Exhibit 10i
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
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Following A Change in Control.
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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."
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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
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the consecutive twenty-four (24) calendar month period
in question; or
(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.
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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
(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
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for Benefits.
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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:
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(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
(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
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(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
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,
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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;
(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
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Involuntarily Terminated, such dispute shall be decided by final and binding
arbitration as provided in this Agreement.
c. Amount and Payment of Benefits.
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(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 date
Executive is Involuntarily Terminated; and
(b) The greater of two times:
(1) The amount of bonus, if any, paid 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 calendar year prior to the date
Executive is Involuntarily Terminated.
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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
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is Involuntarily Terminated or until Executive
obtains coverage under a group insurance
arrangement or program sponsored by a new
employer, whichever occurs first; or
(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.
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(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-
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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 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
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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:
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(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:
(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 willfully 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
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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.
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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 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.
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a. Successors; Binding Agreement.
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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.
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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
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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
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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.
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
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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
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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.
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h. Severability. In the event that any provision or portion of
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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
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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
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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.
PLEASE READ CAREFULLY. THIS IS A BINDING CONTRACT,
AND AFFECTS IMPORTANT LEGAL RIGHTS.
Date:
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X. X. XxXxxxxxx
Executive
XxXXXXXXX ENERGY, INC.
Date: By:
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Xxxxxx X. Xxxxxx, Chairman
Compensation Committee of the Board
of Directors of XxXxxxxxx Energy, Inc.
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AGREEMENT
This Agreement is entered into by and between XxXxxxxxx Energy, Inc.,
(the "Company") and Xxxxxx 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:
6. 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."
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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.
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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
(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
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for Benefits.
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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 after the
effective date of 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:
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(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
(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
83
(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
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,
84
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;
(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
85
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 one and one half 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 date
Executive is Involuntarily Terminated; and
(b) The greater of one and one half times:
(1) The amount of bonus, if any, paid 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
calendar year prior to the date Executive is
Involuntarily Terminated.
86
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
eighteen (18) calendar months from the
date of Executive
87
is Involuntarily Terminated or until
Executive obtains coverage under a group
insurance arrangement or program
sponsored by a new employer, whichever
occurs first; or
(b) By payment of a lump sum amount equal to
eighteen (18) 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.
88
(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 amount thereof at the
rate of eight (8%) percent per annum, compounded daily, from the otherwise due
date of such payment or transfer.
7. 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 of 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, 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:
89
(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:
(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 willfully refuses to carry out the directions and
responsibilities assigned to Executive by the Chief Executive
Office of the Company.
8. 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
90
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.
9. 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 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.
10. 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.
91
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.
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.
92
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.
PLEASE READ CAREFULLY. THIS IS A BINDING CONTRACT,
AND AFFECTS IMPORTANT LEGAL RIGHTS.
Date: __________________ ______________________________________
Xxxxxx X Xxxxxxxxx
Executive
XxXXXXXXX ENERGY, INC.
Date: __________________ By: ___________________________________
X. X. XxXxxxxxx
Chairman and Chief Executive Officer
93
AGREEMENT
This Agreement is entered into by and between XxXxxxxxx Energy, Inc.,
(the "Company") and Xxxxxx X. Xxxxxx ("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:
11. 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
94
(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.
95
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
(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 after the
effective date of 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:
96
(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
(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
97
(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
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,
98
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;
(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
99
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 one and one half 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
date Executive is Involuntarily
Terminated; and
(b) The greater of one and one half times:
(1) The amount of bonus, if any, paid 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 calendar year prior to the
date Executive is Involuntarily
Terminated.
100
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 eighteen
(18) calendar months from the date
of Executive
101
is Involuntarily Terminated or until
Executive obtains coverage under a
group insurance arrangement or
program sponsored by a new employer,
whichever occurs first; or
(b) By payment of a lump sum amount
equal to eighteen (18) 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.
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(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 amount thereof at the
rate of eight (8%) percent per annum, compounded daily, from the otherwise due
date of such payment or transfer.
12. Payment of Benefits In The Event Of Termination Of Employment In
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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 of 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, 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:
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(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:
(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 willfully refuses to carry out the directions and
responsibilities assigned to Executive by the Chief Executive
Office of the Company.
13. Termination of Employment.
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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
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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.
14. 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 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.
15. Miscellaneous.
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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.
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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.
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.
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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.
PLEASE READ CAREFULLY. THIS IS A BINDING CONTRACT, AND AFFECTS
IMPORTANT LEGAL RIGHTS.
Date: __________________ ______________________________________
Xxxxxx X. Xxxxxx
Executive
XxXXXXXXX ENERGY, INC.
Date: __________________ By:
________________________________
X. X. XxXxxxxxx
Chairman and Chief Executive Officer
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