EXHIBIT 10.26
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the Effective Date, by and
between ____________ (the "Executive") and Devon Energy Corporation (the
"Company");
WITNESSETH THAT:
WHEREAS, the parties desire to enter into this Agreement pertaining to
the employment of the Executive by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, it is hereby covenanted and agreed by the Executive and the
Company as follows:
1. Definitions and Construction. The following words, terms, and
phrases used in this Agreement shall have the meanings set forth in this
paragraph 1:
(a) "Affiliate" means any entity during any period that it is an affiliate
of the Company, as the term "affiliate" is defined under Rule 12b-2 of
the Exchange Act (provided that for this purpose, "Affiliate" shall
exclude natural persons).
(b) The "Agreement Term" shall be the period beginning on the Effective
Date and ending on the three-year anniversary of the Effective Date.
Thereafter, as of the date the Agreement Term (as it may be extended
from time to time under this paragraph) would otherwise end, the
Agreement Term will be automatically extended for 12 months, unless one
party to this Agreement provides notice of non-renewal to the other at
least six months before the day that would be the last day of the
Agreement Term in the absence of such renewal. If a Change of Control
Date occurs during the Agreement Term, the Agreement Term shall be
automatically extended to the later of the last day of the 24th
calendar month following the calendar month in which a Change of
Control Date occurs, or the date on which the Agreement Term would
expire in the absence of this sentence. In the event of an extension of
the Agreement Term by reason of a Change of Control Date, then, at the
end of such extended term, the Agreement Term will be automatically
extended for 12-month periods, unless one party to this Agreement
provides notice of non-renewal to the other at least six months before
the day that would be the last day of the Agreement Term in the absence
of such renewal. If a notice of non-renewal has been provided by the
Company to the Executive, but prior to the date on which the Agreement
Term would end after taking into account the notice of non-renewal a
Change of Control Date occurs, then, regardless of the notice of
non-renewal, the automatic 24-month renewal upon a Change of Control
Date shall apply. However, if a notice of non-renewal has been provided
by the Executive to the Company, the occurrence of a Change of Control
Date after such notice shall not extend the Agreement Term under this
paragraph.
(c) "Aggregate Annual Compensation" shall mean the sum of (i) and (ii)
below:
1 of 28
(i) The Executive's annual base Salary rate in effect on the date
immediately prior to the Executive's Date of Termination, or
any greater annual base Salary rate applicable to the
Executive during the two-year period prior to the Date of
Termination.
(ii) An amount equal to the largest annual bonus paid or payable to
the Executive for the three consecutive years prior to the
year in which the Executive's Date of Termination occurs (or,
if fewer than three, for the years in which the Executive is
employed).
Determinations under this paragraph (c) shall be subject to the
following:
(I) If any portion of the Executive's Salary has been reduced to
reflect elective deferrals of amounts that would otherwise be included
in Salary in the absence of such deferral, those deferred amounts shall
be included in the determination of the Executive's Salary at the time
they would have been paid in the absence of such deferral. Conversely,
such amounts shall not be included in the Executive's Salary when they
are paid at the end of the deferral period.
(II) A bonus is deemed paid for a year if it is earned as a result of
services that are performed by the Executive in that year. If any
portion of the Executive's bonus has been reduced to reflect elective
deferrals of amounts that would otherwise be included in bonus in the
absence of such deferral, those deferred amounts shall be included in
the determination of the Executive's bonus without regard to such
deferral. Conversely, such amounts shall not be included in the
Executive's bonus when they are paid at the end of the deferral period.
(III) The determination of the bonus amount paid or payable to the
Executive for any year shall be annualized if the Executive is not
employed by the Company or an Affiliate for the entire year.
(IV) If the Executive's Date of Termination occurs within the period
beginning on a Change of Control Date and ending on the last day of the
24th calendar month following the calendar month in which the Change of
Control Date occurs, then the amount determined in accordance with
paragraph (ii) above shall be not less than the largest of the annual
bonus amounts paid or payable to the Executive for the three
consecutive years prior to the year in which the Change of Control Date
occurs (or, if fewer than three, for the years in which the Executive
is employed).
(V) For the avoidance of doubt, it is recited here that "Aggregate
Annual Compensation" will not include the following: (1) amounts
realized from the exercise of a nonqualified stock option; (2) amounts
realized when restricted stock (or property) held by the Executive
either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture; and (3) amounts realized from the sale,
exchange or other disposition of stock acquired under an incentive
stock option or an employee stock purchase plan.
2 of 28
(d) "Basic Benefits" means health, dental, and life benefits (including
accidental death/dismemberment) for the Executive and the Executive's
family.
(e) "Board" means the Board of Directors of the Company.
(f) "Cause" shall mean the occurrence of the Executive's Date of
Termination for one of the following reasons: (i) the conviction of or
plea of guilty or nolo contendre to a felony by a federal or state
court of competent jurisdiction; (ii) an act or acts of dishonesty
taken by the Executive and intended to result in substantial personal
enrichment of the Executive at the expense of the Company or its
shareholders; or (iii) the Executive's "willful" failure to follow a
direct lawful written order from his or her supervisor, within the
reasonable scope of the Executive's duties, which failure is not cured
by the Executive within 30 days after the receipt of written notice
thereof given by the Company. For purposes of this paragraph (f):
(I) No act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that
the Executive's action or omission was in the best interest of
the Company. Further, the Executive's inability to perform his
or her duties due to a physical or mental condition that
qualifies the Executive for benefits under the Company's
short-term disability policy shall not be considered
"willful."
(II) The Executive shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to the
Executive a copy of the resolution duly adopted by the
affirmative vote of not less than three-fourths (3/4ths) of
the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to
the Executive and an opportunity for the Executive, together
with the Executive's counsel, to be heard before the Board),
finding that in the good faith opinion of the Board the
Executive was guilty of conduct set forth in clauses (i),
(ii), or (iii) above and specifying the particulars thereof in
detail.
(g) A "Change of Control Date" shall be deemed to have occurred each time
any one of the events described in paragraphs (i), (ii), (iii), or (iv)
below occurs; provided that if a Change of Control Date occurs by
reason of an acquisition by any Person that comes within the provisions
of paragraph (i) below), no addition Change of Control Date shall be
deemed to occur under such paragraph (i) by reason of subsequent
changes in holdings by such Person (except if the holdings by such
Person are reduced below 30% and thereafter increase to 30% or above).
For the purpose of this paragraph (g), the term "Company" shall include
Devon Energy Corporation and any successor thereto.
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(a "Person") if, immediately after such acquisition, such
Person has beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 30% or more of
either (I) the then
3 of 28
outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (II) the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change of Control Date: (A) any acquisition by an
underwriter temporarily holding securities pursuant to an
offering of such securities; (B) any acquisition by the
Company; (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or (D) any acquisition
by any corporation pursuant to a transaction which complies
with clauses (A), (B), and (C) of paragraph (iii) below.
(ii) Individuals who, as of the Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
the Effective Date whose election, appointment or nomination
for election by the Company's shareholders was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for purposes of this definition, any such
individual whose initial assumption of office occurs as a
result of an actual or publicly threatened election contest
(as such terms are used in Rule 14a-11 promulgated under the
Exchange Act) with respect to the election or removal of
directors or other actual or publicly threatened solicitation
of proxies or consents by or on behalf of a Person other than
the Board.
(iii) A reorganization, share exchange, merger or consolidation (a
"Business Combination"), in each case, unless, following such
Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may
be, of the ultimate parent entity resulting from such Business
Combination (including, without limitation, an entity which,
as a result of such transaction, has ownership of the Company
or all or substantially all of the assets of the Company
either directly or through one or more subsidiaries) in
substantially the same relative proportions as their
ownership, immediately prior to such Business Combination of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 30% or
more of, respectively, the then outstanding common stock of
the ultimate parent entity resulting from such Business
Combination or the combined voting power of the
4 of 28
then outstanding voting securities of such entity except to
the extent that such ownership existed prior to the Business
Combination, and (C) at least a majority of the members of the
board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Incumbent Board providing for such Business
Combination, or were elected, appointed or nominated by the
Incumbent Board.
(iv) Approval by the shareholders of the Company of (A) a complete
liquidation or dissolution of the Company or, (B) the sale or
other disposition of all or substantially all of the assets of
the Company, other than to an entity with respect to which
following such sale or other disposition, (1) more than 50%
of, respectively, the then outstanding shares of common stock
of such entity and the combined voting power of the then
outstanding voting securities of such entity entitled to vote
generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same
relative proportions as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the
case may be, (2) less than 30% of, respectively, the then
outstanding shares of common stock of such entity and the
combined voting power of the then outstanding voting
securities of such entity entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by any Person (excluding any employee benefit plan
(or related trust) of the Company or such entity), except to
the extent that such Person owned 30% or more of the
Outstanding Company Common Stock or Outstanding Company Voting
Securities prior to the sale or disposition, and (3) at least
a majority of the members of the board of directors of such
entity were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the
Incumbent Board providing for such sale or other disposition
of assets of the Company, or were elected, appointed or
nominated by the Incumbent Board.
If (I) the Executive's Date of Termination occurs on or after the date
of approval by the Company's shareholders of a transaction described in
paragraph (iii) above; (II) the transaction so approved by shareholders
is consummated and constitutes a Change of Control Date under paragraph
(iii) above; and (III) prior to the consummation of such transaction,
the Executive's Date of Termination occurs, then for purposes of
applying the provisions of paragraph 6(e), the Change of Control Date
shall be deemed to have occurred with respect to such Executive
immediately prior to such Executive's Date of Termination provided
that, to the extent that the application of this sentence results in
the Executive becoming entitled to benefits under this Agreement,
commencement of such benefits shall be required to occur not earlier
than the date of the consummation of the transaction.
5 of 28
If (A) the Executive's Date of Termination occurs prior to a Change of
Control Date under circumstances described in paragraph 5(f) (relating
to termination of employment by the Company without Cause); (B) the
Executive reasonably demonstrates that such termination either:
(1) was at the request of a third party who had indicated an
intention or taken steps reasonably calculated to effect a
Change of Control Date or who effectuates a Change of Control
Date or
(2) was otherwise in connection with, or in anticipation of, a
Change of Control Date which actually occurs,
then, for purposes of this Plan, a Change of Control Date with respect
to the Executive shall be deemed to be the date immediately prior to
the Executive's Date of Termination; provided that, to the extent that
the application of this sentence results in the Executive becoming
entitled to benefits under this Agreement, commencement of such
benefits shall be required to occur not earlier than the date of the
Change in Control or, in the case of a Change in Control described in
paragraph (ii) above, consummation of the transaction.. If any such
termination occurs while an agreement is pending and the effective
provisions of such agreement provide for a transaction or transactions
which, if consummated, would constitute a Change of Control Date, and
such Change of Control Date occurs, then such termination shall
conclusively be presumed to be in connection with a Change of Control
Date.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
(i) "Company" means Devon Energy Corporation, a Delaware corporation.
(j) "Confidential Information" shall include all non-public information
(including, without limitation, information regarding litigation and
pending litigation) concerning the Company and the Affiliates which was
acquired by or disclosed to the Executive during the course of
employment with the Company, or during the course of consultation with
the Company prior to the commencement of employment and following the
Date of Termination (regardless of whether consultation is pursuant to
paragraph 12).
(k) "Date of Termination" means the last day the Executive is employed by
the Company (including any successor to the Company as determined in
accordance with paragraph 18). If the Executive becomes employed by the
entity into which Devon Energy Corporation is merged, or the purchaser
of substantially all of the assets of Devon Energy Corporation, or a
successor to such entity or purchaser, the Executive shall not be
treated as having terminated employment for purposes of this Agreement
until such time as the Executive terminates employment with the
successor (including, without limitation, the merged entity or
purchaser). If the Executive is transferred to employment with Devon
Energy Corporation (including a successor to Devon Energy Corporation)
or an Affiliate, such transfer shall not constitute a termination of
employment for purposes of this Agreement, provided that the new
employer agrees to assume this Agreement and be substituted for the
Company under this Agreement.
6 of 28
(l) The Executive shall be considered "Disabled" during any period in which
a physical or mental disability which renders the Executive incapable,
after reasonable accommodation, of performing the duties under this
Agreement. The Executive shall be considered "Permanently Disabled"
during any period in which the Executive is Disabled; provided,
however, that the Executive shall not be considered to be "Permanently
Disabled" on the Date of Termination unless, at that time (i) such
disability is reasonably expected by the Executive's Supervisor to
continue for at least 90 days after the Date of Termination, and (ii)
at the Date of Termination, the Executive is eligible for income
replacement benefits under the Company's long-term disability plan or
another arrangement providing substantially similar benefits. In the
event of a dispute as to whether the Executive is Disabled or
Permanently Disabled, the Company may refer the same to a licensed
practicing physician of the Company's choice, and the Executive agrees
to submit to such tests and examinations as such physician shall deem
appropriate.
(m) "Effective Date" means January 1, 2002.
(n) "Exchange Act" means the Securities Exchange Act of 1934.
(o) "Good Reason" means:
(i) The assignment to the Executive of any duties inconsistent
with the provisions of paragraph 2(a), excluding for this
purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company within
15 days after receipt of written notice thereof given by the
Executive.
(ii) The provision of written notice to the Executive by the
Company that the Agreement Term will not be renewed (as
described in paragraph 1(b)), provided that for purposes of
paragraph 5(d)(I), the Executive shall be deemed to have
provided notice to the Company within a reasonable time after
having knowledge of the circumstances regarding Good Reason
if, and only if, the Executive provides such notice to the
Company within 90 days after receiving such notice of
non-renewal from the Company; and further provided that this
paragraph (ii) shall be without effect unless the notice
results in the Agreement Term ending prior to date which is
three years from the end of the then current Agreement Term
(determined as of the date such notice is provided).
(iii) Any failure by the Company to comply with any of the
provisions of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company within 15 days
after receipt of written notice thereof given by the
Executive.
(iv) The Company's requiring the Executive to be based at any
office or location other than that which he or she occupied at
the Effective Date, or within 50 miles of such location,
except for periodic travel reasonably required in the
performance of the Executive's responsibilities.
7 of 28
(v) Any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this
Agreement.
(vi) Any failure by the Company to comply with and satisfy
paragraph 18.
(p) A "Notice of Termination" means a dated notice which indicates the Date
of Termination (not earlier than the date on which the notice is
provided), and which indicates the specific termination provision in
this Agreement relied on and which sets forth in reasonable detail the
facts and circumstances, if any, claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated.
(q) "Restoration Plan" means the Devon Energy Corporation Benefit
Restoration Plan.
(r) "Retiree Medical Benefit Coverage" shall be the coverage in effect
under the retiree medical benefit plan applicable to the Executive, or
which would be applicable to the Executive if the Executive's
employment then terminated and the Executive satisfied the applicable
age and service requirements.
(s) The Executive's "Supervisor" will be the person to whom the Executive
reports. The Executive's "Supervisor" shall be the Chief Executive
Officer of the Company.
(t) "Supplemental Plan" means the Supplemental Retirement Income Plan of
Devon Energy Corporation.
2. Performance of Services. The Executive's employment with the Company
shall be subject to the following:
(a) Subject to the terms of this Agreement, the Company hereby agrees to
employ the Executive as its ___________________ during the Agreement
Term, and the Executive hereby agrees to remain in the employ of the
Company in such position during the Agreement Term. The Board may
assign the Executive to a different position in the Company only with
the consent of the Executive. The Executive may refuse to give his or
her consent to any such assignment only if the Executive reasonably
determines that such position would or is likely to result (i) in a
diminution of the Executive's position, status, office, titles, or
reporting requirements, or (ii) in the aggregate, in a diminution in
the Executive's authority, duties, and responsibilities. This Agreement
does not constitute a guarantee of continued employment but instead
provides for certain rights and benefits for the Executive during
employment, and in the event the Executive's employment with the
Company terminates under the circumstances described herein. During the
Agreement Term, while employed by the Company, the Executive's main
office shall be at the Company's headquarters in Oklahoma City,
Oklahoma. However, the Company is expected to establish operations in
other locations within and outside of the United States of America,
and, as part of the Executive's duties, the Executive may be required
to travel to and work at other locations within and outside of the
United States of America.
8 of 28
(b) During the Agreement Term, while the Executive is employed by the
Company, the Executive's full time energies and talents shall be
devoted to serving in the position or positions determined in
accordance with paragraph (a) above.
(c) The Executive agrees to perform the duties under this Agreement
faithfully and efficiently subject to the directions of the Executive's
Supervisor. The Executive's duties may include providing services for
both the Company and the Affiliates, as determined by the Executive's
Supervisor; provided that the Executive shall not, without the
Executive's consent, be assigned tasks that would be inconsistent with
those of the position determined in accordance with paragraph (a)
above. The Executive shall report to the Executive's Supervisor and
shall have such authority, power, responsibilities and duties as are
inherent in the positions (and the undertakings applicable to the
positions) and necessary to carry out the responsibilities and the
duties required hereunder. The Executive will also be subject to the
Company policies that are applicable to the Company's other senior
management employees.
(d) Notwithstanding the foregoing provisions of this paragraph 2, during
the Agreement Term, the Executive may devote reasonable time to
activities other than those required under this Agreement, including
the supervision of the Executive's personal investments, and activities
involving professional, charitable, community, educational, religious
and similar types of organizations, speaking engagements, membership on
the boards of directors of other organizations, and similar types of
activities, to the extent that such other activities do not, in the
judgment of the Executive's Supervisor, inhibit or prohibit the
performance of the Executive's duties under this Agreement, or conflict
in any material way with the business of the Company or any Affiliate;
provided, however, that the Executive shall not serve on the board of
any business, hold any other position with any business, or otherwise
engage in any business activity, without the consent of the Executive's
Supervisor.
(e) Subject to the terms of this Agreement, the Executive shall not be
required to perform services under this Agreement during any period
that the Executive is Disabled. During the period in which the
Executive is Disabled, the Company may appoint a temporary replacement
to assume the Executive's responsibilities.
3. Compensation. Subject to the terms of this Agreement, during the
Agreement Term, while the Executive is employed by the Company, the Company
shall provide compensation for services as follows:
(a) Salary. The Executive shall receive, for each 12-consecutive month
period beginning on the Effective Date and each anniversary thereof, in
substantially equal monthly or more frequent installments, an annual
base salary of not less than $________ (the "Salary"). The Executive's
Salary rate shall be reviewed by the Executive's Supervisor on or about
December of each year during the Agreement Term, while the Executive is
employed by the Company, to determine whether an increase in the amount
of Salary is appropriate. In no event shall the Salary of the Executive
be reduced to an amount that is less than the amount specified in this
paragraph (a), or to an amount that is less than the amount that
9 of 28
the Executive was previously receiving, except to the extent that
reductions of the same percentage are being made at the same time to
the salaries of all other Company officers in the corporate office at
or above the vice-president level, and such Salary shall be restored to
its prior level when, and to the same extent, as the restoration that
applies to the other officers.
(b) Bonus. The Executive shall participate in an annual bonus program. For
each annual bonus period while the Executive is employed by the
Company, the Executive's bonus possibility shall be not less than the
bonus possibility offered to other similarly situated executives of the
Company for that year. However, in no event shall the Executive's bonus
possibility for any year, excluding the period beginning on the date
the Executive is first employed by the Company and ending on the end of
the bonus period in which such hire date occurs, be less than the bonus
possibility provided to the Executive for the prior year. For purposes
of applying the preceding sentence, (I) the bonus possibility for any
year shall be expressed as a percentage of the Executive's Salary for
the year; and (II) the determination of the bonus amount paid or
payable to the Executive for any year shall be annualized if the
Executive is not employed by the Company or an Affiliate for the entire
year. The performance goals for the bonus shall be established by the
Executive's Supervisor after consultation with the Executive.
(c) Options. During the Agreement Term, the Executive shall be granted
stock options at such times as options are granted to the Company's
other senior executives. Stock option grants shall be subject to such
terms, and shall cover a number of shares, as are comparable to the
terms of, and number of shares covered by options granted to the
Company's other senior executives from time to time, with the number of
such shares to be adjusted in a manner that reflects the Executive's
position compared with others receiving option grants.
(d) Disability Insurance. The Executive shall receive from the Company
disability income replacement coverage which will provide for
replacement of income at a commercially reasonable rate during any
period in which the Executive is Disabled if the disability arose
during the Agreement Term and prior to the Executive's Date of
Termination. During any period while the Executive is Disabled and is
otherwise entitled to receive Salary and bonus payments under this
Agreement, any such Salary and bonus payments to the Executive shall be
reduced by the amount of any benefits paid for the same period of time
under the Company-provided disability income replacement coverage.
During any period while the Executive is Disabled and is otherwise
entitled to receive Salary and bonus payments under this Agreement
(including payment in lieu of Salary or bonus pursuant to paragraph
6(c)), any such Salary and bonus payments (or such payments in lieu of
Salary and bonus) to the Executive shall be reduced by the amount of
any benefits paid for the same period of time under the
Company-provided disability income replacement coverage.
(e) Expenses. The Executive is authorized to incur reasonable expenses for
entertainment, traveling, meals, lodging and similar items in promoting
the Company's business. The Company will reimburse the Executive for
all reasonable expenses so incurred, provided
10 of 28
that such expenses are incurred and accounted for in accordance with
the reasonable policies and procedures established by the Company.
(f) Change of Control Date. For the period beginning on a Change of Control
Date and ending on the last day of the 24th calendar month following
the calendar month in which a Change of Control Date occurs, the
Company shall make available to the Executive health benefit coverage
(for the Executive and the Executive's family), life insurance
coverage, and disability income replacement insurance coverage on terms
that are not materially less favorable to the Executive than as in
effect immediately prior to the Change of Control Date with respect to
each of such health, life and disability coverage. For the period
beginning on a Change of Control Date and continuing at all times
thereafter, the age and years of service requirements for eligibility
for coverage under the Retiree Medical Benefit Coverage (as applied to
the Executive and the Executive's family) shall not be modified to
adversely affect the Executive's right to coverage.
(g) Indemnification and Insurance. The Company will, to the maximum extent
permitted by law, defend, indemnify and hold harmless the Executive and
the Executive's heirs, estate, executors and administrators against any
costs, losses, claims, suits, proceedings, damages or liabilities to
which the Executive may become subject which arise out of, are based
upon or relate to the Executive's employment by the Company (and any
predecessor company to the Company), or the Executive's service as an
officer or member of the Board of Directors of the Company (or any
predecessor company to the Company) or any Affiliate, including without
limitation reimbursement for any legal or other expenses reasonably
incurred by the Executive in connection with investigation and
defending against any such costs, losses, claims, suits, proceedings,
damages or liabilities. The Company shall maintain directors and
officers liability insurance in commercially reasonable amounts (as
reasonably determined by the Board), and the Executive shall be covered
under such insurance to the same extent as other senior management
employees of the Company; provided, however, that the Company shall not
be required to maintain such insurance coverage unless the Board
determines that it is obtainable at reasonable cost; and further
provided that the Executive shall be given written notice of the
Board's determination to not maintain such coverage promptly after such
determination is made.
(h) Other Fringe Benefits. Except as otherwise specifically provided to the
contrary in this Agreement, the Executive shall be provided with the
welfare benefits and other fringe benefits to the same extent and on
the same terms as those benefits are provided by the Company from time
to time to the Company's other senior management employees and to
receive the benefits and perquisites as may be available to employees
of like rank and position. However, the Company shall not be required
to provide a benefit under this paragraph (h) if such benefit would
duplicate (or otherwise be of the same type as) a benefit specifically
required to be provided under another provision of this Agreement. The
Executive shall complete all forms and physical examinations, and
otherwise take all other similar actions to secure coverage and
benefits described in this paragraph 3, to the extent determined to be
necessary or appropriate by the Company.
11 of 28
(i) Tax Withholding. All payments and distributions under this Agreement
are subject to withholding of all applicable taxes.
4. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, benefit, or distribution
from the Company, any affiliate of the Company, or trusts established
by the Company or by any affiliate of the Company for the benefit of
its employees, to the Executive or for the Executive's benefit, whether
paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, including, by way of example and not by
way of limitation, acceleration of the date of vesting, payment, rate
of payment, benefit or right to future payment or benefit under any
plan, program or arrangement of the Company or by any other company,
person or entity (a "Payment"), would be subject to the excise tax
imposed by section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the sum of: (i) the Excise Tax imposed
upon the Payments; plus (ii) an amount equal to the product of any
deductions disallowed for federal, state, or local income tax purposes
because of the inclusion of the Gross-Up Payment in the Executive's
adjusted gross income multiplied by the highest applicable marginal
rate of federal, state, or local income taxation, respectively, for the
calendar year in which the Gross-Up Payment is to be made.
(b) Subject to the provisions of paragraph 4(c), all determinations
required to be made under this paragraph 4, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by a nationally recognized certified public accounting
firm as may be selected by the Company (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and
the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment which would be subject to the
Excise Tax, or such earlier time as is requested by the Company. The
initial Gross-Up Payment, if any, as determined pursuant to this
paragraph 4(b), shall be paid to the Executive within five days of the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall
furnish the Executive with an opinion that the Executive has
substantial authority not to report any Excise Tax on the Executive's
federal income tax return. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of section 4999 of the Code at the time
of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payment which will not have been made by the
Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to paragraph 4(c) and the
Executive thereafter is required to make a payment of
12 of 28
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after
the Executive knows of such claim, and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to
be paid. The Executive shall not pay such claim prior to the expiration
of the 30-day period following the date on which the Executive gives
such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively
to contest such claim; and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
paragraph 4(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed
and xxx for a refund or contest the claim in any permissible manner.
The Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with respect
to any imputed income with respect to such
13 of 28
advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to paragraph 4(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of paragraph
4(c)) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced
by the Company pursuant to paragraph 4(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of
thirty days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
5. Termination. The Executive's employment with the Company during the
Agreement Term may be terminated by the Company or the Executive without any
breach of this Agreement only under the circumstances described in paragraphs
5(a) through 5(f):
(a) Death. The Executive's employment hereunder will terminate upon the
Executive's death.
(b) Permanently Disabled. The Company may terminate the Executive's
employment during any period in which the Executive is Permanently
Disabled.
(c) Cause. The Company may terminate the Executive's employment at any time
for Cause.
(d) Constructive Discharge. If (I) the Executive provides written notice to
the Company of the occurrence of Good Reason within a reasonable time
after the Executive has knowledge of the circumstances constituting
Good Reason, which notice shall specifically identifies the
circumstances which the Executive believes constitute Good Reason; (II)
the Company fails to notify the Executive of the Company's intended
method of correction within a reasonable period of time after the
Company receives the notice, or the Company fails to correct the
circumstances within a reasonable period of time after such notice; and
(III) the Executive resigns within a reasonable time after receiving
the Company's response, if such notice does not indicate an intention
to correct such circumstances, or within a reasonable time after the
Company fails to correct such circumstances; then the Executive shall
be considered to have been subject to a Constructive Discharge by the
Company. Notwithstanding the foregoing provisions of this paragraph
(d), the Executive shall not be deemed to have been subject to a
14 of 28
"Constructive Discharge" unless the Executive remains in the employ of
the Company for the period requested by the Company at a rate of pay
not less than his or her rate of pay immediately prior to the event
giving rise to the Executive's notice (not to exceed 90 days after the
Executive provides written notice in accordance with clause (I) above).
(e) Termination by Executive. The Executive may terminate his or her
employment hereunder at any time for any reason by giving the Company
prior written Notice of Termination, which Notice of Termination shall
be effective not less than 60 days after it is given to the Company,
provided that nothing in this Agreement shall require the Executive to
specify a reason for any such termination. However, to the extent that
the procedures specified in paragraph 5(d) are required, the procedures
of this paragraph 5(e) may not be used in lieu of the procedures
required under paragraph 5(d).
(f) Termination by Company. The Company may terminate the Executive's
employment hereunder at any time for any reason, by giving the
Executive prior written Notice of Termination, which Notice of
Termination shall be effective immediately, or such later time as is
specified in such notice. The Company shall not be required to specify
a reason for the termination under this paragraph (f), provided that
termination of the Executive's employment by the Company shall be
deemed to have occurred under this paragraph (f) only if it is not for
reasons described in paragraph 5(a), 5(b), 5(c), 5(d), or 5(e).
(g) Notice of Termination. Any termination of the Executive's employment by
the Company or the Executive (other than a termination pursuant to
paragraph 5(a)) must be communicated by a written Notice of Termination
to the other party hereto.
(h) Effect of Termination. If, on the Date of Termination, the Executive is
a member of the Board of Directors of the Company or any of the
Affiliates, or holds any other position with the Company and the
Affiliates, the Executive shall resign from all such positions as of
the Date of Termination.
6. Rights Upon Termination. The Executive's right to payment and
benefits under this Agreement for periods after the Date of Termination shall be
determined in accordance with the following provisions of this paragraph 6:
(a) General. If the Executive's Date of Termination occurs during the
Agreement Term for any reason, the Company shall pay to the Executive:
(i) The Executive's Salary for the period ending on the Date of
Termination.
(ii) Payment for unused vacation days, as determined in accordance with
Company policy as in effect from time to time.
(iii) If the Date of Termination occurs after the end of the period
during which performance is measured for purposes of determining
eligibility for a performance bonus (as described in paragraph 3(b)),
the Executive shall be paid such bonus amount at the regularly
scheduled time.
15 of 28
(iv) The Executive and any of the Executive's dependents shall be
eligible for COBRA continuation coverage (as described in section 4980B
of the Code) to the extent required by applicable law.
(v) Any other payments or benefits to be provided to the Executive by
the Company pursuant to any employee benefit plans or arrangements
established or adopted by the Company, to the extent such amounts are
due from the Company in accordance with the terms of such plans or
arrangements. The Executive's right to payments under this paragraph
(v) shall include, without limitation, any rights to indemnification
from the Company, or from a third-party insurer for directors and
officers liability coverage) with respect to any costs, losses, claims,
suits, proceedings, damages or liabilities to which the Executive may
become subject (regardless of whether they arise during the Executive's
employment or after his or her Date of Termination for any reason)
which arise out of, are based upon or relate to the Executive's
employment by the Company and any predecessors, or the Executive's
service as an officer or member of the Board of Directors of the
Company or any predecessor or any Affiliate.
Except as may otherwise be expressly provided to the contrary in this
Agreement, nothing in this Agreement shall be construed as requiring
the Executive to be treated as employed by the Company for purposes of
any employee benefit plan or arrangement following the Executive's Date
of Termination.
(b) Termination for Cause. If the Executive's Date of Termination occurs
during the Agreement Term under circumstances described in paragraph
5(c) (relating to the Executive's termination for Cause), then, except
as otherwise expressly provided in this Agreement or otherwise agreed
in writing between the Executive and the Company, the Company shall
have no obligation to make payments under the Agreement for periods
after the Executive's Date of Termination; and the right to any
benefits to or for the benefit of the Executive under the Supplemental
Plan shall be forfeited, and no benefits shall be payable to or on
behalf of the Executive under the Supplemental Plan.
(c) Death or Disability. If the Executive's Date of Termination occurs
during the Agreement Term under circumstances described in paragraph
5(a) (relating to Executive's death), or paragraph 5(b) (relating to
Executive's being Permanently Disabled), then, in addition to the
amounts payable in accordance with paragraph 6(a), the Executive shall
receive payment of the bonus for the performance period in which the
Date of Termination occurs, based on actual performance for the entire
period, and payable at the same time as it is payable for other
participants in the bonus plan; provided, however, that it shall be
subject to a pro-rata reduction for the portion of the performance
period following the Date of Termination.
(d) Termination without Cause and Constructive Discharge. If the
Executive's Date of Termination occurs during the Agreement Term under
circumstances described in paragraph 5(d) (relating to Constructive
Discharge) or paragraph 5(f) (relating to termination by the Company
without Cause), then, in addition to the amounts payable in accordance
with paragraph 6(a):
16 of 28
(i) The Company shall pay to the Executive in a lump sum, in cash,
within 30 days after the Date of Termination, an amount equal
to three (3) times the Executive's Aggregate Annual
Compensation.
(ii) For the period beginning on the Date of Termination, and
ending on the 36-month anniversary of the Date of Termination,
the Company shall continue the Basic Benefits to the Executive
and/or the Executive's family which are concurrently being
provided to senior executives then employed by the Company
during that period, subject to the Executive making the
contributions that are generally required of executives of the
Company for such coverage from time to time. At the end of
such 36-month period, the Executive shall be eligible to
purchase COBRA medical continuation coverage (as described in
section 4980B of the Code (if any), with the period of medical
benefit coverage provided in accordance with the first
sentence of this paragraph (ii) being counted toward the
Company's obligation to provide COBRA coverage. However,
during any period after the Executive's Date of Termination
during which the Executive is eligible to obtain medical
benefit coverage (with respect to the Executive or the
Executive's family) from the Executive's employer, or other
person to whom the Executive provides service, the Executive
will file such an application, and take such other steps as
may be necessary to obtain such coverage (including the
payment of premiums), and to the extent permitted by
applicable law, coverage obtained in accordance with this
sentence shall be primary. For the period beginning on the
Date of Termination and ending on the 36-month anniversary of
the Date of Termination, to the extent that the value of the
Basic Benefits provided to the Executive under this paragraph
(ii) are determined to be includible in the Executive's income
for income tax purposes, and such benefits would not have been
includible in the Executive's income for income tax purposes
if the Executive continued in the employ of the Company, the
Company will make a Tax Gross-Up Payment (as described below)
to the Executive with respect to such coverage. For purposes
of this paragraph (ii), the term "Tax Gross-Up Payment" with
respect to any benefit shall mean an amount which shall be
equal to the aggregate amount of additional Federal, state and
local income taxes payable by the Executive from time to time
as a result of the receipt of such benefit and the receipt of
such additional payment.
(iii) The Executive's benefits under the Supplemental Plan shall be
fully vested.
(iv) The Company shall pay for a reasonable amount of outplacement
services to be performed by an outplacement service provider
mutually agreeable by the Executive and the Company. The
amount of such outplacement services will be commensurate with
the Executive's title and position with the Company and other
executives similarly situated in other companies within the
Company's peer industry group.
(v) The Executive shall receive payment of the bonus for the
performance period in which the Date of Termination occurs,
based on actual performance for the entire
17 of 28
period, and payable at the same time as it is payable for
other participants in the bonus plan; provided, however, that
it shall be subject to a pro-rata reduction for the portion of
the performance period following the Date of Termination.
In no event, however, shall the Executive be entitled to receive any
amounts, rights, or benefits under this paragraph (d) unless the
Executive executes a release of claims against the Company in a form
prepared by the Company.
(e) Change of Control Benefits. If, during the period beginning on a Change
of Control Date and ending on the last day of the 24th calendar month
following the calendar month in which a Change of Control Date occurs,
the Executive's Date of Termination occurs under circumstances
described in paragraph 5(d) (relating to Constructive Discharge) or
paragraph 5(f) (relating to termination by the Company without Cause),
then, in addition to the benefits provided payable in accordance with
paragraph 6(a) and paragraph 6(d):
(i) The Executive's entitlement to Retiree Medical Benefit
Coverage shall be determined as though, at the Date of
Termination, the Executive had earned 36 months of service in
addition to the Executive's actual service at the Date of
Termination, and as though the Executive was three years older
than the Executive's actual age at the Date of Termination
(provided that the additional deemed age and service shall not
be construed to reduce the Executive's right to Retiree
Medical Benefit Coverage which may otherwise be reduced by
reason of additional age or service).
(ii) The Executive's entitlement to benefits under the Supplemental
Plan shall be determined as though, at the time of
termination, (A) the Executive had earned 36 months of service
in addition to the Executive's actual service at the Date of
Termination; (B) the Executive's compensation for such 36
months of additional service was equal to the greater of the
Executive's compensation as of the Date of Termination or the
Executive's Compensation immediately prior to the Change of
Control Date; and (C) the Executive was three years older than
the Executive's actual age at the Date of Termination.
However, the additional deemed service, compensation and age
shall not be construed to reduce the Executive's right to
benefits under the Supplemental Plan which may otherwise be
reduced by reason of additional age or service, and further
provided that the deemed additional service credited pursuant
to this paragraph (ii) under the Supplemental Plan shall not
occur to the extent that such service would result in service
in excess of the maximum years of service permitted to be
taken into account under that plan.
This paragraph (e) shall not limit the ability of the Company or an
Affiliate (whichever is applicable) to modify the terms of the
Supplemental Plan for all participants who are similarly situated with
the Executive; subject to the restrictions imposed on the Company or
Affiliate (by that plan, the provisions of paragraph 3(f) of this
Agreement, or otherwise) to modify the terms of the plan. Regardless of
whether the Date of Termination has occurred prior to, on, or after the
Change of Control Date, for the period continuing at all times after
the Change of Control Date (if any), the Retiree Medical
18 of 28
Benefit Coverage (as applied to the Executive and the Executive's
family) shall not be modified to adversely affect the Executive's right
to coverage or benefits as compared to the coverage that was provided
immediately prior to the Change of Control Date.
7. Duties on Termination. Subject to the terms and conditions of this
Agreement, during the period beginning on the date of delivery of a Notice of
Termination, and ending on the Date of Termination, the Executive shall continue
to perform the duties as set forth in this Agreement, and shall also perform
such services for the Company as are necessary and appropriate for a smooth
transition to the Executive's successor, if any. Notwithstanding the foregoing
provisions of this paragraph 7, the Company may suspend the Executive from
performing the duties under this Agreement following the delivery of a Notice of
Termination providing for the Executive's resignation, or delivery by the
Company of a Notice of Termination providing for the Executive's termination of
employment for any reason; provided, however, that during the period of
suspension (which shall end on the Date of Termination), the Executive shall
continue to be treated as employed by the Company for other purposes, and the
Executive's rights to compensation or benefits shall not be reduced by reason of
the suspension. Following the Date of Termination, the Executive agrees to
return to the Company any keys, credit cards, passes, confidential documents or
material, or other property belonging to the Company, and to return all
writings, files, records, correspondence, notebooks, notes and other documents
and things (including any copies thereof) containing any Confidential
Information.
8. Mitigation, Alienation, and Set-Off. The Executive shall not be
required to mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise. The Company shall not be entitled to set
off against the amounts payable to the Executive under this Agreement any
amounts owed to the Company by the Executive, any amounts earned by the
Executive in other employment after termination of employment with the Company,
or any amounts which might have been earned by the Executive in other employment
had such other employment been sought. This Agreement is personal to the
Executive and may not be assigned by the Executive without the written consent
of the Company. The interests of the Executive under this Agreement are not
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Executive or
the Executive's beneficiary. However, to the extent that rights or benefits
under this Agreement otherwise survive the Executive's death, the Executive's
heirs and estate shall succeed to such rights and benefits pursuant to the
Executive's will or the laws of descent and distribution; provided that the
Executive shall have the right at any time and from time to time, by notice
delivered to the Company, to designate or to change the beneficiary or
beneficiaries with respect to such benefits.
9. Confidential Information. The Executive agrees that, during the
Agreement Term, and at all times thereafter:
(a) Except as may be required by the lawful order of a court or agency of
competent jurisdiction, except as necessary to carry out the duties to
the Company and the Affiliates, or except to the extent that the
Executive has express authorization from the Company, the Executive
agrees to keep secret and confidential indefinitely, all Confidential
Information, and not to disclose the same, either directly or
indirectly, to any other
19 of 28
person, firm, or business entity, or to use it in any way. The
Executive shall, during the continuance of the Executive's employment,
use the Executive's best efforts to prevent the unauthorized
publication or misuse of any Confidential Information.
(b) To the extent that any court or agency seeks to have the Executive
disclose Confidential Information, the Executive shall promptly inform
the Company, and shall take reasonable steps to prevent disclosure of
Confidential Information until the Company has been informed of such
requested disclosure, and the Company has an opportunity to respond to
such court or agency. To the extent that the Executive obtains
information on behalf of the Company or any of the Affiliates that may
be subject to attorney-client privilege as to the Company's attorneys,
the Executive shall take reasonable steps to maintain the
confidentiality of such information and to preserve such privilege.
(c) Nothing in the foregoing provisions of this paragraph 9 shall be
construed so as to prevent the Executive from using, in connection with
the Executive's employment for himself or herself or an employer other
than the Company or any of the Affiliates, knowledge which was acquired
during the course of the Executive's employment with the Company and
the Affiliates, and which is generally known to persons of the
Executive's experience in other companies in the same industry.
(d) This paragraph 9 shall not be construed to unreasonably restrict the
Executive's ability to disclose confidential information in an
arbitration proceeding or a court proceeding in connection with the
assertion of, or defense against any claim of breach of this Agreement.
If there is a dispute between the Company and the Executive as to
whether information may be disclosed in accordance with this paragraph
(d), the matter shall be submitted to the arbitrators or the court
(whichever is applicable) for decision.
10. Non-Disparagement. The Executive shall not, while employed by the
Company, and after the Date of Termination, publicly (e.g., via an interview or
speech or presentation available to the public) criticize, defame, or disparage
the Company or its Affiliates or their officers or directors, orally or in
writing, unless compelled by law to do so. While the Executive is employed by
the Company, and after the Date of Termination, the Company agrees, on behalf of
itself and its Affiliates, that neither the officers nor the directors of the
Company or the Affiliates shall publicly (e.g., via an interview or speech or
presentation available to the public) criticize, defame, or disparage the
Executive, orally or in writing, unless compelled by law to do so.
11. Other Duties. Nothing in paragraph 9 or 10 shall be construed as
limiting the Executive's duty of loyalty to the Company, or any other duty the
Executive may otherwise have to the Company, while employed by the Company.
12. Assistance with Claims. The Executive agrees that, for the period
beginning on the Effective Date, and continuing for a reasonable period after
the Executive's Date of Termination, the Executive will assist the Company and
the Affiliates in defense of any claims that may be made against the Company and
the Affiliates, and will assist the Company and the Affiliates in the
prosecution of any claims that may be made by the Company or the Affiliates, to
the extent that such claims may relate to services performed by the Executive
for the Company and the
20 of 28
Affiliates. The Executive agrees to promptly inform the Company if the Executive
becomes aware of any lawsuits involving such claims that may be filed against
the Company or any Affiliate. The Company agrees to provide legal counsel to the
Executive in connection with such assistance (to the extent legally permitted),
and to reimburse the Executive for all of the Executive's reasonable
out-of-pocket expenses associated with such assistance, including travel
expenses. For periods after the Executive's employment with the Company
terminates, the Company agrees to provide reasonable compensation to the
Executive for such assistance. The Executive also agrees to promptly inform the
Company if asked to assist in any investigation of the Company or the Affiliates
(or their actions) that may relate to services performed by the Executive for
the Company or the Affiliates, regardless of whether a lawsuit has then been
filed against the Company or the Affiliates with respect to such investigation.
13. Equitable Remedies. The Executive acknowledges that the Company
and/or the Affiliates would be irreparably injured by a violation of paragraph 9
or 10, and agrees that the Company and any affected Affiliate, in addition to
any other remedies available to it for such breach or threatened breach, shall
be entitled to a preliminary injunction, temporary restraining order, or other
equivalent relief, restraining the Executive from any actual or threatened
breach of either paragraph 9 or 10. The Company acknowledges that the Executive
would be irreparably injured by a violation of paragraph 10, and agrees that the
Executive, in addition to any other remedies available to the Executive for such
breach or threatened breach, shall be entitled to a preliminary injunction,
temporary restraining order, or other equivalent relief, restraining the Company
from any actual or threatened breach of paragraph 10. If a bond is required to
be posted in order for the Company, an Affiliate, or the Executive to secure an
injunction or other equitable remedy, the parties agree that said bond need not
be more than a nominal sum.
14. Amendment. This Agreement may be amended or cancelled only by
mutual agreement of the parties in writing without the consent of any other
person. So long as the Executive lives, no person, other than the parties
hereto, shall have any rights under or interest in this Agreement or the subject
matter hereof.
15. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oklahoma, without reference to
principles of conflict of laws except as superseded by applicable federal law.
All disputes shall be arbitrated or litigated (whichever is applicable) in
Oklahoma City, Oklahoma.
16. Severability. The invalidity or unenforceability of any provision
of this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement will be construed as if such
invalid or unenforceable provision were omitted (but only to the extent that
such provision cannot be appropriately reformed or modified).
17. Waiver of Breach. No waiver by any party hereto of a breach of any
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party of any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time. The failure of any party hereto to take any action by
21 of 28
reason of such breach will not deprive such party of the right to take action at
any time while such breach continues.
18. Successors, Assumption of Contract. This Agreement shall be binding
upon and inure to the benefit of the Company and any successor of the Company,
subject to the following:
(a) The Company may assign its rights and obligations under this Agreement
to any Affiliate. The Company will require that any assignee (pursuant
to the preceding sentence) and will require that any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such assignment or succession had taken place.
(b) Notwithstanding the foregoing provisions of this paragraph 18, if an
assignee or the successor is required to assume the obligations of this
Agreement under paragraph 18(a), and fails to execute and deliver to
the Executive a written acknowledgment of the assumption at that time
or, if later, promptly following demand by the Executive for execution
and deliver of such an acknowledgment, then the successor shall not be
substituted as the Company, the Executive shall be entitled to payments
and benefits as provided under paragraph 6(d), and if the Executive is
then employed by the Company (or successor), the Executive's employment
shall be deemed to have been terminated by the Company under
circumstances described in paragraph 5(f), and the Executive shall not
be required to perform services under this Agreement after such deemed
termination.
(c) The Company's rights and obligations under this Agreement may not be
assigned to an entity that is not an Affiliate without the Executive's
consent. If, during the Agreement Term, and prior to the date that
would otherwise be the Executive's Date of Termination in the absence
of this sentence, the Company ceases to be either Devon Energy
Corporation (or successor thereto) or an Affiliate, then, as of the
Executive's Date of Termination shall be deemed to have occurred as of
the date of such cessation by the Company for reasons other than Cause.
19. Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid
(provided that international mail shall be sent via overnight or two-day
delivery), or sent by facsimile or prepaid overnight courier to the parties at
the addresses set forth below (or such other addresses as shall be specified by
the parties by like notice). Such notices, demands, claims and other
communications shall be deemed given:
(a) in the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery;
(b) in the case of certified or registered U.S. mail, five days after
deposit in the U.S. mail; or
22 of 28
(c) in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that are
to be delivered by the U.S. mail or by overnight service or two-day delivery
service are to be delivered to the addresses set forth below:
to the Company:
Devon Energy Corporation
00 Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
or to the Executive:
Devon Energy Corporation
00 Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
All notices to the Company shall be directed to the attention of Senior Vice
President, Administration of the Company, with a copy to the Vice President,
Human Resources of the Company. Each party, by written notice furnished to the
other party, may modify the applicable delivery address, except that notice of
change of address shall be effective only upon receipt.
20. Arbitration. In the event of a dispute, claim, or controversy
regarding the Executive's rights and obligations in connection with the
Executive's employment or otherwise under this Agreement, the following shall
apply:
(a) The parties agree that the Executive's employment and this Agreement
relate to interstate commerce, and that any disputes, claims or
controversies between the Executive and the Company which may arise out
of or relate to the Executive's employment relationship or this
Agreement shall be settled by arbitration. This agreement to arbitrate
shall survive the Date of Termination. Any arbitration shall be in
accordance with the Rules of the American Arbitration Association and
shall be undertaken pursuant to the Federal Arbitration Act.
Arbitration will be held in Oklahoma City, Oklahoma unless the parties
mutually agree on another location. The decision of the arbitrator(s)
will be enforceable in any court of competent jurisdiction.
(b) The parties agree that punitive, liquidated or indirect damages shall
not be awarded by the arbitrator(s) unless such damages would be
awarded by a court of competent jurisdiction.
(c) This paragraph 20 shall not be construed to limit the right of the
Company, an Affiliate, or the Executive to obtain relief under
paragraph 13 with respect to any matter or controversy subject to
paragraph 13, or otherwise to prevent any on-going breach by the
Executive or the Company and, pending a final determination by the
arbitrator with
23 of 28
respect to any such matter or controversy, the Company or the Executive
shall be entitled to obtain any such relief by direct application to
state, federal, or other applicable court, without being required to
first arbitrate such matter or controversy.
21. Attorney Fees. In the event of a dispute, claim, or controversy
regarding the Executive's rights and obligations in connection with the
Executive's employment or otherwise under this Agreement, the following shall
apply:
(a) The Company otherwise responsible for payment of the benefits shall
reimburse the Executive for all legal fees and expenses reasonably
incurred by the Executive in connection with such contest or dispute
(provided that such legal fees are calculated on an hourly, and not on
a contingency fee, basis), costs and expenses incurred by the Executive
in connection with such enforcement or defense.
(b) The Executive shall be entitled to select his or her legal counsel;
provided, however, that such right of selection shall not affect the
requirement that any costs and expenses reimbursable under this
paragraph 21 be reasonable.
(c) Except as otherwise provided in paragraph (d) below, reimbursement by
the Company shall be made as soon as practicable following the
resolution of the contest or dispute to the extent the Company receives
appropriate documentation evidencing the incurrence of such attorneys'
fees, costs, and expenses. However, subject to paragraph (d) below,
such reimbursement shall be due under this paragraph 21 only if the
Executive is successful in respect of one or more of the Executive's
material claims or defenses brought, raised or pursued in connection
with such contest or dispute.
(d) In the event that (i) within the period beginning on the Change of
Control Date and ending on the last day of the 24th calendar month
following the calendar month in which a Change of Control Date, a claim
(a "Claim") for arbitration or a lawsuits filed by the Company or the
Executive in connection with a dispute, claim, or controversy regarding
the Executive's rights and obligations in connection with the
Executive's employment or otherwise under this Agreement or (ii) a
Claim has been filed prior to a Change of Control Date but has not been
resolved as of the Change of Control Date, then payments required under
this paragraph 21 with respect to such Claim shall be made by the
Company to the Executive (or directly to the Executive's attorney)
promptly following submission to the Company of appropriate
documentation evidencing the incurrence of such attorneys' fees, costs,
and expenses. The Executive shall repay the Company the amount of any
such reimbursement received in connection with such dispute in
accordance with this paragraph 21 (without interest) as soon as
practicable following the resolution of such contest or dispute;
provided, however, that this sentence shall not apply (and no repayment
shall be due from the Executive) if the Executive is successful in
respect of any one or more of the Executive's material claims or
defenses brought, raised or pursued in connection with such contest or
dispute.
(e) The guarantee of payment in accordance with paragraph 22 of amounts due
under this Agreement shall apply to this paragraph 21.
24 of 28
22. Secondary Liability for Payment. To the extent that the Company
and/or an Affiliate are not otherwise obligated to provide benefits to the
Executive by the provisions of the Agreement, the Company shall take such
actions as are necessary, and cause each Affiliate to take such actions as are
necessary, to cause each such entity (the "Guarantors") to jointly and severally
guarantee the payment of benefits otherwise due to the Executive under this
Agreement. However, in no event shall the guarantee provided by the preceding
sentence give rise to an obligation unless the Company does not pay such benefit
within 30 days of the due date for such payment, and no entity organized under
the laws of any jurisdiction outside the United States shall have an obligation
to enter into such guarantee. Each of the Guarantors shall be subrogated to the
Executive's rights under the Agreement to the extent of any payments by each
such Guarantor to or on account of the Executive under this paragraph 22. For
the avoidance of doubt, it is recited here that after a transaction described in
paragraph 18(c), this paragraph 22 shall continue to be applicable to the
Executive.
23. Entire Agreement. Except as otherwise provided herein, this
Agreement constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes any and all prior or contemporaneous oral
and prior written agreements and understandings, subject to the following:
(a) This Agreement shall not adversely affect the Executive's rights under
the terms of any option on stock of the Company or any other award
based on the stock of the Company.
(b) The Executive irrevocably consents to the modification of the
definition of "Change of Control Date" in all Employee Benefit
Arrangements (as defined below), by substituting for such definition,
in each such employee benefit arrangement, the definition of "Change of
Control Date" set forth in this Agreement, with such substitution to be
effective on the Effective Date. For purposes of the preceding
sentence, the term "Employee Benefit Arrangement" shall mean each
agreement with the Executive to which the Company or any Affiliate is a
party, and each plan or arrangement maintained by the Company or any
Affiliate, and including any awards outstanding under any such
agreement, plan, or arrangement, to the extent that such award,
agreement, plan, or arrangement contains a definition of "Change of
Control Date." However, this paragraph (b) shall not apply with respect
to stock options granted prior to the Effective Date (with the grant
date determined without regard to the date of grant of any subsequent
replacement awards).
(c) For purposes of the Restoration Plan, the term "Cause," as applied to
the Executive, shall have the meaning set forth in this Agreement,
rather than the meaning set forth in the Restoration Plan.
(d) As a condition of entering into this Agreement, the Executive and the
Company agree that they shall also enter into the Supplemental Plan
Participation Agreement and the Restoration Plan Participation
Agreement as set forth in Exhibit 1 and Exhibit 2 to this Agreement.
25 of 28
(e) There are no oral promises, conditions, representations,
understandings, interpretations or terms of any kind as conditions or
inducements to the execution hereof or in effect among the parties.
(f) Nothing in this Agreement shall be construed to limit any policy or
agreement that is otherwise applicable relating to confidentiality,
rights to inventions, copyrightable material, business and/or technical
information, trade secrets, solicitation of employees, interference
with relationships with other businesses, competition, and other
similar policies or agreement for the protection of the business and
operations of the Company or the Affiliates.
(g) This Agreement shall supercede any employment agreement or severance
agreement (including any employment offer letter) covering the
Executive and signed prior to the Effective Date.
(h) Except as may be otherwise specifically provided in an amendment of
this paragraph 23 adopted in accordance with paragraph 14, the
Executive's rights under this Agreement shall be in lieu of any
benefits that may be otherwise payable to or on behalf of the Executive
pursuant to the terms of any severance pay arrangement of the Company
or any Affiliate or any other, similar arrangement of the Company or
any Affiliate providing benefits upon involuntary termination of
employment.
24. Acknowledgment by Executive. The Executive represents and warrants
that (i) he or she is not, and will not become a party to any agreement,
contract, arrangement or understanding, whether of employment or otherwise, that
would in any way restrict to prohibit the Executive from undertaking or
performing the duties in accordance with this Agreement or that restricts the
Executive's ability to be employed by the Company in accordance with this
Agreement; (ii) the Executive's employment by the Company will not violate the
terms of any policy of any prior employer of the Executive regarding
competition; and (iii) the Executive's position with the Company, as described
in this Agreement, will not require the Executive to improperly use any trade
secrets or confidential information of any prior employer, or any other person
or entity for whom the Executive has performed services.
IN WITNESS THEREOF, the Executive has hereunto set his or her hand, and
the Company has caused these presents to be executed in its name and on its
behalf, all as of the Effective Date.
------------------------------------
Executive
Devon Energy Corporation
------------------------------------
By: J. Xxxxx Xxxxxxx
Its: Chief Executive Officer
26 of 28
Exhibit 1
Supplemental Plan Participation Agreement
The Supplemental Plan Participation Agreement is immediately following.
27 of 28
Exhibit 2
Restoration Plan Participation Agreement
The Restoration Plan Participation Agreement is immediately following.
28 of 28
