July 1, 1997
PRIVILEGED AND CONFIDENTIAL
Officer
Title
Address
City, State, Zip Code
Re: Termination Agreement
Dear Officer:
XXXXXXXX Gold Corporation (the "Company") considers it essential to the best
interest of its stockholders to xxxxxx the continuous employment of key
management personnel. In this connection, the Board of Directors (the "Board")
of the Company recognizes that, as is the case with many publicly held
corporations and their subsidiaries, the possibility of a Change in Control may
exist and that such possibility, and the uncertainty and questions which it may
raise among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company's
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from the possibility of
a Change in Control of the Company.
In order to induce you to remain in the employ of the Company and in
consideration of your agreement set forth in Subsection 2(ii) hereto, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement ("Agreement") in the event your employment with the Company is
terminated subsequent to a "Change in Control of the Company" (as defined in
Section 2 hereto) under the circumstances below. This letter, however, does not
otherwise change your employment arrangements and except for the conditions
contained therein pertaining to a Change in Control, your continued employment
continues to be subject to the will of the Board of the Company.
1. TERM OF AGREEMENT
This Agreement shall commence on the date hereof and shall continue in
effect through June 30, 2000; provided, however, if a Change in Control
of the Company shall have occurred during the term of this Agreement,
this Agreement shall continue in effect for a period of three
(3) years beyond the month in which such Change in Control occurred;
provided further, that in no event shall this Agreement extend beyond
your normal retirement age unless specifically endorsed to so provide.
2. CHANGE IN CONTROL
(i) No benefits shall be payable hereunder unless there shall have been a
Change in Control of the Company, as set forth below. For purposes of
this Agreement, a "Change in Control of the Company" shall be deemed
to have occurred if:
(A) Any "person" (as such term is used in Sections 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 Company or a corporation owned,
directly or indirectly by the stockholders of the
Company in substantially the same proportions as their
ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of
the Company representing twenty percent (20%) or more
of the combined voting power of the Company's then
outstanding securities; or
(B) During any period of two (2) consecutive years (not
including any period prior to the execution 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 Company to effect a
transaction described in clause (A) or (C) of this
Subsection) whose election by the Board or nomination
for election by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) 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 a majority thereof; or
(C) The shareholders of the Company approve a merger or
consolidation of the Company with any other
corporation, other than a merger or consolidation which
would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity) at least eighty percent (80%) of the combined
voting power of the voting securities of the company or
such surviving entity outstanding immediately after
such merger or consolidation, or the shareholders of
the Company approve an agreement for the sale or
disposition of all or substantially all the Company's
asset; or
(D) There occurs any "Takeover Event," as such term is defined in
the Amended and Restated Long-Term Incentive Plan of the
Company, as amended November 4, 1992, or a "Change in Control,"
as such term is defined in the 1996 Long-Term Equity Incentive
Plan of the Company.
(ii) For purposes of this Agreement, a "potential Change in Control of the
Company" shall be deemed to have occurred if:
(A) The Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control of the
Company;
(B) Any person (including the Company) publicly announces an
intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control of the
Company;
(C) Any person, other than a trustee or other fiduciary
holding securities under an employee benefit plan of
the Company of a corporation owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership
of stock of the Company, who is or becomes the
beneficial owner, directly or indirectly, of securities
of the Company representing nine and a half percent
(9.5%) or more of the combined voting power of the
Company's then outstanding securities, increases his
beneficial ownership of such securities by five percent
(5%) or more over the percentage so owned by such
person on the date hereof; or
(D) The Board adopts a resolution to the effect that, for purposes
of this Agreement, a potential Change in Control of the Company
has occurred.
You agree that, subject to the terms and conditions of this
Agreement, in the event of a potential Change in Control of the
Company, you will remain in the employ of the Company until the
earliest of: (i) a date which is six (6) months from the occurrence
of such potential Change in Control of the Company; (ii) the
termination by your of your employment by reason of Disability, as
defined in Subsection 3(i); or (iii) the occurrence of a Change in
Control of the Company.
3. TERMINATION FOLLOWING CHANGE IN CONTROL
If any of the events described in Subsection 2(i) hereof constituting a
Change in Control of the Company shall have occurred, you shall be
entitled to the benefits provided in Subsection 4(iii) hereof either upon
(a) the subsequent termination of your employment during the term of this
Agreement, or (b) upon your Voluntary Termination within 365 days
following occurrence of any of such events as spedified in Section 2,
hereof, unless such termination is (A) because of your death or
Disability as defined in Section 3 (i), or (B) by the Company for Cause.
(i) DISABILITY. If, as a result of your incapacity due to physical or
mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive
months, and within thirty (30) days after written notice of
termination is given you shall not have returned to the full-time
performance of your duties, your employment may be terminated for
"Disability".
(ii) CAUSE. Termination by the Company of your employment for "Cause" shall
mean
termination upon (A) the willful and continued failure by you to
substantially perform your duties with the Company (other than any
such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance
of a Notice of Termination) after a written demand for substantial
performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that
you have not substantially performed your duties, or (B) the willful
engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. For purposes of
this Subsection, no act, or failure to act, on your part shall be
deemed "willful" unless done, or omitted to be done, by you not in
good faith and without reasonable belief that your action or omission
was in the best interest of the Company. Notwithstanding the
foregoing, you shall not be deemed to have been Terminated for Cause
unless and until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to you and opportunity for you, together with your
counsel, to be heard before the Board), finding that in the good
faith opinion of the Board you were guilty of conduct set forth above
in clauses (A) or (B) of the first sentence of this Subsection and
specifying the particulars thereof in detail.
(iii VOLUNTARY TERMINATION. At any time during a period of 365 consecutive
days following the occurrence of any of the events described in
Subsection 2 (i) hereof constituting a Change of Control of the
Company, you shall be entitled to voluntarily terminate your
employment with the Company ("Voluntary Termination") by a Notice of
Termination as provided in Subsection 3 (iv) hereof. Upon such
Voluntary Termination, you shall be entitled to the benefits
described in Subsection 4 (iii) hereof.
(iv) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (A) if your employment is terminated for
Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have
returned to the full-time performance of your duties
during such thirty (30) day period), and (B) if your
employment is terminated pursuant to Subsection (ii)
above or for any other reason (other than Disability),
the date specified in the Notice of Termination (which,
in the case of a termination pursuant to Subsection
(ii) above shall not be less than thirty (30) days, and
in the case of a termination pursuant to Subsection
(iii) more than sixty (60) days, respectively, from the
date such Notice of Termination is given); provided
that if, within fifteen (15) days after any Notice of
Termination is given, or if later, prior to the Date of
Termination (as determined without regard to this
provision), the party receiving such Notice of
Termination notifies the other party that a dispute
exists concerning the termination, the Date of
Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement
of the parties by a binding arbitration award, or by a
final judgement, order or decree of a court of
competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has
expired and no appeal has been perfected); provide that
the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith
and the party giving such notice pursues the resolution
of such dispute with reasonable diligence.
Notwithstanding the pendency
of any such dispute, the Company will continue to pay you full
compensation in effect when the notice giving rise to the dispute
was given (including, but not limited to, base salary) and
continue you as a participant in all compensation, benefit and
insurance plans in which you were participating when the notice
giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Subsection. Amounts paid under
this Subsection are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
.
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY
Following a Change in Control of the Company, as defined by Subsection
2(i), upon termination of your employment or during a period of
disability, you shall be entitled to the following benefits:
(i) During any period that you fail to perform your
full-time duties with the Company as a result of
incapacity due to physical or mental illness, you shall
continue to receive your base salary at the rate in
effect at the commencement of any such period, together
will all compensation payable to you under the Xxxxxxxx
Gold Corporation annual incentive plan or other plan
during such period, until this Agreement is terminated
pursuant to Section 3(i) hereof. Thereafter, or in the
event your employment shall be terminated, or by reason
of your death, your benefits shall be determined under
the Company's retirement, insurance and other
compensation programs then in effect in accordance with
the terms of such programs.
(ii) If your employment shall be terminated by the Company for Cause or
Disability, or death, the Company shall pay you your full base salary
through the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus all other amounts to which you
are entitled under any compensation plan of the Company at the time
such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(iii) If your employment by the Company shall be terminated (a) by the
Company other than for Cause of Disability or (b) upon your
Voluntary Termination as set forth in Subsection 3(iii) hereof,
then you shall be entitled to the benefits provided below:
(A) The Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are
entitled under any compensation plan of the Company, at the time
such payments are due, except as otherwise provided below.
(B) In lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as
severance pay to you, a lump sum severance payment (together
with the payments provided in Paragraph E below and any payment
you may receive pursuant to Paragraph D below, the "Severance
Payments") equal to 2.0 times the sum of (i) your annual base
salary and (ii) bonuses, averaged over the
three (3) years (or such portion of the three (3) years during
which you actually were employed by the Company) prior to the
occurrence of the circumstances giving rise to the Notice of
Termination.
(C) Health plan, dental plan, life insurance plan, and long-term
disability plan coverage in effect on the Date of Termination
will continue for a period of thirty six (36) months from the
Date of Termination.
(D) Except for Incentive Stock Options ("ISO's") which are
hereby specifically excluded, in lieu of shares of
common stock of the Company ("Company Shares") issuable
upon exercise of outstanding options ("Options")
granted to you under the Company's Long- Term Incentive
Plan as amended from time to time, or any other plan
then in effect (which Option shall be canceled upon the
making of the payment referred to below), unless you
notify the Company by giving notice in accordance with
Section 6 hereof within fifteen (15) days after receipt
of Notice of Termination that you do not wish such
payment, the Company shall pay to you not later than
the fifth day following the Date of Termination, an
amount in cash equal to the product of (i) the
difference (to the extent that such difference is a
positive number) obtained by subtracting the per share
exercise price of each Option held by you whether or
not then fully exercisable from the higher of (A) the
closing price of Company Shares as reported on the
American Stock Exchange on the Date of Termination, or
(B) the highest per share price for Company Shares
actually paid in connection with any Change in Control
of the Company, or (C) the highest per share price
payable under the terms of the Company's Long-Term
Incentive Plans as amended from time to time and (ii)
the number of Company Shares covered by each such
Option.
(E) The Company shall also pay to you all legal fees and expenses
incurred by you as a result of such termination (including all
such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") to any payment or
benefit provided hereunder).
(F) In the event that you become entitled to the payments
(the "Severance Payments") provided under paragraphs
(B), (D), and (E) above, or to any other payments or
benefits received or to be received by you in
connection with a Change in Control of the Company or
your termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement
or agreement with the Company) any person whose actions
result in a Change in Control or any person affiliated
with the Company or such person, (collectively with the
Severance Payments, the "Total Payments") if any of the
Total Payments will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code, the Company
shall pay to you at the time specified in paragraph (G)
below, an additional amount (the "Gross-Up Payment")
such that the net amount retained by you, after
deduction of any Excise Tax on the Total Payments and
any federal income
tax and Excise Tax upon the payment provided for by this
paragraph, shall be equal to the Total Payments. For purposes of
determining whether any of the Total Payments will be subject to
the Excise Tax and the amount of such Excise Tax, (i) the Total
Payments shall be treated as "parachute payments" within the
meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(2) of
the Code, and all "excess parachute payments" within the meaning
of Section 280G(b)(1) shall be treated as subject to the Excise
Tax, unless, in the opinion of tax counsel selected by the
Company's independent auditors and acceptable to you, such other
payments or benefits (in whole or in part) do not constitute
parachute payments, or such compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code in
excess of the base amount within the meaning of Section 280G(b)(3)
of the Code, or are otherwise not subject to the Excise Tax, (ii)
in the amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the
total amount of the total Payment or (B) the amount of excess
parachute payments within the meaning of Section 280G(b)(1) (after
applying clause (i), above), and (iii) the value of any non-cash
benefits or any deferred payment or benefit shall be determined by
the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. For purpose
of determining the amount of the Gross-Up Payment, you shall be
deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up
Payment is to be made. In the event that the Excise Tax is
subsequently determined to be less than the amount taken into
account hereunder at the time of the termination of your
employment, you shall repay to the Company at the time that the
amount of such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such reduction
plus the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable
to the Excise Tax and federal income tax imposed on the Gross-Up
Payment being repaid by you if such repayment results in a
reduction in Excise Tax and/or a federal income tax deduction)
plus interest on the amount of such repayment at the rate provided
in Section 1274(b((2)(B) of the Code. In the event that the Excise
Tax is determined to exceed the amount taken into account
hereunder at the time of the termination of your employment
(including by reason of any payment the existence or amount of
which cannot be determined a the time of the Gross-Up Payment),
the Company shall make an additional gross-up payment in respect
of such excess (plus any interest payable with respect to such
excess) at the time that the amount of such excess is finally
determined.
(G) The payments provided for in paragraph (B), (D), and
(E) above shall be made not later than the fifth (5th)
day following the Date of Termination, provided,
however, that if the amounts of such payments cannot be
finally determined on or before such day, the Company
shall pay to you on such day an estimate, as determined
in good faith by the Company, of the minimum amount of
such payments and shall pay the remainder of such
payments (together with interest at the rate provided
in Section 127(b)(2)(B) of the Code) as soon as the
amount thereof can be determined, but in no event that
the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess
shall constitute a loan by the Company to you payable
on
the fifth (5th) day after demand by the Company (together with
interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(iv) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment of benefit provided
for in this Section 4 be reduced by any compensation earned by you
as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by you
to the Company, or otherwise.
(v) In addition to all other amounts payable to you under this Section 4,
you shall be entitled to receive all benefits payable to you under
the 401(k) Thrift Plan, and any other plan or agreement relating to
retirement benefits.
5. RELATIONSHIP WITH LONG-TERM INCENTIVE PLANS
In the event of any inconsistency between the terms of this Agreement and
terms of the Company's Long-Term Incentive Plans, the terms of this
Agreement shall control.
6. SUCCESSORS: BINDING AGREEMENT
(i) 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 assumption and
agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in
the same amount and on the same terms as you would be
entitled to hereunder if you terminate your employment
for Good Reason following a Change in Control of the
Company, except that for purposes of implementing the
foregoing, the date of which any such succession
becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall
mean the Company as hereinbefore 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.
(ii) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should
die while any amount would still be payable to you hereunder if you
had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement
to your devisee, legatee or other designee or, if there is no such
designee, to your estate.
7. NOTICES
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 respective addresses set
forth on the first page of this Agreement, provided that all notice to
the Company shall be directed to the attention of the Board with a copy
to the Secretary 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.
8. MISCELLANEOUS
No provisions of this Agreement may be modified, waiver or discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or 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. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth
in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State
of Delaware. All references to Sections of the Exchange Act or the Code
shall be deemed also to refer to any successor provisions to such
Sections. Any payments provided for hereunder shall be paid net or any
applicable withholding required under federal, state or local law. The
obligations of the Company under Section 4 shall survive the expiration
of the term of this Agreement.
9. VALIDITY
The invalidity or unenforceable ability or any provision of this
Agreement shall not affect the validity or enforceability or any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, but all of which together will
constitute one and the same instrument.
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter which will then
constitute our agreement on this subject.
Sincerely,
XXXXXXXX GOLD CORPORATION
ACCEPTED AND AGREED to on this _____ day of ___________________, 1997.
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Employee Signature
