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Exhibit 10.19
▇▇▇▇▇▇ OIL AND GAS COMPANY
CONSULTING AGREEMENT
WITH
▇.▇. ▇▇▇▇▇▇
This Consulting Agreement (the "Agreement") is entered into as of January 4,
2000, by and between ▇▇▇▇▇▇ OIL AND GAS COMPANY ("Company") and ▇.▇. ▇▇▇▇▇▇
("▇▇▇▇▇▇").
WHEREAS, ▇▇▇▇▇▇ has previously held the positions of Chairman,
President and Chief Executive Officer of the Company and certain of its
subsidiaries and affiliates;
WHEREAS, pursuant to a Separation Agreement dated as of January 4,
2000, ▇▇▇▇▇▇ resigned certain positions with the Company and its subsidiaries
and terminated his Employment Agreement, and agreed to enter into this
Agreement; and
WHEREAS, the Company and ▇▇▇▇▇▇ have agreed to certain compensation
payments to ▇▇▇▇▇▇, which are to be paid to ▇▇▇▇▇▇ during the term of this
Agreement and, with respect to the "incentive bonus" to be paid to ▇▇▇▇▇▇ at
such time as the incentive bonus is earned, if at all, regardless of whether
▇▇▇▇▇▇ is performing services under this Agreement; and
WHEREAS, the Company desires to secure the benefit of ▇▇▇▇▇▇'▇
knowledge, experience and services by retaining ▇▇▇▇▇▇ and ▇▇▇▇▇▇ desires to
provide services to the Company and its subsidiaries and affiliates on the terms
and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, agreements and promises set forth herein, and
intending to be legally bound, the parties agree as follows:
1. Consulting. During the Term, as defined below, ▇▇▇▇▇▇ shall make
himself available to perform consulting services with respect to the businesses
conducted by the Company and its subsidiaries and affiliates as such consulting
services may be requested from time to time by the Chief Executive Officer or
the Board of Directors of the Company. On a quarterly basis, the Board of
Directors, in consultation with ▇▇▇▇▇▇, shall set forth goals and objectives to
be pursued by ▇▇▇▇▇▇ on behalf of the Company. Such services provided by ▇▇▇▇▇▇
shall primarily be related to the Company's Russian activities, but may include
other projects, at the discretion of the Company. ▇▇▇▇▇▇ shall accommodate
reasonable requests for consulting services, and shall devote his reasonable
best efforts, skill and attention to the performance of such consulting
services, including travel reasonably required in the performance of such
consulting services. Such consulting services are estimated to require
approximately 120 hours of ▇▇▇▇▇▇'▇ time per month, and may include relocation
in Russia. In connection with his services as a consultant to the Company, the
Board will designate ▇▇▇▇▇▇ "Managing Director of Russian Operations." Such
designation is honorary in nature and is designated for the sole purpose of
assisting ▇▇▇▇▇▇ in carrying out his duties under this Agreement. Under no
circumstances is this title deemed to
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designate ▇▇▇▇▇▇ as an officer, employee or representative of the Company, other
than as a consultant under this Agreement, and he shall have no authority to
bind or commit the Company in any way.
2. Term. The term of ▇▇▇▇▇▇'▇ engagement under this Agreement shall be
for a period of time beginning on January 4, 2000 and ending on the earlier of
either (i) December 31, 2006 or (ii) the date which this Agreement is earlier
terminated pursuant to Section 6 (the "Term"). There shall be no extension of
this Agreement other than by written instrument duly executed and delivered by
the parties hereto pursuant to Section 14.
3. Consulting Fees and Expenses. During the Term, the Company shall pay
or cause to be paid to ▇▇▇▇▇▇ the following annual amounts in equal monthly
installments (subject to proration for a partial period) on the last day of each
monthly period during the Term to an account designated in writing by ▇▇▇▇▇▇ as
follows:
January 4, 2000 to June 1, 2001 $485,000 per annum
June 1, 2001 to December 31, 2001 $120,000 per annum
January 1, 2002 to December 31, 2002 $240,000 per annum
January 1, 2003 to December 31, 2003 $170,000 per annum(1)
January 1, 2004 to December 31, 2004 $100,000 per annum(1)
January 1, 2005 to December 31, 2005 $100,000 per annum(1)
January 1, 2006 to December 31, 2006 $ 50,000 per annum(1)
In addition, ▇▇▇▇▇▇ shall be reimbursed for reasonable, documented,
out-of-pocket expenses incurred in connection with the consulting services
rendered pursuant to this Agreement; provided that such expenses are submitted
for reimbursement within thirty (30) days of the date such expenses are
incurred.
The Company will reimburse ▇▇▇▇▇▇ for his cost of life, health and
medical coverage on the same basis as it is being provided to employees of the
Company from time to time, but in no event more than $12,000 per annum. The
Company shall provide adequate office space for ▇▇▇▇▇▇ to perform his duties at
either, in the Company's sole discretion, the Company's offices or off-site. In
addition, the Company shall provide ▇▇▇▇▇▇ with support staff and supplies and
equipment, which it believes are reasonably necessary for ▇▇▇▇▇▇ to perform his
duties, which shall include for at least the first 1 1/2 years of the term of
this Agreement, the support staff and supplies and equipment agreed upon by the
Company and ▇▇▇▇▇▇ and attached hereto as Exhibit A.
4. Incentive Bonus. ▇▇▇▇▇▇ shall be entitled to additional incentive
bonuses for so long as the licenses for Geoilbent, Ltd. and Arctic Gas are owned
by the Company or its successors or assigns, measured as follows:
--------
(1) Such payments, including $50,000 of the payments in 2003, shall be
considered to be a draw against any incentive bonus payable pursuant to Section
4 hereof.
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a. An amount attributable to all hydrocarbon production from
Geoilbent, Ltd. equal to 1% of the net cash receipts received
by the Company in the United States (after deduction of all
taxes imposed on such receipts and excluding any repayment by
Geoilbent, Ltd. of indebtedness or advances by the Company)
for so long as Geoilbent, Ltd. is receiving funds from
hydrocarbon production and distributing such funds to the
Company.
b. An amount attributable to all hydrocarbon production from
Arctic Gas equal to 2% of the net cash receipts received by
the Company in the United States (after deduction of all taxes
imposed on such receipts and excluding any repayment by Arctic
Gas of indebtedness or advances by the Company) for so long as
Arctic Gas is receiving funds from hydrocarbon production and
distributing such funds to the Company.
In addition, in the event that the Company sells directly or indirectly
all or any portion of its interest (the "Interest") in Geoilbent, Ltd. or Arctic
Gas, ▇▇▇▇▇▇ shall be entitled to an incentive bonus measured by the proceeds
actually received by the Company in the United States equal to 1% of its net
after-tax cash receipts resulting from the sale of the Interest of Geoilbent,
Ltd. and 2% of its net after-tax cash receipts resulting from the sale of the
Interest in Arctic Gas, both excluding any repayment of indebtedness or advances
by the Company.
All such bonuses shall be payable to ▇▇▇▇▇▇ within sixty (60) days
after such funds have been received by the Company in the United States and
shall be subject to normal withholding taxes. In the event that the Company
directs that any payments to it under this section be directed to some other
jurisdiction other than the United States, ▇▇▇▇▇▇ shall be entitled to his
incentive bonus as if the funds were received in the United States. ▇▇▇▇▇▇
agrees that five (5%) percent of any bonuses received hereunder shall be used
solely for the purpose of making payments to the Company on account of the
unsecured portion of ▇▇▇▇▇▇'▇ debt to the Company, in such amounts and upon such
terms and conditions as are contained in a Chapter 11 plan of reorganization
that the Company has either proposed or has voted in favor of, and which is the
subject of a final, non-appealable order confirming such plan of reorganization.
This incentive bonus does not require or imply that the Company will continue to
proceed with the development of Geoilbent, Ltd. or Arctic Gas or that it will
fund any of these activities. Such determination will be made by the Company's
Board of Directors.
5. Right of First Refusal. The Company grants to ▇▇▇▇▇▇ during the Term
of this Agreement and for a period of one (1) year thereafter, a right of first
refusal to purchase any and all interest (the "Interest") which the Company may
sell or dispose of in any manner with respect to Geoilbent, Ltd. or Arctic Gas.
If the Company desires to sell all or any part of its Interest in Geoilbent or
Arctic Gas, the Company shall first provide to ▇▇▇▇▇▇ a copy of a bona fide
written offer by a third party ("Third Party") to purchase the Interest which
the Company wishes to accept. ▇▇▇▇▇▇ thereupon shall have the right, but not the
obligation, to purchase all, but not less than all, of such Interest. The terms
of the purchase of such Interest hereunder shall be the terms set forth in the
bona fide offer by the Third Party. Any election to purchase hereunder shall
reflect the terms upon which the purchaser has elected to purchase the Interest.
If ▇▇▇▇▇▇ wishes to exercise his right to purchase, he must give written notice
of his intent to exercise the right
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within thirty (30) days after receiving the bona fide offer from the Company. If
▇▇▇▇▇▇ does not exercise his rights to purchase, the Company may transfer such
Interest to the Third Party pursuant to the terms of the original offer.
If the Company does not sell its Interest so offered within 180 days
(commencing on the date upon which ▇▇▇▇▇▇ had been given notification of the
Company's desire to sell the Interest), then such Interest previously released
by ▇▇▇▇▇▇ and still owned by the Company shall again become subject to the terms
and conditions of this Agreement, but only during the term of the Agreement as
determined under Section 2 hereof.
As used in this Agreement, the Company's "sale or disposal" of an
Interest giving rise to ▇▇▇▇▇▇'▇ rights under Sections 4 and 5 hereof shall not
include any farmouts or joint ventures as to such Interest nor the creation of
security interests in the Interest in connection with any financing.
6. Termination. Notwithstanding any provision in this Agreement to the
contrary, prior to the expiration of the term:
a. From January 4, 2000 until June 1, 2001, this Agreement may be
terminated as provided in Exhibit B attached hereto and
incorporated herein.
b. From June 1, 2001 until December 31, 2002, this Agreement may
be terminated by the Company for any of the following reasons
upon ten (10) days written notice to ▇▇▇▇▇▇:
i) the Company, in its sole discretion, elects not to
fund the further development of Geoilbent and Arctic
Gas;
ii) in the sole judgment of the majority of the Board of
Directors of the Company, ▇▇▇▇▇▇ is not performing
his services in the manner the majority of the Board
of Directors deems appropriate;
iii) ▇▇▇▇▇▇'▇ conviction of, guilty plea concerning, no
contest plea concerning or confession of fraud,
theft, embezzlement, or similar malfeasance or any
crime of moral turpitude;
iv) in the sole judgment of a majority of the Board of
Directors of the Company, the material breach by
▇▇▇▇▇▇ of this Agreement; or
In the event that ▇▇▇▇▇▇ disputes the Company's action in
terminating this Agreement pursuant to this Section
(b)(iii)-(iv), and submits such dispute to arbitration
pursuant to Section 7 of this Agreement, the Company shall
make, on a timely basis, all payments due to ▇▇▇▇▇▇ hereunder
into a mutually agreed upon escrow account, until a final
arbitration decision and/or award is made.
c. After December 31, 2002, this Agreement may be terminated by
the Company for any reason upon ten (10) days written notice
to ▇▇▇▇▇▇.
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d. This Agreement:
(i) may be terminated by the mutual written agreement of
the parties hereto;
(ii) shall be terminated without any additional action in
the event of ▇▇▇▇▇▇'▇ death or adjudicated
incompetency; and
(iii) may be terminated by the Company in the event ▇▇▇▇▇▇
shall become disabled by illness, injury or other
incapacity as a result of which ▇▇▇▇▇▇ is unable to
perform services under this Agreement for a period or
periods aggregating ninety (90) days in any twelve
(12) consecutive months.
e. Any termination of this Agreement by the Company or by ▇▇▇▇▇▇
shall be communicated by written notice of termination to the
other party hereto in accordance with Section 12 of this
Agreement. For purposes of this Agreement, a "notice of
termination" shall mean a written notice.
f. Upon termination of this Agreement pursuant to paragraph a, b
or c of this Section, ▇▇▇▇▇▇ or ▇▇▇▇▇▇'▇ heirs, as the case
may be, shall be entitled to receive:
(i) any unpaid fees or bonuses earned through the Date of
Termination and with respect to Section 4, as
provided therein; and
(ii) any unpaid expenses incurred prior to the Date of
Termination and submitted for reimbursement in
accordance with Section 3 hereof; and
(iii) except as otherwise specifically set forth herein,
the Company shall have no further obligation to
▇▇▇▇▇▇ or ▇▇▇▇▇▇'▇ heirs.
7. Arbitration. Any dispute between the parties arising out of this
Agreement, including but not limited to any dispute regarding any aspect of this
Agreement, its formation, validity, interpretation, effect, performance or
breach ("arbitrable dispute") shall be submitted to arbitration in the city of
Santa Barbara, California, before an experienced arbitrator who is either
licensed to practice law in California, or is a retired judge. The parties agree
to make a good faith effort to select a mutually agreeable arbitrator. However,
if the parties are unable to reach agreement on an arbitrator within 30 days,
one will be selected pursuant to the commercial rules of the American
Arbitration Association or any successor rules thereto. The arbitration shall be
conducted in accordance with the commercial rules of the American Arbitration
Association or any successor rules. The arbitrator shall award to the prevailing
party in any such arbitration its costs, expenses, and reasonable attorneys'
fees incurred in connection with the arbitration, in an aggregate amount not to
exceed $10,000. The Company and ▇▇▇▇▇▇ shall each be responsible for payment of
one-half of the amount of any arbitrator's fee(s) payable prior to the existence
of a prevailing party, such amounts to be repaid to the prevailing party
pursuant to the previous sentence. The arbitrator's decision and/or award will
be final and binding and fully enforceable and subject to an entry of judgment
by any court of competent jurisdiction.
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8. ▇▇▇▇▇▇'▇ Independence and Discretion. Nothing herein contained shall
be construed to constitute the parties hereto as partners or as joint venturers,
or either as agent of the other, or as employer and employee. By virtue of the
relationship described herein ▇▇▇▇▇▇'▇ relationship to the Company during the
term of this Agreement shall only be that of an independent contractor, and
▇▇▇▇▇▇ shall perform all services pursuant to this Agreement as an independent
contractor. ▇▇▇▇▇▇ shall not provide any services under the business name of the
Company or its subsidiaries or affiliates and shall not present himself as an
employee of the Company or its subsidiaries or affiliates.
9. Successors and Assigns; Binding Agreement. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns, provided,
however, that the services to be provided by ▇▇▇▇▇▇ hereunder are personal to
▇▇▇▇▇▇ and may not be delegated or assigned by him.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflict
of law rules thereof.
11. Waiver. The waiver by either party hereto of any right hereunder of
any failure to perform or breach by the other party hereto shall not be deemed a
waiver or any other right hereunder or of any other failure or breach by the
other party hereto, whether of the same or a similar nature or otherwise. No
waiver shall be deemed to have occurred unless set forth in writing executed by
or on behalf of the waiving party. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
12. Notices. All notices or communications that are required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given when delivered personally or sent overnight carrier service to
the parties at the following addresses:
The Company: ▇▇▇▇▇▇ Oil and Gas Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇: XXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
or to such other address as may be specified in a written notice delivered
personally or sent by overnight courier given by one party to the other party
hereunder.
13. Severability. If for any reason any term or provision of this
Agreement is held to be invalid or unenforceable, all other valid terms and
provisions hereof shall remain in full force and effect, and all of the terms
and provisions of this Agreement shall be deemed to be severable in nature.
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14. Integration Clause. This Agreement (including the Exhibit attached
to this Agreement) constitutes the entire agreement between the parties to this
Agreement with respect to the subject matter of this Agreement, and there are no
other terms, obligations, covenants, representations, statements or conditions
except as set forth in this Agreement. No change or amendment to this Agreement
will be effective unless it is contained in a writing denominated as an
"Amendment to Consulting Agreement" and is signed by both of the parties to this
Agreement. Failure to insist upon strict compliance with any term or provision
of this Agreement will not be deemed to be a waiver of any rights under a
subsequent act or failure to act. The parties to this Agreement acknowledge and
agree that in the event of any subsequent litigation, arbitration proceeding,
controversy or dispute concerning this Agreement, neither of the parties to this
Agreement will be permitted to offer or introduce into evidence any oral
testimony concerning any oral promises or oral agreements between them that
relate to the subject matter of this Agreement that are not included or referred
to in this Agreement and that are not evidenced by a writing entitled "Amendment
to Consulting Agreement" which is signed by both of the parties to this
Agreement.
15. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original for all purposes but which, together, shall
constitute one and the same instrument.
16. Agreement on Plan of Bankruptcy. The parties agree that at the
Company's sole discretion, this Agreement may be declared by the Company to be
null and void if: (1) ▇▇▇▇▇▇ and the Company have not agreed upon and filed a
proposed joint plan of reorganization and disclosure statement in ▇▇▇▇▇▇'▇
Chapter 11 bankruptcy case by February 15, 2000; and/or (2) at any time prior to
the entry of a final, nonappealable order confirming a plan of reorganization
for ▇▇▇▇▇▇ in his Chapter 11 bankruptcy case that the Company either voted in
favor of or proposed, ▇▇▇▇▇▇ does not support the Company's position.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective on the date set forth above.
▇▇▇▇▇▇ OIL AND GAS COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Date: February 18, 2000
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Office of the Chief Executive
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Date: February 17, 2000
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Office of the Chief Executive
/s/ ▇.▇. ▇▇▇▇▇▇ Date: February 17, 2000
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▇.▇. ▇▇▇▇▇▇
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EXHIBIT A
TO
CONSULTING AGREEMENT
WITH
▇.▇. ▇▇▇▇▇▇
1. Fax Machine
2. Computer/Software
3. Copier
4. Telephone
5. Cellular Phone
6. Postage
7. General Office Supplies
8. Office Space/Furniture
9. Office Maintenance
10. Credit Card for Business Use and Telephone Calling Card
11. SOS International Service Card.
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EXHIBIT B
1. Termination
1.1. Right to Terminate by Company. Company may terminate ▇▇▇▇▇▇'▇
Consulting Agreement, through its Board of Directors, immediately upon Notice of
Termination for Cause. The term "Cause" when referring to termination by Company
means only the following and any other termination shall be without Cause: (i)
▇▇▇▇▇▇'▇ gross dereliction of his duties; (ii) theft or misappropriation of any
property of Company by ▇▇▇▇▇▇; (iii) conviction of ▇▇▇▇▇▇ of a felony or of any
crime involving dishonesty or moral turpitude; or (iv) violation by ▇▇▇▇▇▇ of
the provisions of this Agreement; provided that, termination for violation by
▇▇▇▇▇▇ of the provisions of this Agreement shall occur only after 30 days'
advance written notice by Company to ▇▇▇▇▇▇ containing reasonably specific
details of the alleged breach and failure to cure the same within such 30 day
period.
1.2. Results of Termination by Company.
(i) Termination for Cause. On the Date of Termination for
Cause of ▇▇▇▇▇▇'▇ employment by Company, Company shall pay the fee due under the
Consulting Agreement then in effect through the Date of Termination.
1.3. Termination for Death or Disability. ▇▇▇▇▇▇'▇ agreement shall
terminate upon the earliest of the events specified below:
(i) the death of ▇▇▇▇▇▇;
(ii) the Date of Termination specified in a written Notice of
Termination by reason of physical or mental condition of ▇▇▇▇▇▇ which shall
substantially incapacitate him from performing his principal duties
("Disability") delivered by the Board of Directors to ▇▇▇▇▇▇ at least 30 days
prior to the specified Date of Termination, which shall be any date after the
expiration of any 120 consecutive days during all of which ▇▇▇▇▇▇ shall be
unable, by reason of his Disability, to perform his principal duties, provided
however, that such Notice of Termination shall be null and void if ▇▇▇▇▇▇ fully
resumes the performance of his duties under this Agreement prior to the Date of
Termination set forth in the Notice of Termination.
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1.4. Results of Termination for Death or Disability.
(i) Death of ▇▇▇▇▇▇. If ▇▇▇▇▇▇'▇ agreement is terminated due
to the death of ▇▇▇▇▇▇, Company shall pay the Base salary due ▇▇▇▇▇▇ through the
date on which death occurs;
(ii) Disability of ▇▇▇▇▇▇. If ▇▇▇▇▇▇'▇ employment is terminated
due to the Disability of ▇▇▇▇▇▇ as described in Section 1.3 (ii) of this of this
Agreement, Company shall continue to pay ▇▇▇▇▇▇ his consulting fee for the
90-day period following the specified Date of Termination. After this 90-day
period, Company agrees to pay to ▇▇▇▇▇▇ during each month for the next six
months an amount equal to the difference between ▇▇▇▇▇▇'▇ monthly fee and the
amount which ▇▇▇▇▇▇ receives or is entitled to receive from any long term
disability insurance coverage provided at the cost of the Company for ▇▇▇▇▇▇.
1.5. Right to Terminate by ▇▇▇▇▇▇. ▇▇▇▇▇▇ may terminate his agreement
for good reason or without good reason upon 30 days' written Notice of
Termination. The term "Good Reason" when referring to termination by ▇▇▇▇▇▇
means a material breach by Company of its obligations under this Agreement,
including the payment of money, and only after 30 days' advance written notice
of Termination containing reasonably specific details of the alleged breach and
failure to cure the same within such 30 day period. Termination for any other
reason shall be without Good Reason.
1.6. Results of Termination by ▇▇▇▇▇▇.
(i) Termination for Good Reason. Upon ▇▇▇▇▇▇'▇ termination of
his agreement for Good Reason, Company shall pay the fee then in effect through
June 1, 2001 and Company shall maintain in full force and effect, for the
continued benefit of ▇▇▇▇▇▇ and Benton's dependents for a period terminating on
June 1, 2001 all life, accidental death, medical insurance plans or programs in
which ▇▇▇▇▇▇ was entitled to participate immediately prior to the Date of
Termination, provided that ▇▇▇▇▇▇'▇ continued participation is possible under
the general terms and provisions of such plans and ▇▇▇▇▇▇ continues to pay an
amount equal to his regular contribution for such participation, if any.
(ii) Termination Without Good Reason. Upon employee's
termination without Good Reason of his agreement, Company shall pay the fee due
▇▇▇▇▇▇ through the Date of Termination.
2. Change in Control
2.1 Change in Control and Proposed Change in Control Defined.
(i) No benefits shall be payable to ▇▇▇▇▇▇ pursuant to the
this Section 2 unless there shall have been a Change in Control of the Company
as set for the below. For purposes of Company of a nature that This Agreement a
"Change in Control" shall mean a Change in Control of Company of a nature that
would be required to be reported in response to Item 1 (a) of the
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Current Report on Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); provided that, without limitation, such a Change in Control shall be
deemed to have occurred at such time as
(a) any Person, as such term is used in Section 13 (d) and 14
(d) of the Exchange Act (other than Company, any trustee or other
fiduciary holding securities under an employee benefit plan of Company,
or any company owned, directly or indirectly, by the stockholders of
Company in substantially the same proportions as their ownership of
stock of Company) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of 25% or
more of the combined voting power of Company's outstanding securities;
(b) individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by Company's shareholders, was approved by a vote of at least
a majority of the directors comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of Company in which
such person is named as a nominee for director, without objection to
such nomination) shall be, for purposes of this clause (b), considered
as though such person were a member of the Incumbent Board.
(c) the stockholders of Company approve a merger or
consolidation of Company with any other company, other than (1) a
merger or consolidation which would result in the voting securities of
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding by or being converted into voting
securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of Company or such surviving
entity outstanding immediately after such merger or consolidation or
(2) a merger or consolidation effected to implement a recapitalization
of Company (or similar transition) in which no "Person" (as defined
above) acquires more than 25% of the combined voting power of the
Company's then outstanding securities; or
(d) the stockholders of Company approve a plan of complete
liquidation of Company or an agreement for the sale or disposition by
Company of all or substantially all of Company's assets.
Notwithstanding anything in the foregoing to the contrary, no Change in
Control shall be deemed to have occurred for purposes of this Agreement by
virtue of any transaction which results in ▇▇▇▇▇▇, or a group of Persons which
includes ▇▇▇▇▇▇, acquiring, directly or indirectly, 25% or more of the combined
voting power of the Company's outstanding securities.
(ii) For purposes of this Agreement, a "Proposed Change in
Control" of Company shall be deemed to have occurred if:
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(a) Company enters in an agreement, the consummation of which
would result in the occurrence of a Change in Control of Company;
(b) any person (including Company) publicly announces an
intention to take or to consider taking actions which if consummated
would constitute a change in Control of Company;
(c) any person (other than a trustee or other fiduciary
holding securities under an employee benefit plan of Company, or a
company owned, directly or indirectly, by the stockholders of Company
in substantially the same proportions as their ownership of stock of
Company), who is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 9.5% or more of
the combined voting power of Company's then outstanding securities,
increases his beneficial ownership of such securities through either
successive or simultaneous acquisition by a total of 3 percentage
points or more over the percentage so owned by such person prior to
such acquisition; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Proposed Change in Control of Company has
occurred.
2.2 Continuing Consulting Agreement. If a Proposed Change in Control
occurs prior to the expiration of this Agreement, ▇▇▇▇▇▇ agrees that he will
remain as a consultant of Company until the earliest of (a) a date which in 180
days from the occurrence of such Proposed Change in control of Company, or (b)
the termination of ▇▇▇▇▇▇'▇ Consulting Agreement by reason of death or
Disability as defined in Section 1.3 of this Agreement.
If a Proposed Change in Control occurs prior to the expiration
of this Agreement, Company agrees that it will not terminate ▇▇▇▇▇▇'▇ Consulting
Agreement without Cause until the earliest of (a) a date on which the Board
adopts a resolution to the effect that the actions leading to such Proposed
Change in control have been abandoned or terminated, or (b) the termination of
▇▇▇▇▇▇'▇ Consulting Agreement by reason of Death or Disability as defined in
Section 1.3 of this Agreement.
2.3 Compensation Upon Termination or During Disability.
(i) Compensation Upon Disability. During any period following
a Change in Control that ▇▇▇▇▇▇ fails to perform his duties as a result of
Disability, Company shall pay ▇▇▇▇▇▇ his fee for the 90-day period following the
specified Date of Termination. After this 90-day period, Company agrees to pay
to ▇▇▇▇▇▇ during each month for the next six months an amount equal to the
difference between ▇▇▇▇▇▇'▇ monthly fee and the amount which ▇▇▇▇▇▇ receives or
is entitled to receive from any long term disability insurance coverage carried
by ▇▇▇▇▇▇.
(ii) Compensation Upon Termination by Company for Cause. If
▇▇▇▇▇▇'▇ agreement shall be terminated by Company for Cause following a Change
in Control, Company shall pay the fee then in effect through the Date of
Termination.
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(iii) Compensation Upon Termination by ▇▇▇▇▇▇ for Good Reason.
If, after a Change in Control and prior to June 1, 2001, ▇▇▇▇▇▇'▇ agreement
shall be terminated by ▇▇▇▇▇▇ for Good Reason based on an event occurring
concurrent with or subsequent to a Change in Control, then, at the time
specified in Subsection (vii), ▇▇▇▇▇▇ shall be entitled, without regard to any
contrary provisions, to the benefits as provided below:
(a) The Company shall pay ▇▇▇▇▇▇ his full fee through the Date
of Termination at the rate in effect just prior to the time a Notice of
Termination is given; and
(b) As severance pay and in lieu of any further payments for
periods subsequent to the Date of Termination, Company shall pay to
▇▇▇▇▇▇ at the time specified in subsection (vii), a single lump sum
payment (the "Payment") in an amount in cash equal to three times
▇▇▇▇▇▇'▇ annual fee of $485,000.
(iv) Termination by ▇▇▇▇▇▇ for Good Reason. ▇▇▇▇▇▇ may
terminate his engagement for Good Reason upon 90 day's written Notice of
Termination. Termination by ▇▇▇▇▇▇ for Good Reason shall have the following
additional meanings:
(a) a reduction by Company in ▇▇▇▇▇▇'▇ fee as in effect
immediately prior to the Change in Control;
(b) Company's requiring ▇▇▇▇▇▇ to be based anywhere other than
where ▇▇▇▇▇▇'▇ office is located immediately prior to the Change in
Control, or as set forth in his Agreement, except for required travel
on Company's business to an extent substantially consistent with the
business travel obligations which ▇▇▇▇▇▇ undertook on behalf of the
Company prior to the Change in Control; and
(c) the failure by Company to obtain from any successor the
assent to this Agreement.
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