CHANGE IN CONTROL/SEVERANCE AGREEMENT
EXHIBIT
10.1
THIS
AGREEMENT, dated July 25, 2008, is made by and between Xxxxx Resources &
Energy, Inc., a Delaware corporation (the “Company”), and Xxxxxxx X. Xxxxxxx
(the “Key Employee”).
WHEREAS,
the Key Employee currently is employed by the Company or one of its
subsidiaries;
WHEREAS,
the Board recognizes that, as is the case with many publicly-held corporations,
the possibility of a Change in Control exists and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment of the Company
and its stockholders; and
WHEREAS,
the Board has determined that appropriate steps should be taken to ensure that
the Key Employee receive the protections afforded under this Agreement for the
one-year period beginning on the date of a Change in Control to reinforce and
encourage the continued attention and dedication of members of the Company’s
management, including the Key Employee, to their assigned duties without
distraction in the face of potentially disturbing circumstances;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the Company and the Key Employee hereby agree as
follows:
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1.
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Defined
Terms. The definitions of capitalized terms used in this
Agreement are provided in the last Section
hereof.
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2.
Term of Agreement. The Term of this Agreement shall
commence on July 25, 2008 (the “Effective Date”) and shall continue in
effect through the first anniversary following a Change in
Control. In the event a Change in Control has not occurred on
or before July 25, 2012, this Agreement shall immediately terminate and be
of no further force and effect.
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3.
Company’s Covenants Summarized. In order to induce the
Key Employee to remain in the employ of the Company, the Company agrees,
under the conditions described herein, to pay the Key Employee the
Severance Payment described herein. No Severance Payment shall
be payable under this Agreement unless there shall have been a termination
of the Key Employee’s employment by the Company without Cause or by the
Key Employee with Good Reason following and within twelve (12) months
after a Change in Control. This Agreement shall not be
construed as creating an express or implied contract of employment and,
except as otherwise agreed in writing between the Key Employee and the
Company, the Key Employee shall not have any right to be retained in the
employ of the Company.
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4. Severance
Payment.
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4.1 If
the Key Employee’s employment is terminated following a Change in Control
and within twelve (12) months after a Change in Control (provided that
such termination of employment constitutes a “separation from service”
within the meaning of Section 409A of the Code), in either event other
than (A) by the Company for Cause, (B) by reason of death or Disability,
or (C) by the Key Employee without Good Reason, then the Company shall pay
the Key Employee the amount described in this Section 4.1 (“Severance
Payment”).
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In
lieu of any further salary payments to the Key Employee for periods
subsequent to the Date of Termination, the Company shall pay to the Key
Employee a lump sum severance payment, in cash, equal to two (2) times the
Key Employee’s highest Base Salary (i.e., a Key Employee’s
annualized regular earnings excluding any bonus) as in effect during the
three-year period ending the last day of the month immediately prior to
the month in which the Date of Termination
occurs.
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4.2 The
payment provided in Section 4.1 hereof shall be made as soon as
practicable (but in any event not later than the 30th day) following the
Date of Termination; provided that, to the extent required to satisfy the
provisions of Section 409A(a)(2)(B)(i) of the Code, such payments shall be
made not earlier than but as soon as practicable on or in any event within
thirty (30) days after (with interest at the six-month certificate of
deposit rate published in The Wall Street Journal
on the Date of Termination (or if not published on that date, on the next
following date when published) the date that is six (6) months after the
Date of Termination (the “409A Payment
Date”)).
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5. Termination
Procedures and Compensation During Dispute.
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5.1 Notice
of Termination. After a Change in Control, any purported
termination of the Key Employee’s employment shall be communicated by
written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 7 hereof. For purposes
of this Agreement, a “Notice of Termination” shall mean a notice which
shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Key Employee’s
employment under the provision so indicated. For purposes of
this Agreement, any purported termination of the Key Employee’s employment
after a Change in Control shall be presumed to be other than for Cause
unless the Notice of Termination includes a copy of a resolution duly
adopted by the affirmative vote of not less a majority of the entire
membership of the Board at a meeting of the Board which was called and
held for the purpose of considering such termination (after reasonable
notice to the Key Employee and an opportunity for the Key Employee,
together with the Key Employee’s counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, the Key Employee was
guilty of conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in
detail.
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5.2 Date of
Termination. “Date of Termination,” with respect to any
purported termination of the Key Employee’s employment after a Change in
Control, shall mean the date specified in the Notice of Termination
(which, in the case of a termination by the Company, shall not be less
than thirty (30) days (except in the case of a termination for Cause) and,
in the case of a termination by the Key Employee, shall not be less than
fifteen (15) days nor more than sixty (60) days, respectively, from the
date such Notice of Termination is given, provided that, in the case of a
termination by the Key Employee, the Company may require a Date of
Termination earlier than that specified in the Notice of Termination upon
payment to the Key Employee of the full amount of base salary that would
have been paid to the Key Employee had the Key Employee continued
employment between the actual Date of Termination and the Date of
Termination specified in the Notice of
Termination).
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5.3 Dispute
Concerning Termination. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this Section 5.3), the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall
be extended until the earlier of (i) the date on which the Term ends or
(ii) the date on which the dispute is finally resolved, either by mutual
written agreement of the parties or by a final judgment, order or decree
of an arbitrator or a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); provided, however, that the
Date of Termination shall be extended by a notice of dispute given by the
Key Employee only if such notice is given in good faith and the Key
Employee pursues the resolution of such dispute with reasonable
diligence.
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5.4 Compensation
During Dispute. If a purported termination occurs
following a Change in Control and the Date of Termination is extended in
accordance with Section 5.3 hereof, the Company shall continue to pay the
Key Employee the full compensation in effect when the notice giving rise
to the dispute was given (including, but not limited to, salary) and
continue the Key Employee as a participant in all compensation, benefit
and insurance plans in which the Key Employee was participating when the
notice giving rise to the dispute was given, until the Date of
Termination, as determined in accordance with Section 5.3
hereof. Amounts paid under this Section 5.4 are in addition to
all other amounts due under this Agreement and shall not be offset against
or reduce any other amounts due under this
Agreement.
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6. Successors;
Binding Agreement.
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6.1 The
Company 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 the Company to be obligated to perform
this Agreement (whether by reason of express assumption by the successor
or by operation of law) in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place.
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6.2 This
Agreement shall inure to the benefit of and be enforceable by the Key
Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the
Key Employee shall die while any amount would still be payable to the Key
Employee hereunder if the Key Employee had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal
representatives or administrators of the Key Employee s
estate.
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7. Notices. For
the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States registered
mail, return receipt requested, postage prepaid, addressed, if to the Key
Employee, to the address of the Key Employee as maintained from time to
time on the payroll system of the Company and, if to the Company, to the
address set forth below, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual
receipt:
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To
the Company:
0000 Xxxx
Xxx Xxxxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Attention: General
Counsel
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8. Miscellaneous. No
provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing and signed
by the Key Employee and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of any lack of compliance with,
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. This
Agreement supersedes any other agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof
which have been made by the Key Employee or the Company. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Texas without regard to its
principles of conflicts of law. All references to sections of
the Code shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net
of any applicable withholding required under federal, state or local law
and any additional withholding to which the Key Employee has
agreed.
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9. Validity. The
invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and
effect.
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10.
Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same
instrument.
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11. Settlement of
Disputes. All claims by the Key Employee for benefits
under this Agreement shall be directed to and determined by the Board and
shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Key Employee in
writing and shall set forth the specific reasons for the denial and the
specific provisions of this Agreement relied upon. The Board
shall afford a reasonable opportunity to the Key Employee for a review of
the decision denying a claim and shall further allow the Key Employee to
appeal to the Board a decision of the Board within sixty (60) days after
notification by the Board that the Key Employee’s claim has been
denied. The Board shall render its final decision within
fifteen (15) days from the date on which the Key Employee files an appeal
with the Board.
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12.
Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated
below:
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(A) “Base Salary” shall have the meaning set forth in
Section 4.1 hereof.
(B) “Board” shall mean the Board of Directors of the
Company.
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(C) “Cause”
for termination by the Company of the Key Employee’s employment shall mean
(i) the willful and continued failure by the Key Employee to substantially
perform the Key Employee’s duties with the Company (other than any such
failure resulting from the Key Employee’s incapacity due to physical or
mental illness or any such actual or anticipated failure after the
issuance of a Notice of Termination for Good Reason by the Key Employee
pursuant to Section 5.1 hereof) after a written demand for
substantial performance is delivered to the Key Employee by the Board,
which demand specifically identifies the manner in which the Board
believes that the Key Employee has not substantially performed the Key
Employee’s duties, or (ii) the willful engaging by the Key Employee in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of clauses (i) and (ii)
of this definition, (x) no act, or failure to act, on the Key Employee’s
part shall be deemed “willful” unless done, or omitted to be done, by the
Key Employee not in good faith and without reasonable belief that the Key
Employee’s act, or failure to act, was in the best interest of the Company
and (y) in the event of a dispute concerning the application of this
provision, no claim by the Company that Cause exists shall be given effect
unless the Company establishes to the Board by clear and convincing
evidence that Cause exists.
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(D) “Change
in Control” shall be deemed to have occurred if the common stock, $.10 par
value, of the Company owned by KSA Industries, Inc., K.S. Xxxxx, Jr.,
Xxxxx X. Xxxxx, and their children and grandchildren is less in the
aggregate than twenty percent (20%) of the then-total issued and
outstanding common stock of the
Company.
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(E) “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to
time.
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(F) “Company”
shall mean Xxxxx Resources & Energy, Inc. and shall include any
successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or
otherwise.
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(G) “Date
of Termination” shall have the meaning set forth in Section 5.2
hereof.
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(H) “Effective
Date” shall have the meaning set forth in Section 2 hereof.
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(I) “Good
Reason” for termination by the Key Employee of the Key Employee’s
employment shall mean the occurrence (without the Key Employee’s express
written consent), after any Change in Control, of any one of the following
acts by the Company or subsidiary (if applicable), or failures by the
Company or subsidiary (if applicable) to act, unless such act or failure
to act is corrected prior to the Date of Termination specified in the
Notice of Termination given in respect
thereof:
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a
material reduction in the Key Employee’s authority, duties or
responsibilities, which for purposes of this Agreement shall include only
the assignment to the Key Employee of any duties substantially
inconsistent with the Key Employee’s status as a senior Key Employee
officer of the Company or subsidiary (if applicable) or a material adverse
alteration in the nature or status of the Key Employee’s responsibilities
from those in effect immediately prior to the Change in
Control;
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II
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a
material diminution in base salary as in effect immediately prior to the
Change in Control; or
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III
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a
material change in the geographic location at which the Key Employee must
perform services, which for purposes of this Agreement shall include only
the relocation of the Key Employee’s principal place of employment to a
location more than fifty (50) miles distant from the Company’s
headquarters immediately prior to the Change in Control or the Company’s
requiring the Key Employee to be based anywhere other than such principal
place of employment (or permitted relocation thereof) except for
reasonably required travel on the Company’s business. The Key
Employee’s continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder, provided that the Key Employee may not assert Good
Reason in respect of any act or failure to act otherwise constituting Good
Reason hereunder unless asserted in a Notice of Termination given in
respect thereof within ninety (90) days following the date of the first
occurrence of such act or failure to
act.
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(J) “Key
Employee” shall mean the individual named in the first paragraph of this
Agreement.
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(K) “Notice
of Termination” shall have the meaning set forth in Section 5.1
hereof.
(L) “Separation” shall have the meaning set forth in the recitals
hereof.
(M) “Severance Payment” shall have the meaning set forth in Section 4.1
hereof.
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IN
WITNESS WHEREOF, the parties have duly executed this Agreement to be effective
as of the Effective Date.
XXXXX
RESOURCES & ENERGY, INC.
By: /s/F. T.
Xxxxxxx
Name: F. T.
Xxxxxxx
Title: President &
C.O.O.
KEY
EMPLOYEE
s/sRichard X.
Xxxxxxx
XXXXXXX
X. XXXXXXX
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