EXHIBIT 5
LETTER AGREEMENT BETWEEN NUEVO ENERGY
COMPANY AND RELATIONAL INVESTORS, LLC, DATED
MARCH 1, 1999.
NUEVO ENERGY COMPANY
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
March 1, 1999
RELATIONAL INVESTORS, LLC
0000 Xx Xxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Gentlemen:
Relational Investors, LLC ("Relational") has submitted
to Nuevo Energy Company, a Delaware corporation (the "Company"), a
letter, dated December 11, 1998 (the "Nomination Notice"),
proposing one nominee to stand for election to the Company's
Board of Directors (the "Board") at the 1999 Annual Meeting of
Stockholders of the Company (the "1999 Annual Meeting"). As a
result of conversations between Relational and the Chairman of the
Corporate Governance Committee of the Board, the Board has agreed
to consider the nomination of Xxxxx X. Xxxxxxxxxx or such other
person proposed by Relational and reasonably acceptable to the
Governance Committee of the Board (the "Proposed Director") to the
Board, in light of (i) the fact that Relational is one of the
Company's largest stockholders, and (ii) the Company's desire to
avoid the expense and distraction of a possible proxy contest by
Relational, subject to Relational entering into this letter
agreement.
In connection with the consideration of the Proposed
Director by the Board, Relational and the Company have agreed that
if the Proposed Director is elected by the Board to become a
member of the Board beginning at the next regularly scheduled
Board meeting (which the Proposed Director shall be invited to
attend and shall be elected a director of the Company at the
beginning of such meeting) and in no case later than March 31,
1999, then upon such election:
1. Relational will withdraw the Nomination Notice, and
Relational, on behalf of itself and each of its affiliates and
associates (as such terms are defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")),
will have waived any right to submit a new Nomination Notice in
connection with the 1999 Annual Meeting;
2. Upon his election to the Board, the Proposed Director will
abide by the Nuevo Energy Company Corporate Governance Guidelines
as currently in effect and neither Relational, nor any of its
affiliates or associates shall, directly or indirectly, take any
action that is intended to frustrate the requirements of such
Guidelines;
3. So long as the Proposed Director is a member of the Board,
and for a period ending on the date that is 90 days after the date
that the Proposed Director is no longer a director of the Company,
Relational will not, and it will cause its affiliates and
associates not to, directly or indirectly, seek or propose to
obtain additional representation on the Board, or solicit any
proxies or consents with respect to any securities of the Company,
or participate as a participant (as such term is defined in
Instruction 3 to Item 4 of Schedule 14A (Rule 14a-101) without
giving effect to the exception set forth in paragraph (b)(iii) of
such Instruction) in the solicitation of any proxies or consents
with respect to any securities of the Company, or make or submit
any proposal to the Company's stockholders (pursuant to Rule 14a-8
under the Exchange Act or otherwise); provided, however, that the
foregoing shall not prohibit Relational or its affiliates and
associates from (a) soliciting to maintain representation on the
Board by the Proposed Director in the event of an "election
contest" (as such term is used in Rule 14a-11 under the Exchange
Act), or (b) stating publicly how they intend to vote their shares
on any matter properly brought before the Company's stockholders
at any annual or special meeting of the Company's stockholders as
contemplated by Rule 14a-1(l)(2)(iv) of the Exchange Act
(including explaining their reasons for such position and
discussing such position with the Company's stockholders);
provided, further, that to the extent (i) the Proposed Director
resigns (other than pursuant to the penultimate paragraph of this
letter agreement) from the Board more than 90 days prior to any
meeting of stockholders where directors are to be elected, or
(ii) this letter agreement is terminated pursuant to the penultimate
paragraph of this letter agreement, then, for a period of fifteen
days following the date that the Proposed Director is no longer a
member of the Board, the Company will take all necessary actions
to permit Relational to submit during such fifteen day period (a)
nominations for the election of directors notwithstanding the
limitation set forth in Section 2 of Article Six of the Company's
Certificate of Incorporation and (b) matters for business to be
considered by the Company's stockholders that may be properly
brought before any such meeting by exempting Relational from the
application of any advance notice provisions that would otherwise
prevent such matters from being brought before such meeting; or
4. So long as the Proposed Director is a member of the Board,
neither Relational nor any of its affiliates and associates will,
directly or indirectly, initiate, continue or enter into any
discussions or negotiations with any industry participant or other
party regarding the Company's pursuit of its strategic
alternatives or such party's or the Company's interest in pursuing
a business combination, acquisition or merger transaction or any
other extraordinary transaction involving the Company; provided,
however, that the foregoing shall not prohibit Relational or its
affiliates or associates from having discussions with any of the
Company's stockholders, solely to the extent such discussions do
not involve such stockholder's interest in pursuing a business
combination, acquisition or merger transaction or other
extraordinary transaction involving the Company or otherwise
involve discussion of any specific Board deliberations regarding
the Company's pursuit of its strategic alternatives; provided,
further, that to the extent Relational or any of its affiliates or
associates receives an unsolicited inquiry from a third party
relating to the Company's interest in pursuing a business
combination, acquisition or merger transaction or any other
extraordinary transaction involving the Company, the Proposed
Director shall refer such third party to the Company's Chairman of
the Board and the Proposed Director shall promptly inform the
Company's Chairman of the Board of such inquiry.
Notwithstanding the foregoing, so long as the Proposed Director is
a member of the Board, nothing shall prohibit Relational and its
respective affiliates and associates, from (a) communicating with
the Proposed Director, or (b) making a request, suggestion or
proposal to the Proposed Director or the Chairman of the Board
(and either the Proposed Director or the Chairman of the Board
conveying such request, proposal or suggestions to the Board),
provided, however, in each case, that such action will not result
in the Company, Relational, or the affiliates or associates of
Relational being required to make any public announcement or
public disclosure as a result of such action. Nothing in this
letter agreement shall prohibit or otherwise prevent the Proposed
Director from exercising his fiduciary duties to the Company's
stockholders as a director of the Company as required by
applicable law.
This letter agreement shall be governed by, and
construed in accordance with, the internal laws of the State of
Delaware, without giving effect to the principles of conflicts of
laws thereof. Venue for any action to enforce the provisions of
this letter agreement shall be properly laid only in any federal
court in the State of Delaware; provided, however, if jurisdiction
or venue may not be properly laid in any federal court in the
State of Delaware then venue for any action to enforce the
provisions of this letter agreement shall be properly laid only in
any state court in the State of Delaware. It is further
understood and agreed that no failure or delay by the Company or
Relational in exercising any right, power or privilege under this
letter agreement shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any right, power or privilege
hereunder. The parties hereto acknowledge that money damages are
an inadequate remedy for breach of this letter agreement because
of the difficulty of ascertaining the amount of damage that will
be suffered in the event that this letter agreement is breached.
Therefore, we each agree that the parties to this letter agreement
may obtain specific performance of this letter agreement and
injunctive or other equitable relief as a remedy for any such
breach, and each party further waives any requirement for the
securing or posting of any bond in connection with any such
remedy. Such remedy shall not be deemed to be the exclusive
remedy for breach of this letter agreement, but shall be in
addition to all other remedies available at law or equity. In the
event that either party to this letter agreement believes that the
other party is in breach of this letter agreement, prior to
commencing any litigation with respect to such breach, the non-
breaching party shall give written notice of the alleged breach to
the breaching party and provide the breaching party with a
reasonable opportunity to respond. If any term, provision,
covenant or restriction of this letter agreement is held by a
court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
The agreements set forth in this letter agreement may be modified
or waived only by a separate writing between the Company and
Relational expressly so modifying or waiving such agreements.
If for any reason, other than a decision by the Proposed
Director not to stand for reelection, the Proposed Director is not
nominated by the Board for reelection to the Board at any meeting
of the Company's stockholders where the Proposed Director would
otherwise stand for reelection, then this letter agreement shall
terminate (except for the provisions set forth in the "provided,
further," clause of numbered paragraph 3 of this letter agreement
that are intended to survive termination of this letter agreement)
upon the decision by the Board (or the Nominating Committee of the
Board) not to renominate the Proposed Director (which decision
shall be communicated to the Proposed Director in writing not
later than the following business day). Prior to becoming a
member of the Board, the Proposed Director shall deliver to the
Board an executed, undated letter of resignation in the form
attached to this letter agreement as Exhibit A. Upon the good
faith acceptance by the Board of such letter of resignation (which
acceptance shall be communicated in writing to the Proposed
Director no later than the following business day), this letter
agreement shall terminate (except for the provisions set forth in
the "provided, further," clause of numbered paragraph 3 of this
letter agreement that are intended to survive termination of this
letter agreement).
If you are in agreement with the foregoing, please so
indicate by signing and returning one copy of this letter
agreement, which will constitute our agreement with respect to the
matters set forth herein. This letter agreement may be executed
in two counterparts which together shall constitute a single
agreement.
Very truly yours,
NUEVO ENERGY COMPANY
/s/ Xxxx X. Xxxxxx
By: Xxxx X. Xxxxxx
Confirmed and Agreed to as of the
date first above written:
RELATIONAL INVESTORS, LLC,
on behalf of itself and its affiliates
and associates (including the
Proposed Director)
/s/ Xxxxx X. Xxxxxxxxx
By: Xxxxx X. Xxxxxxxxx
EXHIBIT A
Board of Directors
Nuevo Energy Company
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Gentlemen:
I hereby resign as a director of Nuevo Energy Company,
such resignation being effective upon the good faith determination
by a majority of the Board of Directors of Nuevo Energy Company
that acceptance of the resignation is necessary to enable the
Company to pursue its strategic alternatives in a manner the Board
of Directors reasonably believes to be in the best interests of
the Company's stockholders. This resignation letter is
irrevocable.
Sincerely,
/s/ Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx
