1
EXHIBIT 10.2
AGREEMENT
THIS AGREEMENT, made and entered into as of the _____ day of
February, 1996 by and between CABOT OIL & GAS CORPORATION, with its principal
office at 00000 Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000 (together with its
successors and assigns permitted under this Agreement, the "Company"), and
_____________________________ (the "Executive"),
W I T N E S S E T H:
WHEREAS, on the Effective Date (as defined below) the Compensation
Committee of the Board of Directors of the Company authorized and adopted a
Change in Control Program to provide for certain benefits to the Executive in
the event of certain terminations of employment, and determined that such
program would be in the best interests of the Company; and
WHEREAS, the Board of Directors of the Company has determined that it
would be in the best interests of the Company to provide for certain benefits
to the Executive in the event of certain terminations of employment, upon the
terms and conditions provided in this Agreement (the "Agreement");
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. Definitions:
(a) "Annual Compensation" shall mean the sum of (I) the Executive's
Base Salary in effect immediately prior to the Change in Control or, if
greater, immediately prior to the Executive's termination and (II) the
greater of (1) 80% of the Executive's target Bonus with respect to the
fiscal year during which the Change in Control occurred or, if greater,
the fiscal year during which the Executive's termination occurred and (2)
the Executive's actual Bonus with respect to the fiscal year immediately
preceding the Change in Control.
(b) "Base Salary" shall mean the Executive's annualized base rate of
pay with the Company.
(c) "Beneficiary" shall mean the person or persons named by the
2
Executive pursuant to Section 10 hereof or, in the event no such person is
named or survives the Executive, his estate.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Bonus" shall mean the cash amount, excluding any amount relating
to the vesting of options or granting of performance shares or vesting of
restricted stock or any other long-term incentive award, in excess of the
Executive's Base Salary, awarded to the Executive in any year.
(f) "Cause" shall mean:
(I) dishonesty by Executive which results in significant
loss to the Company and significant personal enrichment to the
Executive;
(II) a material failure of Executive to perform his
obligations under this Agreement; or
(III) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or one
of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand
for substantial performance is delivered to the Executive by the
Board or the Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the
Executive's duties.
(g) "Change in Control" shall mean the occurrence of any of the
following: (1) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended, but excluding
any Company employee stock ownership plan) becomes the beneficial owner
(within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended), directly or indirectly, of securities of the Company
representing 35% or more of the combined voting power of the Company's
then outstanding securities, (2) during any period of 12 months,
individuals who at the beginning of such period constitute the Board of
Directors of the Company cease for any reason to constitute a majority
thereof unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a vote of at
least a majority of the directors then still in office who were directors
at the beginning of the period or (3) the Company sells or otherwise
disposes of, in one transaction or a series of transactions, in a single
12-month period, assets or properties of the Company representing 50% or
more of the total proved reserves (on a volumetric basis) of the Company
as of the beginning of such 12-month period.
3
(h) "Confidential Information" shall mean information about the
Company or any of its Subsidiaries or their respective businesses,
products and practices, disclosed to or known or obtained by Executive as
a direct or indirect consequence of or through the Executive's employment
with the Company, which information is not generally known in the business
in which the Company or such Subsidiaries are or may be engaged. However,
Confidential Information shall not include under any circumstances any
information with respect to the foregoing matters which is (I) available
to the public from a source other than the Executive, (II) released in
writing by the Company to the public or to persons who are not under a
similar obligation of confidentiality to the Company and who are not
parties to this Agreement, (III) obtained by the Company from a third
party not under a similar obligation of confidentiality to the Company,
(IV) required to be disclosed by any court process or any government or
agency or department of any government, or (V) the subject of a written
waiver executed by the Company for the benefit of the Executive.
(i) "Constructive Termination Without Cause" shall mean a termination
of the Executive's employment at his initiative as provided in Section 2
within 30 days following the occurrence, without the Executive's prior
written consent, of one or more of the following events:
(I) any material loss of the Executive's titles or positions
in effect at the time of a Change in Control or any materially adverse
change in the position to which the Executive reports or the principal
departmental functions that report to the Executive at the time of a
Change in Control (reporting relationships) that in any case results
in a material diminution of the Executive's responsibility or the
Executive's access to the Chief Executive Officer of the Company;
(II) the assignment to the Executive of any duties substantially
inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting relationships), authority,
duties or responsibilities as in effect on the date of a Change in
Control, or any other action by the Company which results in a
material diminution in such position, authority, duties or
responsibilities, excluding action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(III) any material reduction in total aggregate compensation,
including the aggregate benefits of all fringe benefits, performance
shares, Bonus opportunity, long-term incentives or perquisites
applicable to the Executive immediately prior to a Change in Control,
provided that any reduction in Base Salary or Bonus opportunity from
that immediately preceding a Change in Control shall be deemed a
material reduction;
4
(IV) the relocation of the Executive's office location as
assigned to him by the Company to a location more than 35 miles from
his office location at the time of a Change in Control;
(V) any failure by the Company to comply with any of the
provisions of this Agreement, other than a failure not occurring in
bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(VI) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement for
Cause; or
(VII) any failure by the Company to comply with and satisfy
Section 5 of this Agreement, provided that the successor contemplated
by Section 5 has received, at least 10 days prior to the giving of
notice of constructive termination by the Executive, written notice
from the Company or the Executive of the requirements of Section 5 of
the Agreement.
For purposes of clauses (I) and (II), (i) the Executive's titles,
positions, authority, duties and responsibilities with respect to the
Company shall mean such only with respect to (a) the Company if it
continues as a separate entity substantially unchanged after the Change in
Control or (b) the business unit, including an unincorporated division of
a larger entity, that succeeds to the largest part of the Company's assets
and (ii) the status of the Company as a public or private company or as a
parent or subsidiary of another entity shall be disregarded.
(j) "Effective Date" shall mean November 3, 1995.
(k) "Initial Term" shall mean the three-year period commencing on the
Effective Date.
(l) "Subsidiary" shall mean any corporation in which the Company
either (I) controls more than 50% of the voting power of all securities of
such corporation or (II) owns more than 50% of the total value of all
equity securities of such corporation.
(m) "Termination Benefits" shall mean:
(I) an amount equal to the product of (A) Annual
Compensation times (B) three; and
(II) payment with respect to any performance shares granted to
Executive, such payment to be prorated based on actual service
completed at the time of the Executive's termination without
5
Cause or Constructive Termination Without Cause, and valued according
to the percentage of goal attainment on the date of termination,
notwithstanding any contrary provisions of such grants or any plans
pursuant to which they are granted; and
(III) immediate vesting and exercisability of all of the
Executive's options to purchase securities of the Company, and
immediate vesting and lapse of restrictions on any restricted stock
grants, outstanding at the time of the Executive's termination without
Cause or Constructive Termination Without Cause, whether or not such
would be the result under the provisions of such options or stock
grants or any plans pursuant to which they are granted; and
(IV) at Executive's election, and subject to Executive's
payment of the applicable premiums set forth on Schedule A, continued
medical, dental and life insurance coverage (or reimbursement for the
premiums for such coverage or reimbursement for covered expenses, at
the Company's election) in each case for three years following the
date of the Executive's termination without Cause or Constructive
Termination Without Cause as though the Executive's employment were
continued in effect during such time and without regard to any benefit
reductions implemented after the date of such termination; provided
that Executive may elect to receive one or more of such coverages and
not the others; and
(V) immediate crediting of an additional three years of
service in the Company's nonqualified retirement plans in which the
Executive is participating at the time of the Change in Control, and
payments under a non-qualified plan equal to the additional benefits
that would be attributable to a crediting of an additional three years
of service in the Company's qualified plans in which the Executive is
participating at the time of the Change in Control; and
(VI) outplacement assistance in an amount not to exceed 15%
of Executive's Base Salary in effect on the date of a Change in
Control.
Anything in this Agreement to the contrary notwithstanding, in the event
it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any Gross-up Payment required
under this paragraph) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest and
6
penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Executive shall be entitled to receive an additional payment (a
"Gross-up Payment") in an amount such that after payment by the Executive
of all income taxes (and any interest and penalties imposed with respect
thereto), but excluding any Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(n) "Term" shall mean the term of this Agreement as described in
Section 17, consisting of the Initial Term and any extensions thereof.
2. Events Triggering Termination Benefits: In the event, within two
years following a Change in Control occurring during the Term, the Executive's
employment is terminated by the Company without Cause or there is a
Constructive Termination Without Cause, then the Executive shall be entitled to
receive the Termination Benefits. The Termination Benefit described in clauses
(I) and (II) of the definition of Termination Benefits shall be paid
immediately upon such termination in a cash lump sum. Except as otherwise
provided in the definition of Constructive Termination Without Cause, the
failure of the Executive to effect a Constructive Termination Without Cause as
to any one event described in such definition shall not affect his entitlement
to effect a Constructive Termination Without Cause as to any other such event.
If (i) the Executive's employment is terminated for Cause, (ii) the Executive
voluntarily terminates his employment and such does not institute a
Constructive Termination Without Cause, or (iii) the Executive's employment is
terminated by death or disability, then the Executive shall not be entitled to
receive the Termination Benefits.
3. No Mitigation; No Offset: In the event of a termination of
employment under Section 2 of this Agreement, the Executive shall be under no
obligation to seek other employment,and there shall be no offset against the
Termination Benefits due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that he may obtain.
4. Effect of Agreement on Other Benefits and Rights of Executive:
[Except as otherwise provided in this Section 4] [for executives with
employment contracts only], nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any plan,program, policy
or practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any contract or agreement
with the Company or any of its affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any
plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to any termination
pursuant to Section 2 shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. [Notwithstanding the foregoing or any provision to the
contrary in the employment agreement described below, in the event of a
termination of employment as described in Section 2 hereof, the Executive may
elect between receiving the Termination Benefits or the amounts payable to the
Executive under that certain employment agreement between the Executive and the
Company dated _______________, 19___ as a consequence of such termination but
shall not be entitled to both] [for executives with employment
7
contracts only].
5. Assignability; Binding Nature: This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors,
heirs (in the case of the Executive) and assigns. No obligations of the
Company under this Agreement may be assigned or transferred by the Company
except that such obligations shall be assigned or transferred (as described
below) pursuant to a merger or consolidation in which the Company is not the
continuing entity, or the sale or liquidation of all or substantially all of
the assets of the Company, provided that the assignee or transferee is the
surviving entity or successor to all or substantially all of the assets of the
Company and such assignee or transferee assumes the liabilities, obligations
and duties of the Company, as contained in this Agreement, either contractually
or as a matter of law. 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 assume
expressly 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. As used in this Agreement,"Company" shall mean the
Company as herein before defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
6. Representation: The Company represents and warrants that it is
fully authorized and empowered to enter into this Agreement and that the
performance of its obligations under this Agreement will not violate any
agreement between the Company and any other person or entity.
7. Entire Agreement: Except to the extent otherwise provided
herein, this Agreement contains the entire understanding and agreement between
the Parties concerning the subject matter hereof and supersedes any prior
agreement.
8. Amendment or Waiver: No provision in this Agreement may be
amended unless such amendment is agreed to in writing and signed by both the
Executive and an authorized officer of the Company. No waiver by either Party
of any breach by the other Party of any condition or provision contained in
this Agreement to be performed by such other Party shall be deemed a waiver of
a similar or dissimilar condition or provision at the same or any prior or
subsequent time. Any waiver must be in writing and signed by the Executive or
an authorized representative of the Company, as the case may be. The Company
will advise the Compensation Committee of the Board of any waivers under, or
amendments to, this Agreement.
9. Severability: In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.
10. Beneficiaries/References: The Executive shall be entitled to
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following the Executive's death by giving the Company written notice
thereof. In the event of the Executive's death or a judicial determination of
his incompetence, reference in this Agreement to the Executive shall be deemed,
where appropriate, to
8
refer to his beneficiary, estate or other legal representative.
11. Governing Law/Jurisdiction: This Agreement shall be governed by
and construed and interpreted in accordance with the laws of Texas without
reference to principles of conflict of laws.
12. Disputes:
(a) In the event of any dispute concerning this Agreement, either
Executive or the Company may compel the resolution of such dispute by
binding arbitration pursuant to the commercial arbitration rules of the
American Arbitration Association. The location of such arbitration shall
be city in which the Executive's principal office with the Company is
located. Upon receipt of a written demand for arbitration, a hearing
shall be scheduled to be held within 60 days of receiving such demand.
All costs, fees and expenses, including attorney fees of both the
Executive and the Company, of any arbitration in connection with this
Agreement which results in any decision or settlement requiring the
Company to make a payment or provide any form of compensation to the
Executive in excess of any amount agreed to be paid by the Company shall
be borne by, and be the obligation of, the Company. In the event the
arbitration does not result in such a decision or settlement, each party
shall bear its own expenses and 50% of the costs and expenses of the
arbitration. The obligation of the Company under this Section 12 shall
survive the termination for any reason of this Agreement (whether such
termination is by the Company, by the Executive, upon the expiration of
this Agreement or otherwise).
(b) In the event that any person asserts that any of the
payments or benefits provided to or in respect of Executive pursuant
to this Agreement or otherwise, by or on behalf of the Company, are
subject to excise taxes under Section 4999 of the Code, the
Company shall assume, and pay the costs of, the dispute with such
person but may settle such dispute in its discretion.
(c) Pending the outcome or resolution of any arbitration, the Company
shall continue payment of all amounts due the Executive without regard to
any dispute but only if Executive agrees in writing that if and to the
extent that the Company prevails he will promptly repay to the Company
(or, regardless of the existence of such agreement, the Company may set
off against any amounts due to the Executive) appropriate amounts plus
interest at the applicable Federal Rate provided for in Section
7872(f)(2)(A) of the Code from date any amount was paid by Company to
Executive.
13. Notices: Any notice given to either Party shall be in writing and
shall be deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid,return receipt requested, duly
addressed to the Party concerned at the address indicated below or to such
changed address as such Party may subsequently give such notice of:
If to the Company or the Board:
9
Cabot Oil & Gas Corporation
00000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Secretary
If to the Executive:
[Name]
[Address]
14. Confidential Information:
(a) Non-Disclosure: During the Term or at any time
thereafter, irrespective of the time, manner or cause of the
expiration of the Term, Executive will not directly or indirectly
reveal, divulge, disclose or communicate to any person or entity,
other than authorized officers, directors and employees of the
Company, in any manner whatsoever, any Confidential Information
without the prior written consent of the Board.
(b) Return of Property: Upon the Executive's termination of
employment, Executive will surrender to the Company all Confidential
Information, including without limitation, all lists, charts,
schedules, reports, financial statements, books and records of the
Company or any Subsidiary, and all copies thereof, and all other
property belonging to the Company or any Subsidiary, provided
Executive shall be accorded reasonable access to such Confidential
Information subsequent to the Executive's termination of employment
for any proper purpose as determined in the reasonable judgment of
the Company.
15. Headings: The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
16. Counterparts: This Agreement may be executed in two or more
counterparts.
17. Term of Agreement: This Agreement shall remain in effect for the
Initial Term, for any extensions of the Term as set forth herein and thereafter
to the extent necessary to maintain this Agreement in effect for a period of 24
months following any Change in Control during the Term. On the second
anniversary of the Effective Date and on each succeeding anniversary
thereafter, the Term shall be automatically extended by one year from the date
upon which it would otherwise expire, unless prior to such anniversary the
Company shall have given written notice to the Executive that the Term shall
not be so extended. In addition, the respective rights and obligations of the
Parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the
10
date first written above.
CABOT OIL & GAS CORPORATION
Date: February ___, 1996 By ____________________________
Name:
Title:
EXECUTIVE
Date: ______________, 1996 By ____________________________
Name:
11
The following is a list of the officers who entered into a Change in
Control Agreement with the Company:
X. X. Xxxx Vice President, Land
X. X. Xxxxxx Vice President, Marketing
L. A. Machesney Corporate Secretary and Managing Counsel
X. X. Xxxx Controller
X. X. Xxxxxx Vice President, Regional Manager
X. X. Xxxxxxxxxx Vice President, Chief Financial Officer and Treasurer
(also has an employment agreement, dated September 25,
1995 and, accordingly, Section 4 is modified to
reflect that agreement)
X. X. Xxxxxxx Vice President, Business Development and Engineering
X. X. Xxxxxxxxx Vice President, Regional Manager