Exhibit 10.38
AMENDMENT NO. 1
TO THE
EMPLOYMENT AGREEMENT
BETWEEN
CALENERGY COMPANY, INC.
AND
XXXXXX X. XXXXXXXX
This Amendment No. 1 (the "Amendment") to the Employment
Agreement dated August 6, 1996 (the "Employment Agreement") by
and between CalEnergy Company, Inc., a Delaware corporation (the
"Company"), and Xxxxxx X. XxXxxxxx (the "Executive"), is entered
into as of April 16, 1997.
WHEREAS, the Company and the Executive are presently parties
to the Employment Agreement; and
WHEREAS, the Company and the Executive desire to amend the
Employment Agreement as set forth herein;
NOW, THEREFORE, the Employment Agreement is hereby amended
as follows:
(1) By adding the following sentences at the end of Section
4(c):
"The Executive shall also be eligible to be paid other
bonuses for each fiscal year as determined by the
Chairman of the Board. The Executive's annual
incentive merit bonus, together with all such other
bonuses paid or payable for the fiscal year (including
any amounts for which receipt is otherwise deferred
pursuant to a plan or arrangement with the Company), is
referred to herein as `Annual Bonus Compensation.'"
(2) By adding the following sentence after the last sentence
of Section 6(a):
"The preceding sentence notwithstanding, if the
Executive's resignation occurs upon or after a Change
in Control, he shall not be precluded from accepting
employment or providing services to Xxxxx Xxxxxx Sons',
Inc. or any affiliate thereof."
(3) By deleting from the first sentence of Section 8(b) the
language following the parenthetical "(iii)" and replacing it
with the following:
"commencing one month after the month of his
Termination Date, 24 monthly payments each equal to
1/24 of a sum equal to two times the average Annual
Bonus Compensation payable to the Executive in respect
of the two fiscal years immediately preceding the year
in which the Executive's employment with the Company
terminates (with any such year for which no bonus was
payable included in such two year average as a zero)."
(4) By deleting current Section 8(d) and inserting new
Section 8(d), to read as follows:
"(d) If the employment of the Executive is terminated
pursuant to subsections (ii) or (vi) of Section 7(a),
all Performance Accelerated Stock Options ("PASOs")
held by the Executive on the Termination Date will
become vested and immediately exercisable on such
Termination Date and shall otherwise remain exercisable
for their term in accordance with the terms thereof."
(5) By inserting immediately following Section 8(d) a new
Section 8(e) to read as follows:
"(e) If the employment of the Executive is terminated
for any reason after a Change in Control, then without
further action by the Company, the Board or any
committee thereof, the Executive may exercise any
vested stock options (including vested PASOs) held by
the Executive pursuant to existing procedures approved
by the Stock Option Committee for cashless exercise, by
surrendering previously owned shares, electing to have
the Company withhold shares otherwise deliverable upon
exercise of such options, or by providing an
irrevocable direction to a broker to sell shares and
deliver all or a portion of the proceeds to the
Company, in any case in an amount equal to the
aggregate exercise price and any tax withholding
obligation attendant to the exercise."
(6) By inserting immediately following Section 8 a new
Section 8A, which shall read in its entirety as follows:
"Section 8A. Certain Additional Payments by the
Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined
that any payment, distribution, waiver of Company
rights, acceleration of vesting of any stock options or
restricted stock, or any other payment or benefit in
the nature of compensation to or for the benefit in the
nature of compensation to or for the benefit of the
Executive, alone or in combination (whether such
payment, distribution, waiver, acceleration or other
benefit is made pursuant to the terms of this Agreement
or any other agreement, plan or arrangement providing
payments or benefits in the nature of compensation to
or for the benefit of the Executive, but determined
without regard to any additional payments required
under this Section 8A) (a "Payment") would be subject
to the excise tax imposed by Section 4999 of the Code
(or any successor provision) or any interest or
penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes with
respect to the Gross-Up Payment (including any interest
or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and
any interest and penalties imposed with respect
thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-
Up Payment equal to the Excise Tax imposed on the
Payments.
(b) Subject to the provisions of Section 8A(c),
all determinations required to be made under this
Section 8A, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up
Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving
at such determination, shall be made by Deloitte and
Touche LLP, or such other nationally recognized
accounting firm then auditing the accounts of the
Company (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company
and the Executive within 15 business days of the
receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is
unwilling or unable to perform its obligations pursuant
to this Section 8A, the Executive shall appoint another
nationally recognized accounting firm to make the
determinations required hereunder (which accounting
firm shall then be referred to hereunder as the
Accounting Firm). All fees and expenses of the
Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, determined pursuant to this
Section 8A, shall be paid by the Company to the
Executive within five days of the receipt of the
Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company
and the Executive. The parties hereto acknowledge
that, as a result of the potential uncertainty in the
application of Section 4999 of the Code (or any
successor provision) at the time of the initial
determination by the Accounting Firm hereunder, it is
possible that the Company will not have made Gross-Up
Payments which should have been made consistent with
the calculations required to be made hereunder (an
"Underpayment"). In the event that the Company
exhausts its remedies pursuant to Section 8A(c) and the
Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by the Company
to or for the benefit of the Executive.
(c) The Executive 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 as soon as practicable but no later than
20 business days after the Executive is informed in
writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not
pay such claim prior to the expiration of the 30-day
period following the date on which he 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 Executive
in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably
request in writing from time to time, including,
without limitation, accepting legal
representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Executive
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.
Without limiting the foregoing provisions of this
Section 8A(c), the Company shall control all
proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine;
provided, however, that if the Company directs the
Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the
Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-
tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any
imputed income with respect to such advance; and
further provided that any extension of the statute of
limitations relating to payment of taxes for the
taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would
be payable hereunder and the Executive 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.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section
8A(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall
(subject to the Company's complying with the
requirements of Section 8A(c)) promptly pay to the
Company the amount of such refund (together with any
interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant
to Section 8A(c), a determination is made that the
Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify
the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be
paid."
Except as provided herein and to the extent necessary to
give full effect to the provisions of this Amendment, the terms
of the Employment Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have entered into
this Amendment effective as of April 16, 1997.
CALENERGY COMPANY, INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Chairman of the Board
EXECUTIVE
/s/ Xxxxxx X. XxXxxxxx
Xxxxxx X. XxXxxxxx
