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Exhibit 10.3
CHANGE OF CONTROL AGREEMENT
This Change of Control ("Agreement") is made and entered into as of this
20th day of September, 1999, by and between Xxxxxxx Exploration Company, a
Delaware corporation (the "Company"), and [See Schedule I], an individual
currently residing in Austin, Texas ("Officer").
RECITALS
The Board of Directors of the Company (the "Board") has determined that
it is in the best interest of the Company to assure that the Company will have
the continued dedication of Officer, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below). The Board believes it is
imperative to diminish the inevitable distraction of Officer by virtue of the
personal uncertainties and risks created by a pending or threatened Change of
Control, to encourage Officer's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide Officer with compensation and benefit arrangements upon a Change of
Control which ensures that such compensation and benefits are competitive with
other corporations.
AGREEMENT
Now, therefore, in consideration of Officer's continued employment by
the Company and execution of a General Release materially in the form attached
hereto as Exhibit A (the "General Release"), as well as the promises, covenants
and obligations contained herein, the Company and Officer agree as follows:
1. Severance and Other Benefits.
(a) Severance Payment. Prior to the end of the Retention
Period, upon the occurrence of a Termination Event (as defined in
Paragraph 2) and Officer's execution of the General Release--
(i) the Company or its successor shall pay Officer an
amount equal to Officer's Annual Base Salary (as defined in
Paragraph 2) multiplied by 2.0, payable as a lump sum cash
payment within 30 business days after the date of execution of
the General Release;
(ii) if Officer was participating in a life insurance
and/or disability benefit plan maintained by an Employer as of
[his/her] Termination Date, such coverage will be continued at
the same cost, if any, charged to similarly situated active
employees under such plans for a period of eighteen months
following the Termination Date or, if earlier, the date as of
which Officer obtains other employment. Officer shall
immediately notify the Company upon obtaining other
employment;
(iii) if Officer was participating in a hospital,
surgical, medical or dental benefit plan maintained by an
Employer as of [his/her] Termination Date and if Officer
elects to continue such coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA"), Officer
will be reimbursed the premiums paid to continue such coverage
under COBRA until the date as of which Officer obtains other
employment. Officer shall immediately notify the Company upon
obtaining other employment; and
(iv) the Company shall pay all reasonable legal fees
and expenses promptly as they are incurred by Officer in
seeking to obtain or enforce any right or benefit provided by
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this Agreement other than fees or expenses incurred in
connection with any challenge by Officer to the enforceability
of the General Release.
(b) Option Vesting. In the event of a Change of Control, the
Company or any successor thereto (or an affiliate of the Company or any
successor thereto) shall take all such action as may be necessary or
appropriate to amend any option to purchase Xxxxxxx common stock held
by Officer to provide that, with respect to any portion of such option
which has not then vested but is scheduled to vest within five years of
the date of the Change of Control, such portion of the option shall
immediately vest.
2. Definitions.
(a) "Annual Base Salary," as determined on the Termination
Date or Retention Date, as the case may be, shall be equal to the
greater of (i) the annual base salary payable to Officer by the Company
or any successor thereto (or any affiliate of the Company or a
successor thereto) as of the date of the earliest Change of Control to
occur during the eighteen-month period prior to the Termination Date or
Retention Date plus any bonuses or special incentive payments received
by Officer from the Company or any successor thereto (or any affiliate
of the Company or a successor thereto) during the twelve-month period
prior to such Change of Control, determined prior to reduction for any
employee-elected salary reduction contributions made to an
employer-sponsored plan pursuant to Section 401(k) or 125 of the
Internal Revenue Code of 1986, as amended (the "Code"), or (ii) the
annual base salary payable to Officer by the Company or any successor
thereto (or any affiliate of the Company or a successor thereto) as of
the Termination Date or Retention Date plus any bonuses or special
incentive payments received by Officer from the Company or any
successor thereto (or an affiliate of the Company or a successor
thereto) during the twelve-month period prior to the Termination Date
or Retention Date, determined prior to reduction for any
employee-elected salary reduction contributions made to an
employer-sponsored plan pursuant to Section 401(k) or 125 of the Code.
In the event Officer has not been employed by the Company for one year,
such bonus shall be assumed to equal 50% of the Officer's annual base
salary for purposes of determining "Annual Base Salary."
(b) "Xxxxxxx" means Xxxxxxx Exploration Company, a Delaware
corporation, or any successor thereto.
(c) "Cause" as used herein with respect to Officer's
termination of employment shall include any of the following: (A)
Officer's conviction of, or plea of nolo contendere to, any felony of
theft, fraud, embezzlement or violent crime causing substantial harm to
the Company or its affiliates; (B) the willful and continued failure by
Officer to substantially perform Officer's duties with the Company
(other than such failure resulting from Officer's incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to Officer by the Chief Executive Officer of
the Company and the Board, which specifically identifies the manner in
which the Chief Executive Officer and the Board believes that Officer
has not substantially performed Officer's duties or (C) the willful
engaging by Officer in misconduct which is materially injurious to the
interests of the Company or any successor thereto (or any affiliate of
the Company or a successor thereto). For purposes of this Paragraph, no
act, or failure to act, on Officer's part shall be considered "willful"
unless done, or omitted to be done, by Officer not in good faith and
without reasonable belief that Officer's action or omission was in the
best interest of the Company. Notwithstanding the foregoing, Officer
shall not be deemed to have been terminated for cause unless and until
there shall have been delivered to Officer a copy of a notice of
termination from the Chief Executive Officer of the Company and the
Board, after (x) reasonable notice to Officer, (y) an opportunity for
Officer, together with Officer's counsel (the reasonable fees of which
the Company shall pay promptly as incurred), to be heard before the
Board, finding that, in the good faith opinion of the Board, Officer
was guilty of conduct set forth above in clauses (A), (B) or (C)
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of the first sentence of this Subparagraph and specifying the
particulars thereof in detail.
(d) A "Change of Control" shall be deemed to have occurred for
purposes of this Agreement if:
(i) any "affiliates" and "associates" (as such terms
are defined in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of any "person," as that term is defined
in Section 3(a)(9) of the Exchange Act (other than Xxx Xxxxxxx or Xxxx
Xxxxxxx or Xxxxxxx, any of its subsidiaries, any employee benefit plan
of Xxxxxxx or any of its subsidiaries, or any entity organized,
appointed or established by Xxxxxxx for or pursuant to the terms of
such a plan), together with any nominees or appointees of such person
(excluding in any event Xxx Xxxxxxx and Xxxx Xxxxxxx), constitute at
least 51% of members of the Board of Directors of Xxxxxxx;
(ii) the stockholders of Xxxxxxx approve a
reorganization, merger or consolidation, in each case, with respect to
which persons who were the stockholders of the Company immediately
prior to such reorganization, merger or consolidation do not,
immediately thereafter, own more than 50% of the combined voting power
entitled to vote generally in the election of directors ("Voting
Securities") of the reorganized, merged or consolidated company's then
outstanding voting securities;
(iii) Xxxxxxx xxxxx, leases or exchanges or agrees to
sell, lease or exchange all or substantially all of its assets to any
other person or entity and following such transaction does not continue
its business following substantially the same business plan that is in
existence as of the date of this Agreement; or Xxxxxxx is to be
dissolved and liquidated; or
(iv) any "person," as that term is defined in Section
3(a)(9) of the Exchange Act (other than Xxxxxxx, any of its
subsidiaries, any employee benefit plan of Xxxxxxx or any of its
subsidiaries, or any entity organized, appointed or established by
Xxxxxxx for or pursuant to the terms of such a plan), together with all
"affiliates" and "associates" (as such terms are defined in Rule 12b-2
under the Exchange Act) of such person (as well as any "Person" or
"group" as those terms are used in Sections 13(d) and 14(d) of the
Exchange Act), shall become the "beneficial owner" or "beneficial
owners" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of securities of Xxxxxxx representing in the
aggregate 50% or more of either (A) the then outstanding shares of
common stock, par value $.01 per share, of Xxxxxxx ("Common Stock") or
(B) the Voting Securities of Xxxxxxx, in either such case other than
solely as a result of acquisitions of such securities directly from
Xxxxxxx.
Notwithstanding the foregoing, a "Change in Control"
of Xxxxxxx shall not be deemed to have occurred for purposes of
subparagraph (iv) of this paragraph 2(d) solely as the result of an
acquisition of securities by Xxxxxxx which, by reducing the number of
shares of Common Stock or other Voting Securities of Xxxxxxx
outstanding, increases (i) the proportionate number of shares of Common
Stock beneficially owned by any person to 50% or more of the shares of
Common Stock then outstanding or (ii) the proportionate voting power
represented by the Voting Securities of Xxxxxxx beneficially owned by
any person to 50% or more of the combined voting power of all then
outstanding Voting Securities; provided, however, that if any person
referred to in clause (i) or (ii) of this sentence shall thereafter
become the beneficial owner of any additional shares of Common Stock or
other Voting Securities of Xxxxxxx (other than a result of a stock
split, stock dividend or similar transaction), then a Change in Control
of Xxxxxxx shall be deemed to have occurred for purposes of
subparagraph (iv) of this paragraph 2(d).
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(e) The "Retention Date" shall mean the last day of the
Retention Period.
(f) The "Retention Period" shall be the period commencing on
the date of the first Change of Control to occur after the execution of
this Agreement and ending on the second anniversary of such Change of
Control date.
(f) The "Termination Date" shall mean the date of the
termination of Officer's employment in connection with a Termination
Event.
(g) A "Termination Event" shall be deemed to have occurred if
at any time within the Retention Period:
(i) the Company or any successor thereto (or an
affiliate of the Company or any successor thereto) shall
terminate Officer's employment for any reason other than for
Cause; or
(ii) Officer shall voluntarily terminate [his/her]
employment with the Company or any successor thereto (or an
affiliate of the Company or any successor thereto) for "Good
Reason." For purposes of this Agreement, "Good Reason" shall
mean any of the following (without Officer's express written
consent):
(A) A material change in the nature or scope
of Officer's duties from those engaged in by Officer
immediately prior to the date on which a Change of
Control occurs;
(B) A reduction in Officer's annual base
salary from that provided to [him/her] immediately
prior to the date on which the Change of Control
occurs;
(C) A material diminution in Officer's
eligibility to participate in, or in the benefits
provided to Officer, under any bonus, stock option or
other incentive compensation plans or employee
welfare and pension benefit plans (including medical,
dental, life insurance, retirement and long-term
disability plans) from that provided to [him/her]
immediately prior to the date on which the Change of
Control occurs; or
(D) Any required relocation of Officer of
more than thirty miles from the location where
Officer was based and performed services on the date
of this Agreement (including any required business
travel in excess of the greater of 90 days per year
or the level of business travel of Officer for the
year prior to the most recent Change of Control).
3. Adjustments. Any provision of this Agreement to the
contrary notwithstanding, if, in the Company's determination, the total sum of
(i) the payments and benefits to be paid or provided to (or with respect to)
Employee under this Agreement which are considered to be "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code") and (ii) any other payments and benefits which are
considered to be "parachute payments," as so defined, to be paid or provided to
(or with respect to) Employee by the Company or a member of the Company's
affiliated group (within the meaning of Section 280G(d)(5) of the Code) (the
"Total Amount") exceeds the amount
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Employee can receive without having to pay excise tax with respect to all or any
portion of such payments or benefits under Section 4999 of the Code (the
"Reduced Amount"), then the amount payable to Employee pursuant to paragraphs
1(a) and 1(b) of this Agreement shall be reduced to the greater of zero or the
highest amount which will not result in Employee having to pay excise tax with
respect to any payments and benefits under Section 4999 of the Code; provided,
however, that in the event that the Reduced Amount minus any and all applicable
federal, state and local taxes (including but not limited to income and
employment taxes imposed by the Code) is less than the Total Amount minus any
and all applicable federal, state and local taxes (including but not limited to
income and employment taxes imposed by the Code and excise taxes applicable to
such payments under Section 4999 of the Code), then the reduction of the amount
payable to Employee under paragraphs 1(a) and 1(b) of this Agreement provided
for in the preceding provisions of this paragraph 3 shall not be made.
4. Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company to: Xxxxxxx Exploration Company
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxx, Xxxxx 00000
If to Officer to:
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or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
5. Applicable Law. This contract is entered into under, and
shall be governed for all purposes by, the laws of the State of Texas.
6. Severability. If a court of competent jurisdiction
determines that any provision of this Agreement is invalid or unenforceable,
then the invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement, and all
other provisions shall remain in full force and effect.
7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
8. Withholding. The Company or any affiliate of the Company
employing Officer shall withhold from any amount payable to Officer pursuant to
this Agreement or from other remuneration payable to Officer, and shall remit to
the appropriate governmental authority if required by applicable law, any
income, employment or other tax such entity is required by applicable law to so
withhold from and remit on behalf of Officer and any other amounts authorized in
writing by Officer.
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9. No Continued Employment and Effect of Agreement. This
Agreement shall not enlarge or otherwise affect the terms of Officer's
employment with the Company, if any, and the Company or an affiliate employing
Officer may terminate [his/her] employment as freely and with the same effect as
if this Agreement had not been established. This Agreement is the sole and
exclusive program of severance benefits provided to Officer. It is intended that
any and all other representations, agreements or descriptions of similar
benefits be superseded hereby with respect to Officer; provided, however, that
nothing herein is intended to modify or affect in any way the terms of any
written employment agreement signed between the Company and Officer. No oral or
written representation or promise concerning severance which is inconsistent
with the provisions of this Agreement shall have any force or effect.
10. Assignment.
(a) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder, except
as provided in the remainder of this Paragraph 10. Without limiting the
foregoing, Officer's right to receive payments hereunder shall not be
assignable or transferable, whether by pledge, creation of a security
interest or otherwise, other than a transfer by [his/her] will or by
the laws of descent or distribution, and in the event of any attempted
assignment or transfer contrary to this Paragraph 10 the Company shall
have no liability to pay any amount so attempted to be assigned or
transferred. This Agreement shall inure to the benefit of and be
enforceable by Officer's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
(b) The Company may: (x) as long as it remains obligated with
respect to this Agreement, cause its obligations hereunder to be
performed by a subsidiary or subsidiaries for which Officer performs
services, in whole or in part; (y) assign this Agreement and its rights
hereunder in whole, but not in part, to any corporation with or into
which it may hereafter merge or consolidate or to which it may transfer
all or substantially all of its assets, if said corporation shall by
operation of law or expressly in writing assume all liabilities of the
Company hereunder as fully as if it has been originally named the
Company herein; but may not otherwise assign this Agreement or its
rights hereunder. Subject to the foregoing, this Agreement shall inure
to the benefit of and be enforceable by the Company's successors and
assigns.
11. Modifications. This Agreement shall not be varied, altered,
modified, canceled, changed or in any way amended except by mutual agreement of
the parties in a written instrument executed by the parties hereto or their
legal representatives.
12. No Violations. To the extent any provision of this Agreement would
trigger a breach of any material agreement to which the Company or any of its
subsidiaries is a party or would cause a violation of applicable law, it shall
be invalid and of no force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
XXXXXXX EXPLORATION COMPANY
By:
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Name:
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Title:
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OFFICER
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[See Schedule I]
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EXHIBIT A
GENERAL RELEASE AGREEMENT
NOTICE: If you wish to accept the Severance Payment, you must return an executed
copy of this form to the Company by the close of business on the forty-fifth day
after the Termination Event or the expiration of the Retention Period, whichever
is applicable, as defined in the Change of Control Agreement between you and
Xxxxxxx Exploration Company.
GENERAL RELEASE: IN CONSIDERATION OF THE SEVERANCE PAYMENT (PAYMENT) TO BE MADE
TO ME UNDER THE XXXXXXX EXPLORATION COMPANY CHANGE OF CONTROL AGREEMENT (THE
AGREEMENT), I HEREBY RELEASE, ACQUIT, AND FOREVER DISCHARGE (i) XXXXXXX
EXPLORATION COMPANY INC. AND ANY PARENT, SUBSIDIARY, AFFILIATED ENTITY,
SUCCESSORS OR ASSIGNS (THE COMPANY), AND (ii) THE STOCKHOLDERS, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES, AND FIDUCIARIES OF THE COMPANY
(COLLECTIVELY THE RELEASED PARTIES), FROM ANY AND ALL CLAIMS, LIABILITIES,
DEMANDS, AND CAUSES OF ACTION OF WHATEVER KIND OR CHARACTER, WHETHER VICARIOUS,
DERIVATIVE, OR DIRECT, THAT I NOW HAVE OR CLAIM AGAINST THEM CONNECTED IN ANY
WAY TO THE AGREEMENT OR ANY CLAIM FOR BENEFITS UNDER THE AGREEMENT, OR MY
EMPLOYMENT, CONTINUATION OF EMPLOYMENT, OR, IF APPLICABLE, TERMINATION OF
EMPLOYMENT WITH ANY OF THE RELEASED PARTIES, OR WITH ANY OTHER ACT, CONDUCT, OR
OMISSION OF ANY OF THE RELEASED PARTIES, INCLUDING BUT NOT LIMITED TO CLAIMS
ARISING UNDER ANY FEDERAL, STATE, OR LOCAL LAWS RELATING TO THE EMPLOYMENT
RELATIONSHIP, INCLUDING THE AGE DISCRIMINATION IN EMPLOYMENT ACT. THIS GENERAL
RELEASE DOES NOT WAIVE RIGHTS OR CLAIMS THAT MAY ARISE AFTER THE DATE THIS
GENERAL RELEASE IS EXECUTED. FURTHER IN CONSIDERATION OF THE PAYMENT TO BE MADE
TO ME UNDER THE AGREEMENT, I ACKNOWLEDGE AND AGREE THAT THE RELEASED PARTIES MAY
RECOVER FROM ME ANY LOSS, INCLUDING ATTORNEY'S FEES AND COSTS OF DEFENDING
AGAINST ANY CLAIM BROUGHT BY ME, THEY MAY INCUR ARISING OUT OF MY BREACH OF THIS
GENERAL RELEASE.
I understand that I may revoke my acceptance of this General Release by so
notifying the Company within seven days of the date I execute this General
Release. I further understand that if I do not timely revoke my acceptance, this
General Release is final and binding, and I agree not to challenge its
enforceability. If I do challenge the enforceability of this General Release, I
agree initially to tender to the Company the Payment made under the Agreement,
and invite the Company to retain such money and agree with me to cancel this
General Release. In the event the Company accepts my offer, the Company shall
retain such money and this General Release will be void. In the event the
Company does not accept my offer, the Company shall place such money in an
escrow account pending the resolution of any dispute as to whether this General
Release shall be set aside and/or otherwise rendered unenforceable.
I have read and fully understand all of the provisions of this General Release.
I acknowledge that none of the Released Parties have made any promise or
representation to me that is not set out in this General Release, and that in
executing this General Release I am not relying on any such promise or
representation but instead am relying solely on my own judgment. I further
acknowledge that my execution of this General Release is knowing and voluntary,
that I have had a reasonable time to consider its terms, and that I have been
advised to consult with an attorney about this General Release.
Date signed:
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Signature of Employee
Date signed:
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Witness
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Schedule I
Xxxxx X. Xxxxxxx
X. Xxxxx Xxxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxx X. Xxxxx
Xxxxxxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
