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EXHIBIT 5
AGREEMENT
This Agreement is entered into by and between XxXxxxxxx Energy, Inc.,
(the "Company") and X. X. XxXxxxxxx ("Executive").
WHEREAS, the Company has a talented and dedicated management team
which has made many valuable contributions to the success of the Company; and
WHEREAS, the Board of Directors of the Company believes it is
important to provide a limited amount of financial security to key management
members in the event that they are terminated without cause;
WHEREAS, the Board of Directors of the Company believes it is
important to provide a limited additional amount of financial security to key
management members in the event that they are terminated without cause
following a change in control of the Company;
NOW, THEREFORE, in consideration of the premises and mutual promises
contained herein, it is agreed as follows:
1. Payment of Benefits In The Event Of Termination Of Employment
Following A Change in Control.
In the event that a "Change in Control" (as defined in this
Section) occurs on or before December 31, 1999, and that the employment of
Executive is thereafter "Involuntarily Terminated" (as defined in this Section)
within twenty-four (24) calendar months of the effective date of the Change in
Control, the Company (or Post-Change Employer as hereinafter described and
defined) will provide Executive with the benefits set forth in this Section.
a. Definition of "Change in Control."
As used in this Agreement, a "Change in Control" means the
occurrence of any of the following events:
(i) A majority of the members of the Board of
Directors at the end of any consecutive twenty-four (24) calendar month period
is not comprised of "Incumbent Directors" (as defined in this Section). For
purposes of this Agreement, a Director shall be considered to be an "Incumbent
Director" if either of the following conditions is met:
(A) The Director was a Director at the
beginning of the consecutive
twenty-four (24) calendar month
period in question; or
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(B) The Director's election by the
Company's stockholders, or
nomination for election by the
Company's stockholders, was approved
by a vote of a majority of the
members of the Board at a time when
a majority of the members of the
Board were Incumbent Directors.
Such approval may be made by any
resolution of the Board expressing
approval of the Director or nominee,
or by any communication to the
Company's stockholders, which
communication is authorized by the
Board and which communication
recommends election of the Director
or nominee. Such approval may be
made by the Board after the Director
has been elected, provided that a
majority of the members of the Board
at the time of approval consists of
Incumbent Directors.
(ii) Any "person", including a "group" (as such
terms are used in Rule 13(d)(5) of the Securities Exchange Act of 1934 (the
"1934 Act")), but excluding the Company, any of its Subsidiaries, and any
employee benefit plan of the Company or any of its Subsidiaries) is or becomes
the "beneficial owner" (as defined in Rule 13(d)(3) under the 1934 Act),
directly or indirectly, of securities of the Company representing thirty-five
(35%) percent or more of the combined voting power of the Company's then
outstanding securities.
(iii) A merger or other business combination of the
Company takes place, whereby the Company merges or combines with or into
another corporation, provided that the other corporation is not a "Subsidiary"
of the Company (as defined herein). For purposes of this Section, a
corporation shall be considered to be a "Subsidiary" of the Company if either
of the following conditions is met:
(A) A majority of the directors of the
corporation are also directors of
the Company; or
(B) The Company is the "beneficial
owner" (as defined in Rule 13(d)(3)
under the 1934 Act), directly or
indirectly, of securities of the
corporation representing more than
fifty (50%) percent of the combined
voting power of the corporation's
then outstanding securities.
Notwithstanding any other provision of this Section, a merger or other
business combination of the Company shall not constitute a "Change in
Control" if any of the following conditions is met:
(A) A majority of the directors of the
merged or combined corporation were
Incumbent Directors of the Company
immediately before the merger or
combination; or
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(B) "Beneficial ownership" (as defined
in Rule 13(d)(3) under the 1934
Act), directly or indirectly, of
more than fifty (50%) percent of the
combined voting power of the merged
or combined corporation is held,
immediately after the merger or
combination, by persons (as that
term is used in the 1934 Act) who
held beneficial ownership, directly
or indirectly, of more than fifty
(50%) percent of the combined voting
power of the Company immediately
before the merger or combination; or
(C) Securities representing more than
fifty (50%) percent of the combined
voting power of the merged or
combined corporation (as measured
immediately after the merger or
combination), are issued or conveyed
to stockholders of the Company in
exchange for or in consideration of
their shares in the Company.
b. Involuntary Termination of Employment, Qualifying
Executive for Benefits.
Executive will be entitled to receive the benefits set forth
in this Section 1 if the employment of Executive is "Involuntarily Terminated"
(as defined in this Section) within twenty-four (24) calendar months of the
effective date after the Change in Control.
(i) For purposes of this Section, Executive will
be considered to be "Involuntarily Terminated" if, within twenty-four (24)
calendar months after the effective date of the Change in Control, Executive's
employment with the Company or with any successor corporation which employs
Executive as a result of a merger or combination which constitutes a Change in
Control under Section 1a(iii) of this Agreement (collectively, the "Post-
Change Employer"), is terminated for any of the following reasons:
(A) If Executive is terminated by the
Post-Change Employer without "Good
Cause." For purposes of this
Subsection, the Post-Change Employer
shall have Good Cause to terminate
Executive's employment if any of the
following conditions are met:
(a) If grounds exist to terminate
the employment of Executive
pursuant to California Labor
Code Section 2924; or
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(b) If Executive engages in serious
or willful misconduct which
is detrimental to the
interests of the Post-Change
Employer or its stockholders;
or
(c) If Executive willfully refuses
to carry out the directions
and responsibilities assigned
to Executive by the Chief
Executive Officer of the
Post-Change Employer.
(B) If Executive resigns from employment
for "Good Reason."
(a) For purposes of this
Subsection, Executive will
have Good Reason to resign
from employment if any of the
following conditions are met:
(1) There is a significant
adverse change in the
nature or scope of
Executive's authorities
or duties; or
(2) There is a significant
reduction in
Executive's
compensation or
benefits provided by
the Post-Change
Employer in comparison
with the compensation
and benefits which
Executive was receiving
from the Company
immediately before the
Change in Control; or
(3) The geographic location
at which Executive is
required to perform
Executive's principal
duties is moved to a
location more than fifty
(50) miles from such
location existing
immediately before
the Change in Control.
(b) Notwithstanding any other
provision of this Agreement,
Executive will not be
considered to have Good
Reason to resign from
employment unless both of the
following conditions are met:
(1) Executive has given the
Post-Change Employer
timely written notice
of the fact that
Executive contends that
Executive has Good
Reason to resign from
employment, and of the
grounds for Executive's
contention. To be
timely, such notice
must be given within a
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reasonable time after
Executive learns of the
circumstances which
give rise to the
contention that
Executive has Good
Reason to resign from
employment. If
Executive's contention
is based on Subsections
1b(i)(B)(a)(2) or
1b(i)(B)(a)(3) of this
Agreement, a period of
fourteen (14) calendar
days shall be presumed
to constitute a
"reasonable time" for
Executive to give such
notice. If Executive's
contention is based on
Subsection
1b(i)(B)(a)(1) of this
Agreement, a
"reasonable time" to
give such notice shall
be a period of time
sufficient for
Executive to fully
assess the extent and
consequences of any
change in the nature or
scope of Executive's
authorities or duties,
and to make a full and
fair determination as
to whether such change
is "adverse."
(2) The Post-Change
Employer fails to cure
the circumstances
which give rise to
Executive's contention
that Executive has Good
Reason to resign from
employment within
thirty (30) calendar
days following receipt
of such written notice
from Executive.
(C) If Executive is terminated on
account of disability, unless the
disability is such that Executive is
eligible for benefits under the
Post-Change Employer's Long-Term
Disability Plan then in effect, if
any.
(ii) For purposes of this Section,
Executive will not be considered to be "Involuntarily Terminated" if
Executive's employment with the Post-Change Employer is terminated for
any of the following reasons:
(A) On account of Executive's death;
(B) On account of Executive's
disability which renders
Executive eligible for benefits
under the Post-Change Employer's
Long-Term Disability Plan,
provided such eligibility and
benefits are substantially
similar to those in Company's
Plan immediately prior to the
Change in Control;
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(C) If Executive is terminated by
the Post-Change Employer for
"Good Cause" (as defined in
this Section).
(D) If Executive voluntarily resigns
from employment without "Good
Reason" (as defined in this
Section).
(iii) In the event of any dispute as to whether
Executive has been Involuntarily Terminated, such dispute shall be decided by
final and binding arbitration as provided in this Agreement.
c. Amount and Payment of Benefits.
(i) If Executive becomes eligible for benefits
under this Section 1, Executive shall be entitled, upon being Involuntarily
Terminated from employment, to receive from the Post-Change Employer, the
following benefits:
(A) An amount of cash equal to:
(a) The greater of two times:
(1) Executive's annualized
base salary, plus the
amount of Executive's
annualized car allowance,
if any, in effect at the
end of the month
immediately prior to the
Change in Control; or
(2) Executive's annualized
base salary, plus the
amount of Executive's
annualized car allowance,
if any, in effect at the
end of the month
immediately prior to the
Change in Control; or
date Executive is
Involuntarily Terminated;
and
(b) The greater of two times:
(1) The amount of bonus, if
any, or accrued to
Executive for the most
recently ended calendar
year immediately prior
to the Change in Control;
or
(2) The amount of bonus, if
any, paid or accrued to
Executive for the most
recently ended
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calendar year prior to
the date Executive is
Involuntarily Terminated.
The Post-Change Employer shall make
the cash payments described in this
Subsection 1c(i)(A) as a lump sum
payment payable within thirty (30)
calendar days after the date that
Executive is Involuntarily
Terminated, or, at Executive's
written request delivered within
fifteen (15) calendar days after the
date Executive is Involuntarily
Terminated, in twelve (12) equal and
consecutive monthly installments
with the first installment payable
within thirty (30) calendar days
after the date Executive is
Involuntarily Terminated.
(B) Standard outplacement services
provided by a qualified outplacement
agency selected by the Post-Change
Employer, which services will be
made available for a period of
twelve (12) consecutive calendar
months from the date Executive is
Involuntarily Terminated, or until
the date Executive accepts
employment with another employer,
whichever occurs first; and
(C) Compensation for the loss of group
medical and dental insurance
benefits (excluding coverage under
any life or long-term disability
programs), which may be provided, at
the sole discretion of the
Post-Change Employer, by either of
the following options:
(a) By continuing in effect those
group medical and dental
insurance benefits which were
provided by the Post-Change
Employer immediately before
Executive was Involuntarily
Terminated, on the same terms
and conditions which were in
effect immediately before
Executive was Involuntarily
Terminated, provided that
such coverage is
substantially similar to the
coverage (including any
dependent coverage) Executive
was receiving from the
Company immediately prior to
the Change in Control, for a
period of twenty-four (24)
calendar months from the date
of Executive is Involuntarily
Terminated or until Executive
obtains coverage under a
group insurance arrangement
or program sponsored by a new
employer, whichever occurs
first; or
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(b) By payment of a lump sum amount
equal to twenty-four (24)
times the greater of the
following amounts:
(1) the monthly premium
necessary for Executive
to maintain Executive's
group medical and
dental insurance
benefits, pursuant to
COBRA, under the plan
provided by the
Post-Change Employer,
net of Executive's
required co-payments;
or
(2) the monthly premium
which would have been
necessary for Executive
to maintain Executive's
group medical and
dental insurance
benefits, pursuant to
COBRA, under the plan
provided by the Company
immediately prior to
the Change in Control,
net of Executive's
required co-payments.
(ii) In the event that the payments hereunder, or
that the payments hereunder together with any other payments by the Company
under any other plan or arrangement, would cause the loss of deductibility of
any portion of such payments by the Company under Section 280G of the Internal
Revenue Code, then the amounts payable under this Section 1, shall be limited
to an amount that would not cause such loss of deduction. Further, in the
event that any payments are required to be made by any Post-Change Employer to
Executive on or after the date Executive is Involuntarily Terminated, pursuant
to any decree, court award, employment agreement or severance agreement (other
than under this Agreement), or under any plan or policy of the Post-Change
Employer (excluding any retirement, savings or thrift plans), or under the laws
of any government (collectively "Other Required Payments"), the amounts payable
under this Section 1 shall be reduced by the amount of such Other Required
Payments.
(iii) Notwithstanding any other provision of this
Agreement, Executive shall be entitled to receive, in addition to the payments
and benefits provided by this Agreement, any and all wages and vacation pay
actually earned and accrued by Executive during the period of Executive's
employment, which are unpaid as of the time of Executive's termination from
employment.
d. Rights in the Event of Default. In the event that
the Post-Change Employer defaults on its obligations under this Section 1 and,
fails to remedy such default within thirty (30) calendar days after having
received written notice of the default from Executive or Executive's estate or
"Beneficiary" (as defined in Subsection 5a of this Agreement), the Post-Change
Employer shall thereupon pay or transfer to such party, in full discharge of
its obligations under this Section 1, a lump sum amount representing all
payments required under this Section 1, and with interest on the
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amount thereof at the rate of eight (8%) percent per annum, compounded daily,
from the otherwise due date of such payment or transfer.
2. Payment of Benefits In The Event Of Termination Of Employment
In The Absence Of A Change in Control.
If Company (or in the case of a termination which occurs more
than two years after a Change in Control, the Post-Change Employer) terminates
Executive's employment without "Good Cause" (as defined in this Section) and
such termination does not occur within two years after a Change in Control,
then Executive shall be entitled to receive, but limited to receive, from the
Company (or Post-Change Employer), the following benefits:
a. A lump sum severance payment in an amount equal to
the greater of:
(i) Two weeks salary for every year or partial
year of service with the Company (computed
using Executive's most recent annualized base
salary and annualized car allowance, if any,
combined), or
(ii) Four weeks salary, likewise computed.
b. Compensation for the loss of group medical and dental
insurance benefits (excluding coverage under any life
or long-term disability programs) for the same number
of weeks as the number of weeks of salary which
Executive receives under Subsection a of this Section
2, which may be provided, at the sole discretion of
the Company, by either of the following options:
(a) By continuing in effect those group
medical and dental insurance
benefits which were provided by the
Company immediately before Executive
was terminated, on the same terms
and conditions which were in effect
immediately before executive was
terminated, or
(b) By payment of a lump sum amount
computed by the following formula:
(0.23) x (the number of weeks of
benefit which Executive is entitled
to receive) x (the monthly premium
necessary for Executive to maintain
Executive's group medical and dental
insurance benefits, pursuant to
COBRA, under the plan provided by
the Company).
Termination with "Good Cause," as used in this Section 2,
shall mean a termination of Executive's employment where any of the following
conditions are met:
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(a) If grounds exist to terminate the employment of
Executive pursuant to California Labor Code Section
2924; or
(b) If Executive engages in serious or willful misconduct
which is detrimental to the interests of the Company
or its stockholders; or
(c) If Executive wilfully refuses to carry out the
directions and responsibilities assigned to Executive
by the Chief Executive Office of the Company.
3. Termination of Employment.
The parties hereto each expressly agree that Executive's
employment with the Company may be terminated at any time by either Executive
or by the Company, for any reason, with or without cause and with or without
notice. Executive agrees that in the event of the termination of Executive's
employment, either before or after a Change in Control, the sole and exclusive
contractual rights and remedies which Executive shall be entitled to enforce
are the rights and remedies expressly set forth in this Agreement, and that
this Agreement replaces and supersedes any contract or agreement, express or
implied, which in any way limits the rights of Executive or of the Company to
terminate the employment relationship between them without liability; provided,
however, that nothing in this Agreement shall replace, supersede, or modify any
written employment contract which may be in effect, or may hereafter take
effect, between Executive and the Company, if such written employment contract
is or has been duly executed by both Executive and by the Chief Executive
Officer of the Company and has been approved by the express authorization or
ratification of the Company's Board of Directors.
4. Enforcement By Arbitration.
The parties hereto each expressly agree that any dispute or
controversy arising under or in connection with this Agreement, or arising in
any way out of Executive's employment with the Company (a "Dispute") shall be
resolved exclusively by final and binding arbitration in Los Angeles County in
the State of California.
Any such arbitration shall be governed by the Rules of the
American Arbitration Association For The Resolution Of Employment Disputes then
in effect. There shall be one arbitrator, who shall be a retired judge of the
Los Angeles County Superior Court.
The arbitrator's determination shall be final and binding upon
all parties. Judgment upon the arbitrator's award may be entered in any court
having jurisdiction thereof.
The prevailing party in any such arbitration will be entitled
to recover reasonable costs, expenses and attorneys' fees for such arbitration
and for any court proceedings for the entry or enforcement of the arbitrator's
award; provided, however, that if any claim or Dispute is at issue
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in such arbitration, which claim or Dispute is based upon a statute or
regulation which contains provisions for the award of attorneys' fees, costs or
expenses, such statute or regulation will supersede the provisions of this
Agreement with respect to the award of attorneys' fees, costs or expenses in
connection with that claim or Dispute.
The arbitration provisions contained in this Section 4 shall
not apply to any Dispute involving a claim or demand by Executive for workers'
compensation benefits. The arbitration provisions contained in this Section 4
shall not apply to any Dispute which is prohibited by law to be resolved
through arbitration.
5. Miscellaneous.
a. Successors, Binding Agreement.
This Agreement shall be binding, upon Executive and the
Company, and upon any assignee or successor of the Company (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the Company's voting securities or assets, and upon any
Post-Change Employer.
This Agreement shall inure to the benefit of and, be
enforceable by, Executive and by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive should die, any benefits then due and payable to
Executive under Section 1 of this Agreement shall be paid to Executive's
"Beneficiary" as designated by Executive from time to time under Executive's
then most recent principal life insurance coverage provided to Executive by the
Post-Change Employer or Company.
b. Amendment or Termination. No provision of this
Agreement may be modified, amended, waived or terminated, unless such
modification, amendment, wavier or termination is expressly agreed to in
writing, and is signed by Executive and by the Chief Executive Officer of the
Company, and has been approved by the express authorization or ratification of
the Company's Board of Directors.
c. No Vested Interest. Neither Executive nor Executive's
Beneficiary nor any other person shall have any right, title or interest in any
benefit under this Agreement prior to the occurrence of the right to payment
thereof.
d. No Alienation of Benefits. Executive shall not have
any right to pledge, hypothecate, anticipate or in any way create a lien upon
any amounts provided under this Agreement, and no benefits payable hereunder
shall be assignable in anticipation of payment either by voluntary or
involuntary acts.
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e. Prior Agreement. This Agreement contains the entire
understanding between the parties hereto relating to the subject matter hereof,
and supersedes any prior or contemporaneous agreements, contracts or
understandings, express or implied, between the Company (or any predecessor or
subsidiary of the Company) and Executive. If there is any discrepancy or
conflict between this Agreement and any plan, policy or program of the Company,
the language of this Agreement shall govern.
f. Taxes. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as shall
be required pursuant to any law or government regulation or ruling.
g. No Waiver, No Representations. No waiver by any
party hereto at any time of any breach by another party hereto of any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreement or representations, oral or
otherwise, express or implied, relating to the subject matter hereof have been
made by either party that are not set forth expressly on this Agreement.
Executive represents and agrees that Executive understands Executive's right to
thoroughly discuss all aspects of this Agreement with an attorney of
Executive's choice. Executive further represents that Executive has carefully
read and fully understands all of the provisions of this Agreement, and is
voluntarily entering into this Agreement.
h. Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid or unenforceable
for any reason, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect.
i. Applicable Law. This Agreement is made and entered
into in the State of California and shall in all respects be interpreted,
enforced and governed under the laws of said state. The language of all parts
of this Agreement shall, in all cases, be construed as a whole, according to
its fair meaning, and not strictly for or against any of the parties.
j. Notice. Notices and other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when actually delivered. Delivery shall be effective as follows: If to
the Company, at the location of the Company's then principal place of business
and directed to the attention of the Chief Executive Officer. If to Executive,
at the address in the records of the Company listed as Executive's current
address. The parties hereto may change such address upon sending notice of
same to the other party, with such change of address to be effective upon
receipt.
k. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all together only
one agreement; provided, however, that such executed counterparts will not be
effective to execute this Agreement unless all counterparts consist of
identical language.
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PLEASE READ CAREFULLY. THIS IS A BINDING CONTRACT,
AND AFFECTS IMPORTANT LEGAL RIGHTS.
Date: 8/8/95 /s/ X. X. XxXXXXXXX
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X. X. XxXxxxxxx
Executive
XxXXXXXXX ENERGY, INC.
Date: 8/9/95 By: /s/ XXXXXX X. XXXXXX
--------------- ----------------------------
Xxxxxx X. Xxxxxx,
Chairman Compensation
Committee of the Board of
Directors of XxXxxxxxx
Energy, Inc.
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