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EXHIBIT 10.5
TERMINATION AND CONSULTING AGREEMENT
This Termination and Consulting Agreement by and among [PARENT
SURVIVING CORPORATION] [NEWCO], a Delaware corporation (the "Company"), and
Xxxxxx X. Xxxxx, Xx. (the "Executive") is dated as of the __ day of _____, 1999.
WHEREAS, the Executive and Sonat Inc., a Delaware Corporation
("Sonat") are parties to an Executive Severance Agreement dated as of July 23,
1998 (the "Severance Agreement"), and the Executive is entitled to various
benefits under employee benefit and compensation plans, programs and policies
of Sonat (collectively, the "Employee Benefits"); and
WHEREAS, pursuant to an Agreement and Plan of Merger, dated
as of March __, 1999 (the "Merger Agreement"), by and between El Paso Energy
Corporation ("Parent") and Sonat, Parent and Sonat will undergo a business
combination (the "Merger"); and
WHEREAS, it is acknowledged by the parties hereto that as a
result of the consummation of the Merger and the other transactions
contemplated by the Merger Agreement, as of the Effective Time (as defined in
the Merger Agreement), the Severance Agreement shall have become effective and
the Executive will have experienced an event described in Section 2(b) of the
Severance Agreement, as a result of which he will have the right to terminate
his employment and receive severance pay and benefits pursuant to Section 3 of
the Severance Agreement; and
WHEREAS, the Company has determined that it is in the best
interests of its shareholders to set forth, and the Executive has agreed to set
forth, their mutual agreement as to the rights and entitlements of the
Executive under the Severance Agreement and the Employee Benefits from and
after the Effective Time and to provide for the continuing availability to the
Company of the Executive's services and expertise following the Effective Time,
all on the terms and conditions set forth below;
NOW, THEREFORE, it is hereby agreed as follows:
1. Termination of Employment. (a) The Executive shall retire
from his employment with Sonat on the last day of the calendar month that
includes the Closing Date (as defined in the Merger Agreement). It is
acknowledged and agreed that such retirement will constitute a termination of
his employment pursuant to Section 2(b) of the Severance Agreement, with the
result that the Executive shall be entitled to the payments and benefits set
forth in Section 3 of the Severance Agreement. The date of such termination of
employment is hereinafter referred to as the "Date of Termination."
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2. Employee Benefits. The Company acknowledges that for
purposes of the Employee Benefits, the Executive shall be considered to have
taken "early retirement" effective as of the Date of Termination.
3. Post-Merger Services. (a) The Company shall cause the
Executive to be nominated to its Board of Directors (the "Board") beginning as
of the Effective Time for a term or terms extending until the date of the
Executive's retirement from the Board pursuant to the Company's Board of
Directors retirement policy (such date, the "Board Retirement Date"). From the
Effective Time until December 31, 2000, he shall serve as the Non-Executive
Chairman thereof.
(b) From the Date of Termination through December 31, 2000, or
such shorter period as may be provided pursuant to Section 5(a) or (b) below
(the "Initial Term"), in consideration for the compensation and benefits
provided for below, the Executive shall make himself available to the Company,
at mutually convenient times and places, for such consulting services as may be
requested by the Board or the Chief Executive Officer of the Company, in
connection with long-range planning, strategic direction, and integration and
rationalization matters, and shall work with the Chief Executive Officer and
senior management of the Company with respect to matters to be presented to the
Board; provided that, the Executive shall be based, and shall perform the
predominant amount of his consulting services, in Birmingham, Alabama. From
December 31, 2000 until the Board Retirement Date (the "Subsequent Term"), the
Executive's duties shall be the same as those of other non-employee members of
the Board and the Executive Committee thereof.
4. Compensation and Benefits. (a) The Company shall pay the
Executive a fee (the "Fee") of $20,834 per month (or fraction thereof), payable
monthly in advance, during the Initial Term. In addition, during the Initial
Term, the Executive shall continue to be entitled to such other perquisites
(including expense reimbursement and transportation) as are made available to
senior executive officers of Sonat in accordance with Sonat's policies and
practices prevailing as of the date of this Agreement. Without limiting the
generality of the foregoing, during the Initial Term, the Executive shall have
the use of the corporate aircraft owned by the Company and its subsidiaries, at
least one of which shall remain based in Birmingham, Alabama, on the same terms
and conditions as he is currently permitted to use corporate aircraft owned by
Sonat.
(b) In addition to the other compensation and benefits
provided for under this Agreement, during the Initial Term and the Subsequent
Term, (i) the Executive shall receive the same compensation and benefits, other
than cash director fees, as other non-employee members of the Board and the
Executive Committee thereof, and (ii) the Company shall pay the Executive's
country club dues to the same extent and on the same terms and conditions as
Sonat currently pays such dues.
(c) The Company shall provide retiree medical coverage to the
Executive and his spouse from the Date of Termination and for the remainder of
their respective lives, and to the Executive's children so long as they remain
eligible, on terms and conditions no less favorable
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than those in effect under the Company's Retiree Medical Plan for Post-1993
Retirees for individuals who are, as of the Effective Time, receiving or
eligible to receive such coverage under such plan. In addition, from the Date of
Termination and for the remainder of the Executive's life, the Company shall pay
all life insurance premiums under Sonat's Executive Life Insurance Program under
policy number 902715088U sufficient to maintain such insurance in effect in an
amount not less than four times his base pay as in effect immediately before the
Date of Termination.
(d) From the Date of Termination and for the remainder of the
Executive's life, the Company shall (i) provide the Executive with office space
and a parking space and appropriate equipment and support services (including,
without limitation, phones and computer support) and (ii) shall employ, and
shall provide the Executive with the full-time secretarial services of, Xxx
Xxxxxx, his current executive assistant or, if Xxx. Xxxxxx voluntarily ceases to
be an employee of the Company, with the full-time services of another executive
secretary of comparable qualifications employed by the Company and loaned to the
Executive. Such office space shall consist of the office suite formerly occupied
by Xxxx X. Xxxx, Xx., on the 20th floor of the AmSouth-Sonat Tower, and such
parking space shall be the parking space currently designated for the Executive,
in each case except to the extent otherwise agreed upon by the Executive and the
Company; provided, that, in the event the Company and its subsidiaries cease to
own or lease space in the AmSouth-Sonat Tower, the Company shall provide other
comparable office space and another comparable parking space reasonably
acceptable to the Executive. During her employment with the Company pursuant to
the foregoing, Xxx. Xxxxxx shall receive an annual salary at least equal to her
present salary, increased as of each anniversary of the Date of Termination to
reflect increases as necessary to provide her with increases at least equal, on
a percentage basis, to the increases provided to similarly situated executive
secretaries of the Company and shall receive the benefits, including retirement
benefits with appropriate service credit for her service with Sonat, required by
the Merger Agreement for Continuing Company Employees (as defined in the Merger
Agreement). In addition, if and to the extent that the Executive recognizes
taxable income as a result of the provision of the space and services set forth
above, the Company shall make cash payments to the Executive not later than 10
business days before the date on which the Executive becomes obligated to make
any resulting payment of tax (including without limitation federal, state and
local income taxes and payments of estimated taxes) sufficient to make the
Executive whole, on a net after-tax basis taking into account the tax on such
cash payments, for such tax.
(e) The Executive's status during the Initial Term shall be
that of an independent contractor and not, for any purpose, that of an employee
or agent with authority to bind the Company in any respect. All payments and
other consideration made or provided to the Executive under this Section 4 shall
be made or provided without withholding or deduction of any kind, and the
Executive shall assume sole responsibility for discharging, all tax or other
obligations associated therewith.
5. Termination. (a) If the Executive should die or become
permanently disabled before December 31, 2000, the Initial Term shall end on the
date of such death or permanent
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disability, and the Company shall pay to the Executive's estate or to the
Executive or his legal guardian, as applicable, any portion of the Fee that has
accrued but remains unpaid.
(b) The Company may terminate the Initial Term for Cause, in
which event no further payments of the Fee shall be made. For purposes of this
Agreement, "Cause" shall mean the Executive's dishonesty, commission of a felony
or willful unauthorized disclosure of confidential information of the Company
and its subsidiaries. For purposes of this Section 5(b), no act or failure to
act, on the part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or without reasonable
belief that the Executive's action or omission was in the best interests of the
Company and its subsidiaries. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or based upon the
advice of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Company and its subsidiaries. The Initial Term shall not be terminated for
Cause unless and until there shall have been delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion of the
Board, the Executive is guilty of the conduct described in the second sentence
of this Section 5(b), and specifying the particulars thereof in detail.
6. Indemnification; Legal Fees. The Company agrees to
indemnify, protect, defend and hold the Executive and his estate, heirs, and
personal representatives, harmless from and against any actual or threatened
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), and all losses, liabilities, damages
and expenses, including reasonable attorney's fees incurred by counsel
reasonably designated or approved by him, in connection with this Agreement or
his services hereunder, provided that any consulting services giving rise to
such indemnification shall have been performed by the Executive in good faith
and, to the best of his knowledge, in a lawful manner. The Company shall pay or
reimburse the Executive for all costs and expenses, including, without
limitation, court costs and attorneys' fees, incurred by the Executive as a
result of any claim, action or proceeding (including, without limitation, a
claim, action or proceeding by the Executive against the Company arising out of,
or challenging the validity or enforceability of, this Agreement or any
provision hereof) and shall advance such expenses if the Executive undertakes to
repay such amounts if it is ultimately determined that the Executive is not
entitled to be indemnified under Delaware law.
7. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its respective successors and assigns.
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(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of its respective businesses and/or assets to assume expressly
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. As used in this Agreement, the "Company" shall mean the Company, as
hereinbefore defined and any successor to their respective businesses and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
8. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xxxxxx X. Xxxxx, Xx.
0000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
If to the Company:
[INSERT ADDRESS]
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision (or
portion thereof) of this Agreement shall not affect the validity or
enforceability of any other provision (or portion thereof) of this Agreement.
(d) From and after the Effective Time, this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof, except that the Severance Agreement shall remain in full force
and effect, without amendment. This Agreement shall be null and void, ab initio,
and of no further effect if the Merger Agreement is terminated before the
Effective Time.
(e) This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and said counterparts shall
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused this Agreement to be executed in its name on
its behalf, all as of the day and year first above written.
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Xxxxxx X. Xxxxx, Xx.
[PARENT SURVIVING CORPORATION]
[NEWCO]
By
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Name:
Title:
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