EXHIBIT 10.7
PIONEER NATURAL RESOURCES COMPANY
SEVERANCE AGREEMENT
This Severance Agreement (this "Agreement") is entered into, effective
August 8, 1997, between Pioneer Natural Resources Company, a Delaware
corporation ("Parent"), and Xxxxx X. Xxxxxxxxx (the "Officer"). As used in this
Agreement, the term "Company" shall be deemed to include Parent and its direct
or indirect wholly-owned subsidiaries.
Recitals
A. Officer is currently serving as an officer of Parent. Parent and Officer
desire to enter into an agreement governing certain matters relating to
Officer's employment with the Company, including compensation arrangements and
restrictions on Officer's use of Company information.
B. Parent acknowledges that Officer is a significant employee of the
Company, possessing skills and knowledge instrumental to the successful conduct
of the Company's business. Parent is willing to enter into a severance
arrangement with Officer in order to better ensure itself of the continued
management services of Officer for itself and its subsidiaries and, in part, to
induce Officer to continue to provide those services and subject himself to
certain restrictions regarding the use of Company information.
C. Officer is willing to subject himself to the restrictions mentioned
above in part to induce Parent to enter into a compensation arrangement that
provides for, among other things, the payment of certain benefits upon the
termination of Officer's employment under certain circumstances.
Now, therefore, for and in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement hereby agree as follows:
1. Position and Duties. Officer shall serve Parent as President and Chief
Executive Officer, and, in so doing, shall report to Parent's Board of Directors
(the "Board"). Officer shall have supervision and control over, and
responsibility for, such management and operational functions of the Company
currently assigned to such position, and shall have such other or different
powers and duties (including holding officer positions with one or more
subsidiaries of Parent), as may from time to time be prescribed by the Board, so
long as such functions, powers and duties are reasonable and customary for a
President and Chief Executive Officer serving an enterprise comparable to
Parent.
2. Devotion of Efforts. So long as Officer is serving the Company in the
capacities described in Section 1, he shall devote his full time, skill and
attention and his best efforts during normal business hours to the business and
affairs of the Company to the extent necessary to discharge faithfully and
efficiently his duties and responsibilities described in Section 1, except for
usual, ordinary and customary periods of vacation and absence due to illness or
other disability or such periods of leave as are approved in writing by the
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Board. The provisions of this Section shall not be construed to prevent Officer
from making investments in other businesses or enterprises, so long as such
investments do not violate the Company's conflict of interest policies or
require the provision of services by Officer to such businesses or enterprises
to an extent that would interfere in any material respect with the performance
of Officer's duties and responsibilities to the Company.
3. Compensation.
(a) Base Salary. As compensation for Officer's services, the Company shall
pay Officer an annualized base salary of a specified amount per annum (the "Base
Salary"). The Base Salary shall be payable in substantially equal semi-monthly
installments. The Compensation Committee of the Board (the "Compensation
Committee") may review the Base Salary periodically and may grant such
increases, or effect such reductions, in the Base Salary as the Compensation
Committee considers appropriate in accordance with such compensation guidelines
and policies as it may establish from time to time. The Base Salary applicable
from time to time for any period of Officer's employment with the Company,
commencing on the effective date of this Agreement, shall be identified on
Schedule A attached hereto, which shall be amended periodically to reflect any
increases or reductions effected by the Compensation Committee.
(b) Bonuses. Officer shall be entitled to receive (in addition to the Base
Salary) such annual or other periodic bonus as the Compensation Committee may
award in accordance with such compensation guidelines and policies as it may
establish from time to time.
(c) Other Benefits. Officer shall be entitled to participate in, or receive
benefits under, any employee benefit plan or other arrangement made available
now or in the future by the Company to the officers of Parent (a "Benefit
Plan"), subject to the terms, conditions and overall administration of such
Benefit Plan. Officer's participation in, or receipt of benefits under, any
Benefit Plan shall be in addition to (and not in lieu of) the Base Salary.
(d) Vacations and Holidays. Officer shall be entitled to the number of paid
vacation days in each calendar year determined by Parent from time to time for
its officers and shall be entitled to all paid holidays given by the Company to
its employees in general.
4. Relocation. Officer shall be required to perform his duties and
responsibilities hereunder at Parent's offices located in Irving, Texas. If the
Company requires Officer to perform his duties and responsibilities at any
location that is more than 50 miles from the nearest border of Irving, Texas (a
"New Location") and, within 30 days after receiving notice thereof, Officer
accepts such relocation rather than terminating his employment with the Company
pursuant to Section 5(a), the Company shall pay to Officer, or shall reimburse
Officer for (upon submission of reasonably detailed evidence thereof), such sums
as are provided for under the Relocation Policy for Exempt Employees as
established by Parent.
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5. Termination of Employment.
(a) Right to Terminate. Officer's employment with the Company (including
his officer position with Parent) shall be terminated upon the death, Disability
(as defined in subsection (f)(3) of this Section) or Normal Retirement (as
defined in subsection (f)(6) of this Section) of Officer. In addition, Officer's
employment with the Company (including his officer position with Parent) may be
terminated at any time and for any reason as a result of a dismissal or other
action by the Company or as a result of a voluntary action by Officer. Any such
termination of employment is referred to herein as a "Termination of
Employment."
(b) Notice of Termination.
(1) Any Termination of Employment that is the result of Officer's
Disability shall be communicated by the Company to Officer in a
written notice thereof. Such notice shall state that, in the opinion
of the Board, Officer is suffering from a Disability and such
Disability is the reason for the Termination of Employment.
(2) Any Termination of Employment that is the result of Officer's Normal
Retirement shall be communicated by Officer to Parent by a written
notice thereof. Such notice shall state that Officer is retiring and
shall specify the date of such Termination of Employment, which shall
be not less than 30 days following the date such notice is received by
Parent.
(3) Any Termination of Employment that is the result of a dismissal or
other action by the Company (but is not the result of Officer's
Disability) shall be communicated by the Company to Officer by a
written notice thereof. Such notice shall state whether or not (in the
Company's opinion) the Termination of Employment constitutes a
Termination for Cause (as defined in subsection (f)(7) of this
Section) and, if so, shall set forth in reasonable detail facts and
circumstances constituting a basis for such Termination for Cause.
(4) Any Termination of Employment that is the result of a voluntary action
by Officer (but is not the result of Officer's Normal Retirement)
shall be communicated by Officer to Parent by written notice thereof.
Such notice shall state whether or not (in Officer's opinion) the
Termination of Employment constitutes a Termination for Good Reason
(as defined in subsection (f)(8) of this Section) and, if so, shall
set forth in reasonable detail the facts and circumstances claimed as
the basis for such Termination for Good Reason. Such notice shall also
specify the date of such Termination of Employment, which (if the
Termination of Employment does not constitute a Termination for Good
Reason) shall be not less than 30 days following the date such notice
is received by Parent.
(c) Date of Termination of Employment. For purposes of this Agreement, the
date of a Termination of Employment shall be (1) if the Termination of
Employment is the result of Officer's death, the date of such death, (2) if the
Termination of Employment is the result of Officer's Disability, the date on
which the notice described in subsection (b) (1) of this Section is received by
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Officer, (3) if the Termination of Employment is the result of Officer's Normal
Retirement, the date specified in the notice described in subsection (b)(2) of
this Section, (4) if the Termination of Employment is the result of a dismissal
or other action by the Company (but is not the result of Officer's Disability),
the date on which the notice described in subsection (b)(3) of this Section is
received by the Officer, and (5) if the Termination of Employment is the result
of a voluntary action by Officer (but is not the result of Officer's Normal
Retirement), the date specified in the notice described in subsection (b)(4) of
this Section.
(d) Payments Due Upon Termination of Employment. The provisions of
subsections (d)(1) and (d)(3) of this Section shall apply to any Termination of
Employment, whether occurring prior to, at the time of or at any time following
a Change in Control (as defined in subsection (f)(2) of this Section); and the
provisions of subsection (d)(2) of this Section shall apply only to any
Termination of Employment prior to a Change in Control.
(1) Death, Disability or Normal Retirement. If the Termination of
Employment is the result of Officer's death, Disability or Normal
Retirement, the Company shall pay the following amounts to Officer (or
his estate or personal representative):
(A) The Base Salary (at the rate in effect on the date of such
Termination of Employment, as identified on Schedule A) through
and including the date of such Termination of Employment, to the
extent not already paid, which amount shall be paid in cash on
the first normal semi-monthly Base Salary payment date
immediately succeeding the date of such Termination of
Employment;
(B) Any amounts arising from Officer's participation in, or benefits
under, any Benefit Plan through and including the date of such
Termination of Employment, which amounts shall be payable in
accordance with the terms and conditions of such Benefit Plan;
and
(C) An amount equal to one full year's Base Salary (at the rate in
effect on the date of such Termination of Employment, as
identified on Schedule A), which amount shall be paid in cash
within 30 days following the date of such Termination of
Employment.
(2) Termination for Good Reason or Not for Cause. If the Termination of
Employment (i) is the result of a dismissal or other action by the
Company (but is not the result of Officer's Disability) and does not
constitute a Termination for Cause or (ii) is the result of a
voluntary action by Officer (but is not the result of Officer's Normal
Retirement) and constitutes a Termination for Good Reason, the Company
shall pay the following amounts, and provide the following benefits to
Officer:
(A) The Base Salary (at the rate in effect on the date of such
Termination of Employment, as identified on Schedule A) through
and including the date of such Termination of Employment, which
amount shall be paid in cash on the date of such Termination of
Employment;
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(B) Any amount arising from Officer's participation in, or benefits
under, any Benefit Plan through and including the date of such
Termination of Employment, which amounts shall be payable in
accordance with the terms and conditions of such Benefit Plan;
(C) An amount equal to one full year's Base Salary (at the rate in
effect on the date of such Termination of Employment, as
identified on Schedule A), which amount shall be paid in cash on
the date of such Termination of Employment;
(D) For a period of one year following the date of such Termination
of Employment, a continuation of all health insurance coverage
applicable at the time of such Termination of Employment to
Officer and his immediate family under any Benefit Plan; and
(E) With respect to a Termination of Employment described in Section
5(d)(2)(i), an amount equal to one-twelfth (1/12) of the
Officer's Base Salary, which amount shall be paid in cash on the
date of such Termination of Employment.
(3) Termination for Cause or Not for Good Reason. If the Termination of
Employment (i) is the result of a dismissal or other action by the
Company (but is not the result of Officer's Disability) and
constitutes a Termination for Cause or (ii) is the result of a
voluntary action by Officer (but is not the result of Officer's Normal
Retirement) and does not constitute a Termination for Good Reason, the
Company shall pay the following amounts to Officer:
(A) The Base Salary (at the rate in effect on the date of such
Termination of Employment, as identified on Schedule A) through
and including the date of such Termination of Employment, which
amount shall be paid in cash on the first normal semi-monthly
Base Salary payment date immediately succeeding the date of such
Termination of Employment; and
(B) Any amounts arising from Officer's participation in, or benefits
under, any Benefit Plan through and including the date of such
Termination of Employment, which amounts shall be payable in
accordance with the terms and conditions of such Benefit Plan.
(4) Payment Contingent on Release. If Officer's Termination of Employment
is prior to a Change in Control (and only in that event), and Officer
is otherwise entitled to the payment provided in subsection (d)(2) of
this Section, then such payment shall be subject to, and contingent
upon, Officer's execution of a General Release Agreement in favor of
the Company in substantially the form and substance as the one
attached hereto as Schedule B.
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(e) Additional Provisions Applicable Upon Termination of Employment
Concurrent with or Following Change in Control. The following provisions shall
apply to any Termination of Employment occurring at the time of, or at any time
within one year following, a Change in Control.
(1) Termination for Good Reason or Not for Cause. If the Termination of
Employment (i) is the result of a dismissal or other action by the
Company (but is not the result of Officer's Disability) and does not
constitute a Termination for Cause, or (ii) is the result of a
voluntary action by Officer (but is not the result of Officer's Normal
Retirement) and constitutes a Termination for Good Reason, the Company
shall pay the following amounts, and provide the following benefits,
to Officer:
(A) The Base Salary (at the rate in effect on the date of such
Termination of Employment, as identified on Schedule A) through
and including the date of such Termination of Employment, which
amount shall be paid in cash on the date of such Termination of
Employment;
(B) A lump sum in cash equal to 2.99 times the sum of (i) Officer's
Base Salary (at the rate in effect on the date of such
Termination of Employment, as identified on Schedule A), plus
(ii) the greater of the then current year's targeted bonus or
actual bonus award (if applicable) for Officer, which amount
shall be paid in cash on the date of such Termination of
Employment;
(C) Any amount arising from Officer's participation in, or benefits
under, any Benefit Plan through and including the date of such
Termination of Employment, which amounts shall be payable in
accordance with the terms and conditions of such Benefit Plan;
(D) For a period of one year following the date of such Termination
of Employment, a continuation of all health insurance coverage
applicable at the time of such Termination of Employment to
Officer and his immediate family under any Benefit Plan; and
(E) With respect to a Termination of Employment described in Section
5(e)(1)(i), an amount equal to one-twelfth (1/12) of the
Officer's Base Salary, which amount shall be paid in cash on the
date of such Termination of Employment.
(2) Voluntary Termination Not for Good Reason. If the Termination of
Employment is the result of a voluntary action by Officer, does not
constitute a Termination for Good Reason and either (A) occurs at
least six months, but not more than one year, following a Change in
Control or (B) occurs at the time of, or at any time within one year
following, a Change in Control and following the Company's requiring
the Officer to perform his duties and responsibilities hereunder at a
New Location, which relocation is not accepted by Officer within 30
days after receiving notice thereof, then the Company shall pay to
Officer all amounts that would be payable pursuant to subsection
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(d)(2) of this Section had such Termination of Employment occurred
prior to the Change in Control and constituted a Termination for Good
Reason.
(3) Excise Tax and Gross-Up Payment.
(A) If any portion of such compensation constitutes a parachute
payment (a "Payment" and is subject to the Excise Tax
(hereinafter defined), then Company shall, in addition to
providing such compensation, pay the Gross-Up Payment
(hereinafter defined) to Officer in the manner described below.
For purposes of this Agreement, (i) "Excise Tax" shall mean the
tax imposed pursuant to section 4999 of the Code and any interest
or penalties incurred by the Officer with respect to such Excise
Tax, and (ii) "Gross-Up Payment" shall mean, with respect to any
compensation provided to the Officer by Company (including
without limitation the payments provided for under this Agreement
and any payments to the Officer under any employee benefit plan,
including without limitation the Company's Long-term Incentive
Plan, or other arrangement) that is subject to the Excise Tax, an
amount that, after reduction of the amount of such Gross-Up
Payment for all federal, state, and local tax (including any
interest or penalties imposed with respect to such taxes) to
which the Gross-Up Payment is subject (including the Excise Tax
to which the Gross-Up Payment is subject), is equal to the amount
of the Excise Tax to which such compensation is subject. For
purposes of determining the amount of any Gross-Up Payment,
Officer shall be deemed to pay federal income taxes at the
highest marginal rate of taxation and state and local taxes, if
applicable, at the highest marginal rate of taxation in the state
and locality of residence of the Officer on the Date of
Termination, net of the maximum reduction in federal income taxes
that could be obtained from deduction of such state and local
taxes, if any.
(B) Subject to the provisions of subsection 5(e)(3)(C), all
determinations required to be made under this subsection 5(e)(3),
including whether and when a Gross-Up Payment is required, the
amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by the
accounting firm which performed the audit of the Company for the
year preceding the year in which the Change in Control occurred
(the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Officer within 15
business days of the receipt of notice from the Officer that
there has been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group
effecting the Change in Control, the Officer shall appoint
another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees
and expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this
subsection 5(e)(3), shall be paid by the Company to the Officer
within five days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise
Tax is payable by the Officer, it shall furnish the Officer with
a written opinion that failure to report the Excise Tax on the
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Officer's applicable federal income or excise tax return would
not result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm shall be binding upon
the Company and the Officer.
(C) The Officer shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such
notification shall be given no later than ten business days after
the Officer is informed in writing of such claim. The Officer
shall not pay such claim prior to the expiration of the 30-day
period following the date on which it gives such notice to the
Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the
Company notifies the Officer in writing prior to the expiration
of such period that it desires to contest such claim, (i) the
Officer shall accept legal representation with respect to such
claim by an attorney reasonably selected by the Company, (ii)
cooperate with the Company in good faith in order to effectively
contest such claim, and (iii) permit the Company to participate
in any proceedings relating to such claim; provided, however, the
Company shall bear and pay directly all costs and expenses
(including legal and accounting fees and additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold the Officer harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. The Company
shall control all proceedings taken in connection with such
contest to the extent relating to issues impacting whether a
Gross-Up Payment is payable hereunder. The Officer shall be
entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority in connection with such contest.
(D) If any such claim referred to in subsection 5(e)(3)(C) is made by
the Internal Revenue Service and the Company does not request the
Officer to contest the claim within the 30-day period following
notice of the claim, the Company shall pay to the Officer the
amount of any Gross-Up Payment owed to the Officer, but not
previously paid pursuant to subsection 5(e)(3)(B), immediately
upon the expiration of such 30-day period. If any such claim is
made by the Internal Revenue Service and the Company requests the
Officer to contest such claim, the Company shall pay to the
Officer the amount of any Gross-Up Payment owed to the Officer,
but not previously paid under the provisions of subsection
5(e)(3)(B), within five days of a Final Determination of the
liability of the Officer for such Excise Tax. For purposes of
this Agreement, a "Final Determination" shall be deemed to occur
with respect to a claim when (i) there is a decision, judgment,
decree or other order by any court of competent jurisdiction,
which decision, judgment, decree or other order has become final,
i.e., all allowable appeals have been exhausted by either party
to the action, (ii) there is a closing agreement made under
Section 7121 of the Code, or (iii) the time for instituting a
claim for refund has expired, or if a claim was filed, the time
for instituting suit with respect thereto has expired.
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(4) Letter of Credit. Following a Change in Control, Parent (within 10
days following receipt of Officer's written request therefor), at its
sole cost and expense, shall post an irrevocable letter of credit with
a banking institution reasonably acceptable to Officer in an amount
equal to the maximum amount of the aggregate cash payments that would
be made to Officer pursuant to the provisions of paragraph (1) of this
subsection if the provisions of paragraph (1) of this subsection were
to become applicable. Such letter of credit shall contain provisions
making the funds available thereunder to Officer by Officer's drafts
drawn at sight at any time and from time to time. Such provisions
shall permit Officer to present drafts (including drafts for partial
draws) drawn at sight by presentation by Officer to the applicable
banking institution of a written statement to the effect that the
Company is in default on a payment to be made to Officer pursuant to
the terms of this Agreement (setting forth the amount of such payment
in default) and that Officer is not in default under, and has not
breached the terms of, this Agreement. Parent shall continue to keep
such letter of credit in place until the expiration of at least 60
days following the date of a Termination of Employment occurring after
the Change in Control.
(5) Retirement Benefits Funded. Upon a Change in Control, any accrued but
unfunded retirement benefit obligations to Officer under any then
existing retirement plan shall be fully funded to a Rabbi Trust for
the benefit of such Officer, which amount shall be paid in cash on the
date of such Change in Control.
(f) Certain Definitions. As used in the Section and elsewhere in this
Agreement, the following terms shall have the respective meanings indicated:
(1) "Across-the-Board Salary Reduction" shall mean a reduction in the Base
Salary that is a part of, and is at a rate consistent with, a
reduction in the base salaries paid to substantially all officers of
Parent.
(2) "Change in Control" shall mean the occurrence of any of the following
events:
(A) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the"Exchange Act")) (a"Person")
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (x)
the then outstanding shares of common stock of Parent
(the"Outstanding Parent Common Stock") or (y) the combined voting
power of the then outstanding voting securities of Parent
entitled to vote generally in the election of directors
(the"Outstanding Parent Voting Securities"); provided, however,
that for purposes of this subsection (A), the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from Parent, (ii) any acquisition by Parent,
(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Parent or any corporation
controlled by Parent or (iv) any acquisition by any corporation
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pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of paragraph (C) below; or
(B) Members of the Incumbent Board cease for any reason to constitute
at least a majority of the Board; or
(C) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of
Parent or an acquisition of assets of another corporation
(a"Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Parent Common Stock and
Outstanding Parent Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns Parent or all or substantially all of Parent's assets either
directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Parent Common Stock
and Outstanding Parent Voting Securities, as the case may be,
(ii) no Person (excluding any employee benefit plan (or related
trust) of Parent or the corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination
or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such
ownership results solely from ownership of Parent that existed
prior to the Business Combination and (iii) at least a majority
of the members of the board of directors of the corporation
resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(D) Approval by the shareholders of Parent of a complete liquidation
or dissolution of Parent; or
(E) Consummation of a Business Combination not otherwise constituting
a Change of Control but, pursuant to which the Person serving as
Chief Executive Officer at the time of the execution of the
initial agreement is removed from, or replaced in, such capacity
with respect to the corporation resulting from such Business
Combination.
(3) "Disability" shall mean Officer's physical or mental impairment or
incapacity of sufficient severity that, in the opinion of the Board,
either (A) Officer is unable to continue to perform his duties and
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responsibilities hereunder or (B) Officer's condition entitles him to
disability benefits under any Benefit Plan providing for the payment
thereof.
(4) "Excessive Salary Reduction" shall mean (A) a reduction in the Base
Salary that is not an Across-the-Board Salary Reduction (as defined in
paragraph (1) of this subsection) and that, when combined with the net
effect of all prior increases and reductions in the Base Salary (other
than prior reductions that were Across-the-Board Salary Reductions),
results in the Base Salary being less than 80% of the highest Base
Salary to which Officer has ever been subject pursuant to this
Agreement (as identified on Schedule A) or (B) a reduction in the Base
Salary (whether or nor an Across-the-Board Salary Reduction) that,
when combined with the net effect of all prior increases and
reductions in the Base Salary (whether or not Across-the-Board Salary
Reductions), results in the Base Salary being less than 65% of the
highest Base Salary to which Officer has ever been subject pursuant to
this Agreement (as identified on Schedule A).
(5) "Incumbent Board" means the individuals who, as of the date of this
Agreement, constitute the Board and any other individual who becomes a
director of Parent after that date and whose election or nomination
for election by Parent's shareholders was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Incumbent Board.
(6) "Normal Retirement" shall have the meaning given to such term in
Section 1.27 of the Long-term Incentive Plan.
(7) "Termination for Cause" shall mean a Termination of Employment as a
result of a dismissal or other action by the Company following (A)
Officer's continued failure to substantially perform his duties and
responsibilities as described in Section 1 (other than any such
failure resulting from Officer's physical or mental impairment or
incapacity) after written demand for substantial performance is
delivered by the Board or the Chief Executive Officer specifically
identifying the manner in which the Board or the Chief Executive
Officer, as the case may be, believes Officer has not substantially
performed such duties and responsibilities, (B) Officer's engaging in
misconduct that is materially injurious to the Company, monetarily or
otherwise, or (C) a material violation by Officer of the provisions of
Section 6. For purposes of clause (B) of this paragraph, an act, or
failure to act, on Officer's part shall be considered"misconduct" if
done, or omitted, by Officer not in good faith and without reasonable
belief that such act, or failure to act, was in the best interest of
the Company.
(8) "Termination for Good Reason" shall mean a Termination of Employment
as a result of voluntary action by Officer within 30 days after
receiving notice of (A) the demotion of the Officer to an officer
position junior to the officer position specified in Section 1 or to a
non-officer position, (B) an Excessive Salary Reduction (as defined in
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paragraph (4) of this subsection), or (C) the failure by Parent to
obtain the assumption agreement described in Section 7(f) on or prior
to a succession described in Section 7(f).
6. Nonpublic Information.
(a) Officer hereby acknowledges that, in connection with his employment
with the Company, he has received, and will continue to receive, various
information regarding the Company and its business, operations and affairs. All
such information, to the extent not publicly available other than as a result of
a disclosure by Officer in violation of this Agreement, is referred to herein as
the"Nonpublic Information."
(b) Officer hereby agrees that, from and after the date hereof and
continuing until three (3) years following a Termination of Employment, he will
keep all Nonpublic Information confidential and will not, without the prior
written consent of the Board, disclose any Nonpublic Information in any manner
whatsoever or use any Nonpublic Information other than in connection with the
performance of his services to the Company hereunder; provided, however, that
the provisions of this subsection shall not prevent Officer from (1) disclosing
any Nonpublic Information to any other employee of the Company or to any
representative or agent of the Company (such as an independent accountant,
engineer, attorney or financial advisor) when such disclosure is reasonably
necessary or appropriate (in Officer's judgment) in connection with the
performance by Officer of his duties and responsibilities hereunder or (2)
disclosing any Nonpublic Information as required by applicable law, rule,
regulation or legal process (but only after compliance with the provisions of
subsection (c) of this Section).
(c) If Officer is requested pursuant to, or required by, applicable law,
rule, regulation or legal process to disclose any Nonpublic Information, Officer
will notify Parent promptly so that the Company may seek a protective order or
other appropriate remedy or, in the Company's sole discretion, waive compliance
with the terms of this Section, and Officer will fully cooperate in any attempt
by the Company to obtain any such protective order or other remedy. If no such
protective order or other remedy is obtained, or the Company waives compliance
with the terms of this Section, Officer will furnish or disclose only that
portion of the Nonpublic Information as is legally required and will exercise
all reasonable efforts to obtain reliable assurance that confidential treatment
will be accorded the Nonpublic Information that is so disclosed.
7. Miscellaneous Provisions.
(a) Mitigation. Officer shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
and the amount of any payment provided for in this Agreement shall not be
reduced by any compensation earned by Officer as the result of employment by
another employer after the date of any Termination of Employment or otherwise.
12
(b) Interest. Until paid, all past due amounts required to be paid by the
Company to Officer under any provision of this Agreement shall bear interest at
the highest non-usurious rate permitted by applicable federal, state or local
law.
(c) Equitable Relief Available. Officer acknowledges that remedies at law
may be inadequate to protect the Company against any actual or threatened breach
of the provisions of Section 6 by Officer. Accordingly, without prejudice to any
other rights or remedies otherwise available to the Company, Officer agrees that
the Company shall have the right to equitable and injunctive relief to prevent
any breach of the provisions of Section 6, as well as to such damages or other
relief as may be available to the Company by reason of any such breach as does
occur.
(d) Breach Not a Defense. The representations and covenants on the part of
Officer contained in Section 6 shall be construed as ancillary to and
independent of any other provision of this Agreement, and the existence of any
claim or cause of action of Officer against the Company or any officer,
director, stockholder or representative of the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of the covenants on the part of Officer contained in Section 6.
(e) Notices. Any notice or other communication called for by the terms of
this Agreement shall be in writing and either delivered personally or by
registered or certified mail (postage prepaid and return receipt requested) and
shall be deemed given when received at the following addresses (or at such other
address for a party as shall be specified by like notice):
(1) If to Parent or the Company, 0000 Xxxxxxxx Xxxxxx West, 0000 Xxxxx
X'Xxxxxx Xxxxxxxxx, Xxxxxx, Xxxxx 00000, Attention: General Counsel.
(2) If to Officer, the address of Officer set forth below Officer's
signature on the signature page of this Agreement, and
marked"Confidential."
(f) Assumption by Successor of Parent. Parent shall require any successor
(whether direct or indirect) to all or substantially all of the business or
assets of Parent (whether by purchase of securities, merger, consolidation, sale
of assets or otherwise), by a written agreement in form and substance
satisfactory to Officer, to expressly assume and agree to perform the
obligations to be performed by Parent or the Company under this Agreement in the
same manner and to the same extent that Parent or the Company would be required
to perform if no such succession had taken place.
(g) Assignment.
(1) Except pursuant to an assumption by a successor described in
subsection (f) of this Section, the rights and obligations of the
Company pursuant to this Agreement may not be assigned, in whole or in
part, by the Company to any other person or entity without the express
written consent of Officer.
13
(2) The rights and obligations of Officer pursuant to this Agreement may
not be assigned, in whole or in part, by Officer to any other person
or entity without the express written consent of the Board.
(h) Successors. This Agreement shall be binding on, and shall inure to the
benefit of, the Company, Officer and their respective successors, permitted
assigns, personal and legal representatives, executors, administrators, heirs,
distributees, devisees and legatees, as applicable.
(i) Amendment and Waivers. Except as hereinafter provided, no provision of
this Agreement may be amended or otherwise modified, and no right of any party
to this Agreement may be waived, unless such amendment, modification or waiver
is agreed to in a written instrument signed by Officer and Parent (and any dated
and signed Schedule A, as described in subsection (o) of this Section, shall
constitute such an instrument). Beginning on the fifth anniversary of the date
hereof, unless a Change of Control shall have occurred or be pending or
contemplated, Parent may amend, modify, or waive any provision of, or terminate,
this Agreement upon sixty (60) days notice without the consent of Officer;
provided that any such amendment, modification, waiver or termination shall be
made to all severance agreements of Parent covering all officers of Parent
similarly situated to Officer. No waiver by either party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
the other party hereto shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
(j) Complete Agreement. The provisions of this Agreement constitute the
complete understanding and agreement among the parties with respect to the
subject matter hereof, and no agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
(k) Governing Law. THIS AGREEMENT IS BEING MADE AND EXECUTED IN, AND IS
INTENDED TO BE PERFORMED IN, THE STATE OF TEXAS AND SHALL BE GOVERNED,
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF
THE STATE OF TEXAS.
(l) Attorney Fees. All legal fees and other costs incurred by Officer in
connection with the resolution of any dispute or controversy under or in
connection with this Agreement shall be reimbursed by the Company to Officer, if
such dispute or controversy is resolved in favor of Officer. The Company shall
be responsible for, and shall pay, all legal fees and other costs incurred by
the Company in connection with the resolution of any dispute or controversy
under or in connection with this Agreement, regardless of whether such dispute
or controversy is resolved in favor of the Company or Officer.
(m) 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 agreement.
14
(n) Construction. The captions of the Sections, subsections and paragraphs
of this Agreement have been inserted as a matter of convenience of reference
only and shall not affect the meaning or construction of any of the terms or
provisions of this Agreement. Unless otherwise specified, references in this
Agreement to a"Section,""subsection,""paragraph,""subparagraph" or"Schedule"
shall be considered to be references to the appropriate Section, subsection,
paragraph, subparagraph or Schedule, respectively, of this Agreement. Unless the
context otherwise requires, all words used in this Agreement in any gender shall
include the masculine, feminine and neuter gender, all singular words shall
include the plural and all plural words shall include the singular. As used in
this Agreement, the term"including" shall mean"including, but not limited to."
(o) Schedule A. Schedule A may be replaced at any time and from time to
time to reflect a change in the Base Salary; provided, however, that no Schedule
A attached hereto shall be effective unless it contains a date and bears a
signature of approval on behalf of Officer and a signature of approval on behalf
of Parent; and provided further, however, that if at any time two or more dated
and signed copies of Schedule A conflict with each other, the later dated of
such copies shall control.
(p) Validity and Severability. If any term or provision of this Agreement
is held to be illegal, invalid or unenforceable under the present or future laws
effective during the term of this Agreement, (1) such term or provision shall be
fully severable, (2) this Agreement shall be construed and enforced as if such
term or provision had never comprised a part of this Agreement and (3) the
remaining terms and provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable term
or provision or by its severance from this Agreement. Furthermore, in lieu of
such illegal, invalid or unenforceable term or provision, there shall be added
automatically as a part of this Agreement, a term or provision as similar to
such illegal, invalid or unenforceable term or provision as may be possible and
be legal, valid and enforceable.
(q) Execution by Parent. The execution of this Agreement by Parent shall
constitute an acceptance of, and an agreement to be bound by, the terms and
provisions of this Agreement by Parent and each of its direct and indirect
wholly-owned subsidiaries, and Parent hereby agrees to cause each of its direct
and indirect wholly-owned subsidiaries, now and in the future, to fully comply
with all obligations applicable to the Company pursuant to the terms of this
Agreement.
(r) Effect on Other Rights. Xxxxxx & Xxxxxxx Petroleum Company, a Delaware
corporation ("PPPC"), and Officer have previously entered into that certain
Severance Agreement effective January 1, 1996 (the"Original Severance
Agreement"). Effective as of the date hereof, PPPC has merged with and into MESA
Operating Co., a Delaware corporation and a direct wholly owned subsidiary of
Parent ("Merger Sub"), with Merger Sub being the surviving entity of such merger
(the"Merger"). Parent hereby expressly assumes and agrees to perform PPPC's
obligations under Section 5(e) of the Original Severance Agreement in the same
manner and to the same extent that PPPC would be required to perform such
obligations, and Officer hereby acknowledges that the form and substance of such
assumption is satisfactory to Officer. Each of Parent and Officer hereby
acknowledges, covenants and agrees that (i) the Merger constitutes a"Change in
Control" (as such term is defined in the Original Severance Agreement), (ii)
15
the terms and provisions of this Agreement are not intended to, shall not, and
shall not be deemed to, supersede, limit or in any way affect any of Officer's
rights under Section 5(e) of the Original Severance Agreement to receive certain
payments as a result of a termination of Officer's employment with PPPC
occurring within one year after consummation of the Merger (a"MESA Merger
Termination"), and (iii) other than as set forth in Section 5(e) of the Original
Severance Agreement, Officer shall not be entitled to receive any payment under
this Agreement as a result of a MESA Merger Termination. Parent and Officer
hereby agree that, except for the rights, duties and obligations of Parent and
Officer arising as a result of a MESA Merger Termination as set forth in Section
5(e) of the Original Severance Agreement, the Original Severance Agreement is
hereby completely and irrevocably terminated in all respects effective as of the
date hereof, and all terms and provisions of the Original Severance Agreement
other than Section 5(e) as such section relates to the MESA Merger Termination
are replaced and superseded in all respects by the terms and provisions of this
Agreement.
(SIGNATURE PAGE ATTACHED)
16
In witness whereof, the parties have executed this Agreement effective as
of the date first written above.
PIONEER NATURAL RESOURCES COMPANY
By: /s/ Xxxx X. Xxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
OFFICER:
/s/ Xxxxx X. Xxxxxxxxx
-------------------------
Printed Name:
Address:
----------------------------------
----------------------------------
[Signature Page - Severance Agreement - Page 1 of 1]
CONSENT OF PIONEER NATURAL RESOURCES USA, INC.
Pioneer Natural Resources USA, Inc., a Delaware corporation formerly named
MESA Operating Co. into which Xxxxxx & Xxxxxxx Petroleum Company was merged,
hereby consents to the partial termination, replacement and supersession of the
Original Severance Agreement (as defined in Section 7(r) of the foregoing
Severance Agreement) to the extent provided in Section 7(r) of the foregoing
Severance Agreement.
PIONEER NATURAL RESOURCES USA, INC.
By: /s/ Xxxx X. Xxxxxxx
------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
[Signature Page - Severance Agreement - Page 1 of 1]
Schedule A
Attached to Severance Agreement between
Pioneer Natural Resources Company and
Xxxxx X. Xxxxxxxxx
BASE Salary:
Effective Date Amount
August 8, 1997 $600,000
Dated and Approved as of 8/8/97 :
PIONEER NATURAL RESOURCES OFFICER:
COMPANY
By: /s/ Xxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxxxx
--------------------------- --------------------------------
Name: Xxxx X. Xxxxxxx Printed Name:
Title: Executive Vice President -------------------
A-1
Schedule B
GENERAL RELEASE AGREEMENT
NOTICE: Various state and federal laws and regulations prohibit employment
discrimination based on age, race, color, religion, sex, national origin,
disability, citizenship, and membership or application for membership in a
uniformed service. These laws are enforced through the Equal Employment
Opportunity Commission, U.S. Department of Labor, Texas Commission on Human
Rights, and other federal and state agencies. You are advised to discuss this
release with your attorney. In any event, you should thoroughly review and
understand the effect of this document before signing it. Therefore, please take
this General Release Agreement home and carefully consider it for at least five
days before signing it. In accordance with the requirements of the Older Workers
Benefit Protection Act, you are allowed at least 45 days from the date of your
receipt of this document and the accompanying explanatory letter to consider the
offer made to you and to return an executed copy of this form to the Vice
President Administration. Additionally, after you have executed this form, you
have seven days to reconsider and revoke your agreement.
GENERAL RELEASE: In consideration of my acceptance of the payments and benefits
offered to me under Section 5(d)(2)(c) of the Severance Agreement, I hereby
release and discharge Pioneer Natural Resources Company and its subsidiaries and
affiliates (the"Company"), and the officers, directors, employees, agents,
successors, and assigns of such entities (collectively the"Released Parties")
from any and all claims, liabilities, demands, and causes of action, known or
unknown, fixed or contingent, which I have or claim against them as a result of
the termination of my employment, including but not limited to claims arising
under federal, state, or local laws prohibiting employment discrimination,
including the Age Discrimination in Employment Act, or claims growing out of any
legal restrictions, contractual or otherwise, on the Company's right to
terminate the employment of its employees, and I do hereby agree not to file a
lawsuit to assert such claims. I further acknowledge and agree that by accepting
the Severance Agreement benefits, I have given up my right to file any
complaint, lawsuit, or other legal action against any of the Released Parties
growing out of, connected with, or relating in any way to my employment or the
termination of my employment with the Company. Further in consideration of the
payments and benefits offered to me under the Severance Agreement, I acknowledge
and agree that the Released Parties may recover from me any loss, including
attorney's fees and costs of defending against any claim brought by me, that
they may suffer arising out of my breach of this General Release Agreement.
I understand that this General Release Agreement is final and binding, and
I agree not to challenge its enforceability. If I do challenge the
enforceability of this General Release Agreement, I agree initially to tender to
the Company all money received pursuant to the Severance Agreement, and invite
the Company to retain such money and agree with me to cancel this General
Release Agreement. In the event the Company accepts this offer, the Company
shall retain such money and this General Release Agreement will be void. In the
event the Company does not accept such offer, the Company shall so notify me,
and shall place such money in an interest-bearing escrow account pending the
B-1
resolution of any dispute as to whether this General Release Agreement shall be
set aside and/or otherwise be rendered unenforceable.
I acknowledge and agree that the Company has no legal obligation to provide
the payment under Section 5(d)(2)(c) of the Severance Agreement offered to me,
and my acceptance of the obligations and attendant additional payment as
described therein constitutes my agreement to all terms and conditions set forth
in this General Release Agreement, and are in consideration of the promises and
undertakings of the Company pursuant to the Severance Agreement. I further
acknowledge and agree that for unemployment compensation purposes, the payments
I receive under the Severance Agreement shall be considered additional wages in
lieu of notice; and that, accordingly, I may be ineligible to receive
unemployment compensation benefits for an equivalent period of time.
This General Release Agreement does not have any effect on any claim I may
have against the Released Parties unrelated to the termination of my employment
or with respect to any rights or claims that may arise after the date this
General Release Agreement is executed.
I have carefully read and fully understand all of the provisions of this
General Release. I further acknowledge that entering into this General Release
Agreement is knowing and voluntary on my part, that I have had a reasonable time
to deliberate regarding its terms, and that I have had the right to consult with
an attorney if I so desired.
I acknowledge that I initially executed a General Release Agreement,
containing the same terms and conditions as this General Release Agreement, more
than seven days prior to the date appearing below and placed the General Release
Agreement in the mail addressed to the Company. I further acknowledge that I
have had at least seven days since the date of execution of the originally
executed General Release Agreement in which to reconsider and revoke my
agreement to the terms and conditions set forth in this General Release
Agreement.
Date signed: ----------------- -----------------------------
Signature of Officer
Date signed: ----------------- -----------------------------
Signature of Officer
B-2
Schedule I
I. Xxx Xxxxxxx
Xxxxxxx X. Xxxx
Xxxxxx X. Xxxxxxxxxx
Xxx Xxxxxxx
Xxxx X. Xxxxxxx
Xxx X. Xxxx
M. Xxxxxxx Xxxxx
B-3
