AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
This Amended and Restated Executive Employment Agreement is made and
entered into this 3rd day of November, 1999 (the "Effective Date") by and
between GREKA Energy Corporation, a Colorado corporation ("Employer"), and
Xxxxxxx X. Xxxxxx ("Executive").
RECITALS
A. Employer and Executive initially entered into an Executive
Employment Agreement dated September 9, 1997, as amended by the First Amendment
to Employment Agreement dated October 14, 1998 (the "Agreement").
B. The Board of Directors of Employer (the "Board") has determined that
it is in the best interests of Employer and its shareholders to amend and
restate the terms of the Agreement and to ensure that Employer will have the
continued dedication of the Executive, notwithstanding the possibility, threat
or occurrence of a Change of Control (as hereinafter defined) of Employer. The
Board believes it is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control and to encourage the Executive's attention and
dedication to Employer currently and in the event of any threatened or pending
Change of Control, and to provide the Executive with a compensation and benefits
arrangements upon a Change of Control which ensure that the compensation and
benefits expectations of the Executive will be satisfied and which are
competitive with those of other corporations.
C. In order to accomplish these objectives, Employer desires to
continue the employment of Executive and Executive desires to continue his
employment with Employer, all upon and subject to the terms and conditions of
the Amended and Restated Agreement set forth herein.
NOW, THEREFORE, in consideration of the Executive's continued
employment with Employer and the mutual agreements hereinafter set forth, the
parties, intending to be legally bound, agree as follows:
1. Employment. Employer hereby agrees to continue to employ Executive
and Executive hereby accepts such employment, subject to the terms and
conditions of this Agreement. Executive shall serve in the capacity of Chairman,
Chief Executive Officer and President of Employer reporting solely to the Board
and shall perform such functions as the Board shall reasonably determine from
time to time, provided however that Executive's duties shall be consistent with
the foregoing capacity and with the training, talent and ability of Executive.
2. Time Dedicated. Executive shall devote the time and attention
reasonable to run a drilling company and shall at all times perform all of his
obligations hereunder to the best of his ability, experience and talent.
3. Term and Termination. The term of this Agreement shall commence on
the Effective Date and shall continue uninterrupted through and including
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December 31, 2004. The Agreement thereafter will be automatically renewed for
additional three year periods, unless terminated sooner by operation of one of
the other provisions of this Agreement. The Executive's employment hereunder may
be terminated as follows:
(a) Death. In the event the Executive dies prior to the expiration of
this Agreement, the Employer shall pay to the beneficiary of the Executive an
amount equal to the Executive's total compensation for 270 days (the "Severance
Period"), such amount payable in a lump sum to the designated beneficiary
hereunder within sixty (60) days of the Executive's Death. In addition, at the
option of the Executive's Estate, the Employer shall either (i) pay to the
Executive's Estate, in a lump sum within 60 days of the end of the Employer's
then-current fiscal year, an amount (to the extent such amount is a positive
number) equal to the value of all Employer stock and stock options held by the
Executive as of the date of his death, or (ii) distribute to the Executive's
Estate, within 60 days of the Executive's death, all Employer stock and stock
options held by the Executive as of the date of his death, all in accordance
with the terms of any benefits to which the Executive would be entitled in any
plan in which he is a participant.
(b) Disability. In the event that the Executive in unable to
substantially perform his duties hereunder for a period of six months during any
continuous period of 12 months due to physical or mental illness or disability,
whether or not connected to his employment hereunder, the Employer shall have
the right, by written notice to the Executive, to place the Executive on
disability status ("Disability Effective Date.") In such event, the Employer
shall pay to the Executive (or to his Estate if the Executive is no longer
alive) his Salary and Bonus and furnish to the Executive and his family all
Executive Benefits during the term of the Agreement. The determination of the
Executive's disability shall be made by the Executive's regular treating
physician.
(c) Cause. The Employer may terminate the Executive's employment
for"Cause". For purposes of this Agreement, "Cause" shall mean only:
(i) an act or acts of personal dishonesty taken by the Executive
and intended to result in substantial personal enrichment of
the Executive at the expense of the Employer;
(ii) repeated failure to perform the duties assigned to the
Executive under Section 1 of this Agreement which are
demonstrably willful and deliberate on the Executive's part
and which are not remedied in a reasonable period of time
after receipt of written notice from the Employer; or
(iii) the conviction of the Executive of a felony involving moral
turpitude which results in a detriment to the Employer, xxxxx
the Employee's reputation, or otherwise reflects poorly on the
Employer.
(d) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason"means
any of the following:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
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by this Agreement, or any other action by the Employer which results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Employer promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Employer to comply with any of the provisions
of Sections 7, 8 and 9 of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is remedied by the
Employer promptly after receipt of notice thereof given by the Executive;
(iii) Employer's requirement of the Executive that he be based at any
office or location other than New York, New York, except for travel reasonably
required in the performance of the Executive's responsibilities;
(iv) any purported termination by the Employer of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Employer or any successor to comply with and
satisfy the successor obligations of this Agreement.
For purposes of this section, any good faith determination of "Good Reason" made
by the Executive shall be conclusive.
(e) Notice of Termination. Any termination by the Employer for Cause or
by the Executive for Good Reason shall be communicated by Notice of Termination
to the other party hereto given in accordance with this Agreement. For purposes
of this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated, and (iii) specifies the effective date of the termination(which date
shall be not more than 15 days after the giving of such notice) (the "Date of
Termination"). The failure by the Executive to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason shall not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing his rights
hereunder.
4. Obligations of the Employer upon Termination.
(a) Death. If the Executive's employment is terminated by reason of the
Executive's death, this Agreement shall not terminate without fulfillment of the
obligations to the Executive's legal representatives under this Agreement,
including those obligations that would have been accrued or earned by the
Executive hereunder through the date of the Severance Period, including any
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compensation previously deferred by the Executive (together with any accrued
interest thereon) and not yet paid by the Employer and any accrued vacation pay
not yet paid by the Employer and any other amounts or benefits owing to or
accrued or vested for the account of the Executive under the then applicable
employee benefit plans or policies of the Employer (such amounts are hereinafter
referred to as "Accrued Obligations"). All such Accrued Obligations shall be
paid to the Executive in a lump sum in immediately available federal funds
within thirty (30) days of the Date of Termination. Anything in this Agreement
to the contrary notwithstanding, the Executive's family shall be entitled to
receive benefits at least equal to the most favorable benefits provided by the
Employer to surviving families of executives of the Employer under such plans,
programs and policies relating to family death benefits, if any, in accordance
with the most favorable policies of the Employer in effect, or, if more
favorable to the Executive and/or the Executive's family, as if effect on the
date of the Executive's death with respect to other key executives and their
families.
(b) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability, this Agreement shall terminate without further
obligations to the Executive, other than those Salary and Bonus and Executive
Benefit obligations accrued or to be earned by the Executive hereunder through
the term of the Agreement. Anything in this Agreement to the contrary
notwithstanding, the Executive shall be entitled after the Disability Effective
Date to receive disability and other benefits at least equal to the most
favorable of those provided by the Employer to disabled employees and/or other
families accordance with such plans, programs and policies relating to
disability, if any, in accordance with the most favorable policies of the
Employer in effect at any time during the ninety (90) day period immediately
preceding the Disability Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect at anytime thereafter with respect
to other key executives and their families.
(c) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive
the Highest Base Salary through the Date of Termination plus the amount of any
compensation previously deferred by the Executive (together with accrued
interest thereon). If the Executive terminates employment other than for Good
Reason, this Agreement shall terminate without further obligations to the
Executive, other than those obligations accrued or earned by the Executive
through the Date of Termination, including for this purpose, all Accrued
Obligations. Executive shall receive any vested or accrued compensation and
benefits under this or any other agreement notwithstanding the reason for
termination of employment.
(d) Good Reason; Other than for Cause or Disability of Death. If,
during the Employment Period, the Employer shall terminate the Executive's
employment other than for Cause, Disability, or Death or the Executive shall
terminate his employment for Good Reason, the Employer shall pay to the
executive in a lump sum in immediately available federal funds within thirty
(30) days, or as soon as practicable where the value of the benefit is not
readily ascertainable, after the Date of Termination the aggregate of the
following amounts:
(i) to the extent not theretofore paid, the Executive's Salary and
Bonus through the date of the Date of Termination;
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(ii) the Executive's Salary and Bonus for the balance of the term
of this Agreement at the rate set forth in the Agreement;
(iii) the Annual Bonus paid to the Executive for the balance of the
term of the Agreement;
(iv) in the case of compensation previously deferred by the
Executive, all amounts previously deferred (together with any
accrued interest thereon) and not yet paid by the Employer;
(v) all other amounts accrued and earned by the Executive through
the term of the Agreement and amounts otherwise owing under
the then existing plans and policies at the Employer; and
(vi) at the option of the Executive or his legal representative,
the Employer shall either (A) pay to the Executive or his
legal representative, in a lump sum within 30 days of the Date
of Termination, an amount (to the extent such amount is a
positive number) equal to the value of all Employer stock and
stock options held by the Executive as of the Date of
Termination, or (B) distribute to the Executive or his legal
representative, within 30 days of the Date of Termination, all
Employer stock and stock options held by the Executive as of
the Date of Termination.
Further, for the remainder of the term of the Agreement, or such longer period
as any plan, program or policy may provide, the Employer shall continue
Executive Benefits to the Executive and the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs and policies described in this Agreement as if the Executive's
employment had not been terminated, including health insurance and life
insurance, or, if more favorable, in accordance with the plans, programs or
policies of the Employer in effect at any time thereafter with respect to other
key executives and their families; for purposes of eligibility for retiree
benefits pursuant to such plans, programs and policies, the Executive shall be
considered to have remained employed until the end of the term of the Agreement
and to have retired on the last day of such period.
5. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Employer and for which
the Executive may qualify, nor shall anything herein limit or otherwise affect
such rights as the Executive may have under any stock option or other agreements
with the Employer or any of its affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
program or agreement of the Employer (including company stock and stock options)
at or subsequent to the Date of Termination shall be payable in accordance with
such plan, program or agreement.
6. Full Settlement. The Employer's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
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defense or other claim, right or action which the Employer may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement. The Employer
agrees to pay, to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest(regardless
of outcome thereof) by the Employer or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive about
the amount of any payment pursuant to any Section of this Agreement), plus in
each case interest at the applicable Federal rate provided for in Section 7872
(f) (2) of the Code. Employer also agrees to pay all legal fees and expenses
incurred by Executive in connection with the preparation, review, or enforcement
of this Agreement.
7. Salary and Bonus. In consideration for his services, Employer shall
pay the Executive a salary at the rate of $287,500 per annum. Such salary shall
be reviewed and increased not less than 15% annually in the good faith sole
discretion of the Board of Directors based upon Employer's and Executive's
performance during the prior year. Executive's salary hereunder shall be payable
in bi-monthly installments or on such other payment schedule as issued to pay
senior executives of Employer. Additionally, Executive shall receive an
irrevocable assignment of 2% overriding royalty of all oil and gas production
received by the Employer.
8. Stock Grants. Upon the Effective Date, the Executive shall be issued
30,000 shares of the Employer's Common Stock, no par value per share. These
shares shall be fully vested and non-forfeitable as of the date of their
issuance.
9. Executive Benefits.
(a) Annual Bonus. In addition to Salary and Bonus payable as herein
above provided, the Executive shall be awarded, for each fiscal year during the
term of the Agreement, an annual bonus (an "Annual Bonus") (either pursuant to
the incentive compensation plan of the Employer or otherwise) in cash at least
equal to the average bonus received by the executive officers of the Employer in
respect of the fiscal year for which the bonus is awarded.
(b) Stock Option, Incentive, Savings and Retirement Plans. In addition
to Base Salary and Bonus and Annual Bonus payable as herein above provided, the
Executive shall be entitled to participate during the term of the Agreement in
all stock option plans, incentive, savings and retirement plans, practices,
policies and programs applicable to other key or peer executives of the Employer
and its affiliates(including Employer's employee benefit plans, in each case
comparable to those in effect or as subsequently amended). Such plans,
practices, policies and programs, in the aggregate, shall provide the Executive
with compensation, benefits and reward opportunities at least as favorable as
the most favorable of such compensation, benefits and reward opportunities
provided by the Employer for the Executive under such plans and programs.
(c) Welfare Benefit Plans. During the term of the Agreement, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive benefits under the welfare benefit plans,
practices, policies and programs provided by the Employer and its affiliates
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(including, without limitation, medical, prescription, dental, disability,
salary continuance, executive life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other key or peer executives of Employer and its affiliates.
(d) Expenses. During the term of the Agreement, the Executive shall be
entitled to receive prompt reimbursement for reasonable expenses incurred by the
Executive in accordance with the most favorable policies and procedures of the
Employer and its affiliates.
(e) Fringe Benefits. During the term of the Agreement, the Executive
shall be entitled to those fringe benefits offered to other key employees of
Employer, as well as an automobile allowance of $1,000 per month.
(f) Office and Support Staff. During the term of the Agreement, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the other executive officers of the
Employer.
(g) Vacation. Upon the Effective Date, Executive is entitled to five
weeks of paid vacation per year. Paid vacation shall increased by one week per
year of service up to a maximum of seven weeks. Vacation time may be accrued up
to a maximum of six weeks or 240 hours. Once vacation accrual meets this
maximum, vacation accruals will cease until the vacation balance falls below the
maximum.
10. Corporate Opportunity. For the purpose of determining the
Executive's responsibility for presenting corporate opportunities to the Board
of Directors, the business in which the Employer is engaged shall be defined as
the horizontal oil and gas well drilling service business. The Executive shall
be permitted on his own time to engage in other businesses and can be rewarded
for presenting opportunities to the Board of Directors of the Employer outside
of the current corporate opportunities which are approved by and acted upon by
the Employer.
11. Confidentiality and Proprietary Information. The Executive shall
hold in a fiduciary capacity for the benefit of the Employer all secret or
confidential information or data relating to the Employer or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Employer or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the Executive's employment
with the Employer, the Executive shall not, without the prior written consent of
the Employer, communicate or divulge any such information or data to any one
other than the Employer and those designated by it. In no event shall an
asserted violation of the provisions of this Section constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
12. Board Membership. Executive shall be appointed to the Board of
Directors of Employer and shall subsequently be included for re-election on
management's proposed election slate, with such Board membership to terminate
when Executive's employment with Employer is terminated.
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13. Arbitration. Any controversy or claim arising out of or relating to
any provision of this Agreement or the breach thereof, shall be resolved by
binding arbitration in accordance with the rules then in effect of the American
Arbitration Association (the "AAA"), to the extent consistent with the laws of
the State of New York. Unless otherwise agreed by the parties, arbitration under
this provision must be initiated within 30 days of the action, inaction, or
occurrence about which the party initiating the arbitration is complaining.
Within fifteen days of the initiation of an arbitration hereunder, if the
parties are unable to agree on an arbitrator, each party will designate an
arbitrator pursuant to Rule 14 of the AAA Rules. The appointed arbitrators will
appoint a neutral arbitrator from the panel in the manner prescribed in Rule 13
of the AAA Rules. However, the arbitrator shall only be qualified if the
arbitrator is recognized as a qualified labor and employment arbitrator by the
American Arbitration Association or Federal Mediation & Conciliation Service.
The award may include an award of costs and attorneys' fees for the prevailing
party; provided, however, that Employer agrees that the Executive is not
required to pay any costs and attorney's fees awarded to Employer. It is agreed
that any party to any award rendered in any such arbitration proceedings may
seek a judgment upon the award and that judgment may be entered thereon by any
court having jurisdiction.
14. Miscellaneous.
(a) Entire Agreement. This Agreement contains the complete agreement
between the parties with respect to the subject matter hereof and supersedes any
prior agreements or understandings, written or oral. No waiver under this
Agreement shall be valid unless it is in writing and duly executed by the party
to be charged therewith. This Agreement may be amended at anytime, provided that
such amendment is in writing and is signed by each of the parties hereto.
(b) Binding Effect. This Agreement may not assigned by either party
hereto; provided that the Employer may assign this Agreement, in connection with
a merger or consolidation involving the Employer or a sale of substantially all
of its assets, to the surviving corporation or purchaser as the case may be, so
long as the assignee agrees to assume the Employer's obligations hereunder at
the time of the assignment. Subject to that limitation, this Agreement shall be
binding upon and shall inure to the benefit of Executive, his heirs and personal
representatives, and shall be binding upon and shall inure to the benefit of
Employer, its successors and assigns.
(c) Obligations of Successor. Employer will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of Employer to assume
expressly and agree in writing to perform this Agreement in the same manner and
to the same extent that Employer would be required to perform it if no such
succession had taken place. As used in this Agreement, "Employer" shall mean
Employer as hereinbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees in writing to perform this Agreement by
operation of law, or otherwise.
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(d) Notice. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: Xxxxxxx X. Xxxxxx
00000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
If to Employer: GREKA Energy Corporation
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx, Vice President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(e) Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York.
(f) Enforceability of Agreement. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(g) Withholding of Taxes. Employer may withhold from any amounts payable
under this Agreement such federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(h) Waiver. The Executive's or Employer's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or Employer may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant Section 15(D)(c)(i)-(v), shall not be deemed
to be a waiver of such provision or right or any other provision or right of
this Agreement.
15. Employment After a Change of Control. Notwithstanding anything to
the contrary contained in this Agreement, the following provisions shall govern
in the event of a Change of Control of Employer (as hereinafter defined).
(A) Definitions. For purposes of this Section 15, the following
definitions shall apply:
(a) A "Change of Control" shall mean for purposes of this Section 15:
(i) The acquisition after the date hereof by any individual,
entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
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Exchange Act) of either (i) shares of common stock of Employer
(the "Company Common Stock"), or (ii) voting power of
outstanding voting securities of Employer entitled to vote
generally in the election of directors (the "Company Voting
Securities"), if that Person by virtue of such acquisition
becomes the beneficial owner of 33% or more of the outstanding
Company Common Stock or Company Voting Securities; provided,
however, that the following acquisitions shall not constitute
a Change of Control: (A) any acquisition directly from
Employer (excluding an acquisition by virtue of the exercise
of a conversion privilege), (B) any acquisition by Employer,
(C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Employer or any corporation
controlled by Employer or (D) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (A), (B)
and (C) of Section 15(A)(a)(iii) are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the members of the Board; provided,
however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by
Employer'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 this purpose, any such
individual whose initial assumption of office occurs as a
result of either an actual or threatened contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(iii) Approval by the shareholders of Employer of a reorganization,
merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (A) more than 67% of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then
outstanding voting securities of such corporation 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 reorganization, merger or
consolidation, in substantially the same proportions as their
ownership immediately prior to such reorganization, merger or
consolidation of the outstanding Company Common Stock and
outstanding Company Voting Securities, as the case may be, (B)
no Person (excluding Employer, any employee benefit plan (or
related trust) of Employer or such corporation resulting from
such reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 33% or more
of the outstanding Company Common Stock or outstanding Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 33% or more of, respectively, the then outstanding
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shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the
board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(iv) Approval by the shareholders of Employer of (A) a complete
liquidation or dissolution of Employer or (B) the sale or
other disposition of all or substantially all of the assets of
Employer, other than to a corporation, with respect to which
following such sale or other disposition, (1) more than 67%
of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then
outstanding voting securities of such corporation 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 proportion 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) no Person
(excluding Employer and any employee benefit plan (or related
trust) of Employer or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 33% or more of the
outstanding Company Common Stock or outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 33% or more of, respectively, the then outstanding
shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (3) at least a majority of the members of the
board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or
other disposition of assets of Employer.
(b) The "Change of Control Period" shall mean for purposes of this
Section 15 the period commencing on the date hereof and ending on the third
anniversary of such date; provided, however, that commencing on the date one
year after the date hereof, and on each annual anniversary of such date (such
date and each annual anniversary thereof shall be hereinafter referred to as the
"Renewal Date"), the Change of Control Period shall be automatically extended so
as to terminate three years from such Renewal Date.
(c) The "Change of Control Date" shall mean for purposes of this Section
15 the first date during the Change of Control Period (as defined in Section
l5(A)(b)) on which a Change of Control occurs. Anything in this Section 15 to
the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with Employer is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by the
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Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect the Change of Control
or (ii) otherwise arose in connection with or anticipation of the Change of
Control, then for all purposes of this Section 15 the "Change of Control Date"
shall mean the date immediately prior to the date of such termination of
employment.
(B) Change of Control Employment Period. Employer hereby agrees to
continue the Executive in its employ, and the Executive hereby agrees to remain
in the employ of Employer, in accordance with the terms and provisions of this
Agreement, for the period commencing on the Change of Control Date and ending on
the later of December 31, 2004 or the third anniversary of such date (the
"Change of Control Employment Period").
(C) Terms of Employment.
a. Position and Duties.
(i) During the Change of Control Employment Period, (A) the
Executive's position (including status, offices, titles, and
reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all
material respects with the most significant of those held,
exercised and assigned at any time during the 90-day period
immediately preceding the Change of Control Date and (B) the
Executive's services shall be performed at the location where
the Executive was employed immediately preceding the Change of
Control Date or any office which is the headquarters of
Employer and is less than 35 miles from such location.
(ii) During the Change of Control Employment Period, and excluding
any periods of vacation and sick leave to which the Executive
is entitled, the Executive agrees to devote his professional
time and attention during normal business hours to the
business and affairs of Employer and, to the extent necessary
to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to
perform faithfully and efficiently such responsibilities.
During the Change of Control Employment Period it shall not be
a violation of this Agreement for the Executive to (A) serve
on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions or (C) manage personal investments,
so long as such activities do not significantly interfere with
the performance of the Executive's responsibilities as an
employee of Employer in accordance with this Agreement. It is
expressly understood and agreed that to the extent that any
activities have been conducted by the Executive prior to the
Change of Control Date, the continued conduct of such
activities (or the conduct of activities similar in nature and
scope thereto) subsequent to the Change of Control Date shall
not hereafter be deemed to interfere with the performance of
the Executive's responsibilities to Employer.
b. Compensation. In the event of a Change of Control, the Executive's
compensation by Employer during the Change of Control Employment period shall
not be diminished in any particular respect from that prior to the Change of
Control, and shall include the following:
12
(i) Salary and Bonus. During the Change of Control Employment
Period, the Executive shall receive a salary, which shall be
paid in equal installments on a monthly basis, at least equal
to twelve times the highest monthly base salary paid or
payable to the Executive by Employer and its affiliated
companies in respect of the twelve-month period immediately
preceding the month in which the Change of Control Date
occurs. During the Change of Control Employment Period, the
Annual Base Salary shall be reviewed at least annually and
shall be increased annually at a rate not less than 15% or as
shall be substantially consistent with increases in base
salary generally awarded in the ordinary course of business to
other peer executives of Employer and its affiliated
companies, whichever is greater. Any increase in salary shall
not serve to limit or reduce any other obligation to the
Executive under this Agreement. Executive's salary shall not
be reduced after any such increase and the term salary as
utilized in this Agreement shall refer to salary as so
increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by,
controlling or under common control with Employer.
Additionally, Executive shall receive an irrevocable
assignment of 2% overriding royalty of all oil and gas
production received by Employer.
(ii) Annual Bonus. In addition to Salary and Bonus payable as
herein provided, the Executive shall be awarded, for each
fiscal year ending during the Change of Control Employment
Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the average bonus paid or payable, including by
reason of any deferral, to the Executive by Employer and its
affiliated companies in respect of the three fiscal years
immediately preceding the fiscal year in which the Change of
Control Date occurs (the "Recent Average Bonus"). Each such
Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for
which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
(iii) Special Bonus. In addition to Salary and Bonus and Annual
Bonus payable as herein above provided, if the Executive
remains employed with Employer and its affiliated companies
through the first anniversary of the Change of Control Date,
Employer shall pay to the Executive a special bonus (the
"Special Bonus") in recognition of the Executive's services
during the crucial one-year transition period following the
Change of Control in cash equal to the sum of (A) the
Executive's Salary and Bonus and (B) the greater of (1) the
Annual Bonus paid or payable, including by reason of any
deferral, to the Executive for the most recently completed
fiscal year during the Change of Control Employment Period, if
any, and (2) the Recent Average Bonus (such greater amount
shall be hereinafter referred to as the "Highest Annual
Bonus"). The Special Bonus shall be paid no later than 30 days
following the first anniversary of the Change of Control Date.
(iv) Stock Option, Incentive, Savings and Retirement Plans. During
the Change of Control Employment Period, the Executive shall
be entitled to participate in all stock option plans,
incentive, savings and retirement plans, practices, policies
13
and programs applicable generally to other key or peer
executives of Employer and its affiliated companies, but in no
event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured
with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate,
than the most favorable of those provided by Employer and its
affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time
during the 90-day period immediately preceding the Change of
Control Date or if more favorable to the Executive, those
provided generally at any time after the Change of Control
Date to other key or peer executives of Employer and its
affiliated companies.
(v) Welfare Benefit Plans. During the Change of Control Employment
Period, the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices,
policies and programs provided by Employer and its affiliated
companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee
life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable
generally to other key or peer executives of Employer and its
affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs
in effect for the Executive at any time during the 90-day
period immediately preceding the Change of Control Date or, if
more favorable to the Executive, those provided generally at
any time after the Change of Control Date to other key or peer
executives of Employer and its affiliated companies.
(vi) Expenses. During the Change of Control Employment Period, the
Executive shall be entitled to receive prompt reimbursement
for all reasonable employment expenses incurred by the
Executive in accordance with the most favorable policies,
practices and procedures of Employer and its affiliated
companies in effect for the Executive at any time during the
90-day period immediately preceding the Change of Control Date
or, if more favorable to the Executive, as in effect generally
at any time thereafter with respect to other key or peer
executives of Employer and its affiliated companies.
(vii) Fringe Benefits. During the Change of Control Employment
Period, the Executive shall be entitled to fringe benefits in
accordance with the most favorable plans, practices, programs
and policies of Employer and its affiliated companies in
effect for the Executive at any time during the 90-day period
immediately preceding the Change of Control Date, or if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other key or peer executives of
Employer and its affiliated companies.
14
(viii) Office and Support Staff. During the Change of Control
Employment Period, the Executive shall be entitled to an
office or offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial and other
assistance, at least equal to the most favorable of the
foregoing provided to the Executive by Employer and its
affiliated companies at any time during the 90-day period
immediately preceding the Change of Control Date or, if more
favorable to the Executive, as provided generally at any time
thereafter with respect to other key or peer executives of
Employer and its affiliated companies.
(ix) Vacation. During the Change of Control Employment Period, the
Executive shall be entitled to paid vacation in accordance
with the most favorable plans, policies, programs and
practices of Employer and its affiliated companies as in
effect for the Executive at any time during the 90-day period
immediately preceding the Change of Control Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other key or peer executives of
Employer and its affiliated companies.
(D) Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Change of Control Employment
Period. In the Executive's employment is terminated by reason of the Executive's
disability during the Change of Control Employment Period (pursuant to the
definition of Disability set forth below), Employer may give to the Executive
written notice in accordance with Section 15(I)(a) of its intention to terminate
the Executive's employment. In such event, the Executive's employment with
Employer shall terminate effective on the 30th day after receipt of such notice
by the Executive (the "Disability Change of Control Date"), provided that,
within the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Section
15, "Disability" shall mean the absence of the Executive from the Executive's
duties with Employer on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness or disability which is
determined to be total and permanent by Executive's regular treating physician.
(b) Cause. Employer may terminate the Executive's employment during the
Change of Control Employment Period for Cause. For purposes of this Section 15,
"Cause" shall mean only:
(i) a material breach by the Executive of the Executive's obligations
under this Agreement (other than as a result of incapacity due to physical or
mental illness or disability) which is demonstrably willful and deliberate on
the Executive's part, which is committed in bad faith and without reasonable
belief that such breach is in the best interests of Employer and which is not
remedied in a reasonable period of time after receipt of written notice from
Employer specifying such breach or (ii) the conviction of the Executive of a
felony involving moral turpitude which results in a detriment to the Employer,
xxxxx the Executive's reputation, or otherwise reflects poorly on the Employer.
Termination may occur only when (1) the Executive has been provided with written
notice of assertion that there is a basis for termination for cause which notice
15
shall specify in reasonable detail specific facts regarding such assertion, (2)
such written notice is provided to the Executive a reasonable time before the
Board meets to consider any possible termination for cause, (3) at or prior to
the meeting of the Board to consider the matters described in the written
notice, an opportunity is provided to Executive and his counsel to be heard
before the Board with respect to any matters described in the written notice,
(4) any resolution or other Board action held with respect to any deliberation
regarding or decision to terminate the Executive for cause is duly adopted by a
vote of a majority of the entire Board at a meeting of the Board called and held
and (5) the Executive is promptly provided with a copy of the resolution or
other corporate action taken with respect to such termination. The unwillingness
of the Executive to accept any or all of a change in the nature or scope of his
position, title, authorities or duties, a reduction in his total compensation or
benefits, a relocation that he deems unreasonable, or other action by or at the
request of the Employer in respect of his position, title, authority or
responsibility that he deems to be contrary to this Agreement, may not be
considered by the Board to be a breach of this Agreement by the Executive.
(c) Good Reason; Window Period. The Executive's employment may be
terminated (i) during the Change of Control Employment Period by the Executive
for Good Reason or (ii) during the Window Period by the Executive without any
reason. For purposes of this Agreement, the "Window Period" shall mean the
30-day period immediately following the first anniversary of the Change of
Control Date. For purposes of this Section 15, "Good Reason" shall mean
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status,
offices, titles and reporting requirement), authority, duties
or responsibilities as contemplated by this Agreement or any
other action by Employer which results in a diminution in such
position, authority, duties or responsibilities, excluding for
this purpose an isolated, unsubstantial and inadvertent action
not taken in bad faith and which is remedied by Employer
promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by Employer 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 Employer promptly after receipt of notice thereof
given by the Executive;
(iii) Employer's requiring the Executive to be based at any office
or location other than New York, New York;
(iv) any purported termination by Employer of the Executive's
employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by Employer to comply with and satisfy Section
15(I)(b), provided that such successor has received at least
ten business days' prior written notice from Employer or the
Executive of the requirements of Section 15(I)(b).
For purposes of this Section 15(D)(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
16
(d) Notice of Termination. Any termination by Employer for Cause, or by
the Executive without any reason during the Window Period or for Good Reason,
shall be communicated by Notice of Termination to the other party hereto given
in accordance with Section 15(I)(a). For purposes of this Section 15, a "Notice
of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
under such notice. The failure by the Executive or Employer to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of the Executive or Employer
hereunder or preclude the Executive or Employer from asserting such fact or
circumstance in enforcing the Executive's or Employer's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by Employer for Cause, or by the Executive
without any reason during the Window Period or for Good Reason, the date of
receipt of the Notice of Termination or any later date specified therein, as the
case may be, (ii) if the Executive's employment is terminated by Employer other
than for Cause, Death or Disability, the Date of Termination shall be the date
on which Employer notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of Death or Disability, the Date
of Termination shall be the date of death of the Executive or the Disability
Change of Control Date, as the case may be.
(E) Obligations of Employer Upon Termination.
(a) Good Reason or during the Window Period; Other than for Cause, Death
or Disability. If, during the Change of Control Employment Period, Employer
shall terminate the Executive's employment other than for Cause, Death or
Disability or the Executive shall terminate employment either for Good Reason or
without any reason during the Window Period:
(i) Employer shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. The sum of (1) the Salary and Bonus for the
Change of Control Employment Period at the
rate set forth in the Agreement, (2) the
Highest Annual Bonus for the Change of
Control Employment Period, (3) the Special
Bonus, if due to the Executive pursuant to
Section 15(C)b.ii., to the extent not
theretofore paid, (4) all other amounts
accrued and earned by the Executive for the
Change of Control Employment Period and
amounts otherwise owing under the then
existing plans, practices, policies and
agreements of Employer, (5) any compensation
previously deferred by the Executive
(together with any accrued interest or
earnings thereon) and any accrued vacation
pay, in each case to the extent not
theretofore paid (the sum of the amounts
described in clauses (1), (2), (3), (4) and
(5) shall be hereinafter referred to as the
"Accrued Change of Control Obligations");
and
17
B. The amount (such amount shall be hereinafter
referred to as the "Severance Amount") equal
to the product of (1) two and (2) the sum of
(x) the Executive's annual base salary and
(y) the Highest Annual Bonus; provided,
however, that if the Special Bonus has not
been paid to the Executive, such amount
shall be increased by the amount of the
Special Bonus; and, provided further, that
such amount shall be reduced by the present
value (determined as provided in Section
280G(d)(4) of the Internal Revenue Code of
1986, as amended (the "Code")) of any other
amount of severance relating to salary or
bonus continuation to be received by the
Executive upon termination of employment of
the Executive under any severance plan,
policy or arrangement of Employer;
(ii) for the remainder of the Change of Control Employment
Period, or such longer period as any plan, program,
practice or policy may provide, Employer shall
continue Executive Benefits to the Executive and/or
the Executive's family at least equal to those which
would have been provided to them in accordance with
the plans, programs, practices and policies described
in Section 15(C)b.v. if the Executive's employment
had not been terminated in accordance with the most
favorable plans, practices, programs or policies of
Employer and its affiliated companies as in effect
and applicable generally to other key or peer
executives and their families during the 90-day
period immediately preceding the Change of Control
Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect
to other key or peer executives of Employer and its
affiliated companies and their families, provided,
however, that if the Executive becomes reemployed
with another employer and is eligible to receive
medical or other welfare benefits under another
employer-provided plan, the medical and other welfare
benefits described herein shall be secondary to those
provided under such other plan during such applicable
period of eligibility (such continuation of such
benefits for the applicable period herein set forth
shall be hereinafter referred to as "Welfare Benefit
Continuation"). For purposes of determining
eligibility of the Executive for retiree benefits
pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have
remained employed until the end of the Change of
Control Employment Period and to have retired on the
last day of such period;
(iii) to the extent not theretofore paid or provided,
Employer shall timely pay or provide to the Executive
and/or the Executive's family any other amounts or
Executive Benefits required to be paid or provided or
which the Executive and/or the Executive's family is
eligible to receive pursuant to this Agreement and
under any plan, program, policy or practice or
18
contract or agreement of Employer and its affiliated
companies as in effect and applicable generally to
other key or peer executives of Employer and its
affiliated companies and their families (such other
amounts and benefits shall be hereinafter referred to
as the "Other Benefits"); and
(iv) at the option of the Executive or his legal
representative, the Employer shall either (A) pay to
the Executive or his legal representative, in a lump
sum within 30 days of the Date of Termination, an
amount (to the extent such amount is a positive
number) equal to the value of all Employer stock and
stock options held by the Executive as of the Date of
Termination, or (B) distribute to the executive or
his legal representative, within 30 days of
termination, all Employer stock and stock options
held by the Executive as of the Date of Termination.
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Change of Control Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for (i) payment of Accrued
Change of Control Obligations (which shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination) and the timely payment or provision of the Welfare Benefit
Continuation and Other Benefits (excluding, in each case, Death Benefits (as
defined below)) and (ii) payment to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination of
an amount equal to the greater of (A) the Severance Amount or (B) the present
value (determined as provided in Section 280G(d)(4) of the Code) of any cash
amount to be received by the Executive or the Executive's family as a death
benefit pursuant to the terms of any plan, policy or arrangement of Employer and
its affiliated companies, but not including any proceeds of life insurance
covering the Executive to the extent paid for directly or on a contributory
basis by the Executive (which shall be paid in any event as an Other Benefit)
(the benefits included in this clause (B) shall be hereinafter referred to as
the "Death Benefits").
(c) Disability. If the Executive's employment is terminated by reason of
the Executive's Disability during the Change of Control Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for (i) payment of Accrued Change of Control Obligations (which shall be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination) and the timely payment or provision of the Welfare Benefit
Continuation and Other Benefits (excluding, in each case, Disability Benefits
(as defined below)) and (ii) payment to the Executive in a lump sum in cash
within 30 days of the Date of Termination of an amount equal to the greater of
(A) the Severance Amount or (b) the present value (determined as provided in
Section 280G(d)(4) of the Code) of any cash amount to be received by the
Executive as a disability benefit pursuant to the terms of any plan, policy or
arrangement of Employer and its affiliated companies, but not including any
proceeds of disability insurance covering the Executive to the extent paid for
directly or on a contributory basis by the Executive (which shall be paid in any
event as an Other Benefit) (the benefits included in this clause (B) shall be
hereinafter referred to as the "Disability Benefits").
19
(d) Cause; Other Than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Change of Control Employment Period,
this Agreement shall terminate without further obligations to the Executive
other than the obligation to pay to the Executive annual base salary through the
Date of Termination plus the amount of any compensation previously deferred by
the Executive, in each case to the extent theretofore unpaid. If the Executive
terminates employment during the Change of Control Employment Period, excluding
a termination either for Good Reason or without any reason during the Window
Period, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Change of Control Obligations and the timely
payment or provision of Other Benefits. In such case, all Accrued Change of
Control Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination.
(F) Non-exclusivity of Rights. Except as provided in Sections
15(E)(a)(ii), 15(E)(b) and 15(E)(c), nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by Employer or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with Employer or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with
Employer or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
(G) Full Settlement, Resolution of Disputes.
(a) Employer's obligation to make the payments provided for in this
Section 15 and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which Employer may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and, except as provided in Section
15(E)(a)(ii), such amounts shall not be reduced whether or not the Executive
obtains other employment. Employer agrees to pay promptly as incurred, to the
full extent permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of any contest (regardless of the outcome
thereof) by Employer, the Executive or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive about
the amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate provided for in
Section 7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between Employer and the Executive (i)
in the event of any termination of the Executive's employment by Employer,
whether such termination was for Cause, or (ii) in the event of any termination
of employment by the Executive, whether Good Reason existed, then, unless and
until there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or that the
20
determination by the Executive of the existence of Good Reason was not made in
good faith, Employer shall pay all amounts, and provide all benefits, to the
Executive and/or the Executive's family or other beneficiaries, as the case may
be, that Employer would be required to pay or provide pursuant to Section
15(E)(a) as though such termination were by Employer without Cause, or by the
Executive with Good Reason; provided, however, that Employer shall not be
required to pay any disputed amount pursuant to this paragraph except upon
receipt of an agreement by or on behalf of the Executive to repay all such
amounts to which the Executive is ultimately adjudged by such court not to be
entitled.
(H) Certain Additional Payments by Employer.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by Employer to or
for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
15(H) (a "Payment") would be subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties are incurred by the Executive 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"), an
additional payment (a "Gross-Up Payment") shall be made by Employer to the
Executive 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, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 15(H)(c), all determinations
required to be made under this Section 15, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Xxxxxx
Xxxxxxxx LLP (the "Accounting Firm"), which shall provide detailed supporting
calculations both to Employer and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by Employer. In the event that the Accounting Firm
is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by Employer. Any
Gross-Up Payment, as determined pursuant to this Section 15(H), shall be paid by
Employer 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 a written opinion
that failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon Employer
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 Payments which will not have been made
by Employer should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that Employer exhausts
its remedies pursuant to Section 15(H)(c) and the Executive thereafter is
21
required to make a payment of 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 Employer to or for the benefit of the
Executive.
(c) The Executive shall notify Employer in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
Employer of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and the Executive shall apprise Employer 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 it gives such notice to Employer (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If Employer notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive shall:
(i) give Employer any information reasonably requested by Employer
relating to such claim,
(ii) take such action in connection with contesting such claim as
Employer 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 Employer,
(iii) cooperate with Employer in good faith in order effectively to
contest such claim, and
(iv) permit Employer to participate in any proceedings relating to
such claim;
provided, however, that Employer 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 Section 15(H)(c), Employer 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, and 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 Employer shall
determine; provided, however, that if Employer directs the Executive to pay such
claim and xxx for a refund, Employer 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 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, Employer's control of the contest shall be limited to
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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
Employer pursuant to Section 15(H)(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to
Employer's complying with the requirements of Section 15(H)(c)) promptly pay to
Employer 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 Employer pursuant to Section 15(H)(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and Employer does not notify the Executive in writing of its intent
to contest such denial of refund prior to the expiration of 30 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.
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Executive Employment Agreement as of the date first above written.
EXECUTIVE: EMPLOYER:
GREKA ENERGY CORPORATION,
a Colorado corporation
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
---------------------- -------------------------------
Xxxxxxx X. Xxxxxx Printed Name: Xxxxxx X. Xxxxxxx
Title: Director
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