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Exhibit 10.9
EXECUTIVE EMPLOYMENT CONTRACT
THIS AGREEMENT is dated as of September 2, 1997.
BETWEEN:
GULF CANADA RESOURCES LIMITED
(hereinafter called the "Corporation")
OF THE FIRST PART
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XXXXXX X. HRAP
(hereinafter called the "Executive")
OF THE SECOND PART
WHEREAS
(a) The Executive is an officer of the Corporation and is considered by
the Board of Directors of the Corporation to be a valued employee
of the Corporation and has acquired outstanding and special skills
and abilities and an extensive background in and knowledge of the
Corporation's business and the industry in which it is engaged;
(b) The Board of Directors recognizes that it is essential, in the best
interests of the Corporation, that the Corporation retain the
continuing dedication of the Executive to his office and employment
and that the past service of the Executive to the Corporation
requires that the Executive receive fair treatment, particularly in
the event of an actual or constructive termination of his
employment with the Corporation;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants herein contained and in consideration of the Executive
remaining in office and in the employment of the Corporation at the present
time and throughout the period of material change of ownership or organization
of the Corporation, it is hereby agreed as follows:
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1. DEFINITIONS
In this Agreement:
(a) "affiliate" means:
(i) one body corporate is an affiliate of another body
corporate if one of them is the subsidiary of the other or
both are subsidiaries of the same body corporate or each of
them is under the control of the same person; and
(ii) two bodies corporate that are an affiliate of the same body
corporate at the same time are affiliates of each other.
(b) "associate" has the meaning ascribed to that term in the Canada
Business Corporations Act.
(c) "change of control" means or shall be deemed to have occurred if
and when:
(i) the acquisition, by whatever means (including without
limitation, amalgamation, consolidation, liquidation,
arrangement or merger), by a person (or two or more
persons who in such acquisition have acted jointly or in
concert or intend to exercise jointly or in concert any
voting rights attaching to the securities acquired),
directly or indirectly, of the beneficial ownership of
such number of voting securities or rights to voting
securities of the Corporation, which together with such
person's then owned voting securities and rights to voting
securities, if any, represent (assuming the full exercise
of such rights to voting securities) more than 20% of the
combined voting power of the Corporation's then outstanding
voting securities, together with the voting securities
acquired and such person's previously owned rights to
voting securities; or
(ii) individuals who were members of the Board of Directors of
the Corporation immediately prior to a meeting of the
shareholders of the Corporation involving a contest for or
on an item of business relating to the election of
directors shall not constitute a majority of the Board of
Directors following such election.
(d) "Compensation Committee" means the Committee of the Board of
Directors of the Corporation from time to time appointed to fix
the
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remuneration of executives of the Corporation or, if such Committee
has not been appointed, means the Board of Directors of the
Corporation.
(e) "constructive dismissal" means, unless consented to by the
Executive in writing, any action by the Corporation which
constitutes constructive dismissal of the Executive, including,
without limiting the generality of the foregoing:
(i) any material reduction in the Executive's office, titles,
positions, duties, responsibilities, powers or reporting
relationships;
(ii) any reduction in the annual salary of the Executive;
(iii) a requirement to relocate to another province, state or
country; and
(iv) any reduction in the value of the Executive's employee
benefits plans and programmes, including, without limiting
the generality of the foregoing, bonus arrangements.
(f) "confidential information" means information, processes, know-how,
data, trade secrets, techniques, knowledge and other confidential
information not generally known to the public relating to or
connected with the business or corporate affairs and operations of
the Corporation and its affiliates.
(g) "control" has the meaning ascribed to that term in the Canada
Business Corporations Act.
(h) "person" has the meaning ascribed to that term in the Canada
Business Corporations Act.
(i) "subsidiary" of a corporation means, at any time, a corporation of
which the corporation has control at that time, whether directly or
indirectly through one or more subsidiaries.
2. EMPLOYMENT
2.1 Position, Duties and Responsibilities of Executive
The Executive shall have such responsibilities and powers as the Board of
Directors or the by-laws of the Corporation or the Executive's superiors may
from time to time prescribe. The Executive shall devote the whole of his time to
the Executive's duties hereunder and shall use his best efforts to promote the
interests of the Corporation. The executive shall, during the term of this
agreement:
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(a) perform such managerial duties and responsibilities for the
Corporation as may be assigned to him by the Chief Executive
Officer and by the Board of Directors of the Corporation, and at no
additional remuneration, shall serve in such other comparable
positions with affiliates and associates of the Corporation as the
Board of Directors of the Corporation may from time to time
determine; and
(b) accept such office or offices to which he may be elected or
appointed by the Chief Executive Officer or by the Board of
Directors of the Corporation in addition to those of Vice-President
North America, provided that the performance of the duties of such
offices shall be consistent with the scope of the duties assigned
in accordance with or as provided for in section 2.1(a) above.
2.2 Term of Agreement
The term of this Agreement shall commence on the date hereof, and shall
continue in effect to and including the earlier of:
(a) the date of voluntary retirement of the Executive in accordance
with the retirement policies established for senior employees of
the Corporation; or
(b) the voluntary resignation of the Executive other than a voluntary
resignation pursuant to either section 2.6(b)(ii) or section
2.6(b)(iii) hereof.
2.3 Termination of Agreement upon Disability of Executive
If at the end of any month the Executive is and has been for a period of
more than twelve (12) consecutive months unable to perform the duties specified
pursuant to this Agreement in the normal and regular manner due to mental or
physical disability, this Agreement may be terminated by the Corporation on 30
days' notice. Notwithstanding anything contained in this Section 2.3, the
Executive shall be entitled to all benefits provided under the disability and
pension plans of the Corporation or its affiliates applicable to the Executive
at the date of this Agreement.
2.4 Termination of Agreement upon Death of Executive
If the Executive dies, this Agreement shall be terminated immediately on
the date of the Executive's death. Provided that the Executive is insurable at
reasonable premium rates, the Corporation shall cause to be obtained and
maintained during the term of this
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Agreement a life insurance policy naming beneficiaries specified by the
Executive, which life insurance policy shall provide a lump sum payment of not
less than two times the Executive's salary to such beneficiaries in the event
that the Executive dies during the term of this Agreement. This insurance policy
shall be in addition to and not in substitution for any insurance policies
provided to the Executive under the Corporation's benefit plans and programmes.
2.5 Termination of Agreement by the Corporation for Cause
The Corporation may terminate this Agreement at any time without notice in
the event the Executive shall be convicted of a criminal act of dishonesty
resulting or intended to result directly or indirectly in gain or personal
enrichment of the Executive at the expense of the Corporation, or for other
sufficient cause pursuant to written notice setting forth particulars of such
cause.
2.6 Severance Entitlement Upon Termination of Employment of the Executive
(a) The provisions of sub-section 2.6(c) shall not apply to, and the
Executive shall not be entitled to receive any severance payments
or other benefits as provided for in this Agreement as a result of
any circumstance where the termination of the Executive's
employment arises from the occurrence of any event described in any
of sections 2.2, 2.3, 2.4 or 2.5 hereof.
(b) The provisions of sub-section 2.6(c) shall, except as specifically
provided in sub-section 2.6(a) hereof, apply in all circumstances
where the Executive's employment with the Corporation terminates,
including, without limiting the generality of the foregoing, any of
the following circumstances:
(i) where the Corporation terminates the employment of the
Executive for any reason other than for cause; or,
(ii) where the Executive, by notice in writing to the
Corporation, terminates his employment with the Corporation
within ninety (90) days following constructive dismissal of
the Executive;
(iii) where the Executive, by notice in writing to the
Corporation, terminates his employment with the Corporation
within ninety (90) days following a change of control of
the Corporation as described in section 1(c)(i).
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(c) In the event of the termination of the Executive's employment as
provided in sub-section 2.6(b) hereof, the following provisions
shall apply:
(i) the Executive shall be entitled to receive and the
Corporation shall forthwith pay to the Executive, a
retiring allowance (hereinafter called the "Retiring
Allowance") in an undiscounted cash amount equal to one (1)
month's base salary multiplied by the number of years of
service of the Executive with the Corporation subject to a
minimum entitlement and payment equal to twenty-four (24)
months' base salary and a maximum entitlement and payment
equal to thirty (30) months' base salary;
(ii) in addition, the Executive shall be entitled to receive and
the Corporation shall forthwith pay to the Executive an
undiscounted cash amount equal to the value to the
Executive of all those benefits plans and programmes
provided by the Corporation and listed in Schedule "A"
attached hereto for a period of time equal to one (1) month
for every year of service of the Executive with the
Corporation with a minimum entitlement and payment equal to
twenty-four (24) months of benefits value and a maximum
entitlement and payment equal to thirty (30) months of
benefits value. All amounts payable under this sub-section
2(c)(ii) shall be determined by a Fellow of the Canadian
Institute of Actuaries acceptable to the Corporation and
the Executive;
(iii) in addition, the Executive may be entitled, at the
discretion of executive management, to receive and the
Corporation shall forthwith pay to the Executive an
undiscounted amount equal to the product obtained by
multiplying by two (2) the Executive's target bonus under
the Corporation's Total Compensation Plan or such other
similar plan that may have replaced the Total Compensation
Plan for the year in which his employment is terminated;
(iv) all options for the purchase of shares of the Corporation
which have been granted by the Corporation to the Executive
prior to January 31, 1995 under the Executive Stock Option
Plan (1990) or (1994) but not yet vested shall immediately
vest on the date of
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termination of the Executive and the Executive shall be
entitled to exercise all such options for the purchase of
shares of the Corporation for a period of five (5) years
from the date of termination of the Executive whether the
options vested on or before the date of termination of the
Executive;
(v) all options for the purchase of shares of the Corporation
granted by the Corporation to the Executive since January
1, 1995 under the Incentive Stock Option Plan (1994) or
otherwise (including, without limitation, those options
granted to the Executive on January 31, 1995) to the date
of termination of the Executive but not yet vested shall
immediately vest on the date of termination of the
Executive and the Executive shall be entitled to exercise
any or all such options for the purchase of shares of the
Corporation for a period of one (1) year from the date of
termination of the Executive whether such options vested on
or before the date of termination of the Executive;
(vi) the Corporation and the Executive agree that the provisions
of section 2.6(c) are fair and reasonable and that the
amounts payable by the Corporation to the Executive
pursuant to section 2.6(c) are reasonable estimates of the
damages which will be suffered by the Executive in the
event of the termination of his employment with the
Corporation in any and all of the circumstances set out in
section 2.6(b) and shall not be construed as a penalty;
and,
(vii) all amounts paid by the Corporation to the Executive
pursuant to section 2.6(c) shall satisfy and forever
discharge all liabilities, claims or actions that the
Executive may or shall have against the Corporation arising
from the termination of employment of the Executive whether
at common law or under statute or otherwise and such
payment shall be made against delivery by the Executive to
the Corporation of a release in form and terms reasonably
satisfactory to the Corporation and the Executive.
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2.7 Directors' and Officers' Liability Insurance
Unless otherwise agreed between the parties hereto, Gulf shall purchase and
maintain, or cause to be purchased and maintained, while the Executive remains
an officer of Gulf and for a period of 10 years thereafter, directors' and
officers' errors and omissions insurance for the benefit of the Executive on
terms no less favourable in terms of coverage, and amounts, to the extent
available on reasonable commercial terms, than such insurance maintained in
effect by the Corporation on the date hereof.
3. INTEGRATION
Except for the Executive's rights to continued participation in the
Corporation's employee benefit plans, including, without limitation, the
Corporation's or its affiliates' stock option plans and savings plans and
conditions of employment generally available to other Executives of the
Corporation or its affiliates, this Agreement contains the entire agreement
between the parties and supersedes all prior oral and written agreements,
understandings, commitments and practices between the parties, including all
prior employment agreements, whether or not fully performed by the Executive
before the date of this Agreement. No amendments to this Agreement may be made
except in writing signed by both parties.
4. CONFIDENTIAL INFORMATION
In the event of termination of employment of the Executive, the Executive
agrees to keep confidential all information of a confidential or proprietary
nature concerning the Corporation, its subsidiaries and affiliates and their
respective operations, assets, finances, business and affairs and further agrees
not to use such information for personal advantage or the advantage of an
employer, provided that nothing herein shall prevent disclosure of information
which is publicly available or which is required to be disclosed under
appropriate statues, rules of law or legal process.
5. SEVERABILITY
The invalidity and unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.
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6. BENEFIT OF AGREEMENT
This Agreement shall enure to and be binding upon the Corporation and its
successors and the Executive and his legal representatives but otherwise it is
not assignable. It shall be a condition of any transfer by the Corporation of
the Executive to any affiliate or associate of the Corporation that, on request
of the Executive, such affiliate or associate agree to observe all the covenants
of and be bound by all obligations imposed on the Corporation under this
Agreement. The failure to do so shall be deemed to constitute a constructive
dismissal of the Executive for the purposes of section 2.6.
7. CHOICE OF LAW
This Agreement shall be governed and interpreted in accordance with the
laws of the Province of Alberta, which Province shall be the sole and proper
forum with respect to any suit brought with respect to this Agreement.
8. COPY OF AGREEMENT
The Executive hereby acknowledges having received a copy of this Agreement
duly signed by the Corporation.
IN WITNESS WHEREOF the parties hereto have duly executed and delivered this
Agreement.
GULF CANADA RESOURCES LIMITED
_____________________________
_____________________________
____________________________________ _____________________________
Witness XXXXXX X. HRAP
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SCHEDULE "A"
BENEFITS PROVIDED TO EXECUTIVES
GROUP LIFE INSURANCE
Plan provides basic coverage equal to two times annual salary to a maximum of
$750,000. This is 100% Corporation paid and is in addition to the personal life
insurance referred to in section 2.4 of the Employment Agreement.
Voluntary insurance and dependent insurance are also available and all premiums
are paid by the employee.
ACCIDENTAL DEATH AND DISMEMBERMENT
Canadian based executives:
Plan provides coverage of three times annual salary in the event of accidental
death to a maximum of $500,000. Lesser amounts are paid for loss of limb, etc.
Premiums are 100% Corporation paid.
U.S. based executives:
Plan provides coverage of two times salary in the event of accidental death to a
maximum of $750,000. Lesser amounts are paid for loss of limb, etc. Premiums are
100% Corporation paid.
SICK LEAVE
Depending on your years of service, the Corporation pays up to 26 weeks at full
pay and 26 weeks at two-thirds pay.
LONG TERM DISABILITY
Canadian based executives:
Plan provides coverage of two-thirds of salary to a maximum benefit of $6,000
per month. Premiums are cost shared with the Corporation paying 2/3 and the
employee paying 1/3.
U.S. based executives:
Plan provides coverage of 60% of salary to a maximum benefit of $10,000 per
month. Premiums are cost shared with the Corporation paying 2/3 and the employee
paying 1/3.
PROVINCIAL HEALTH CARE
For Canadian based employees the Corporation will pay 50% of the premiums for
health care in any province where premiums are charged.
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HEALTH CARE BENEFIT
Canadian based executives:
The plan provides 100% coverage for semi-private hospital rooms and 85% coverage
for most other health services including generic prescription drugs,
physiotherapy, and para-medical practitioners. An annual $25 deductible applies
to most services and premiums are shared between the Corporation and the
employee.
U.S. based executives:
The plan provides 100% coverage for all medical services including doctor's
appointments, hospital rooms, generic prescription drugs, physiotherapy, and
para-medical practitioners. A co-payment by the employee is required for most
services. Premiums are shared with the Corporation paying the full cost of an
HMO plan for the employee and 50% of all costs for dependents. Employees pay the
cost difference for a more comprehensive plan (i.e. POS of Indemnity) and 50% of
the cost for dependents.
VISION CARE
Canadian based executives:
Plan covers 85% of the cost for glasses/contact lenses to a maximum of $175 plus
85% of the cost of an eye exam per person every two calendar years. Corporation
pays 100% of the premiums.
U.S. based executives:
Plan covers 100% of the cost of glasses/contact lenses and eye exams per person
once per calendar year. Employees pay a $20 co-payment and the Corporation pays
100% of the premiums.
DENTAL PLAN
Canadian based executives:
Plan pays 80% of routine dental care and 50% of major dental care to a maximum
of $1,500 per person per calendar year. Orthodontic coverage is provided for
children under 18 and is paid at 50% of the cost to an annual maximum of $1,500
and a lifetime maximum of $5,000. The Corporation pays 100% of the premiums.
U.S. based executives:
Plan pays 80% of routine dental care and 50% of major dental care to a maximum
of $1,500 per person per calendar year. Orthodontic coverage is provided for
children under 18 and is paid at 50% of the cost with a lifetime maximum of
$2,000. The Corporation pays 100% of the premiums.
HEALTH SPENDING ACCOUNT
To assist with medical/dental expenses not covered by the above plans, an annual
amount of $800 will be provided by the Corporation. This money can be used to
pay for deductibles and co-payments on an after tax basis if left in the account
or can be taken as cash and added to the semi-monthly pay. U.S. employees may
top up this amount from their own earnings if they wish.
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SAVINGS ALLOWANCE
A payment of 4.5% of base salary is made to all executives. In Canada this is
added to semi-monthly pay and in the U.S. it is contributed to the 401(k) plan
to the maximum amount allowed, with any excess added to semi-monthly pay.
PENSION PLAN
Any employee with service as an executive prior to January 1, 1996 has pension
accrued under the Executive Pension Plan and Superannuation Plan. Service in
these plans has been frozen and the resulting pension will be calculated based
on earnings at the time of termination/retirement.
For service after January 1, 1996 all employees participate in a defined
contribution pension plan. No employee contributions are allowed and the
Corporation's contribution is based on years of plan membership. Contributions
are made monthly to the registered plan to the maximum amount allowed under
legislation and the employee directs the investment of these funds. If the
annual contribution exceeds the amount allowed by legislation, the excess is
added to semi-monthly pay.
PARKING
Executives are eligible for parking for one vehicle at the Corporation's office.
LUNCHEON CLUB
Executives may join a luncheon club with the Corporation paying annual dues and
assessments. Luncheon club memberships are taken in the Corporation's name so
they may be reassigned to other individuals in the event the executives retires
or leaves the Corporation.
PERQUISITE ALLOWANCE
In addition to regular salary, the Corporation will pay a perquisite allowance
of $12,000 per year. These funds are to be used at the discretion of the
employee.
OUTPLACEMENT COUNSELLING
If severance is payable under section 2.6(c) of the Employment Agreement, the
Corporation shall provide outplacement counselling services to a maximum value
of $20,000 or cash, in lieu thereof, of $20,000.
