EXHIBIT 10.23
EXECUTIVE EMPLOYMENT AGREEMENT
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AGREEMENT by and between POGO PRODUCING COMPANY, a Delaware
corporation (the "Company") and Xxxx Xxx Xxxxxxx (the "Executive"), dated as of
the 1/st/ day of February, 2001.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive, and to
provide the Executive with compensation and benefits arrangements which are
competitive with those of other corporations and which ensure that the
compensation and benefits expectations of the Executive will be satisfied. The
Board also believes it is imperative to diminish the inevitable distraction of
the Executive by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the Executive's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to insure the continuation of
favorable compensation and benefits upon a Change of Control. Therefore, in
order to accomplish these objectives, the Board has caused the Company to enter
into this Agreement, which shall supersede the Employment Agreement between
Company and Executive dated as of February 1, 1996 and extended and renewed most
recently as of February 1, 2000.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS;
1. Certain Definitions. (a) The "Effective Date" shall mean the date of
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this Agreement.
(b) The "Employment Period" shall mean the period commencing on the
Effective Date and ending on the second anniversary of such date. On each
annual anniversary of the Effective Date (the "Renewal Date"), the Employment
Period shall be reviewed, to determine whether, in the discretion of the
Company, it should be extended for one additional year so as to terminate two
years from such Renewal Date. A determination by the Company to extend the term
for one year shall be effective only if, prior to the Renewal Date, the Company
shall give notice to the Executive that the Employment Period shall be so
extended. Upon a Change of Control the Employment Period shall be extended to
the fifth anniversary of the Change of Control.
2. Change of Control. For the purpose of this Agreement, a "Change of
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Control" shall mean:
(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 (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities").
Notwithstanding anything in this Agreement to the contrary, the
following shall not constitute a Change of Control:
(i) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege),
(ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled
by the Company, or
(iv) any acquisition by State Farm Mutual Automobile Insurance
Company and certain affiliates ("State Farm") or Xxxxxxxxxxxx, Fields &
Co., L.P. ("Klingenstein") ("Specified Stockholders") of beneficial
ownership of Outstanding Company Voting Securities resulting in an
accumulation of said securities up to and including the following amounts:
A. In the case of State Farm, 30% of Outstanding Voting
Securities, and
B. In the case of Xxxxxxxxxxxx, 30% of Outstanding Voting
Securities, or
(v) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (i), (ii) and
(iii) of subsection (c) of this Section 2 are satisfied; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (i) more than 60% of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who
where the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same proportions as
their ownership, immediately
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prior to such reorganization, merger or consolidation, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (ii) no Person [excluding the Company, any Specified Stockholder, any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 20% or more of the Outstanding Company
Common Stock or Outstanding Voting Securities, as the case may be] beneficially
owns, directly or indirectly, 20% or more, respectively, of the then outstanding
shares of common stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the then outstanding
voting securities of such corporation, entitled to vote generally in the
election of directors and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the execution
of the initial agreement providing for such reorganization, merger or
consolidation; or
(d) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation with respect to which following such sale or other disposition (A)
more than 60% of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
[excluding the Company, any Specified Stockholder, any employee benefit plan (or
related trust) of the Company or such corporation and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or
indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be] beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors and (C) at least a majority of the members of the board of
directors of such corporation where members of the Incumbent Board at the time
of the execution of the initial agreement or action of the Board providing for
such sale or other disposition of assets of the Company.
3. Employment Agreement. The Company hereby agrees to continue the
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Executive in its employ in accordance with the terms and provisions of this
Agreement, for the Employment Period.
4. Terms of Employment. (a) Position and Duties. (i) During the
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Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be (x) prior to a Change of Control, at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 90-day period immediately preceding the later of the Effective
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Date or the most recent Renewal Date and (y) upon and after a Change of Control,
if any (the Effective Date, Renewal Date or date of a Change of Control, as
applicable, is hereafter referred to as the "Applicable Date"), the Executive's
position shall be at least commensurate in all respects (disregarding a change
or changes that are in the aggregate de minimis) with the most significant of
those held, exercised and assigned at any time during the 90-day period
immediately preceding the Applicable Date and (B) the Executive's services shall
be performed at the location where the Executive was employed immediately
preceding the Applicable Date or any office which is the headquarters of the
Company and is less than 35 miles from such location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of the Company. During the Employment Period it shall
not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement; provided Executive may not serve on
the board of a publicly traded for profit corporation or similar body of a
publicly traded for profit business organized in other than corporate form
without the consent of the Compensation Committee of the Board of Directors of
the Company. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Applicable
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Applicable Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment Period,
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the Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid on a monthly basis, at least equal to twelve times the highest
monthly base salary paid or payable to the Executive by the Company and its
affiliated companies in respect of the twelve-month period immediately preceding
the month in which the Applicable Date occurs. During the Employment Period,
the Annual Base Salary shall be reviewed at least annually and may be increased
at any time and from time to time as shall be substantially consistent with
increases in base salary generally awarded in the ordinary course of business to
other executives of the Company and its affiliated companies. Following a
Change of Control, Annual Base Salary shall be increased not less frequently
than annually in an amount not less than the percentage increase, if any, in the
United States Department of Labor's U.S. Consumer Price Index - All Items (All
Urban Consumers) from the last day of the last full month preceding the Change
of Control to the last month preceding the date of increase. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. As used in this Agreement, the term
"affiliated companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the
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Executive may be awarded at the discretion of the Company for any fiscal year
ending during the Employment Period, a bonus.
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(iii) Incentive, Savings and Retirement Plans. During the
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Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other executives of the Company and its affiliated
companies. Such plans, practices, policies and programs shall provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, equal to the most favorable of those provided by
the Company and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the 90-day
period immediately preceding the Applicable Date.
(iv) Welfare Benefit Plans. During the Employment Period, the
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Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other executives of the Company and its affiliated companies. Such plans,
practices, policies and programs shall provide the Executive with benefits which
are equal, in the aggregate, to the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Applicable Date.
(v) Expenses. During the Employment Period, the Executive shall
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be entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 90-day period immediately preceding the
Applicable Date.
(vi) Fringe Benefits. During the Employment Period, the Executive
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shall be entitled to fringe benefits in accordance with the most favorable
plans, practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the 90-day period
immediately preceding the Applicable Date.
(vii) Office and Support Staff. During the Employment Period, the
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Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Executive by the Company and its affiliated companies at any time during the
90-day period immediately preceding the Applicable Date.
(viii) Vacation. During the Employment Period, the Executive shall
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be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 90-day period immediately
preceding the Applicable Date.
(ix) Stock Options. In addition to Annual Base Salary and annual
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bonus, the Executive may be awarded a stock option grant at the discretion of
the Company for any fiscal year ending during the Employment Period.
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5. Termination of Employment. (a) Death or Disability. The Executive's
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employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(c) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to full-
time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
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during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean (i) a material violation by the Executive of the Executive's
obligations under Section 4(a) of this Agreement (other than as a result of
incapacity due to physical or mental illness) which is willful and deliberate on
the Executive's part, which is committed in bad faith or without reasonable
belief that such violation is in the best interests of the Company and which is
not remedied in a reasonable period of time after receipt of written notice from
the Company specifying such violation or (ii) the conviction of the Executive of
a felony involving moral turpitude.
(c) Good Reason; Window Period; Other Terminations. The Executive's
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employment may be terminated (i) during the Employment Period by the Executive
for Good Reason, (ii) during the Window Period by the Executive without any
reason or (iii) by Executive other than (A) for Good Reason or (B) during a
Window Period.
For purposes of this Agreement, the "Window Period" shall mean the 30-
day period immediately following the first anniversary of the date a Change of
Control occurs. Anything in this Agreement to the contrary notwithstanding, if
a Change of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment or
cessation of status as an officer (i) was at the request of a third party who
has taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of Control,
then for all purposes of this Agreement the "date a Change of Control occurs"
shall mean the date immediately prior to the date of such termination of
employment or cessation of status as an officer.
For purposes of this Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties inconsistent with
the Executive's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by
Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in
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such position, authority, duties or responsibilities excluding for this
purpose an insubstantial or inadvertent action which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an insubstantial
or inadvertent failure which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i)(B) hereof;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement;
(v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement; or
(vi) following a Change of Control, any failure to provide both an
annual bonus and stock option grant no less favorable to Executive than
those provided to Executive during the 18 months prior to a Change of
Control, appropriately increased to reflect annual salary increases
provided for in Section 4(b)(i) and/or additional positions or
responsibilities.
(d) Notice of Termination. Any termination by the Company for
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Cause, or by the Executive without any reason during the Window Period or for
Good Reason, shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 12(c) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than fifteen days after the
giving of such notice). The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the Company hereunder or preclude the Executive or the Company from asserting
such fact or circumstance in enforcing the Executive's or the Company's right
hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
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Executive's employment is terminated by the Company for Cause, or by the
Executive during the Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination, (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be, and (iv) if the Executive's
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employment is terminated by the Executive other than for Good Reason or during a
Window Period, the date of the receipt of the Notice of Termination or any later
date specified therein.
6. Obligations of the Company upon Termination.
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(a) Prior to a Change of Control: Good Reason; Other than for Cause,
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Death or Disability. If, during the Employment Period, the Company shall
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terminate the Executive's employment other than for Cause or Disability or the
Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of (1) the Executive's Annual Base Salary through the
Date of Termination to the extent not theretofore paid and (2) any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in
each case to the extent not theretofore paid (the sum of the amounts
described in clauses (1) and (2) shall be hereinafter referred to as
the "Accrued Obligations"); and
B. the amount (such amount shall be hereinafter referred to as
the "Severance Amount") equal to the product of (1) three and (2) the
sum of (x) the Executive's Annual Base Salary and (y) any bonus
described in Section 4(b)(ii) paid or payable in respect of the most
recently completed fiscal year of the Company; and, provided further,
that such amount shall be reduced by the present value (determined as
provided in Section 280G(d)(4) of the Internal Revenue Code of 1986,
as amended (the "Code")) of any other amount of severance relating to
salary or bonus continuation to be received by the Executive upon
termination of employment of the Executive under any severance plan,
severance policy or severance arrangement of the Company; and
C. a separate lump sum supplemental retirement benefit equal to
the difference between (1) the actuarial equivalent (utilizing for
this purpose the actuarial assumptions utilized with respect to the
Employees Retirement Plan for Pogo Producing Company (or any successor
plan thereto) (the "Retirement Plan") during the 90-day period
immediately preceding the Applicable Date) of the benefit payable
under the Retirement Plan and any supplemental and/or excess
retirement plan of the Company and its affiliated companies providing
benefits for the Executive (the "SERP") which the Executive would
receive if the Executive's employment continued at the compensation
level provided for in Sections 4(b)(i) and 4(b)(ii) of this Agreement
for the 3-year period following termination of employment, assuming
for this
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purpose that all accrued benefits are fully vested and that benefit
accrual formulas are no less advantageous to the Executive than those
in effect during the 90-day period immediately preceding the
Applicable Date, and (2) the actuarial equivalent (utilizing for this
purpose the actuarial assumptions utilized with respect to the
Retirement Plan during the 90-day period immediately preceding the
Applicable Date) of the Executive's actual benefit (paid or payable),
if any, under the Retirement Plan and the SERP (the amount of such
benefit shall be hereinafter referred to as the "Supplemental
Retirement Amount");
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the Company
shall continue benefits to the Executive and/or the Executive's family at
least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Section
4(b)(iv) of this Agreement if the Executive's employment had not been
terminated in accordance with the most favorable plans, practices, programs
or policies of the Company and its affiliated companies as in effect and
applicable generally to other executives and their families during the 90-
day period immediately preceding the Applicable Date, provided, however,
that if the Executive becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits under another
employer provided plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan during
such applicable period of eligibility (such continuation of such benefits
for the applicable period herein set forth shall be hereinafter referred to
as "Welfare Benefit Continuation"). For purposes of determining eligibility
of the Executive for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have remained
employed until the end of the Employment Period and to have retired on the
last day of such period; and
(iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive and/or the Executive's family
any other amounts or benefits required to be paid or provided or which the
Executive and/or the Executive's family is eligible to receive pursuant to
this Agreement and under any plan, program, policy or practice or contract
or agreement of the Company and its affiliated companies as in effect and
applicable generally to other executives and their families during the 90-
day period immediately preceding the Applicable Date (such other amounts
and benefits shall be hereinafter referred to as the "Other Benefits").
(b) Following a Change of Control: During the Window Period; Good
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Reason; Other than for Cause, Death or Disability. If, during the Employment
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Period, the Company shall terminate the Executive's employment other than for
Cause or Disability following a Change of Control, the Executive shall terminate
employment for Good Reason following a Change of Control or the Executive shall
terminate employment without any reason during the Window Period, then the
Company shall pay or provide to the Executive all the amounts and benefits set
forth in Section 6(a) above; provided however, that:
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(i) instead of the Severance Amount payable pursuant to Section
6(a)(i)(B) above, the company shall pay to the Executive a Severance Amount
equal to the product of:
(1) five, and
(2) the sum of
(x) the Executive's Annual Base Salary, and
(y) any bonus described in Section 4(b)(ii) paid or payable in
respect of the most recently completed fiscal year of the
Company; and
(ii) instead of the separate lump sum amount payable pursuant to
Section 6(a)(i)(C) above, the Company shall pay to the Executive a separate
lump sum supplemental retirement benefit equal to the difference between
(1) the actuarial equivalent (utilizing for this purpose the actuarial
assumptions utilized with respect to the Retirement Plan during the 90-day
period immediately preceding the Applicable Date) of the benefit payable
under the Retirement Plan and the SERP which the Executive would receive if
the Executive's employment continued at the compensation level provided for
in Sections 4(b)(i) and 4(b)(ii) of this Agreement for the 5-year period
following termination of employment, assuming for this purpose that all
accrued benefits are fully vested and that benefit accrual formulas are no
less advantageous to the Executive than those in effect during the 90-day
period immediately preceding the Applicable Date, and (2) the actuarial
equivalent (utilizing for this purpose the actuarial assumptions utilized
with respect to the Retirement Plan during the 90-day period immediately
preceding the Applicable Date) of the Executive's actual benefit (paid or
payable), if any, under the Retirement Plan and the SERP (the amount of
such benefit shall be hereinafter referred to as the "Supplemental
Retirement Amount"); and
(iii) in addition to the amounts payable pursuant to Sections
6(a)(i)(A) and 6(a)(i), the Company shall pay to the Executive a separate
lump sum amount equal to the value of the equity awards that the Executive
would have received during the five years following termination, determined
in accordance with Exhibit A attached hereto.
(c) Death. If the Executive's employment is terminated by reason of
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the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for (i) payment of Accrued Obligations (which
shall be paid to the Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination) and the timely payment or
provision of the Welfare Benefit Continuation and Other Benefits and (ii)
payment to the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the
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Date of Termination of an amount equal to the sum of the Severance Amount and
the Supplemental Retirement Amount.
(d) Disability. If the Executive's employment is terminated by reason
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of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for (i)
payment of Accrued Obligations (which shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination) and the timely payment or
provision of the Welfare Benefit Continuation and Other Benefits (excluding, in
each case, Disability Benefits (as defined below)) and (ii) payment to the
Executive in a lump sum in cash within 30 days of the Date of Termination of an
amount equal to the greater of (A) the sum of the Severance Amount and the
Supplemental Retirement Amount and (B) the present value (determined as provided
in Section 280G(d)(4) of the Code) of any cash amount to be received by the
Executive as a disability benefit pursuant to the terms of any long term
disability plan, policy or arrangement of the Company and its affiliated
companies, but not including any proceeds of disability insurance covering the
Executive to the extent paid for on a contributory basis by the Executive (which
shall be paid in any event as an Other Benefit) (the benefits included in this
clause (B) shall be hereinafter referred to as the "Disability Benefits").
(e) Cause; By Executive Other than for Good Reason And Other Than
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During a Window Period. If the Executive's employment shall be terminated for
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Cause during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive Annual Base Salary through the Date of Termination plus the amount of
any compensation previously deferred by the Executive, in each case to the
extent theretofore unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination either for Good Reason or without any
reason during the Window Period, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations and the timely
payment or provision of Other Benefits. In such case, all Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination.
7. Non-exclusivity of Rights. Except as provided in Section 6(a)(ii),
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6(c) and 6(d) of this Agreement, nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement with
the Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
8. Full Settlement; Resolution of Disputes. (a) The Company's obligation
---------------------------------------
to make payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and,
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except as provided in Section 6(a)(ii), 6(c) and 6(d) of this Agreement, such
amounts shall not be reduced whether or not the Executive obtains other
employment. If there is any contest by the Company concerning the Payments or
benefits to be provided to the Executive hereunder whether through litigation,
arbitration or mediation, or with respect to the validity or enforceability of,
or liability under, any provision of this Agreement or any guarantee of
performance thereof, and the Executive is the prevailing party, the Company
agrees to pay promptly upon conclusion of the contest all legal fees and
expenses which the Executive may reasonably have incurred.
(b) If there shall be any dispute between the Company and the
Executive (i) in the event of any termination of the Executive's employment by
the Company, whether such termination was for Cause, or (ii) in the event of any
termination of employment by the Executive, whether Good Reason existed, then,
unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or that
Good Reason did not exist, the Company shall pay all amounts, and provide all
benefits, to the Executive and/or the Executive's family or other beneficiaries,
as the case may be, that the Company would be required to pay or provide
pursuant to Section 6(a) or 6(b) hereof as though such termination were by the
Company without Cause or by the Executive with Good Reason; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant to
this paragraph except upon receipt of an undertaking (which need not be secured)
by or on behalf of the Executive to repay all such amounts to which the
Executive is ultimately adjudged by such court not to be entitled.
9. 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 or distribution by the Company to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code 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 (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 upon the
Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when 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 Xxxxxx
Xxxxxxxx LLP (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 serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the
12
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 Section 9, shall be paid by the Company to the Executive 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 Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive's applicable federal income 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 Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(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 claims
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 ten 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 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 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 limitation on the foregoing provisions
of this Section 9(c), the Company shall control all proceedings taken in
connection
13
with such contest and, at its sole option, may pursue or forego 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 (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 9(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 9(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 be offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold in a fiduciary
------------------------
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. 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.
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(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially a ll of the business and/or assets of the Company 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, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be an unfunded obligation of
-------------
the Company.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, 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.
(c) 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:
-------------------
Xxxx Xxx Xxxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
If to the Company:
-----------------
Pogo Producing Company
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Chief Administrative Officer
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.
(d) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(e) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
15
(f) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
(g) This Agreement supersedes the Employment Agreement between
Company and Executive dated as of February 1, 1996 and extended and renewed most
recently as of February 1, 2000, which shall no longer be of any force or
effect.
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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 these presents to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ Xxxx X. Xxx Xxxxxxx
-------------------------------------
Xxxx Xxx Xxxxxxx
POGO PRODUCING COMPANY
By /s/ Xxxx XxXxx
---------------------------------
Xxxx XxXxx
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EXHIBIT A
For purposes of Section 6(b), the value of the option grants that the Executive
would have received in the five years following termination shall be determined
by multiplying the Black-Scholes value of the Executive's most recent annual
grant of stock options (or, if greater, the most recent annual grant prior to a
Change of Control) by a factor of four, using the highest Black-Scholes
valuation during the period beginning one-year period prior to the Change of
Control and ending on the date of the Executive's termination; provided,
however, that if the Executive has been promoted and/or has received a salary
increase since the date of the last annual option grant that would otherwise be
determinative under this provision, the value shall be adjusted upward to
reflect the anticipated increase in grant size associated with the promotion
and/or salary increase, and the value shall also be adjusted upward to reflect
at least the minimum annual salary increases provided for in Section 4(b)(i).
The assumptions used to determine the Black-Scholes value will be consistent
with Company practice. The assumptions used to value the most recent option
grant are as follows:
Volatility: 43.41%
Risk-Free Rate of Return: 5.87% (the rate of interest on 10 year treasury
bonds as of the date of grant)
Dividend Opportunity: $.12/share
Term: 10 years
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