EXHIBIT (e) (4)
HALLWOOD ENERGY CORPORATION
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT ("Agreement") is entered into as of March 29,
2001, by and between Hallwood Energy Corporation ("HEC") and Xxxxxxx X. Xxxxxxxx
("Executive").
WHEREAS, HEC has previously entered into a change of control agreement with
Executive effective as of June 9, 1999 (the "Change of Control Agreement"), and
HEC and Executive now wish to amend and restate the Change of Control Agreement
to remove the gross-up payment, provide more certainty as to timing of payments,
add a limitation on payments provision as well as noncompetition,
confidentiality and nonhiring provisions, and make certain other changes;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, HEC and Executive agree that the Change of Control
Agreement is hereby amended and restated in its entirety as the Hallwood Energy
Corporation Separation Agreement to read as follows:
1. DEFINITIONS.
(a) "Change of Control" shall mean the occurrence after the effective date
of this Agreement of:
(i) An acquisition of any voting securities of HEC (the "Voting
Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934 (the "Exchange Act")), other than The Hallwood Group
Incorporated and its affiliates immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule
l3d-3 promulgated under the Exchange Act) of thirty percent
(30%) or more of the combined voting power of HEC's then
outstanding Voting Securities;
(ii) The individuals who, as of the effective date of this Agreement,
are members of the Board of Directors of HEC (the "Incumbent
Board"), cease for any reason to constitute at least a majority
of the members of the Board of Directors of HEC (the "Board");
provided, however, that if the election, or nomination for
election by HEC's common stockholders, of any new director was
approved by a vote of at least a majority of the Incumbent
Board, such new director shall, for purposes of this Agreement,
be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened
"election contest" (as described in Rule 14A-11 promulgated
under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board (a "Proxy Contest") including by reason of
any agreement intended to avoid or settle any Election Contest
or Proxy Contest; or
(iii) Approval by stockholders of HEC of:
(A) A merger, consolidation or reorganization involving HEC,
unless:
(1) the stockholders of HEC, immediately before such
merger, consolidation or reorganization, own
directly or indirectly immediately following such
merger, consolidation or reorganization, at least
fifty percent (50%) of the combined voting power of
the outstanding voting securities of the corporation
resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership
of the Voting Securities immediately before such
merger, consolidation or reorganization, and
(2) the individuals who were members of the Incumbent
Board immediately prior to the execution of the
agreement providing for such merger, consolidation
or reorganization constitute at least a majority of
the members of the board of directors of the
Surviving Corporation; or
(B) A complete liquidation or dissolution of HEC; or
(C) An agreement for the sale or other disposition of all or
substantially all of the assets of HEC to any Person
(other than a transfer to a wholly owned subsidiary).
(iv) Notwithstanding the foregoing, a Change of Control shall not
be deemed to occur solely because any Person (the "Subject
Person") acquired beneficial ownership of more than the
permitted percent of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by HEC which,
by reducing the number of Voting Securities outstanding,
increases the proportional number of shares beneficially owned
by the Subject Person, provided that if a Change of Control
would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by HEC, and
after such share acquisition by HEC, the Subject Person
becomes the beneficial owner of any additional Voting
Securities which increases the percentage of the then
outstanding Voting Securities beneficially owned by the
Subject Person, then a Change of Control shall occur; or
(v) Notwithstanding anything contained in this Agreement to the
contrary, if Executive's employment is terminated prior to a
Change of Control and Executive reasonably demonstrates that
such termination (i) was at the request of a third party who
has indicated an intention or taken steps reasonably
calculated to effect a Change of Control and who effectuates a
Change of Control (a "Third Party") or (ii) otherwise occurred
in connection with, or in
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anticipation of, a Change of Control which actually occurs,
then for all purposes of this Agreement, the date of Change of
Control with respect to Executive shall mean the date
immediately prior to the date of such termination of
Executive's employment.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "HEC" means Hallwood Energy Corporation or any successor thereto.
(d) "Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, a limited liability company, an
unincorporated organization and a government or any department or
agency thereof.
(e) "Severance Amount" shall mean $876,207.
(f) "Stock Options" shall mean options granted to Executive by HEC or its
successor to purchase stock of HEC or its successor.
2. SEVERANCE BENEFITS. If a Change of Control occurs and (i) Executive is an
employee of HEC or a subsidiary of HEC on the date of such Change of
Control or (ii) Executive's employment with HEC or a subsidiary of HEC is
involuntarily terminated other than for Cause prior to such Change of
Control, then Executive shall be entitled to receive, as additional
compensation for services rendered to HEC or its successor:
(a) A lump sum cash payment in an amount equal to Executive's Severance
Amount.
(b) Notwithstanding any provision to the contrary in any stock option
agreement, or other agreement relating to equity-type compensation that
may be outstanding between Executive and HEC, all stock options,
incentive stock options, performance shares, and stock appreciation
rights under the 1999 Long Term Incentive Plan or any other plan or
arrangement then held by Executive shall immediately become 100% vested
and exercisable, and Executive shall become 100% vested in all shares
of restricted stock held by or for the benefit of Executive; provided,
however, that to the extent HEC is unable to provide for such
acceleration of vesting, HEC shall provide in lieu thereof a lump-sum
cash payment equal to the difference between the total value of such
outstanding units, stock options, incentive stock options, performance
shares, stock appreciation rights and shares of restricted stock (the
"Stock Rights") as of the date of Executive's termination of employment
and the total value of the stock rights in which Executive is vested as
of the date of his termination of employment. The value of such
accelerated vesting in Executive stock rights shall be determined by
the Board in good faith based on a valuation performed by an
independent consultant selected by the Board. Notwithstanding any
provision to the contrary in any stock option agreement that may be
outstanding between Executive and HEC, Executive's right to exercise
any previously unexercised options under any such stock option
agreement shall not terminate until the latest date on which the option
granted under such agreement would expire under the terms of such
agreement but for Executive's
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termination of employment; provided, however, that to the extent HEC is
unable to provide for the extension of the expiration date of such
options, HEC shall provide in lieu thereof a lump-sum cash payment
equal to the value of such extension HEC is unable to provide. Such
values of such accelerated vesting and exercisability shall be
determined by the Board in good faith based on a valuation performed by
an independent consultant selected by the Board. Notwithstanding the
foregoing provisions of this paragraph, the provisions of any option
cancellation or similar agreement entered into between HEC and
Executive in connection with any negotiated merger agreement shall
apply to the transactions described in that agreement.
(c) For a period of eighteen (18) months subsequent to Executive's
termination of employment, HEC shall at its expense continue on behalf
of Executive and his dependents and beneficiaries, all medical, dental,
vision, and health benefits and insurance coverage which were being
provided to Executive at the time of termination of employment.
Executive acknowledges and agrees that this benefit and insurance
coverage continuation shall run concurrently with continuation coverage
under the Consolidated Omnibus Budget Reconciliation Act of 1985. The
benefits provided in this Section 2(c) shall be no less favorable to
Executive, in terms of amounts and deductibles and costs to him, than
the coverage provided Executive under the plans providing such benefits
at the time Notice of Termination is given. HEC's obligation hereunder
to provide a benefit shall terminate if Executive obtains comparable
coverage under a subsequent employer's benefit plan. For purposes of
the preceding sentence, benefits will not be comparable during any
waiting period for eligibility for such benefits or during any period
during which there is a preexisting condition limitation on such
benefits. HEC also shall pay to Executive a lump sum equal to the
amount of any additional income tax payable by Executive and
attributable to the benefits provided under this Section 2(c) at the
time such tax is imposed upon Executive. In the event that Executive's
participation in any such coverage is barred under the general terms
and provisions of the plans and programs under which such coverage is
provided, or any such coverage is discontinued or the benefits
thereunder are materially reduced, HEC shall provide or arrange to
provide Executive with benefits substantially similar to those which
Executive was entitled to receive under such coverage immediately prior
to the Notice of Termination. At the end of the period of coverage set
forth above, Executive shall have the option to have assigned to him at
no cost to Executive and with no apportionment of prepaid premiums, any
assignable insurance owned by HEC and relating specifically to
Executive.
(d) Subject to the provisions of Sections 4 and 7(c) of this Agreement,
fifty percent of the amounts payable pursuant to Section 2(a) and fifty
percent of the consideration for the noncompetition, confidentiality
and nonsolicitation agreement in Section 5 shall be due to the
Executive as of the date on which a Change of Control occurs. Subject
to the provisions of Sections 4 and 7(c) of this Agreement, the
remaining fifty percent shall be due to Executive on the 60th day
following the date on which a Change of Control occurs (the "Retention
Date").
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Any severance benefits paid pursuant to this Section will be deemed to be a
severance payment and not compensation for purposes of determining benefits
under HEC's qualified plans and shall be subject to any required tax
withholding.
3. NO MITIGATION. Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of
any compensation or benefits provided to Executive in any subsequent
employment.
4. LIMITATION ON PAYMENTS.
(a) Notwithstanding any provision in this Agreement to the contrary, if
the total amount of payments and benefits to be paid or provided to
Executive under this Agreement which are considered to be "parachute
payments" within the meaning of Section 280G of the Code, when added
to any other such "parachute payments" received by Executive from HEC
or from a member of HEC's affiliated group (as provided in Section
280G(d)(5) of the Code) or from HEC's successor or a member of such
successor's affiliated group, whether or not under this Agreement,
are in excess of the amount Executive can receive without causing HEC
to lose its deduction with respect to all or any portion of such
total amount on account of Section 280G of the Code, the amount of
payments and benefits to be paid or provided to Executive under this
Agreement which are parachute payments shall be reduced to the
highest amount which will not cause HEC to lose its deduction with
respect to any such payments and benefits on account of Section 280G
of the Code.
(b) All determinations required to be made under this Section 4 shall be
made by Deloitte & Touche (the "Accounting Firm"), which shall
provide detailed supporting calculations both to HEC and Executive
within 10 business days of the date of a Change of Control or such
earlier time as is requested by HEC. Any such determination by the
Accounting Firm shall be binding upon HEC and Executive. Within five
business days after the determination by the Accounting Firm (or, if
later, the date specified in Section 7), HEC shall pay to or
distribute to or for the benefit of Executive such amounts as are
then due to Executive under this Agreement. All fees and expenses of
the Accounting Firm shall be borne solely by HEC.
(c) As a result of the uncertainty in the application of Section 280G of
the Code at the time of the initial determination by the Accounting
Firm under this Section 4, it is possible that payments will have
been made by HEC hereunder which should not have been made
("Overpayment") or that additional payments hereunder which will not
have been made by HEC should have been made ("Underpayment"), in each
case, consistent with the calculations required to be made hereunder.
In the event that the Accounting Firm determines that an Overpayment
has been made, any such Overpayment shall be treated for all purposes
as a loan to Executive which he shall repay to HEC together with
interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code; provided, however, that no amount shall be
payable by Executive to HEC (or if paid by Executive to HEC shall be
returned to Executive)
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if and to the extent such payment would not reduce the amount which is
subject to taxation under Section 4999 of the Code. In the event that
the Accounting Firm determines that an Underpayment has occurred, any
such Underpayment shall be promptly paid by HEC to or for the benefit
of Executive together with interest at the applicable federal rate
provided for in Section 7872(f)(2) of the Code.
5. NONCOMPETITION, CONFIDENTIALITY, AND EMPLOYEE HIRING MORATORIUM. In
consideration of the payment by HEC to Executive of $1,000,000, which
payment shall be made at the time specified in Section 2(d) hereof,
Executive hereby covenants and agrees as follows:
(a) NONCOMPETITION AND CONFIDENTIALITY. Except with the prior written
consent of HEC duly authorized by its Board of Directors after the
date of a Change of Control, during the period commencing on the date
of this Agreement and ending on the date that is 36 months after the
date of Executive's termination of employment with HEC or an affiliate
(the "Restricted Period"), Executive agrees not to compete with HEC or
its affiliates for any acquisition, prospect or project that HEC, at
any time during the three-year period prior to Executive's
termination, was pursuing (other than any acquisition, prospect or
project pertaining to properties sold by HEC during the three-year
period prior to the date hereof), as evidenced by (i) HEC's or an
affiliate's expenditure of funds, (ii) a recommendation by HEC's or an
affiliate's personnel for an expenditure of funds (other than nominal
administrative expenditures), or (iii) inclusion or proposal for
inclusion in HEC's or an affiliate's capital expenditure budget, and
Executive shall hold in strict confidence and shall not, directly or
indirectly, disclose or reveal to any person, or use for his own
personal benefit or for the benefit of anyone else, any trade secrets,
confidential dealings, or other confidential or proprietary
information of any kind, nature, or description (whether or not
acquired, learned, obtained, or developed by Executive alone or in
conjunction with others) belonging to or concerning HEC or any of its
affiliates, except (i) with the prior written consent of HEC duly
authorized by its Board of Directors after the date of a Change of
Control, (ii) for information (x) that becomes generally available to
the public other than as a result of unauthorized disclosure by
Executive or his affiliates or (y) that becomes available to Executive
on a nonconfidential basis from a source other than HEC or its
affiliates who is not bound by a duty of confidentiality, or other
contractual, legal, or fiduciary obligation, to HEC, or (iii) as
required by applicable law or legal process. HEC agrees that after
the date of Executive's termination of employment with HEC or an
affiliate, Executive may engage directly or indirectly in the oil and
gas business and may apply Executive's knowledge, experience and
opinions to those activities.
(b) EMPLOYEE HIRING MORATORIUM. During the period commencing on the date
hereof and ending on the date which is six months after the date on
which a Change of Control occurs, Executive shall not, either on
Executive's own account or for any corporation, limited liability
company, partnership or other entity or person (including, without
limitation, through any existing or future Affiliate), hire any person
who presently is an employee of HEC or any existing or future
Affiliate of HEC
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(whether or not he or she remains an employee of HEC unless such
employee has been involuntarily terminated by HEC). "Affiliate," as
used in this Section, means, with respect to any person or entity, any
person or entity directly or indirectly controlling, controlled by or
under direct or indirect common control with such other person or
entity, or any corporation, partnership or other entity in which such
person or entity owns an equity interest of 5% or greater.
(c) INJUNCTIVE RELIEF. Executive acknowledges that failure to comply with
this Section 5 will irreparably harm HEC's business and that the
remedy at law for any breach of this Agreement is and will be
inadequate. Therefore, in the event of a breach or threatened breach
by Executive of this Section 5, after giving Executive at least 30
days' notice of HEC's intention to seek an injunction, such notice to
include a specific description of the actions to which HEC objects and
a specific description of the actions that Executive may take to avoid
or cure such a breach, HEC shall be entitled to seek an injunction
restraining Executive from breaching or otherwise violating any
provision of this Section and/or specific performance without the
posting of bond or other security. Nothing herein contained shall be
construed as prohibiting HEC from pursuing any other remedies
available to it or them for such breach or threatened breach,
including, without limitation, the recovery of damages from Executive
if HEC has provided to Executive the notice contemplated by the
preceding sentence at least 30 days in advance of seeking such other
remedy.
(d) The parties expressly agree that the character, duration and
geographical scope of this Section are reasonable in light of the
circumstances as they exist on the date upon which this Agreement has
been executed. However, should a determination nonetheless be made by
a court of competent jurisdiction at a later date that the character,
duration or geographical scope of this Section is unreasonable in
light of the circumstances as they then exist, then it is the
intention and the agreement of HEC and Executive that this Agreement
shall be construed by the court in such a manner as to impose only
those restrictions on the conduct of HEC or Executive that are
reasonable in light of the circumstances as they then exist and as are
necessary to assure HEC of the intended benefit of this Section.
6. TERM. This Agreement shall remain in effect until December 31, 2001. If a
Change of Control occurs while this Agreement is in effect, then after such
Change of Control, Executive shall have no obligations under this Agreement
after the expiration of the Restricted Period and HEC shall have no
obligations under this Agreement after it has made all payments required by
Section 2, and provided further that in no event shall this Agreement
require HEC to provide more than one payment of the severance and other
benefits provided for in this Agreement. Notwithstanding the foregoing,
Section 5 of this Agreement shall remain in effect for the time period(s)
specified therein and Section 7 shall survive the termination of this
Agreement. Notwithstanding any other provision of this Agreement, in the
event that the Agreement and Plan of Merger among Pure Resources, Inc.,
Pure Resources II, Inc. and HEC (the "Merger Agreement") is terminated in
accordance with its terms prior to the time that Pure Resources II, Inc.
accepts for payment and pays for, any shares of common and preferred stock
pursuant to the Merger Agreement, this Agreement
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shall terminate and be deemed to be null and void, with the effect that the
Change of Control Agreement shall be deemed to have remained in effect.
7. RELEASE.
(a) GENERAL RELEASE. In consideration of the mutual promises and
undertakings in this Agreement, Executive and Executive's family
members, heirs, successors, and assigns (collectively the "Releasing
Parties") hereby release, acquit, and forever discharge any and all
claims and demands of whatever kind or character, whether vicarious,
derivative, or direct, that Executive and the other Releasing Parties,
individually, collectively, or otherwise, may now or hereafter have or
assert against: (i) HEC; (ii) any corporation, general or limited
partnership, or other entity affiliated with HEC through common
ownership; or (iii) any officer, director, partner, trustee,
fiduciary, agent, employee, representative, insurer, attorney, or any
successors and assigns of the persons or entities just named
(collectively the "Released Parties"). This General Release includes
but is not limited to any claim or demand based on any federal, state,
or local statutory or common law or constitutional provision that
applies or is asserted to apply, directly or indirectly, to the
formation, continuation, or termination of Executive's employment
relationship with HEC. Thus, Executive and the other Releasing Parties
agree to waive to the maximum extent permitted by law any claims or
demands against HEC or any of the other Released Parties such as for
wrongful discharge; unlawful employment discrimination on the basis of
age or any other form of unlawful employment discrimination;
retaliation; breach of contract (express or implied), breach of the
duty of good faith and fair dealing; violation of the public policy of
the United States, the State of Colorado, or any other state;
intentional or negligent infliction of emotional distress; tortious
interference with contract; promissory estoppel; detrimental reliance;
defamation of character; duress; negligent misrepresentation;
intentional misrepresentation or fraud; invasion of privacy; loss of
consortium; assault; battery; conspiracy; bad faith; negligent hiring,
retention, or supervision; any intentional or negligent act of
personal injury; any alleged act of harassment or intimidation; or any
other intentional or negligent tort; or any alleged violation of the
Age Discrimination in Employment Act; Title VII of the Civil Rights
Act; the Americans with Disabilities Act; the Family and Medical Leave
Act; the Employee Retirement Income Security Act; the Fair Labor
Standards Act; the Fair Credit Reporting Act; the Colorado Anti-
Discrimination in Employment Act; the Colorado Civil Rights Act; the
Colorado Labor Peace Act; or any other federal, state, or local
statute, rule, order or ordinance.
The effect of Executive's acceptance of this Agreement is to release,
acquit, and forever discharge any and all claims and demands of
whatever kind or character that Executive or any of the other
Releasing Parties may now have or hereafter have or assert against HEC
or any of the other Released Parties for any liability, whether
vicarious, derivative, or direct. This release includes any claims or
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demands for damages (actual or punitive), back wages, future wages or
front pay, commissions, bonuses, severance benefits, medical expenses
and the costs of any counseling, reinstatement or priority placement,
promotion, accrued leave benefits, past and future medical or other
employment benefits (except as to which there is existing contractual
or vested entitlement) including contributions to any employee benefit
plans, retirement benefits (except as to which there is vested
entitlement), benefits under the 1999 Long Term Incentive Plan of
Hallwood Energy Corporation, benefits provided for under the Change of
Control Agreement, relocation expenses, compensatory damages,
injunctive relief, liquidated damages, penalties, equitable relief,
attorney's fees, costs of court, disbursements, interest, and any and
all other loss, expense, or detriment of whatever kind or character,
resulting from, growing out of, connected with, or related in any way
to the formation, continuation, or termination of Executive's
employment relationship with HEC. This General Release does not apply
to any rights or claims that arise under the Amended and Restated
Phantom Working Interest Incentive Plan of Hallwood Energy Corporation
or to any rights or claims that may arise after the date this
Agreement is executed (until such time as Executive has subsequently
renewed and ratified this Agreement by executing the Renewal and
Ratification Agreement attached hereto as Exhibit A, at which time
this General Release will not apply to any rights or claims that may
arise after the date Executive's Renewal and Ratification Agreement is
executed). Notwithstanding the foregoing, Executive does not release
any claims he or she might have for indemnification under the articles
of incorporation or bylaws of the HEC or its affiliates as of the date
of this Agreement.
(b) AUTHORITY TO EXECUTE AND INDEMNIFICATION FROM CLAIMS. Executive
represents and warrants that Executive has the authority to execute
this Agreement on behalf of all the Releasing Parties. Executive
further agrees to indemnify fully and hold harmless HEC and any of the
other Released Parties from any and all claims brought by the
Releasing Parties or derivative of Executive's own relating in any
manner to Executive's employment or termination of Executive's
employment with Executive's on, including the amount of any such
claims HEC or any of the other Released Parties are compelled to pay,
and the costs and attorney's fees incurred in defending against all
such claims.
(c) RENEWAL AND RATIFICATION OF GENERAL RELEASE. In consideration of the
mutual promises and undertakings in this Agreement, Executive agrees
to execute the Renewal and Ratification Agreement, attached hereto as
Exhibit A, no sooner than the 60/th/ day following the date on which a
Change of Control occurs. The Renewal and Ratification Agreement shall
not become effective and enforceable until the expiration of seven
days after Executive's execution of such agreement (the "Ratification
Effective Date"). At any time before the expiration of the
Ratification Effective Date, Executive may revoke the Renewal and
Ratification Agreement by providing written notice to HEC; provided
however, that if Executive revokes the
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Renewal and Ratification Agreement, Executive shall forfeit any and
all rights to the amount due to him or her on the Retention Date
pursuant to Section 2(d) of this Agreement, but this Agreement
otherwise shall be valid and enforceable. If Executive does not revoke
the Renewal and Ratification Agreement on or before the Ratification
Effective Date, Executive shall be entitled to receive the payment due
to him or her under Section 2(d) of this Agreement on the eighth day
following the execution of the Renewal and Ratification Agreement.
Executive hereby acknowledges that he or she has received and reviewed
the Memorandum For Consideration in Connection with the Renewal and
Ratification Agreement attached hereto as Exhibit B.
8. GENERAL.
(a) SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of HEC and any successor of HEC, by merger or otherwise. This
Agreement shall also be binding upon and inure to the benefit of
Executive and Executive's estate. If Executive shall die prior to full
payment of amounts due pursuant to this Agreement, such amounts shall
be payable pursuant to the terms of this Agreement, to Executive's
estate.
(b) SEVERABILITY. Any provision in this Agreement which is prohibited or
unenforceable in any jurisdiction by reason of applicable law shall,
as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or affecting the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(c) CONTROLLING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Colorado.
(d) UNFUNDED OBLIGATION. The obligation to pay amounts under this
Agreement is an unfunded obligation of HEC and no such obligation
shall create a trust or be deemed to be secured by any pledge or
encumbrance on any property of HEC.
(e) NOT A CONTRACT OF EMPLOYMENT. This Agreement shall not be deemed to
constitute a contract of employment, nor shall any provision hereof
effect (i) the right to HEC of discharge Executive at will or (ii) the
terms and conditions of any other agreement between HEC and Executive
except as provided herein. No severance compensation shall be payable
hereunder as a result of any termination of employment before a Change
of Control.
(f) NONALIENATION. No benefit payable hereunder may be assigned, pledged
or mortgaged and shall not be subject to legal process or attachment
for claims of creditors of Executive except to the extent required by
applicable law.
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(g) OTHER SEVERANCE ARRANGEMENTS. If Executive is entitled to severance
pay and benefits pursuant to this Agreement following a Change of
Control, the following shall apply:
(i) The severance pay, benefits and other consideration provided for
in Sections 2 and 5 of this Agreement shall be reduced by the
amount of any other severance or termination pay to which
Executive may be entitled under any agreement with HEC or any of
its Affiliates, and
(ii) Executive's entitlement to any other compensation or benefits or
any indemnification shall be determined in accordance with HEC's
employee benefit plans and other applicable programs, policies
and practices or any indemnification agreement then in effect.
(h) FEES AND EXPENSES. HEC shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) reasonably
incurred by Executive as they become due as a result of Executive
seeking to obtain or enforce any right or benefit provided by this
Agreement.
(i) NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return
receipt requested, postage prepaid, or overnight couriers or by
facsimile, addresses to the respective addresses and facsimile numbers
last given by each party to the other, provided that all notices to
HEC shall be directed to the attention of the Board with a copy to the
Secretary of HEC. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the third
business day after the mailing thereof, except that notice of change
of address shall be effective only upon receipt.
(j) NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by HEC (except for
any severance or termination policies, plans, programs or practices)
and for which Executive may qualify, nor shall anything herein limit
or reduce such rights as Executive may have under any other agreements
with HEC (except for any severance or termination agreements). Amounts
which are vested benefits or which Executive is otherwise entitled to
receive under any plan or program of HEC shall be payable in
accordance with such plan or program, except as explicitly modified by
this Agreement.
(k) SETTLEMENT OF CLAIMS. HEC's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including,
without limitations, any set-off, counterclaim, recoupment, defense or
other right which HEC may have against Executive or others.
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(l) MUTUAL NON-DISPARAGEMENT. HEC, its affiliates and subsidiaries agree
and HEC shall use its best efforts to cause their respective executive
officers and directors to agree, that they will not make or publish
any statement critical of Executive or in any way adversely affecting
or otherwise maligning Executive's reputation. Executive agrees that
it will not make or publish any statement critical of HEC, its
affiliates and their respective executive officers and directors, or
in any way adversely affecting or otherwise maligning the business
reputation of any member of HEC, its affiliates and subsidiaries and
their respective officers, directors and employees.
(m) MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by Executive and HEC. 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 agreement or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this
Agreement.
(n) CONSULTATION WITH AN ATTORNEY. Executive acknowledges that he or she
has been advised to and has had the opportunity to consult with an
attorney before executing this Agreement.
(o) VOLUNTARY AGREEMENT AND TIME FOR CONSIDERATION. Executive acknowledges
that he or she has read and fully understands all of the provisions of
this Agreement. Executive further acknowledges that his or her
execution of this Agreement is knowing and voluntary, and that he or
she has had a reasonable time to consider its terms.
(p) ENTIRE AGREEMENT. Executive acknowledges that none of the Released
Parties has made any promise or representation to Executive in
consideration for his or her execution of this Agreement that is not
set out in this Agreement, and that in executing this Agreement
Executive is not relying on any such promise or representation but
instead is relying solely on his or her own judgment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
29/th/ day of March, 2001.
"EXECUTIVE"
/s/
---------------------------------
Xxxxxxx X. Xxxxxxxx
"HEC"
-00-
XXXXXXXX XXXXXX CORPORATION
By: /s/
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
-13-
EXHIBIT A
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RENEWAL AND RATIFICATION AGREEMENT
----------------------------------
EXECUTIVE IS TO COMPLETE THIS RENEWAL AND RATIFICATION AGREEMENT NO SOONER THAN
THE 60/TH/ DAY FOLLOWING THE DATE ON WHICH A CHANGE OF CONTROL OCCURS.
THIS RENEWAL AND RATIFICATION AGREEMENT is entered into as of
________________, 2001, between Hallwood Energy Corporation ("HEC") and Xxxxxxx
X. Xxxxxxxx ("Executive").
WHEREAS, HEC has previously entered into a separation agreement with
Executive effective as of March ___, 2001 (the "Separation Agreement"), which
provides that Executive is to execute this Renewal and Ratification Agreement as
a condition to receiving a portion of the payments due under the Separation
Agreement;
NOW, THEREFORE, HEC and the Executive hereby agree as follows:
1. General Release. In consideration of the mutual promises and undertakings in
---------------
the Separation Agreement and this Renewal and Ratification Agreement,
Executive and Executive's family members, heirs, successors, and assigns
(collectively the "Releasing Parties") hereby release, acquit, and forever
discharge any and all claims and demands of whatever kind or character,
whether vicarious, derivative, or direct, that Executive and the other
Releasing Parties, individually, collectively, or otherwise, may now or
hereafter have or assert against: (i) HEC; (ii) any corporation, general or
limited partnership, or other entity affiliated with HEC through common
ownership; or (iii) any officer, director, partner, trustee, fiduciary,
agent, employee, representative, insurer, attorney, or any successors and
assigns of the persons or entities just named (collectively the "Released
Parties"). This General Release includes but is not limited to any claim or
demand based on any federal, state, or local statutory or common law or
constitutional provision that applies or is asserted to apply, directly or
indirectly, to the formation, continuation, or termination of Executive's
employment relationship with HEC. Thus, Executive and the other Releasing
Parties agree to waive to the maximum extent permitted by law any claims or
demands against HEC or any of the other Released Parties such as for wrongful
discharge; unlawful employment discrimination on the basis of age or any
other form of unlawful employment discrimination; retaliation; breach of
contract (express or implied), breach of the duty of good faith and fair
dealing; violation of the public policy of the United States, the State of
Colorado, or any other state; intentional or negligent infliction of
emotional distress; tortious interference with contract; promissory estoppel;
detrimental reliance; defamation of character; duress; negligent
misrepresentation; intentional misrepresentation or fraud; invasion of
privacy; loss of consortium; assault; battery; conspiracy; bad faith;
negligent hiring, retention, or supervision; any intentional or negligent act
of personal injury; any alleged act of harassment or intimidation; or any
other intentional or negligent tort; or any alleged violation of the Age
Discrimination in Employment Act; Title VII of the Civil Rights Act;
the Americans with Disabilities Act; the Family and Medical Leave Act; the
Employee Retirement Income Security Act; the Fair Labor Standards Act; the
Fair Credit Reporting Act; the Colorado Anti-Discrimination in Employment
Act; the Colorado Civil Rights Act; the Colorado Labor Peace Act; or any
other federal, state or local statute, rule, order or ordinance.
The effect of Executive's acceptance of this Renewal and Ratification
Agreement is to release, acquit, and forever discharge any and all claims and
demands of whatever kind or character that Executive or any of the other
Releasing Parties may now have or hereafter have or assert against HEC or any
of the other Released Parties for any liability, whether vicarious,
derivative, or direct. This release includes any claims or demands for
damages (actual or punitive), back wages, future wages or front pay,
commissions, bonuses, severance benefits, medical expenses and the costs of
any counseling, reinstatement or priority placement, promotion, accrued leave
benefits, past and future medical or other employment benefits (except as to
which there is existing contractual or vested entitlement) including
contributions to any employee benefit plans, retirement benefits (except as
to which there is vested entitlement), benefits under the 1999 Long Term
Incentive Plan of Hallwood Energy Corporation, benefits provided for under
the Hallwood Energy Corporation Change of Control Agreement between Executive
and HEC dated June 9, 1999, benefits provided for under the Separation
Agreement (other than the second payment to be made thereunder), relocation
expenses, compensatory damages, injunctive relief, liquidated damages,
penalties, equitable relief, attorney's fees, costs of court, disbursements,
interest, and any and all other loss, expense, or detriment of whatever kind
or character, resulting from, growing out of, connected with, or related in
any way to the formation, continuation, or termination of Executive's
employment relationship with HEC. This General Release does not apply to any
rights or claims that arise under the Amended and Restated Phantom Working
Interest Incentive Plan of Hallwood Energy Corporation or to any rights or
claims that may arise after the date this Renewal and Ratification Agreement
is executed. Notwithstanding the foregoing, Executive does not release any
claims he or she might have for indemnification under the articles of
incorporation or bylaws of the HEC or its affiliates as of the date of this
Renewal and Ratification Agreement.
2. Authority to Execute and Indemnification From Claims. Executive represents
----------------------------------------------------
and warrants that Executive has the authority to execute this Renewal and
Ratification Agreement on behalf of all the Releasing Parties. Executive
further agrees to indemnify fully and hold harmless HEC and any of the other
Released Parties from any and all claims brought by the Releasing Parties or
derivative of Executive's own relating in any manner to Executive's
employment or termination of Executive's employment with Executive's on,
including the amount of any such claims HEC or any of the other Released
Parties are compelled to pay, and the costs and attorney's fees incurred in
defending against all such claims.
3. Effective Date. This Renewal and Ratification Agreement shall not become
--------------
effective and enforceable until the expiration of seven days after its
execution (the "Ratification Effective Date"). At any time before the
expiration of the Ratification Effective Date, Executive may revoke this
Renewal and Ratification Agreement by providing written notice to HEC;
provided,
however, that if Executive revokes this Renewal and Ratification Agreement,
Executive shall forfeit any and all rights to the amount due to him or her on
the Retention Date pursuant to Section 2(d) of the Separation Agreement, but
the Separation Agreement otherwise shall be valid and enforceable. If
Executive does not revoke this Renewal and Ratification Agreement on or
before the Ratification Effective Date, Executive shall be entitled to
receive the payment due to him or her on the Retention Date under Section
2(d) of the Separation Agreement on the eighth day following the execution of
this Renewal and Ratification Agreement.
4. Consultation With an Attorney. Executive acknowledges that he or she has
-----------------------------
been advised to and has had the opportunity to consult with an attorney
before executing this Renewal and Ratification Agreement.
5. Voluntary Agreement and Time for Consideration. Executive acknowledges that
----------------------------------------------
he or she has read and fully understands all of the provisions of this
Renewal and Ratification Agreement. Executive further acknowledges that his
or her execution of this Renewal and Ratification Agreement is knowing and
voluntary, and that he or she has had at least 45 days to consider its terms.
Executive hereby acknowledges that he or she has received and reviewed the
Memorandum For Consideration in Connection with the Renewal and Ratification
Agreement attached as Exhibit B to the Separation Agreement.
6. Entire Agreement. Executive acknowledges that none of the Released Parties
----------------
have made any promise or representation to Executive in consideration for his
or her execution of this Renewal and Ratification Agreement that is not set
out in this Renewal and Ratification Agreement, and that in executing this
Renewal and Ratification Agreement Executive is not relying on any such
promise or representation but instead is relying solely on his or her own
judgment.
IN WITNESS WHEREOF, the parties hereto have executed this Renewal and
Ratification Agreement as of _______________________, 2001.
HALLWOOD ENERGY CORPORATION
By_______________________________________
Name:__________________________
Title:_________________________
ACCEPTED AND AGREED TO:
______________________________
Signature of Executive
Date signed: ___________________
EXHIBIT B
---------
MEMORANDUM FOR CONSIDERATION
IN CONNECTION WITH RENEWAL AND RATIFICATION AGREEMENT
For: Xxxxxxx X. Xxxxxxxx
In connection with your consideration of the Renewal and Ratification
Agreement, this memorandum contains, as required by law, certain information
regarding (i) the individuals covered by Separation Agreements between Hallwood
Energy Corporation and its officers, any eligibility factors, and any time
limits; and (ii) the job titles and ages of all individuals eligible for the
benefits provided under the Separation Agreements.
All officers of Hallwood Energy Corporation are covered by and eligible for
the benefits provided under the Separation Agreements. To receive all of the
payments under the Separation Agreement, each officer is required to sign the
Separation Agreement; each officer (other than the Chairman and CEO and the
President and COO) may not voluntarily terminate their employment for a period
of 60 days following a Change of Control other than by reason of death or
disability or with Just Cause; sign the Renewal and Ratification Agreement no
sooner than the 60/th/ day following the date on which a Change of Control
occurs; and not revoke his execution of the Renewal and Ratification Agreement.
The payments for each individual are contingent on the Change of Control.
The following lists by job titles and ages all individuals who are covered by
and eligible for the benefits provided under the Separation Agreements:
Job Title Age
-------------------------------------------------------
Chairman and CEO 55
-------------------------------------------------------
President and COO 56
-------------------------------------------------------
Executive Vice President 45
-------------------------------------------------------
Vice President, Secretary and General Counsel 47
-------------------------------------------------------
Vice President and COO 44
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Vice President of Exploration 58
-------------------------------------------------------
Vice President of Business Development 48
-------------------------------------------------------
If you do not understand this information or need additional information, you
should contact Xxxxxxxx Xxxxxxx at (000) 000-0000.
