EXHIBIT 10(a)(i)
FORM OF TERMINATION AGREEMENT WITH CERTAIN
SENIOR MANAGEMENT PERSONNEL (AS AMENDED)
Exhibit 10(a)(i)
TERMINATION AGREEMENT
This Agreement, made and entered into as of this ___ day
of ________, 1996, by and between THE LOUISIANA LAND AND
EXPLORATION COMPANY, a Maryland corporation with its principal
executive offices at 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxx
00000 ("Company"), and __________________________ residing at
___________________ ("Executive").
W I T N E S S E T H :
WHEREAS, Company and Executive entered into a Termination
Agreement as of ____________, as amended and restated as of
__________ (the "Prior Termination Agreement"), and wish to amend
and restate said Prior Termination Agreement as hereinafter set
forth in this Agreement; and
WHEREAS, the Board of Directors of Company considers the
maintenance of a sound management to be essential to protecting and
enhancing the best interests of Company and its stockholders and
recognizes that the possibility of a change in control raises
uncertainty and questions among key employees and may result in the
departure or distraction of such key employees to the detriment of
Company and its stockholders; and
WHEREAS, the Board of Directors of Company believes it is
important, should Company receive proposals from third parties with
respect to its future, to enable Executive, without being
influenced by the uncertainties of his own situation, to assess and
advise Company whether such proposals would be in the best
interests of Company and its stockholders and to take such other
action regarding such proposals as Company might determine to be
appropriate; and
WHEREAS, the Board of Directors of Company wishes to
assure that it will have the continued dedication of Executive and
the availability of Executive's advice and counsel notwithstanding
the possibility, threat, or occurrence of an event affecting
control of Company, and to induce Executive to remain in the employ
of Company;
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED:
ARTICLE I
Definitions
For the purposes of this Agreement, the following terms
shall have the meanings set forth herein:
(a) "Change in Control" shall be deemed to have occurred
if any of the following shall occur:
(i) Any person (within the meaning of Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934,
as amended) ("Person") (but excluding Company, a
Subsidiary, or a trustee or other fiduciary holding
securities under any employee benefit plan or
employee stock plan of Company or a Subsidiary)
becomes, directly or indirectly, the "beneficial
owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of 25%
or more of the combined voting power of the then
outstanding voting securities entitled to vote
generally in the election of directors ("Voting
Securities") of Company.
(ii) Individuals constituting the Board of Directors of
Company on the date of this Agreement and the
successors of such individuals ("Continuing
Directors") cease to constitute a majority of the
Board of Directors of Company. For this purpose, a
director shall be a successor if and only if he or
she was nominated by a Board of Directors of
Company (or a Nominating Committee thereof) on
which individuals constituting the Board of
Directors of Company on the date of this Agreement
and their successors (determined by prior
application of this sentence) constituted a
majority.
(iii) The stockholders of Company approve a merger,
consolidation, or reorganization of Company
("Combination") with any other corporation or legal
person, other than a Combination which both (a) is
approved by a majority of the directors of Company
who are Continuing Directors, and (b) would result
in stockholders of Company immediately prior to the
Combination owning, immediately thereafter, more
than fifty percent (50%) of the combined voting
power of either the surviving entity or the Person
owning directly or indirectly all the common stock,
or its equivalent, of the surviving entity.
(iv) The stockholders of Company approve a plan of
complete liquidation of Company or an agreement for
the sale or disposition by Company of all or
substantially all of Company's assets.
(v) The Board of Directors of Company adopts a
resolution to the effect that, for purposes of this
Agreement, a Change in Control of Company has
occurred.
(b) "Involuntary Termination" shall mean termination of
Executive's employment with Company within the Protection Period
(as hereinafter defined) if such termination results from:
(i) termination by Company on any grounds whatsoever
except for "cause" as defined below; or
(ii) termination by Executive in connection with or
based upon any of the following: a significant
change in the nature or scope of Executive's duties
and/or responsibilities; notification of a
reduction in Executive's compensation or in his
participation in any employee benefit plan or
program; ordered relocation to a place of
employment which is more than 50 miles away from
Executive's principal place of employment
immediately before the Change in Control; failure
to provide facilities or services which are
suitable to Executive's position and adequate for
the performance of his duties; or a good faith
determination by Executive that due to any other
material change in circumstances affecting the
terms and conditions of employment he is not able
properly to carry on his duties and
responsibilities.
The Protection Period shall be: (i) if Executive has not attained
age 55 at the time of the Change in Control, the period of two
years beginning on the date of the Change in Control, and (ii) if
Executive is age 55 or older at the time of the Change in Control,
the period of five years beginning on the date of the Change in
Control. For purposes of subsection b(i), termination for "cause"
shall mean: (A) an act or acts of dishonesty on the part of
Executive resulting or intending to result directly or indirectly
in substantial gain or personal enrichment to which Executive was
not legally entitled at the expense of Company; or (B) a material
breach of Executive's duties or responsibilities resulting in
demonstrably material injury to Company, provided, however, that
such breach shall not include (i) bad judgment or negligence on the
part of Executive; (ii) neglect of duties; (iii) any act or
omission believed by Executive in good faith to have been in or not
opposed to the interests of Company; or (iv) any act or omission in
respect of which a determination could properly be made that
Executive met the applicable standard of conduct prescribed for
indemnification or reimbursement or payment of expenses under the
By-Laws of Company, the laws of the State of Maryland or the
directors' and officers' liability insurance of Company, in each
case as in effect at the time of such act or omission.
(c) "Subsidiary" shall mean any corporation in which
Company possesses directly or indirectly fifty percent (50%) or
more of the total combined voting power of all classes of stock.
ARTICLE II
Termination Benefits
In the event Executive's employment with Company
terminates as a result of an Involuntary Termination, Company shall
provide to Executive the following benefits:
(a) Company shall pay to Executive in a lump sum within
30 days of such Involuntary Termination an amount of cash equal to
three times the sum of (i) Executive's highest annual salary rate
from Company, whether current or deferred, in effect for any of the
thirty-six months immediately prior to the date of Involuntary
Termination or Change in Control (whichever is greater), and
(ii) the greater of (A) the highest annual bonus paid, granted or
awarded Executive by Company, whether current or deferred and
whether or not vested, during or in respect of any of the three
calendar years immediately prior to the date of Involuntary
Termination or Change in Control (whichever is greater) or (B) the
product of the percentage of salary payable as a bonus at 100% of
target with respect to Executive under Company's target bonus
program for the calendar year in which the Involuntary Termination
occurs multiplied by Executive's highest annual salary rate
determined pursuant to (i) above. For purposes of clause (ii) of
the preceding sentence, awards of Company Common Stock shall be
valued at the average of the high and low sales prices as reported
on the New York Stock Exchange - Composite Transactions on the date
of the award (or, if the stock did not trade on that date, on the
first date prior thereto on which the stock traded).
(b) Company shall supplement the benefits payable in
respect of Executive under The LL&E Pension Plan, the pension plan
component of The LL&E Compensatory Benefits Agreement, and the
pension plan component of The LL&E Supplemental Excess Plan
(collectively, the "Pension Plans") by making a lump-sum cash
payment within 30 days of such Involuntary Termination in an amount
equal to the present value of the difference between (i) the
benefits that Executive would have been entitled to receive under
the Pension Plans if he had been credited with three additional
years of service (but no additional years of age) for purposes of
the benefit accrual formula under the Pension Plans as of the date
of his Involuntary Termination, and (ii) the benefits that
Executive is entitled to receive under the Pension Plans determined
without regard to this subsection b. Such present value shall be
determined by an actuary selected by Company based on the actuarial
equivalence factors, methods, and assumptions used in determining
lump-sum distributions under The LL&E Pension Plan. The additional
years of service added for purposes of the benefit accrual formula
under the Pension Plans pursuant to this subsection b shall not be
counted for purposes of determining whether Executive qualifies as
a retiree eligible for retiree benefits or for any other enhanced
benefits under the Pension Plans or under any other benefit plan or
program of Company.
(c) During the period of three years beginning on the
date of Executive's Involuntary Termination, Executive shall be
deemed to remain an employee of Company for purposes of the
applicable medical, life insurance, and long-term disability plans
and programs of Company and shall be entitled to receive the
benefits available to employees thereunder, provided that continued
participation is possible under applicable law and the terms of
such plan or program, and provided, further, that if Executive
qualified for retiree benefits under the applicable medical plan or
program on the date of his termination of employment, Executive
shall instead be entitled to receive the benefits available to
retirees in accordance with the terms of such plan or program. In
the event that Executive's participation in any such benefit plan
or program is barred, Company shall arrange to provide Executive
with substantially similar benefits. The additional three years of
coverage pursuant to this subsection c shall not be counted for
purposes of determining whether Executive qualifies as a retiree
eligible for retiree benefits under the applicable medical plan or
program or under any other benefit plan or program of Company.
(d) Company shall pay to Executive in a lump sum within
30 days of such Involuntary Termination an amount of cash equal to
30% of Executive's highest annual salary rate from Company paid by
Company during any of the thirty-six months immediately prior to
the date of Involuntary Termination or Change in Control (whichever
is greater). The payment pursuant to this subsection d is intended
to compensate Executive for the Company-provided benefits that he
would have received under The LL&E Savings Plan, the savings plan
component of The LL&E Compensatory Benefits Agreement, and the
savings plan component of The LL&E Supplemental Excess Plan if he
had remained an employee of Company for the three-year period
following the Involuntary Termination.
(e) Company shall promptly reimburse Executive for any
fees that he may pay to an outplacement assistance firm in order to
obtain outplacement assistance services, provided that (i) such
expenses must be incurred within twelve (12) months after the
Involuntary Termination and (ii) Company's obligation pursuant to
this subsection e shall be limited to fifteen percent (15%) of
Executive's highest annual base salary rate from Company, whether
current or deferred, in effect during any of the thirty-six months
immediately prior to the Involuntary Termination or Change in
Control (whichever is greater).
(f) Each stock option granted by Company to Executive
and outstanding immediately prior to the Involuntary Termination
shall be fully exercisable and may be exercised by Executive (or
his beneficiary or personal representative) at any time prior to
the expiration date of the applicable option (determined without
regard to any earlier termination that would otherwise occur by
reason of termination of employment). With respect to any shares
of restricted stock granted by Company to Executive and still
subject to restrictions immediately prior to the Involuntary
Termination, all restrictions shall immediately lapse upon such
Involuntary Termination. With respect to any performance shares
granted by Company to Executive and for which the Performance Cycle
has not expired on the date of Involuntary Termination, Executive
shall receive an immediate payment of a percentage of such
performance shares, which percentage shall be the greater of: (i)
100%, or (ii) the percentage of performance shares earned under the
applicable program for the last Performance Cycle that ended before
the date of Involuntary Termination. Any outstanding award
agreements with Executive are deemed amended to the extent
necessary to conform with this subsection f.
(g) Company shall pay and provide to Executive any and
all other payments and benefits to which Executive would at that
time be entitled as a terminating employee under any then existing
Company plan or program.
(h) Any payments and benefits provided for under this
Agreement shall be paid net of any applicable withholding required
under Federal, state or local law.
ARTICLE III
Parachute Payments
If any payment or benefit received by or in respect of
Executive under this Agreement or any other plan, arrangement or
agreement with Company or any of its subsidiaries (determined
without regard to any additional payments required under this
Article III and Appendix A) (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 similar tax that may
hereafter be imposed) or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, being hereinafter
collectively referred to as the "Excise Tax"), Company shall pay to
Executive with respect to such Payment at the time specified in
Appendix A an additional amount (the "Gross-up Payment") such that
the net amount retained by Executive from the Payment and the
Gross-up Payment, after reduction for any Excise Tax upon the
payment and any Federal, state and local income and employment tax
and Excise Tax upon the Gross-up Payment, shall be equal to the
Payment. The calculation and payment of the Gross-up Payment shall
be subject to the provisions of Appendix A.
ARTICLE IV
Restrictions on Executive
During the term of this Agreement, Executive will regard
and preserve as confidential all knowledge and information
pertaining uniquely to the business of Company obtained by him from
any source whatever as a result of his employment with Company and
which is not a matter of public knowledge.
ARTICLE V
Miscellaneous
SECTION 1. Not an Employment Agreement. This Agreement
does not constitute an agreement or contract of employment and
shall not be construed to limit in any manner the right of Company
to terminate Executive's employment.
SECTION 2. No Duty to Seek Employment. Executive shall
not be under any duty or obligation to seek or accept other
employment following termination and no amount, payment or benefit
due Executive hereunder or otherwise shall be reduced or suspended
if Executive accepts subsequent employment.
SECTION 3. Failure to Enforce and Waiver. The failure
to insist upon strict compliance with any of the terms, covenants
or conditions of this Agreement shall not be deemed a waiver of
such terms, covenants or conditions, and the waiver or
relinquishment of any right or power under this Agreement at any
one or more times shall not be deemed a waiver or relinquishment of
such right or power at any other time or times.
SECTION 4. Amendment and Restatement of Prior
Termination Agreement. This Agreement constitutes an amendment and
restatement of the Prior Termination Agreement between Executive
and Company and supersedes the Prior Termination Agreement.
SECTION 5. No Set-Offs or Counterclaims. The Company's
obligation to provide the benefits set forth in this Agreement
shall be absolute and unconditional and shall not be affected by
any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, or other right which Company or any
Subsidiary may have against Executive or anyone else.
SECTION 6. Company's Successors. Any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of
Company, by agreement in form and substance satisfactory to
Executive, shall expressly assume and agree to perform this
Agreement in the same manner and to the same extent that Company
would be required to perform if no such succession had taken place.
As used in this Agreement, "Company" shall mean Company as defined
in the preamble to this Agreement and any successor to its business
or assets which executes and delivers the agreement provided for in
this Section 6 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.
SECTION 7. Inurement. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by Company and
Executive and their respective personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees, legatees and assigns.
SECTION 8. Executive's Representative. In the event
Executive dies while entitled to any payments and benefits
hereunder, Executive's legal representatives shall be entitled to
receive all payments and benefits due Executive.
SECTION 9. Legal Expenses; Dispute Resolution;
Arbitration.
(a) Company shall promptly pay all legal fees and
related expenses incurred by Executive in seeking to obtain or
enforce any right or benefit under this Agreement or to defend
against any claim or assertion in connection with this Agreement
(in each case including all fees and expenses, if any, incurred in
seeking advice in connection therewith) or to enforce or defend
against any arbitration award pursuant to subsection c below.
(b) If any dispute or controversy arises under or in
connection with this Agreement, including without limitation any
claim under any Federal, state or local law, rule, decision or
order relating to employment or the fact or manner of its
termination, Company and Executive shall attempt to resolve such
dispute or controversy through good faith negotiations.
(c) If such parties fail to resolve such dispute or
controversy within ninety days, such dispute or controversy shall
be settled by arbitration, conducted before a panel of three
arbitrators in Louisiana in accordance with the applicable rules
and procedures of the American Arbitration Association then in
effect. Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction. Such arbitration shall
be final and binding on the parties. Costs of any arbitration,
including, without limitation, reasonable attorneys' fees of both
parties, shall be borne by Company.
(d) Pending the resolution of any dispute, Company shall
continue payment of all amounts due Executive under this Agreement
and all benefits to which Executive is entitled other than those
specifically at issue.
SECTION 10. Notices. All notices required or permitted
to be given under this Agreement shall be given in writing and
shall be deemed sufficiently given if delivered by hand or mailed
by registered mail, return receipt requested, to his residence in
the case of Executive and to its principal executive offices in the
case of Company. Either party may by giving notice to the other
party in accordance with this Section 10 change the address at
which it is to receive notices hereunder.
SECTION 11. Unsecured Creditor. The rights of Executive
to benefits under this Agreement shall be solely those of an
unsecured creditor of Company. Any asset acquired or held by
Company or funds allocated by Company in connection with the
liabilities assumed by Company pursuant to this Agreement shall not
be deemed to be security for the performance of Company's
obligations pursuant hereto, but shall be and remain general assets
of Company.
SECTION 12. Nonalienation. To the extent permitted by
law, the right or interest of Executive hereunder shall not be
assignable or transferable, in whole or in part, either directly or
by operation of law or otherwise, including without limitation,
execution, levy, garnishment, attachment, pledge, bankruptcy or in
any other manner (but excluding devolution on account of mental
incompetency and passage under will or intestacy laws in the case
of death), and any such right or interest hereunder shall not be
liable for or subject to any obligation or liability of Executive.
SECTION 13. Governing Law. This Agreement is made
pursuant to, and shall be governed by, the laws of the State of New
York, in all respects (without giving effect to principles of
conflict of laws), including, without limitation, matters of
construction, validity and performance.
SECTION 14. Severability. It is the desire and intent
of the parties that the terms, provisions, covenants and remedies
contained in this Agreement shall be enforceable to the fullest
extent permitted by law. If any such term, provision, covenant or
remedy of this Agreement or the application thereof to any person
or circumstances shall, to any extent, be construed to be invalid
or unenforceable in whole or in part, then such term, provision,
covenant or remedy shall be construed in a manner so as to permit
its enforceability under the applicable law to the fullest extent
permitted by law. In any case, the remaining provisions of this
Agreement or the application thereof to any person or circumstances
other than those to which they have been held invalid or
unenforceable, shall remain in full force and effect.
SECTION 15. Changes to Agreement. This Agreement may
not be changed orally but only by agreement in writing, signed by
the party against whom enforcement of any waiver, change,
modification or discharge is sought.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year set forth above.
THE LOUISIANA LAND AND
EXPLORATION COMPANY
ATTEST:
_________________________ By
WITNESS:
_________________________
Appendix A
Gross-up Payments
The following provisions shall be applicable with respect
to the Gross-up Payments described in Article III:
(a) For purposes of determining whether any of the
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) all of the Payments received or to be received
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)(1) of the Code shall be
treated as subject to the Excise Tax unless, in the opinion of tax
counsel selected by Executive and reasonably acceptable to Company,
the Payments (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of the Code,
or excess parachute payments (as determined after application of
Section 280G(b)(4)(B) of the Code), and (ii) the value of any non-
cash benefits or any deferred payment or benefit shall be
determined by independent auditors selected by Executive and
reasonably acceptable to Company in accordance with the principles
of Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-up Payment Executive 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 and state and local income taxes at the
highest marginal rate of taxation to which such payment could be
subject based upon the state and locality of Executive's residence
or employment, net of the maximum reduction in Federal income taxes
which could be obtained from deduction of such state and local
taxes. In addition, for purposes of determining the amount of the
Gross-up Payment, Company shall make a determination of the amount
of employment taxes required to be paid on the Gross-up Payment.
In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the time the
Gross-up Payment is made, Executive shall repay to 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 the Excise Tax and Federal and state and local
income and employment tax imposed on the portion of the Gross-up
Payment being repaid by Executive if such repayment results in a
reduction in Excise Tax and/or a Federal and state and local income
or employment tax deduction), plus interest on the amount of such
repayment at the Federal short-term rate as defined in Section
1274(d)(1)(C)(i) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time the Gross-up Payment is made (including by reason of any
payments the existence or amount of which cannot be determined at
the time of the Gross-up Payment), Company shall make an additional
gross-up payment in respect of such excess (plus any interest,
penalties or additions payable with respect to such excess) at the
time that the amount of such excess is finally determined.
Notwithstanding the foregoing, Company shall withhold from any
payment due to Executive the amount required by law to be so
withheld under Federal, state or local wage or employment tax
withholding requirements or otherwise (including without limitation
Section 4999 of the Code), and shall pay over to the appropriate
government authorities the amount so withheld.
(b) The Gross-up Payment with respect to a Payment shall
be paid not later than the thirtieth day following the date of the
Payment; provided, however, that if the amount of such Gross-up
Payment or portion thereof cannot be finally determined on or
before such day, Company shall pay to Executive on such date an
estimate, as determined in good faith by the Company, of the amount
of such payments and shall pay the remainder of such payments
(together with interest at the Federal short-term rate provided in
Section 1274(d)(1)(C)(i) of the Code) as soon as the amount thereof
can be determined. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by Company to Executive,
payable on the fifth day after demand by Company (together with
interest at the Federal short-term rate provided in Section
1274(d)(1)(C)(i) of the Code). At the time that payments are made
under Article III and this Appendix A, Company shall provide
Executive with a written statement setting forth the manner in
which such payments were calculated and the basis for such
calculations, including, without limitation, any opinions or other
advice Company has received from outside counsel, auditors or
consultants (and any such opinions or advice which are in writing
shall be attached to the statement).
(c) Company shall promptly pay the fees and related
expenses of any tax counsel and auditors selected by Executive to
provide services in connection with this Appendix A.
