expenses of the Accounting Firm shall be borne
solely by the Company. (The Company shall indemnify and hold
harmless Employee, on an after-tax basis, for any Excise Tax
or income tax (including interest and penalties with respect
thereto) imposed on Employee as a result of such payment of
fees and expenses.) Any Gross-Up Payment, as determined
pursuant hereto, shall be paid by the Company to Employee
within five days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no
Excise Tax is payable by Employee, it shall furnish Employee
and the Company with a written opinion that failure to report
-9-
the Excise Tax on Employee's applicable federal income tax
return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm
shall be binding upon the Company and Employee. As a result
of uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments may not
have been made by the Company which should have been made
("Underpayment"), consistent with the calculations required to
be made hereunder. If the Company exhausts its remedies
pursuant to subparagraph (4) below and Employee thereafter is
required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by
the Company to or for the benefit of Employee.
(4) Employee shall notify the Company in writing
of any claim (including any threatened tax lien related to or
based upon any such claim) by the Internal Revenue Service
that, if successful, would require the payment by the Company
of the Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than 10 business days after
Employee is informed in writing of such claim (or threatened
lien) and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be
paid. Employee shall not pay such claim prior to the
expiration of the 30-day period following the date on which
Employee gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with
respect to such claim is due or such tax lien would be
imposed). If the Company notifies Employee in writing prior
to the expiration of such period that it desires to contest
such claim (or threatened lien), Employee shall:
(a) give the Company any information
reasonably requested by the Company relating to such
claim (or threatened lien);
(b) take such action in connection with
contesting such claim (or threatened lien) as the
Company shall reasonably request in writing from time
to time, including, without limitation, accepting
legal representation with respect to such claim by an
attorney reasonably selected by the Company;
(c) cooperate with the Company in good
faith in order effectively to contest such claim (or
threatened lien); and
(d) permit the Company to participate in
any proceedings relating to such claim (or threatened
lien);
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest
and penalties) incurred in connection with
-10-
such contest and shall indemnify and hold Employee harmless,
on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this subparagraph (4), the Company shall control
all proceedings taken in connection with such contest and, at
its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at
its sole option, either direct Employee to pay the tax claimed
and xxx for a refund or contest the claim in any permissible
manner, and Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts,
as Employee shall determine (but in no event shall the Company
permit or direct Employee to allow a tax lien to be imposed on
Employee's property); provided, further, that if the Company
directs Employee to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to Employee,
on an interest-free basis, and shall indemnify and hold
Employee harmless on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and
further, provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year
of Employee with respect to which such contested amount is
claimed to be due is limited solely to such contested amount.
In addition, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Employee shall be entitled to
settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
(5) If, after the receipt by Employee of an
amount advanced by the Company pursuant to subparagraph (4),
Employee becomes entitled to receive any refund with respect
to such claim, Employee shall (subject to the Company's
complying with the requirements of subparagraph (4) above)
promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after
taxes applicable thereto). If after the receipt by Employee
of an amount advanced by the Company pursuant to subparagraph
(4) above, a determination is made that Employee shall not be
entitled to any refund with respect to such claim and the
Company does not notify Employee in writing of its intent to
contest such denial of refund prior to the expiration of 30
days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
(6) The Company hereby acknowledges that, as a
consequence of this full parachute tax gross-up to Employee
under this Agreement, any provision in a Company plan or
program that provides for a parachute payment, "cut-back" to
2.99,
-11-
if such "cut-back" would result in the employee being in a
better net after-tax position, shall be inapplicable to
Employee.
8. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit Employee's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company or any of its
affiliated companies and for which Employee may qualify, nor shall anything
herein limit or otherwise adversely affect such rights as Employee may have
under any stock option or other agreements with the Company or any of its
affiliated companies.
9. Assignability. The obligations of Employee hereunder are
personal and may not be assigned or delegated by him or transferred in any
manner whatsoever, nor are such obligations subject to involuntary alienation,
assignment or transfer. The Company shall have the right to assign this
Agreement and to delegate all rights, duties and obligations hereunder, either
in whole or in part, to any parent, affiliate, successor or subsidiary
organization or company of the Company, so long as the obligations of the
Company under this Agreement remain the obligations of the Company.
10. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the Company at its principal office address, directed to the attention of the
Board with a copy to the Secretary of the Company, and to Employee at
Employee's residence address on the records of the Company or to such other
address as either party may have furnished to the other in writing in
accordance herewith except that notice of change of address shall be effective
only upon receipt.
11. Validity. 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.
12. Successors; Binding Agreement.
(a) The Company 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 Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle Employee to compensation from the Company in the same amount and
on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used herein, the term "Company" shall
include any successor to its business and/or assets as aforesaid
-12-
which executes and delivers the Agreement provided for in this Section 12 or
which otherwise becomes bound by all terms and provisions of this Agreement by
operation of law.
(b) This Agreement and all rights of Employee hereunder shall
inure to the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts would be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Employee's devisee, legatee, or other designee or, if there be no
such designee, to Employee's estate.
13. Indemnification. In consideration of the premises and of the
mutual agreements set forth in this Agreement, the parties hereto further agree
as follows:
1. The Company shall pay on behalf of Employee and
Employee's executors, administrators or assigns, any amount which
Employee is or becomes legally obligated to pay as a result of any
claim or claims made against Employee by reason of the fact that
Employee served as an employee, director and/or officer of the Company
or because of any actual or alleged breach of duty, neglect, error,
misstatement, misleading statement, omission or other act done, or
suffered or wrongfully attempted by Employee in Employee's capacity as
an employee, Director and/or Officer of the Company. The payments
that the Company will be obligated to make hereunder shall include
(without limitation) damages, judgments, settlements, costs and
expenses of investigation, costs and expenses of defense of legal
actions, claims and proceedings and appeals therefrom, and costs of
attachments and similar bonds; provided, however, that the Company
shall not be obligated to pay fines or other obligations or fees
imposed by law or otherwise that it is prohibited by applicable law
from paying as indemnity or for any other reason.
2. Costs and expenses (including, without limitation,
attorneys' fees) incurred by Employee in defending or investigating
any action, suit, proceeding or claim shall be paid by the Company in
advance of the final disposition of such matter upon receipt of a
written undertaking by or on behalf of Employee to repay any such
amounts if it is ultimately determined that Employee is not entitled
to indemnification under the terms of this Agreement.
3. If a claim under this Agreement is not paid by or on
behalf of the Company within ninety days after a written claim has
been received by the Company, Employee may at any time thereafter
bring suit against the Company to recover the unpaid amount of the
claim and, if successful in whole or in part, Employee shall also be
entitled to be paid the expense of prosecuting such claim.
4. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of Employee, who shall execute all papers
required and shall do everything that may be necessary to secure such
-13-
rights, including the execution of such documents necessary to
enable the Company effectively to bring suit to enforce such rights.
5. The Company shall not be liable under this Agreement
to make any payment in connection with any claim made against
Employee:
(a) for which payment is actually made to
Employee under an insurance policy maintained by the Company,
except in respect of any excess beyond the amount of payment
under such insurance;
(b) for which Employee is indemnified by the
Company otherwise than pursuant to this Agreement;
(c) based upon or attributable to Employee
gaining in fact any personal profit or advantage to which
Employee was not legally entitled;
(d) for an accounting of profits made from the
purchase or sale by Employee of securities of the Company
within the meaning of Section 16(b) of the Securities Exchange
Act of 1934 and amendments thereto; or
(e) brought about or contributed to by the
dishonesty of Employee; provided, however, that
notwithstanding the foregoing, Employee shall be protected
under this Agreement as to any claims upon which suit may be
brought alleging dishonesty on the part of Employee, unless a
judgment or other final adjudication thereof adverse to
Employee shall establish that Employee committed acts of
active and deliberate dishonesty with actual dishonest purpose
and intent, which acts were material to the cause of action so
adjudicated.
6. Employee, as a condition precedent to his right to be
indemnified under this Agreement, shall give to the Company notice in
writing as soon as practicable of any claim made against him for which
indemnity will or could be sought under this Agreement. Notice to the
Company shall be directed to the Company, 0000 Xxxxxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxxxxx 00000, Attention: Secretary (or such other
address as the Company shall designate in writing to Employee).
Notice shall be deemed received if sent by prepaid mail properly
addressed, the date of such notice being the date postmarked. In
addition, Employee shall give the Company such information and
cooperation as it may reasonably require and as shall be within
Employee's power.
7. Nothing herein shall be deemed to diminish or
otherwise restrict Employee's right to indemnification under any
provision of the Certificate of Incorporation or Bylaws of the Company
or under Delaware law.
-14-
14. Miscellaneous. 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 Employee and such officer 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. This Agreement is an integration
of the parties agreement; no agreement or representations, 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. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Delaware.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. Arbitration. Employee shall be permitted (but not required)
to elect that any dispute or controversy arising under or in connection with
this Agreement be settled by arbitration in Los Angeles, California, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. All legal fees and costs incurred by Employee in connection with
the resolution of any dispute or controversy under or in connection with this
Agreement shall be paid by the Company as bills for such services are presented
by Employee to the Company.
17. Prior Agreements. This Agreement shall replace in full any
prior agreement (written or oral) between SFER and Employee concerning
employment and benefits on or following a Change in Control and any such prior
agreement(s) are hereby terminated as of the effective date of this Agreement.
-15-
IN WITNESS WHEREOF, the parties have executed this Agreement on
___________, 1996, effective for all purposes as provided above.
MONTEREY RESOURCES, INC.
By: /s/ X. X. XXXXXXXXXX
Name: X. X. Xxxxxxxxxx
Title: President
EMPLOYEE
/s/ X. XXXXXX WHALING
X. Xxxxxx Whaling
-16-
