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SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT (the "Agreement"), dated as of July 1, 1998
is between XXX XXXXX, INC., a Delaware corporation (the "Company"), and
________________________ ("Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes the possibility of a proposed or threatened transaction or
transactions, the aggregate effect of which may be a Change in Control or an
Asset Acquisition (both as defined in Section 2(c) hereof) (each of which is
referred to below as a "Transaction");
WHEREAS, the Board has determined that, pending the consideration of
such a Transaction, it is imperative that the Company and the Board be able to
rely upon Executive to continue in Executive's position, and that the Company
be able to receive and rely upon Executive's advice, if requested, as to the
best interests of the Company and its shareholders without concern that
Executive might be distracted by the personal uncertainties and risks created
by such proposed Transaction; and
WHEREAS, the Board has authorized the Company to enter into a
severance agreement in the form hereof with Executive.
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of Executive and the availability of Executive's advice and counsel
notwithstanding the possibility, threat or occurrence of any Transaction, and
to induce Executive to remain in the employ of the Company, and for other good
and valuable consideration, the Company and Executive agree as follows:
1. SERVICES DURING CERTAIN EVENTS.
(a) Executive agrees that Executive will not voluntarily
leave the employ of the Company, and will render the services
contemplated in the recitals to this Agreement, during the pendency of
any Transaction and until such Transaction has been consummated or the
discussions relating to any such Transaction are terminated.
(b) In the event an Asset Acquisition with a Person other
than the Company is proposed or a Person begins a tender or exchange
offer or takes other steps to effect a Change in Control, Executive
agrees that Executive will not voluntarily leave the employ of the
Company, and will render the services contemplated in the recitals to
this Agreement, until such Asset Acquisition is effected or terminated
or such Person has abandoned or terminated its efforts to effect a
Change in Control or until a Change in Control has occurred.
2. TERMINATION FOLLOWING CERTAIN EVENTS. Except as provided
in Section 4 hereof, the Company will provide or cause to be provided to
Executive the rights and benefits described in Section 3 hereof in the event
that Executive's employment by the
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Company is terminated within two (2) years following an Asset Acquisition or a
Change in Control (or, if prior to an Asset Acquisition or a Change in Control,
the Executive's employment by the Company is terminated and if it is reasonably
demonstrated by the Executive that such termination of employment was at the
request of a third party who has taken steps reasonably calculated to effect an
Asset Acquisition or a Change in Control or otherwise arose in connection with
or anticipation of an Asset Acquisition or a Change in Control) and such
termination is instituted:
(a) by the Company for reasons other than:
(i) (as defined in Section 4(a) hereof),
(ii) Executive's death or disability, or
(iii) Executive's retirement on or after
reaching age 65 ("Normal Retirement Date"), or
(b) by Executive following the occurrence of any of the
following events without Executive's written consent (but in no event
upon termination for cause, as defined in Section 4(a) hereof, by the
Company):
(i) the assignment of Executive to any duties or
responsibilities that are materially inconsistent with
Executive's position and status with the Company,
(ii) the reduction of Executive's Earnings (as
defined in Section 3(a)) (including any deferred portion
thereof),
(iii) a diminution in (A) Executive's eligibility
to participate in bonus, stock option, incentive award and
other compensation plans or (B) employee benefits (including
but not limited to medical, dental, life insurance, long term
disability and supplemental employee retirement plans) and
perquisites applicable to Executive, or
(iv) a change in the location of Executive's
principal place of employment by the Company from the location
where Executive was principally employed,
each such event determined as compared to Executive's terms and
conditions of employment immediately prior to such Asset Acquisition
or Change in Control or anticipatory period preceding such Asset
Acquisition or Change in Control, if applicable.
(c) Certain Definitions. For purposes of this Agreement:
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(i) an "Asset Acquisition" shall be deemed to
have occurred if any Person, a group or groups of related or
unrelated Persons acquires more than fifty percent (50%) in
value of the oil and gas properties of the Company pursuant to
one or more transactions with the Company during the term of
this Agreement.
(ii) a "Change in Control" shall be deemed to have
occurred if (A) any Person is or becomes the Beneficial Owner
(as defined in Section 2(c) hereof) of securities of the
Company representing twenty percent (20%) or more of the
Voting Power (as defined in Section 2(c) hereof), (B) there
shall occur a change in the composition of a majority of the
Board within any period of four (4) consecutive years which
change shall not have been approved by a majority of the Board
as constituted immediately prior to such change in
composition, (C) at any meeting of the shareholders of the
Company called for the purpose of electing directors, more
than one of the persons nominated by the Board for election as
directors shall fail to be elected, or (D) the consummation of
a merger, consolidation, sale of substantially all of the
assets of the Company or other reorganization of the Company,
other than a reincorporation, in which the Company does not
survive.
(iii) (A) "Person" shall have the meaning set forth
in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange
Act of 1934, as in effect on May 1, 1995, (B) "Beneficial
Owner" shall have the meaning set forth in Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934, as in effect
on May 1, 1998, and (C) "Voting Power" shall mean the voting
power of the outstanding securities of the Company having the
right under ordinary circumstances to vote at an election of
the Board.
3. RIGHTS AND BENEFITS UPON TERMINATION. Subject to the
conditions set forth in Section 4 hereof, in the event Executive is entitled
pursuant to Section 2 hereof to receive the rights and benefits described in
this Section 3 as a result of the termination of Executive's employment
("Termination"), the Company agrees to provide or cause to be provided to
Executive the following rights and benefits:
(a) Cash Payment. Executive shall be entitled to receive
not later than five (5) days following the date of Termination a
lump-sum payment in cash in an amount equal to a multiple of
____________ (____) times the Executive's Earnings (as such term is
defined below). For purposes of this Agreement, "Earnings" shall mean
the total of (i) the base salary paid to Executive during the twelve
month period preceding the date of Termination; and (ii) the amount of
any bonus or bonuses paid to Executive during the twelve month period
preceding the date of Termination; but no less than the base salary
and bonuses paid to Executive during the twelve month period preceding
the Asset Acquisition or Change in Control or anticipatory period
preceding such Asset Acquisition or Change in Control, if applicable.
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(b) Insurance and Other Similar Benefits. To the extent
Executive is eligible thereunder, Executive shall continue to be
covered by the life insurance, medical and dental plans, and accident
and disability plans of the Company or any successor plan or program
in effect at Termination for employees in the same class or category
as Executive, subject to the terms of such plans and to Executive's
making any required contributions thereto, for a period of
_________________ (___) years after the date of Termination, exclusive
of and in addition to all benefits required by the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA"), (or until
Executive's Normal Retirement Date, whichever is sooner); provided,
however, that if during such period Executive should enter into the
employ of another company or firm which provides such benefits
(similar in scope to those currently provided by the Company) to its
executives in general, the Company's obligations to provide such
benefits shall cease. In the event Executive is ineligible to
continue to be so covered under the terms of any such benefit plan or
program, or, in the event Executive is eligible but the benefits
applicable to Executive are not substantially equivalent to the
benefits applicable to Executive immediately prior to Termination, for
the aforementioned period, the Company shall provide to Executive
through other sources such benefits, including such additional
benefits, as may be necessary to make the benefits applicable to
Executive substantially equivalent (on an after-tax basis) to those in
effect before Termination. Nothing contained in this paragraph shall
be deemed to require or cause termination or restriction of any of
Executive's coverages under any such benefit plan or program of the
Company or any of its subsidiaries or any successor plan or program
thereto to which Executive is entitled under the terms of such plan or
program, whether at the end of the aforementioned period or at any
other time.
(c) Other Benefit Plans. The specific arrangements
referred to in this Section 3 are not intended to require or to
exclude Executive's continued participation in other benefit plans in
which Executive currently participates or which are available to
executive personnel generally in the class or category of Executive or
to preclude other compensation or benefits as may be authorized by the
Board from time to time.
(d) Duty to Mitigate. Executive's entitlement to
benefits hereunder shall not be governed by any duty to mitigate by
seeking further employment nor offset by any compensation which
Executive may receive from future employment.
4. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The Company
shall have no obligation to provide or cause to be provided to Executive the
rights and benefits described in Section 3 hereof if any of the following
events shall occur:
(a) the Company shall terminate Executive's employment by
reason of Executive's (i) conviction of a felony or a misdemeanor
involving moral
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turpitude, (ii) failure to perform his duties or responsibilities in a
manner satisfactory to the Company, (iii) engagement in conduct which
is injurious (monetarily or otherwise) to the Company or any of its
affiliates (including, without limitation, misuse of the Company's or
an affiliate's funds or other property), (iv) engagement in business
activities which are in conflict with the business interests of the
Company, (v) insubordination or (vi) engagement in conduct which is in
violation of the Company's safety rules or standards or which
otherwise causes injury to another employee or any other person
(termination for "cause"); or
(b) Executive shall not, promptly after Termination and
upon receiving a written request to do so, resign as a director or
officer of the Company and each subsidiary and affiliate of the
Company of which Executive is then serving as a director or officer;
or
(c) Executive shall fail to release the Company, its
affiliates and their officers, directors, employees and agents from
any and all claims and causes of action, in a written form acceptable
to the Company and signed by the Executive.
5. CONFIDENTIALITY AND CONSULTANCY.
(a) Confidentiality. Executive agrees that at all times
following Termination, Executive will not, without the prior written
consent of the Company, disclose to any person, firm or corporation
any confidential information of the Company or its subsidiaries which
is now known to Executive or which hereafter may become known to
Executive as a result of his employment or association with the
Company and which could be helpful to a competitor, unless such
disclosure is required under the terms of a valid and effective
subpoena or order issued by a court or governmental body; provided,
however, that the foregoing shall not apply to confidential
information which becomes publicly disseminated by means other than a
breach of this Agreement.
(b) Consultation. Executive agrees that, for a period of
one (1) year following the date of Termination, Executive will use
reasonable efforts to be available to the Company for consultation
with the Board and senior officers of the Company; provided, however,
that Executive shall not be required to perform consulting services
(i) for more than three (3) days in any month or (ii) for more than
ten (10) hours in any month. It is expressly agreed that Executive's
consulting services will be required at such time and such places as
will result in the least inconvenience to Executive, taking into
consideration Executive's other business commitments during such
period which may obligate Executive to honor such other commitments
prior to Executive's rendering services hereunder. It is further
agreed that Executive's consulting services shall be rendered by
personal consultation at Executive's principal residence or office,
wherever maintained, or by correspondence through mail, telephone or
electronic mail or other similar modes of communication at times,
including weekends and evenings, most
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convenient to Executive. The Company and Executive agree that if,
during such period, Executive should enter into the full-time employ
of another company or firm, Executive shall not be required to consult
at times that will conflict with Executive's responsibilities with
respect to such employment.
(c) Remedies for Breach. It is recognized that damages
in the event of breach of this Section 5 by Executive would be
difficult, if not impossible, to ascertain, and it is therefore agreed
that the Company, in addition to and without limiting any other remedy
or right it may have, shall have the right to an injunction or other
equitable relief in any court of competent jurisdiction enjoining any
such breach, and Executive hereby waives any and all defenses
Executive may have on the ground of lack of jurisdiction or competence
of the court to grant such an injunction or other equitable relief.
The existence of this right shall not preclude the Company from
pursuing any other rights and remedies at law or in equity which the
Company may have.
6. REDUCTION IN PAYMENTS. Notwithstanding the provisions of
Section 3(a) hereof, in no event shall any payment to be made under Section
3(a) exceed $1.00 less than three times the Executive's "base amount" within
the meaning of Section 280 G of the Internal Revenue Code of 1986, as amended
(the "Code"). If any portion of the payments or benefits to be made available
to Executive pursuant to Section 3 would be considered an "excess parachute
payment" within the meaning of Section 280G of the Code, the amount of cash
otherwise payable to Executive pursuant to Section 3(a) hereof shall be reduced
to the extent (but only to the extent) necessary to cause no portion of the
payments or benefits made available to the Executive pursuant to Section 3
hereof to be considered an "excess parachute payment" within the meaning of
Section 280G of the Code. Xxxxxx Xxxxxxxx LLP or such other accounting firm
that may be agreed upon by the Company and the Executive (the "Accounting
Firm") shall determine the Executive's "base amount" and the amount of any
"excess parachute payments" for purposes of this Section 6. All determinations
made by the Accounting Firm shall be made within 60 days of Termination and
shall be binding on the Company and the Executive. All fees and expenses of
the Accounting Firm shall be borne solely by the Company.
7. TERM OF AGREEMENT. This Agreement shall remain in full force
and effect through December 31, 2003, and, beginning each January 1st
thereafter, this Agreement shall be automatically extended for additional one
(1) year periods, unless by September 30th of any year the Company gives notice
that this Agreement will not be so extended. Notwithstanding the foregoing,
the term of this Agreement is automatically extended for a minimum of
twenty-four (24) months following an Asset Acquisition or a Change in Control.
8. MISCELLANEOUS.
(a) Assignment. No right, benefit or interest hereunder
shall be subject to assignment, anticipation, alienation, sale,
encumbrance, charge, pledge, hypothecation or set-off in respect of
any claim, debt or obligation, or to
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execution, attachment, levy or similar process; provided, however,
that Executive may assign any right, benefit or interest hereunder if
such assignment is permitted under the terms of any plan or policy of
insurance or annuity contract governing such right, benefit or
interest.
(b) Construction of Agreement. Except as expressly
provided herein, nothing in this Agreement shall be construed to amend
any provision of any plan or policy of the Company. This Agreement is
not, and nothing herein shall be deemed to create, a commitment of
continued employment of Executive by the Company. The benefits
provided under this Agreement shall be in addition to any other
compensation agreement or arrangement that the Company may have with
Executive.
(c) Amendment. This Agreement may not be amended,
modified or cancelled except by written agreement of the parties.
(d) Waiver. No provision of this Agreement may be waived
except by a writing signed by the party to be bound thereby.
(e) 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 remain in full force and effect to the fullest extent
permitted by law.
(f) Successors.
(i) The Company will require any successor,
whether direct or indirect, by purchase, merger, consolidation
or otherwise, to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no
such succession had taken place.
(ii) This Agreement shall inure to the benefit of,
and be enforceable by, Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legates. If the Executive dies
prior to the receipt of all benefits payable hereunder with
respect to events occurring prior to death, all such benefits
shall be paid pursuant to the last beneficiary designation
executed by the Executive and filed with the Company. If no
beneficiary form has been filed with respect to this
Agreement, all such benefits shall be paid to the Executive's
estate.
(g) Taxes. Any payment or delivery required under this
Agreement shall be subject to all requirements of the law with regard
to withholding of taxes, filing, making of reports and the like, and
the Company shall use its best efforts to satisfy promptly all such
requirements.
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(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT
GIVING EFFECT TO ITS CONFLICTS OF LAWS PRINCIPLES.
(i) Not Contract of Employment. Subject to the
provisions of Sections 1 (a) and (b), and Section 3, of this
Agreement, the entering into of this Agreement shall not be deemed to
be a contract of employment between the Company and the Executive, or
to be consideration for the employment of the Executive, and thus
nothing herein contained shall be deemed to give the Executive the
right to be retained in the employ of the Company or to restrict the
right of the Company to discharge the Executive at any time.
(j) Gender. Wherever in this instrument words are used
in the masculine or neuter gender, they shall be read and construed as
in the masculine, feminine or neuter gender wherever they would so
apply, and vice versa. Wherever words appear in the singular or
plural, they shall be read and construed as in the plural or singular,
respectively, wherever they would so apply.
(k) Headings. The headings of the Sections herein are
included solely for reference convenience, and shall not in any way
affect the meaning or interpretation of the Agreement.
(l) Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties hereto with respect
to the matters covered hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXX XXXXX, INC.
By:_________________________________
EXECUTIVE
By:_________________________________
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Severance Agreements
Officer Multiple
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Xxxxxx X. Xxxxx 2.5
Xxxxxxx X. Xxxxxxxxx 2
Xxxxx X. Xxxxxxx 2
Xxxxxx X. Xxx 2
Xxxxx X. XxXxxx 2
Xxxxxxxx X. Xxxxxxxx 2
Xxxxxxx X. Xxxxxx 2
R. Xxx Xxxxxx 2
B. Xxxx Xxxx 2
Xxxxxxx X. Xxxx, XX 2
