Exhibit 4.6
SEVERANCE AGREEMENT
Agreement made as of February 20, 1992 between Enterra Corporation,
a Delaware corporation (the "Company"), and M. Xxxxxxx Xxxxx (the "Employee").
WHEREAS, the Employee has previously been employed as Executive Vice
President of CRC-Xxxxx Pipeline International, Inc., a "Subsidiary" (as defined
in Section 1 hereof); and
WHEREAS, as of the date of this Agreement the Employee shall become
employed by the Company as President of the Oilfield Services and Equipment
Group of the Company;
WHEREAS, the Company considers it essential to xxxxxx the employment
of well qualified key management personnel for the Company and its Subsidiaries,
and, in this regard, the board of directors of the Company recognizes that, as
is the case with many publicly held corporations, the possibility of a change in
control of the Company may exist and that such possibility, and the uncertainty
and questions which it may raise among management, may result in the departure
or distraction of key management personnel to the detriment of the Company and
its Subsidiaries;
WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the management of the Company and its
Subsidiaries to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a change in
control of the Company, although no such change is now contemplated; and
WHEREAS, in order to induce the Employee to remain in the employ of
the Company, the Company agrees that the Employee shall receive the compensation
and benefits set forth in this Agreement in the event his employment with such
Subsidiary is terminated subsequent to a "Change of Control" (as defined in
Section l hereof) of the Company as a cushion against the financial and career
impact on the Employee of any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. For all purposes of this Agreement, the
following terms shall have the meanings specified in this Section unless the
context clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Base Salary" shall mean the total cash remuneration earned by
the Employee on an annualized basis in all capacities with the Company and its
Subsidiaries, including any compensation the payment of which has been deferred
pursuant to a salary reduction or deferral plan (including a 401(k) plan, other
than company matching contributions) or agreement, but exclusive of any cash
payments made to him under the Company's Bonus Plan, or any contributions made
for his benefit to the Company's 401(k) Plan or CRC-Xxxxx Plan.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed
the "Beneficial Owner" of securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for payment, purchase or exchange;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including without limitation pursuant to any agreement, arrangement
or understanding, whether or not in writing; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of any
security under this subsection (ii) as a result of an oral or
written agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
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(iii) that are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except,
pursuant to a revocable proxy as described in the proviso to
subsection (ii) above) or disposing of any voting securities of the
Company;
PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of any securities acquired through such Person's participation in good faith in
a firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(d) "Board" shall mean the board of directors of the Company.
(e) "Bonus Plan" shall mean the Company's Management Incentive
Bonus Plan, as in effect immediately prior to a Change of Control.
(f) "Change of Control" shall be deemed to have taken place if (i)
any Person (except the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, any Person or
entity organized, appointed or established by the Company for or pursuant to the
terms of any such employee benefit plan, or an Exempted Person), together with
all Affiliates and Associates of such Person acting in concert as described in
Section 14(d)(2) of the Exchange Act, shall become the Beneficial Owner in the
aggregate of 30% or more of the Common Stock of the Company then outstanding
within the meaning of Rule 13d-3 promulgated under the Exchange Act.
(g) "CRC-Xxxxx Plan" shall mean the CRC-Xxxxx Money Purchase
Pension Plan, as in effect immediately prior to a Change of Control.
(h) "Exempted Person" shall mean any of Shamrock Holdings of
California, Inc., a Delaware corporation ("Shamrock"), Shamrock Holdings, Inc.,
a Delaware corporation ("Shamrock Holdings"), or any Affiliate or Associate of
Shamrock or Shamrock Holdings. "Exempted Person" shall not include transferees
from any Exempted Person except where such transferees are Affiliates or
Associates of Shamrock or Shamrock Holdings.
(i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in
effect immediately prior to a Change of Control.
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(j) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the Employee's 65th birthday.
(k) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(l) "Stock Plan" shall mean the Company's Stock Option Plan or any
successor plan thereto, as in effect immediately prior to a Change of Control.
(m) "Subsidiary" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
(n) "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.
(o) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.
(p) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within two years after a Change of Control
either:
(i) initiated by the Company or any Subsidiary for any
reason other than (x) the Employee's continuous illness, injury or
incapacity for a period of twenty-six consecutive weeks, (y) for
"cause," as defined in Section 8.3 of the Employment Agreement (as
assigned and amended), dated as of February l, 1988, among the
Company, CRC-Xxxxx Pipeline International, Inc. and the Employee
(the "Employment Agreement") , or (z) by reason of the occurrence of
the Normal Retirement Date; or
(ii) initiated by the Employee following one or more of the
following occurrences:
(A) a significant reduction by the Company or its
Subsidiaries of the authority, duties or responsibilities of
the Employee immediately prior to the Change of Control;
(B) any removal of the Employee from or any failure to
re-elect the Employee to the officer positions with the
Company and its Subsidiaries held by him immediately prior to
the Change of Control, except in connection with promotions to
higher office or in connection with consolidations among the
Company's Subsidiaries where the
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Employee is elected to similar positions in the successor
company or companies;
(C) a reduction by the Company in the Employee's Base
Salary as in effect immediately prior to the Change of
Control;
(D) revocation or any modification (except as may be
required in the normal course of business in light of any
requirement of or change in federal law or regulations) of the
Bonus Plan, 401(k) Plan or CRC-Xxxxx Plan, or any action taken
pursuant to the terms of such plans, which materially (x)
reduces the opportunity to receive compensation under any of
such plans of equivalent amounts received by the Employee
during the two fiscal years immediately preceding the Change
of Control, subject to the right of the Board to establish in
a manner consistent with past practice prior to the Change of
Control reasonable goals under such plans, (y) reduces the
compensation payable to the Employee under any of such plans
but which does not effect comparable reductions in the
compensation payable to the other participants in such plans,
or (z) increases the compensation payable to other
participants in any of such plans but which does not effect
corresponding increases in the amount of compensation payable
to the Employee; or
(E) a transfer of the Employee, without his express
written consent, to a location which is outside the general
metropolitan area in which his principal place of business
immediately preceding the Change of Control may be located, or
which is otherwise an unreasonable commuting distance from the
Employee's principal residence at the date of the Change of
Control.
2. NOTICE OF TERMINATION. Any Termination upon a Change of
Control shall be communicated by a Notice of Termination to the other party
hereto given in accordance with Section 14 hereof. 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) briefly
summarizes the facts and circumstances deemed to provide a basis for termination
of the Employee's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall not be more than 15 days after the giving of
such notice).
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3. SEVERANCE COMPENSATION UPON TERMINATION.
(a) Subject to the provisions of Section 10 hereof and to
adjustment as provided in paragraph (b) below and Section 9(a), in the event of
the Employee's Termination upon a Change of Control, the Company shall pay to
the Employee, within fifteen days after the Termination Date (or as soon as
possible thereafter in the event that the procedures set forth in Section 10(b)
hereof cannot be completed within 15 days), an amount in cash equal to two times
the sum of paragraphs (i) and (ii) below:
(i) The Employee's Base Salary in effect either immediately
prior to the Termination of Employment or immediately prior to the
Change of Control, whichever is higher; and
(ii) The average of the annual bonuses earned by the
Employee under the Bonus Plan in the two fiscal years immediately
prior to such Termination of Employment.
(b) In the event the Employee's Normal Retirement Date would occur
prior to twenty-four months after the Termination Date, the aggregate cash
amount determined as set forth in (a) above shall be reduced by multiplying it
by a fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 730. No payments shall be due Employee in the event that the
Normal Retirement Date has been reached prior to the Termination Date.
4. OTHER PAYMENTS. Subject to the provisions of Section 10
hereof, in the event of the Employee's Termination upon a Change of Control, the
Company shall:
(a) pay to the Employee within fifteen days after the Termination
Date, unless the Employee has exercised such options and rights, an amount equal
to the excess, if any, of the aggregate fair market value of the shares of the
Company's Common Stock subject to all stock options and stock appreciation
rights outstanding and unexercised immediately prior to the Termination Date,
whether vested or unvested, granted to the Employee under the Stock Plan, over
the aggregate exercise price of all such stock options. For purposes of this
paragraph, fair market value shall mean the highest of (x) the closing price of
the Company's Common Stock on the business day immediately preceding the
Termination Date, if such Common Stock is publicly traded at such date, (y) if
such Common Stock is not publicly traded at the Termination Date, the value
determined by an independent appraiser, such appraiser to be selected by the
Employee and to be reasonably satisfactory to the Company (the fees and expenses
of such appraiser to be borne by the Company), or (z) the highest
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per share price of the Company's Common Stock paid (in connection with the
Change of Control or at any time thereafter) by the Person or group whose
acquisition of shares of Common Stock of the Company has given rise to a Change
of Control;
(b) to the extent permitted by applicable law, continue or cause
to be continued until 24 months after the Termination Date, on the cost-sharing
basis (if any) in effect immediately prior to the Change of Control, medical,
dental and life insurance benefits (and, at the option of the Employee,
disability insurance benefits) substantially equivalent in all material respects
to those furnished by the Company and its Subsidiaries to the Employee
immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the
Employee's Normal Retirement Date would have occurred prior to 24 months after
the Termination Date, the obligation of the Company to provide such benefits
shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER,
HOWEVER, that the obligation of the Company to provide such benefits shall
cease at such time as the Employee is employed on a full time basis by a
corporation not owned or controlled by the Employee that provides the Employee,
on substantially the same cost-sharing basis (if any) between the Company and
the Employee in effect immediately prior to the Change of Control, with medical,
dental, life and disability insurance benefits substantially equivalent in all
material respects to those furnished by the Company and its Subsidiaries to the
Employee immediately prior to the Change of Control;
(c) for vesting purposes only, in the event of a Termination upon
a Change of Control occurring prior to the Normal Retirement Date, credit the
Employee with the lesser of (i) two additional "years of service" (as defined in
the Company's 401(k) Plan) or (ii) the period of time from the Termination Date
to the Normal Retirement Date under each of the Company's 401(k) Plan and
CRC-Xxxxx Plan, in addition to the years of service that would have otherwise
been calculated by reference solely to the Termination Date, it being understood
that benefits in respect of the two additional years of service shall to the
extent permitted by applicable law be paid to the Employee under the Company's
401(k) Plan or CRC-Xxxxx Plan, and that the Company shall, to the extent
necessary to provide the Employee the additional benefits intended hereby, amend
the 401(k) Plan or CRC-Xxxxx Plan or pay such additional benefits outside the
plan as may be necessary; and
(d) permit the Employee to continue the use of his Company car, if
any, without any cost for a period of six months thereafter. Thereafter, the
Employee shall return the car to the Company unless, in the case of a car owned
by the Company, the Employee elects to purchase the car from the Company at the
net book value thereof at the date of the purchase or, in the case of a car
leased by the Company, the Employee pays the Company, as
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such amounts become due and payable, all rental payments charged to the Company
for the use of such car for the remainder of the lease therefore.
5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of
a Termination upon a Change of Control, and subject to the provisions of Section
10 hereof, all restrictions remaining on the Termination Date on the restricted
shares, if any, received by the Employee, pursuant to the Stock Plan shall
lapse, and said shares shall thereupon be owned by the Employee free and clear
of all restrictions of any nature whatsoever, except those, if any, under
applicable federal and state securities laws.
6. ENFORCEMENT.
(a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within
the respective time periods provided therein, the Company shall pay to the
Employee, in addition to the payment of any other sums provided in this
Agreement, interest, compounded daily, on any amount remaining unpaid from the
date payment is required under Section 3, 4 or 5, as appropriate, until paid to
the Employee, at the rate from time to time announced by Xxxxx Fargo Bank, N.A.
as its "prime rate" plus 2%, each change in such rate to take effect on the
effective date of the change in such prime rate.
(b) It is the intent of the parties that the Employee not be
required to incur any expenses associated with the enforcement of his rights
under this Agreement by arbitration, litigation or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Employee hereunder. Accordingly, the Company
shall pay the Employee on demand the amount necessary to reimburse the Employee
in full for all expenses (including all attorneys' fees and legal expenses)
incurred by the Employee in enforcing any of the obligations of the Company
under this Agreement.
7. NO MITIGATION. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company or any of its Subsidiaries or Affiliates and for which the Employee may
qualify.
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9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES.
(a) The Employment Agreement, the severance plan or policy, if
any, applicable to employees of the Company or the Subsidiary which employs the
Employee, and any other severance payments required by applicable statutes or
provided under government programs may provide compensation and benefits to
Employee upon events which also constitute a Termination upon a Change of
Control as defined in this Agreement. In such event, Employee shall be entitled
only to the largest cash compensation provided for under any of such agreements,
plans, policies, statutes or programs and the maximum benefit continuance
provided for under any of such agreements, plans, policies, statutes or
programs, and the payments referred to in Section 3 hereof shall be reduced to
the extent necessary to effect such coordination of benefits.
(b) Except as specifically set forth in (a) above, the Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Employee or others.
(c) Employee alone, and not the Company or any Subsidiary, shall
be responsible for the payment of all federal, state and local taxes in respect
of the payments to be made and benefits to be provided under this Agreement.
10. CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined as set forth herein that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and that it would be economically advantageous to
the Company to reduce the Payment to avoid or reduce the taxation of excess
parachute payments under Section 4999 of the Code, the aggregate present value
of amounts payable or distributable to or for the benefit of the Employee
pursuant to this Agreement (such payments or distributions pursuant to this
Agreement are hereinafter referred to as "Agreement Payments") shall be reduced
(but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an
amount expressed in present value which maximizes the aggregate present value of
Agreement Payments without causing any Payment to be subject to the taxation
under Section 4999 of the Code. For
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purposes of this Section 10, present value shall be determined in accordance
with Section 280G(d) (4) of the Code.
(b) All determinations to be made under this Section 10 shall be
made by KPMG Peat Marwick, or the Company's independent public accountant
immediately prior to the Change of Control if other than KPMG Peat Marwick (the
"Accounting Firm"), which firm shall use its best efforts to provide its
determinations and any supporting calculations both to the Company and the
Employee within 10 days of the Termination Date. Any such determination by the
Accounting Firm shall be binding upon the Company and the Employee. The Company
shall in its sole discretion determine which and how much of the Agreement
Payments shall be eliminated or reduced consistent with the requirements of this
Section 10. Within five days after the Company's determination, the Company
shall pay (or cause to be paid) or distribute (or cause to be distributed) to or
for the benefit of the Employee such amounts as are then due to the Employee
under this Agreement.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Agreement Payments, as the case may be, will have
been made by the Company which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the Company could have
been made ("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. Within two years after the Termination of
Employment, the Accounting Firm shall review the determination made by it
pursuant to the preceding paragraph. In the event that the Accounting Firm
determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Employee which the Employee shall
repay to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f) (2) of the Code (the "Federal Rate"); PROVIDED,
HOWEVER, that no amount shall be payable by the Employee to the Company if and
to the extent such payment would not reduce the amount which is subject to
taxation under Section 4999 of the Code. In the event that the Accounting Firm
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee together with
interest at the Federal Rate.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above shall
be borne solely by the Company. The Company agrees to indemnify and hold
harmless the Accounting Firm of and from any and all claims, damages and
expenses of any nature resulting from or relating to its determinations pursuant
to subsections (b) and (c) above, except for claims, damages or
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expenses resulting from the gross negligence or willful misconduct of the
Accounting Firm.
11. SETTLEMENT OF ALL DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating
to any provision of this Agreement or the Employee's Termination upon a Change
of Control shall be settled by arbitration in the City of Houston, Texas, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom shall
be selected by the Company and the Employee, respectively, and the third of whom
shall be selected by the other two arbitrators. Each arbitrator selected as
provided herein is required to be or have been a director or an executive
officer of a corporation whose shares of common stock were listed during at
least one year of such service on the New York Stock Exchange or the American
Stock Exchange or quoted on the National Association of Securities Dealers
Automated Quotations System. Any award entered by the arbitrators shall be
final, binding and nonappealable and judgment may be entered thereon by any
party in accordance with applicable law in any court of competent
jurisdiction. This arbitration provision shall be specifically
enforceable. The fees of the American Arbitration Association and the
arbitrators and any expenses relating to the conduct of the arbitration shall be
paid by the Company.
(b) The party or parties challenging the right of the Employee to
the benefits of this Agreement shall in all circumstances have the burden of
proof.
12. TERM OF AGREEMENT. This Agreement shall commence as of the
date first written above and shall continue in effect until the earlier of (i)
the date upon which the Employee ceases to be in the employ of the Company or
any Subsidiary thereof for any reason other than a Termination upon a Change of
Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED,
HOWEVER, that all of the obligations of the parties hereunder arising after a
Change of Control shall continue in effect until such obligations are satisfied
or have expired.
13. SUCCESSOR COMPANY. The Company shall require any successor
or successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession or successions had taken place. Failure of the
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Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement. As used in this Agreement, the
Company shall mean the Company as hereinbefore defined and any such successor or
successors to its business and/or assets, jointly and severally.
14. NOTICE. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:
If to the Company, to:
Enterra Corporation
00000 Xxxxxxxxx Xxxxxxx
Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxx, Esq.
If to the Employee, to:
M. Xxxxxxx Xxxxx
00000 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
With a required copy to:
Xxxxxxxx, Xxxxx & Xxxx
0000 Xxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx, Esq.
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE
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WITHOUT GIVING EFFECT TO SUCH STATE'S CONFLICT OF LAWS
PROVISIONS.
16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT.
(a) This Agreement is intended to be in addition to the provisions
of the Employment Agreement; provided, however, that in the event of a
Termination upon a Change of Control, (i) Sections 5 and 6 of the Employment
Agreement, and (ii) any similar provisions contained in any agreements then in
effect entered into by Employee with CRC-Xxxxx Pipeline International, Inc., a
Texas corporation, or its predecessor by merger, shall terminate and be of no
further force and effect. Subject to the foregoing, this Agreement supersedes
all prior agreements and sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment executed by the
Employee and approved by the board and executed on the Company's behalf by a
duly authorized officer. The provisions of this Agreement may provide for
payments to the Employee under certain compensation or bonus plans (including
without limitation the Stock Plan, the Bonus Plan, the 401(k) Plan and the
CRC-Xxxxx Plan) under circumstances where such plans would not provide for
payment thereof. It is the specific intention of the parties that the
provisions of this Agreement shall supersede any provisions to the contrary in
such plans, and such plans shall be deemed to have been amended to correspond
with this Agreement without further action by the Company or the Board.
(b) Nothing in this Agreement shall be construed as giving the
Employee any right to be retained in the employ of the Company or any of its
Subsidiaries.
(c) The Employee acknowledges that from time to time, the Company
and its subsidiaries may establish, maintain and distribute employee manuals or
handbooks or personnel policy manuals, and officers or other representatives of
the Company or its Subsidiaries may make written or oral statements relating to
personnel policies and procedures. Such manuals, handbooks and statements are
intended only for general guidance. No policies, procedures or statements of
any nature by or on behalf of the Company or its Subsidiaries (whether written
or oral, and whether or not contained in any employee manual or handbook or
personnel policy manual), and no acts or practices of any nature, shall be
construed to modify this Agreement.
(d) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and
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responsibilities of the Employee and the Company hereunder shall not be
assignable in whole or in part by the Company.
17. SEVERABILITY. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or application.
18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon
the Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, including without limitation any delay
by the Employee in delivering a Notice of Termination pursuant to Section 2
hereof after an event has occurred which would, if the Employee had resigned,
have constituted a Termination upon a Change of Control pursuant to Section
1(p)(ii) of this Agreement.
19. MISCELLANEOUS. All section headings are for convenience
only. This Agreement may be executed in several counterparts, each of which is
an original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement on May 4, 1992, but as of the date first above
written.
Attest: ENTERRA CORPORATION
/s/ M. Gay Xxxxxx By: /s/ D. Xxxx Xxxx
------------------------------ ---------------------------------
M. Gay Xxxxxx D. Xxxx Xxxx
Secretary President and Chief
Executive Officer
/s/ Xxxxxxx X. Xxxxxx /s/ M. Xxxxxxx Xxxxx
------------------------------ ---------------------------------
Witness M. XXXXXXX XXXXX
14
SEVERANCE AGREEMENT
Agreement made as of February 20, 1992 between Enterra Corporation,
a Delaware corporation (the "Company"), and C. Xxxx Xxxxx (the "Employee").
WHEREAS, the Employee has previously been employed as President and
Chief Operating Officer of CRC-Xxxxx Pipeline International, Inc., a
"Subsidiary" (as defined in Section 1 hereof); and
WHEREAS, as of the date of this Agreement the Employee shall become
employed by CRC-Xxxxx Pipeline International, Inc. as its President and Chief
Executive Officer, and shall also hold the title of President of the Pipeline
Services and Equipment Group of the Company;
WHEREAS, the Company considers it essential to xxxxxx the
employment of well qualified key management personnel for the Company and its
Subsidiaries, and, in this regard, the board of directors of the Company
recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control of the Company may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of key management
personnel to the detriment of the Company and its Subsidiaries;
WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the management of the Company and its
Subsidiaries to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a change in
control of the Company, although no such change is now contemplated; and
WHEREAS, in order to induce the Employee to remain in the employ of
the Company's CRC-Xxxxx Pipeline international, Inc. Subsidiary, the Company
agrees that the Employee shall receive the compensation and benefits set forth
in this Agreement in the event his employment with such Subsidiary is terminated
subsequent to a "Change of Control" (as defined in Section l hereof) of the
Company as a cushion against the financial and career impact on the Employee of
any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
l. DEFINITIONS. For all purposes of this Agreement, the
following terms shall have the meanings specified in this Section unless the
context clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities,Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Base Salary" shall mean the total cash remuneration earned by
the Employee on an annualized basis in all capacities with the Company and its
Subsidiaries, including any compensation the payment of which has been deferred
pursuant to a salary reduction or deferral plan (including a 401(k) plan, other
than company matching contributions) or agreement, but exclusive of any cash
payments made to him under the Company's Bonus Plan, or any contributions made
for his benefit to the Company's 401(k) Plan or CRC-Xxxxx Plan.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed
the "Beneficial Owner" of securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for payment, purchase or exchange;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including without limitation pursuant to any agreement, arrangement
or understanding, whether or not in writing; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of any
security under this subsection (ii) as a result of an oral or
written agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and
2
Regulations under the Exchange Act, and (B) is not then reportable
by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) that are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except,
pursuant to a revocable proxy as described in the proviso to
subsection (ii) above) or disposing of any voting securities of the
Company;
PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial
Owner" of any securities acquired through such Person's participation in good
faith in a firm commitment underwriting until the expiration of forty days after
the date of such acquisition.
(d) "Board" shall mean the board of directors- of the Company.
(e) "Bonus Plan" shall mean the Company's Management Incentive
Bonus Plan, as in effect immediately prior to a Change of Control.
(f) "Change of Control" shall be deemed to have taken place if (i)
any Person (except the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, any Person or
entity organized, appointed or established by the Company for or pursuant to the
terms of any such employee benefit plan, or an Exempted Person), together with
all Affiliates and Associates of such Person acting in concert as described in
Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the
aggregate of 30% or more of the Common Stock of the Company then outstanding
within the meaning of Rule 13d-3 promulgated under the Exchange Act.
(g) "CRC-Xxxxx Plan" shall mean the CRC-Xxxxx Money Purchase
Pension Plan, as in effect immediately prior to a Change of Control.
(h) "Exempted Person" shall mean any of Shamrock Holdings of
California, Inc., a Delaware corporation ("Shamrock"), Shamrock Holdings, Inc.,
a Delaware corporation ("Shamrock Holdings"), or any Affiliate or Associate of
Shamrock or Shamrock Holdings. "Exempted Person" shall not include transferees
from any Exempted Person except where such
3
transferees are Affiliates or Associates of Shamrock or Shamrock Holdings.
(i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in
effect immediately prior to a Change of Control.
(j) "Normal Retirement Date" shall mean, the first day of the
calendar month coincident with or next following the Employee's 65th birthday.
(k) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(l) "Stock Plan" shall mean the Company's Stock Option Plan or any
successor plan thereto, as in effect immediately prior to a Change of Control.
(m) "Subsidiary" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
(n) "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.
(o) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.
(p) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within two years after a Change of Control
either:
(i) initiated by the Company or any Subsidiary for any
reason other than (x) the Employee's continuous illness, injury or
incapacity for a period of twenty-six consecutive weeks, (y) for
"cause," as defined in Section 8.3 of the Employment Agreement (as
amended), dated as of February l, 1988, among the Company, CRC-Xxxxx
Pipeline International, Inc. and the Employee (the "Employment
Agreement"), or (z) by reason of the occurrence of the Normal
Retirement Date; or
(ii) initiated by the Employee following one or more of the
following occurrences:
(A) a significant reduction by the Company or its
Subsidiaries of the authority, duties or responsibilities of the
Employee immediately prior to the Change of Control;
4
(B) any removal of the Employee from or any failure to
re-elect the Employee to the officer positions with the Company and
its Subsidiaries held by him immediately prior to the Change of
Control, except in connection with promotions to higher office or
in connection with consolidations among the Company's Subsidiaries
where the Employee is elected to similar positions in the successor
company or companies;
(C) a reduction by the Company in the Employee's Base
Salary as in effect immediately prior to the Change of Control;
(D) revocation or any modification (except as may be
required in the normal course of business in light of any
requirement of or change in federal law or regulations) of the
Bonus Plan, 401(k) Plan or CRC-Xxxxx Plan, or any action taken
pursuant to the terms of such plans, which materially (x) reduces
the opportunity to receive compensation under any of such plans of
equivalent amounts received by the Employee during the two fiscal
years immediately preceding the Change of Control, subject to the
right of the Board to establish in a manner consistent with past
practice prior to the Change of Control reasonable goals under such
plans, (y) reduces the compensation payable to the Employee under
any of such plans but which does not effect comparable reductions
in the compensation payable to the other participants in such
plans, or (z) increases the compensation payable to other
participants in any of such plans but which does not effect
corresponding increases in the amount of compensation payable to
the Employee; or
(E) a transfer of the Employee, without his express written
consent, to a location which is outside the general metropolitan
area in which his principal place of business immediately preceding
the Change of Control may be located, or which is otherwise an
unreasonable commuting distance from the Employee's principal
residence at the date of the Change of Control.
2. NOTICE OF TERMINATION. Any Termination upon a Change of
Control shall be communicated by a Notice of Termination to the other party
hereto given in accordance with Section 14 hereof. 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,
5
(ii) briefly summarizes the facts and circumstances deemed to provide a basis
for termination of the Employee's employment under the provision so indicated,
and (iii) if the termination date is other than the date of receipt of such
notice, specifies the termination date (which date shall not be more than 15
days after the giving of such notice)
3. SEVERANCE COMPENSATION UPON TERMINATION.
(a) Subject to the provisions of Section 10 hereof and to
adjustment as provided in paragraph (b) below and Section 9(a), in the event of
the Employee's Termination upon a Change of Control, the Company shall pay to
the Employee, within fifteen days after the Termination Date (or as soon as
possible thereafter in the event that the procedures set forth in Section 10(b)
hereof cannot be completed within 15 days), an amount in cash equal to two times
the sum of paragraphs (i) and (ii) below:
(i) The Employee's Base Salary in effect either immediately
prior to the Termination of Employment or immediately prior to the
Change of Control, whichever is higher; and
(ii) The average of the annual bonuses earned by the
Employee under the Bonus Plan in the two fiscal years immediately
prior to such Termination of Employment.
(b) In the event the Employee's Normal Retirement Date would occur
prior to twenty-four months after the Termination Date, the aggregate cash
amount determined as set forth in (a) above shall be reduced by multiplying it
by a fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 730. No payments shall be due Employee in the event that the
Normal Retirement Date has been reached prior to the Termination Date.
4. OTHER PAYMENTS. Subject to the provisions of Section 10
hereof, in the event of the Employee's Termination upon a Change of Control, the
Company shall:
(a) pay to the Employee within fifteen days after the Termination
Date, unless the Employee has exercised such options and rights, an amount equal
to the excess, if any, of the aggregate fair market value of the shares of the
Company's Common Stock subject to all stock options and stock appreciation
rights outstanding and unexercised immediately prior to the Termination Date,
whether vested or unvested, granted to the Employee under the Stock Plan, over
the aggregate exercise price of all such stock options. For purposes of this
paragraph, fair market value shall mean the highest of (x) the closing price of
the Company's
6
Common Stock on the business day immediately preceding the Termination Date, if
such Common Stock is publicly traded at such date, (y) if such Common Stock is
not publicly traded at the Termination Date, the value determined by an
independent appraiser, such appraiser to be selected by the Employee and to be
reasonably satisfactory to the Company (the fees and expenses of such appraiser
to be borne by the Company), or (z) the highest per share price of the Company's
Common Stock paid (in connection with the Change of Control or at any time
thereafter) by the Person or group whose acquisition of shares of Common Stock
of the Company has given rise to a Change of Control;
(b) to the extent permitted by applicable law, continue or cause
to be continued until 24 months after the Termination Date, on the cost-sharing
basis (if any) in effect immediately prior to the Change of Control, medical,
dental and life insurance benefits (and, at the option of the Employee,
disability insurance benefits) substantially equivalent in all material respects
to those furnished by the Company and its subsidiaries to the Employee
immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the
Employee's Normal Retirement Date would have occurred prior to 24 months after
the Termination Date, the obligation of the Company to provide such benefits
shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER,
HOWEVER, that the obligation of the Company to provide such benefits shall
cease at such time as the Employee is employed on a full time basis by a
corporation not owned or controlled by the Employee that provides the Employee,
on substantially the same cost-sharing basis (if any) between the Company and
the Employee in effect immediately prior to the Change of Control, with medical,
dental, life and disability insurance benefits substantially equivalent in all
material respects to those furnished by the Company and its Subsidiaries to the
Employee immediately prior to the Change of Control;
(c) for vesting purposes only, in the event of a Termination upon
a Change of Control occurring prior to the Normal Retirement Date, credit the
Employee with the lesser of (i) two additional "years of service" (as defined in
the Company's 401(k) Plan) or (ii) the period of time from the Termination Date
to the Normal Retirement Date under each of the Company's 401(k) Plan and
CRC-Xxxxx Plan, in addition to the years of service that would have otherwise
been calculated by reference solely to the Termination Date, it being understood
that benefits in respect of the two additional years of service shall to the
extent permitted by applicable law be paid to the Employee under the Company's
401(k) Plan or CRC-Xxxxx Plan, and that the Company shall, to the extent
necessary to provide the Employee the additional benefits intended hereby, amend
the 401(k) Plan or CRC-Xxxxx Plan or pay such additional benefits outside the
plan as may be necessary; and
7
(d) permit the Employee to continue the use of his Company car, if
any, without any cost for a period of six months thereafter. Thereafter, the
Employee shall return the car to the Company unless, in the case of a car owned
by the Company, the Employee elects to purchase the car from the Company at the
net book value thereof at the date of the purchase or, in the case of a car
leased by the Company, the Employee pays the Company, as such amounts become due
and payable, all rental payments charged to the Company for the use of such car
for the remainder of the lease therefore.
5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event
of a Termination upon a Change of Control, and subject to the provisions of
Section 10 hereof, all restrictions remaining on the Termination Date on the
restricted shares, if any, received by the Employee, pursuant to the Stock Plan
shall lapse, and said shares shall thereupon be owned by the Employee free and
clear of all restrictions of any nature whatsoever, except those, if any, under
applicable federal and state securities laws.
6. ENFORCEMENT.
(a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within
the respective time periods provided therein, the Company shall pay to the
Employee, in addition to the payment of any other sums provided in this
Agreement, interest, compounded daily, on any amount remaining unpaid from the
date payment is required under Section 3, 4 or 5, as appropriate, until paid to
the Employee, at the rate from time to time announced by Xxxxx Fargo Bank, N.A.
as its "prime rate" plus 2%, each change in such rate to take effect on the
effective date of the change in such prime rate.
(b) It is the intent of the parties that the Employee not be
required to incur any expenses associated with the enforcement of his rights
under this Agreement by arbitration, litigation or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Employee hereunder. Accordingly, the Company
shall pay the Employee on demand the amount necessary to reimburse the Employee
in full for all expenses (including all attorneys' fees and legal expenses)
incurred by the Employee in enforcing any of the obligations of the Company
under this Agreement.
7. NO MITIGATION. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise.
8
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company or any of its Subsidiaries or Affiliates and for which the Employee may
qualify.
9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES.
(a) The Employment Agreement, the severance plan or policy, if
any, applicable to employees of the Company or the Subsidiary which employs the
Employee, and any other severance payments required by applicable statutes or
provided under government programs may provide compensation and benefits to
Employee upon events which also constitute a Termination upon a Change of
Control as defined in this Agreement. In such event, Employee shall be entitled
only to the largest cash compensation provided for under any of such agreements,
plans, policies, statutes or programs and the maximum benefit continuance
provided for under any of such agreements, plans, policies, statutes or
programs, and the payments referred to in Section 3 hereof shall be reduced to
the extent necessary to effect such coordination of benefits.
(b) Except as specifically set forth in (a) above, the Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Employee or others.
(c) Employee alone, and not the Company or any Subsidiary, shall
be responsible for the payment of all federal, state and local taxes in respect
of the payments to be made and benefits to be provided under this Agreement.
10. CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined as set forth herein that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and that it would be economically advantageous to
the Company to reduce the Payment to avoid or reduce the taxation of excess
parachute payments under Section 4999 of the Code, the aggregate present value
of amounts payable or distributable to or for the benefit of the Employee
pursuant to this Agreement (such payments or
9
distributions pursuant to this Agreement are hereinafter referred to as
"Agreement Payments") shall be reduced (but not below zero) to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present value
which maximizes the aggregate present value of Agreement Payments without
causing any Payment to be subject to the taxation under Section 4999 of the
Code. For purposes of this Section 10, present value shall be determined in
accordance with Section 280G(d) (4) of the Code.
(b) All determinations to be made under this Section 10 shall be
made by KPMG Peat Marwick, or the Company's independent public accountant
immediately prior to the Change of Control if other than KPMG Peat Marwick (the
"Accounting Firm"), which firm shall use its best efforts to provide its
determinations and any supporting calculations both to the Company and the
Employee within 10 days of the Termination Date. Any such determination by the
Accounting Firm shall be binding upon the Company and the Employee. The Company
shall in its sole discretion determine which and how much of the Agreement
Payments shall be eliminated or reduced consistent with the requirements of this
Section 10. Within five days after the Company's determination, the Company
shall pay (or cause to be paid) or distribute (or cause to be distributed) to or
for the benefit of the Employee such amounts as are then due to the Employee
under this Agreement.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Agreement Payments, as the case may be, will have
been made by the Company which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the Company could have
been made ("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. Within two years after the Termination of
Employment, the Accounting Firm shall review the determination made by it
pursuant to the preceding paragraph. In the event that the Accounting Firm
determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Employee which the Employee shall
repay to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code (the "Federal Rate"); PROVIDED,
however, that no amount shall be payable by the Employee to the Company if and
to the extent such payment would not reduce the amount which is subject to
taxation under Section 4999 of the Code. In the event that the Accounting Firm
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee together with
interest at the Federal Rate.
10
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above shall
be borne solely by the Company. The Company agrees to indemnify and hold
harmless the Accounting Firm of and from any and all claims, damages and
expenses of any nature resulting from or relating to its determinations pursuant
to subsections (b) and (c) above, except for claims, damages or expenses
resulting from the gross negligence or willful misconduct of the Accounting
Firm.
11. SETTLEMENT OF ALL DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating
to any provision of this Agreement or the Employee's Termination upon a Change
of Control shall be settled by arbitration in the City of Houston, Texas, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom shall
be selected by the Company and the Employee, respectively, and the third of whom
shall be selected by the other two arbitrators. Each arbitrator selected as
provided herein is required to be or have been a director or an executive
officer of a corporation whose shares of common stock were listed during at
least one year of such service on the New York Stock Exchange or the American
Stock Exchange or quoted on the National Association of Securities Dealers
Automated Quotations System. Any award entered by the arbitrators shall be
final, binding and nonappealable and judgment may be entered thereon by any
party in accordance with applicable law in any court of competent
jurisdiction. This arbitration provision shall be specifically
enforceable. The fees of the American Arbitration Association and the
arbitrators and any expenses relating to the conduct of the arbitration shall be
paid by the Company.
(b) The party or parties challenging the right of the Employee to
the benefits of this Agreement shall in all circumstances have the burden of
proof.
12. TERM OF AGREEMENT. This Agreement shall commence as of the
date first written above and shall continue in effect until the earlier of (i)
the date upon which the Employee ceases to be in the employ of the Company or
any Subsidiary thereof for any reason other than a Termination upon a Change of
Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED,
HOWEVER, that all of the obligations of the parties hereunder arising after a
Change of Control shall continue in effect until such obligations are satisfied
or have expired.
13. SUCCESSOR COMPANY. The Company shall require any successor
or successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets Of the
Company, by agreement in
11
form and substance satisfactory to the Employee, to acknowledge expressly that
this Agreement is binding upon and enforceable against the Company in accordance
with the terms hereof, and to become jointly and severally obligated with the
Company to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession or successions
had taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement. As
used in this Agreement, the Company shall mean the Company as hereinbefore
defined and any such successor or successors to its business and/or assets,
jointly and severally.
14. NOTICE. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:
If to the Company, to:
Enterra Corporation
00000 Xxxxxxxxx Xxxxxxx
Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxx, Esq.
If to the Employee, to:
C. Xxxx Xxxxx
CRC-Xxxxx Pipeline International, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: C. Xxxx Xxxxx
With a required copy to:
Xxxxxxx, XxXxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxx
000 Xxxx 0xx Xxxxxx
Xxxxx, XX 00000-0000
Attention: Xxxxx X. XxXxxxxx, Esq.
12
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO
SUCH STATES CONFLICT OF LAWS PROVISIONS.
16. CONTENTS OF AGREEMENT AMENDMENT AND ASSIGNMENT.
(a) This Agreement is intended to be in addition to the provisions
of the Employment Agreement; provided, however, that in the event of a
Termination upon a Change of Control, (i) Sections 5 and 6 of the Employment
Agreement, and (ii) any similar provisions contained in any agreements then in
effect entered into by Employee with CRC-Xxxxx Pipeline International, Inc., a
Texas corporation, or its predecessor by merger, shall terminate and be of no
further force and effect. Subject to the foregoing, this Agreement supersedes
all prior agreements and sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment executed by the
Employee and approved by the board and executed on the Company's behalf by a
duly authorized officer. The provisions of this Agreement may provide for
payments to the Employee under certain compensation or bonus plans (including
without limitation the Stock Plan, the Bonus Plan, the 401(k) Plan and the
CRC-Xxxxx Plan) under circumstances where such plans would not provide for
payment thereof. It is the specific intention of the parties that the
provisions of this Agreement shall supersede any provisions to the contrary in
such plans, and such plans shall be deemed to have been amended to correspond
with this Agreement without further action by the Company or the Board.
(b) Nothing in this Agreement shall be construed as giving the
Employee any right to be retained in the employ of the Company or any of its
Subsidiaries.
(c) The Employee acknowledges that from time to time, the Company
and its subsidiaries may establish, maintain and distribute employee manuals or
handbooks or personnel policy manuals, and officers or other representatives of
the Company or its Subsidiaries may make written or oral statements relating to
personnel policies and procedures. Such manuals, handbooks and statements are
intended only for general guidance. No policies,
13
procedures or statements of any nature by or on behalf of the Company or its
Subsidiaries (whether written or oral, and whether or not contained in any
employee manual or handbook or personnel policy manual), and no acts or
practices of any nature, shall be construed to modify this Agreement.
(d) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of the Employee and the Company hereunder
shall not be assignable in whole or in part by the Company.
17. SEVERABILITY. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or application.
18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon
the Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, including without limitation any delay
by the Employee in delivering a Notice of Termination pursuant to Section 2
hereof after an event has occurred which would, if the Employee had resigned,
have constituted a Termination upon a Change of Control pursuant to Section 1(p)
(ii) of this Agreement.
19. MISCELLANEOUS. All section headings are for convenience
only. This Agreement may be executed in several counterparts, each of which is
an original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
14
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement on March __, 1992, but as of the date first above
written.
Attest: ENTERRA CORPORATION
/s/ M. Gay Xxxxxx By: /s/ D. Xxxx Xxxx
------------------------------ ------------------------------
M. Gay Xxxxxx D. Xxxx Xxxx
Secretary President and
Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxx /s/ C. Xxxx Xxxxx
------------------------------ --------------------------------
Witness C. XXXX XXXXX
15
SEVERANCE AGREEMENT
Agreement made as of April 1, 1993 between Pipeline Induction Heat
Limited (the "Company") and Xxxxx Xxxxxxx Xxxx (the "Employee").
WHEREAS, the Employee is presently employed by the Company as its
Managing Director;
WHEREAS, the Company considers it essential to xxxxxx the employment
of well qualified key management personnel for the Company and, in this regard,
the directors of the Company recognize that, as is the case with many publicly
held corporations, the possibility of a change in control of Enterra Corporation
("Enterra"), the parent of the Company, may exist and that such possibility, and
the uncertainty and questions which it may raise among management of the
Company, may result in the departure or distraction of key management personnel
to the detriment of the Company;
WHEREAS, the directors of the Company, with the concurrence of
Enterra, have determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of key members of the
management of the Company to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the possibility of a
change in control of Enterra or the Company, although no such change is now
contemplated; and
WHEREAS, in order to induce the Employee to remain in the employ of
the Company, the Company agrees that the Employee shall receive the compensation
and benefits set forth in this Agreement in the event his employment with the
Company is terminated subsequent to a "Change of Control" (as defined in Section
l hereof) of Enterra or the Company as a cushion against the financial and
career impact on the Employee of any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
l. DEFINITIONS. For all purposes of this Agreement, the
following terms shall have the meanings specified in this Section unless the
context clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the U.S. Securities Exchange Act of
1934, as amended (the "Exchange Act").
(b) "Base Salary" shall mean the total cash remuneration earned by
the Employee on an annualized basis in all capacities with the Company and its
Subsidiaries, if any, but exclusive of any cash payments made to him under the
Company's Bonus Plan, if any, or under any type of deferred compensation or
retirement plan;
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed
the "Beneficial Owner" of securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for payment, purchase or exchange;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including without limitation pursuant to any agreement, arrangement
or understanding, whether or not in writing; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of any
security under this subsection (ii) as a result of an oral or
written agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (a) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (b) is not then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
2
(iii) that are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting or disposing
of any voting securities of Enterra;
PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of any securities acquired through such Person's participation in good faith in
a firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(d) "Bonus Plan" shall mean any Company or Enterra bonus plan in
which the Employee participates, as in effect immediately prior to a Change of
Control.
(e) "Change of Control" shall be deemed to have taken place if (i)
any Person (except Enterra, any Subsidiary of Enterra, any employee benefit plan
of Enterra or of any Subsidiary of Enterra, or any Person or entity organized,
appointed or established by Enterra for or pursuant to the terms of any such
employee benefit plan), together with all Affiliates and Associates of such
Person acting in concert as described in Section 14(d)(2) of the Exchange Act,
shall become the Beneficial Owner in the aggregate of 30% or more of the Common
Stock of Enterra then outstanding within the meaning of Rule 13d-3 promulgated
under the Exchange Act, or (ii) the Company ceases to be controlled, directly or
indirectly, by Enterra, or if it sells all or substantially all of its assets to
a company not so controlled by Enterra.
(f) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the Employee's 65th birthday.
(g) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(h) "Stock Plan" shall mean Enterra's Stock Option Plan or any
successor plan thereto, as in effect immediately prior to a Change of Control.
(i) "Subsidiary" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
(j) "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2
3
hereof or any later date specified therein, as the case may be.
(k) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.
(l) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within two years after a Change of Control
either:
(i) initiated by the Company or Enterra for any reason other
than (x) the Employee's continuous illness, injury or incapacity for
a period of six consecutive months, (y) for "cause," which shall
mean misappropriation of funds, habitual insobriety, substance
abuse, conviction of a crime involving moral turpitude, or gross
negligence in the performance of his duties, which gross negligence
has had a material adverse effect on the business, operations,
assets, properties or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, or (z) by reason of the
occurrence of the Normal Retirement Date; or
(ii) initiated by the Employee following one or more of the
following occurrences:
(A) a significant reduction by the Company or its
Subsidiaries, if any, of the authority, duties or
responsibilities of the Employee immediately prior to the
Change of Control;
(B) any removal of the Employee from or any failure to
re-elect the Employee to the officer positions with the
Company and its subsidiaries, if any, held by him immediately
prior to the Change of Control, except in connection with
promotions to higher office or in connection with
consolidations among the Company's Subsidiaries where the
Employee is elected to similar positions in the successor
company or companies;
(C) a reduction by the Company in the Employee's Base
Salary as in effect immediately prior to the Change of
Control;
(D) any revocation or material modification (except as
may be required in the
4
normal course of business in light of any requirement of or
change in applicable law or regulations) of any Bonus Plan or
deferred compensation or retirement plan, or any action taken
pursuant to the terms of any of such plans, which materially
(x) reduces the opportunity to receive compensation under any
of such plans of amounts equivalent to those received by the
Employee during the two fiscal years immediately preceding the
Change of Control, subject to the right of the directors of
the Company or of Enterra to establish in a manner consistent
with past practice prior to the Change of Control reasonable
goals under such plans, (y) reduces the compensation payable
to the Employee under any of such plans but which does not
effect comparable reductions in the compensation payable to
the other participants in such plans, or (z) increases the
compensation payable to other participants in any of such
plans but which does not effect corresponding increases in the
amount of compensation payable to the Employee; or
(E) a transfer of the Employee, without his express
written consent, to a location which is outside the general
metropolitan area in which his principal place of business
immediately preceding the Change of Control may be located, or
which is otherwise an unreasonable commuting distance from the
Employee's principal residence at the date of the Change of
Control.
2. NOTICE OF TERMINATION. Any Termination upon a Change of
Control shall be communicated by a Notice of Termination to the other party
hereto given in accordance with Section 12 hereof. 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) briefly
summarizes the facts and circumstances deemed to provide a basis for termination
of the Employee's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall not be more than 15 days after the giving of
such notice).
5
3. SEVERANCE COMPENSATION UPON TERMINATION.
(a) Subject to the adjustments provided in paragraph (b) below and
Section 9(a) hereof, in the event of the Employee's Termination upon a Change of
Control, the Company shall pay to the Employee, within 15 days after the
Termination Date, an amount in cash equal to two times the sum of paragraphs (i)
and (ii) below:
(i) the Employee's Base Salary in effect either immediately
prior to the Termination of Employment or immediately prior to the
Change of Control, whichever is higher; and
(ii) the average of the annual bonuses earned by the Employee
under any Bonus Plan in the two fiscal years immediately prior to
such Termination of Employment.
(b) In the event the Employee's Normal Retirement Date would occur
prior to 24 months after the Termination Date, the aggregate cash amount
determined as set forth in (a) above shall be reduced by multiplying it by a
fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 730. No payments shall be due Employee in the event that the
Normal Retirement Date has been reached prior to the Termination Date.
4. OTHER PAYMENTS. In the event of the Employee's Termination
upon a Change of Control, the Company shall also:
(a) pay to the Employee within 15 days after the Termination Date,
unless the Employee has exercised such options and rights, an amount equal to
the excess, if any, of the aggregate fair market value of the shares of
Enterra's Common Stock subject to all stock options and stock appreciation
rights outstanding and unexercised immediately prior to the Termination Date,
whether vested or unvested, granted to the Employee under the Stock Plan, over
the aggregate exercise price of all such stock options. Upon such payment, the
options or rights shall terminate. For purposes of this paragraph, fair market
value shall mean the highest of (x) the closing price of Enterra's Common Stock
on the business day immediately preceding the Termination Date, if such Common
Stock is publicly traded at such date, (y) if such Common Stock is not publicly
traded at the Termination Date, the value determined by an independent
appraiser, such appraiser to be selected by the Employee and to be reasonably
satisfactory to the Company (the fees and expenses of such appraiser to be borne
by the Company), and (z) in respect of a Change of Control under Section 1(e)(i)
hereof, the highest
6
per share price of Enterra's Common Stock paid (in connection with the Change of
Control or at any time thereafter) by the Person or group whose acquisition of
shares of Common Stock of Enterra has given rise to a Change of Control;
(b) to the extent permitted by applicable law, continue or cause to
be continued until 24 months, after the Termination Date, on the cost-sharing
basis (if any) in effect immediately prior to the Change of Control, medical,
dental and life insurance benefits (and, at the option of the Employee,
disability insurance benefits) substantially equivalent in all material respects
to those furnished by the Company and its Subsidiaries to the Employee
immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the
Employee's Normal Retirement Date would have occurred prior to 24 months after
the Termination Date, the obligation of the Company to provide such benefits
shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER,
HOWEVER, that the obligation of the Company to provide such benefits shall
cease at such time as the Employee is employed on a full time basis by a
corporation not owned or controlled by the Employee that provides the Employee,
on substantially the same cost-sharing basis (if any) between the Company and
the Employee in effect immediately prior to the Change of Control, with medical,
dental, life and disability insurance benefits substantially equivalent in all
material respects to those furnished by the Company and its Subsidiaries to the
Employee immediately prior to the Change of Control; and
(c) permit the Employee to receive any car allowance or continue the
use of his Company car, if any, without any cost for a period of six months
thereafter. Thereafter, the Employee shall return the car to the Company unless,
in the case of a car owned by the Company, the Employee elects to purchase the
car from the Company at the net book value thereof at the date of the purchase
or, in the case of a car leased by the Company, the Employee pays the Company,
as such amounts become due and payable, all rental payments charged to the
Company for the use of such car for the remainder of the lease therefor.
5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event
of a Termination upon a Change of Control, all restrictions remaining on the
Termination Date on the restricted shares, if any, received by the Employee
pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned
by the Employee free and clear of all restrictions of any nature whatsoever,
except those, if any, under applicable U.S. federal and state securities laws.
7
6. ENFORCEMENT.
(a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within
the respective time periods provided therein, the Company shall pay to the
Employee, in addition to the payment of any other sums provided in this
Agreement, interest, compounded daily, on any amount remaining unpaid from the
date payment is required under Section 3, 4 or 5, as appropriate, until paid to
the Employee, at the rate from time to time announced by Xxxxx Fargo Bank, N.A.
as its "prime rate" plus 2%, each change in such rate to take effect on the
effective date of the change in such prime rate.
(b) It is the intent of the parties that the Employee not be
required to incur any expenses associated with the enforcement of his rights
under this Agreement by arbitration, litigation or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Employee hereunder. Accordingly, the Company
shall pay the Employee on demand the amount necessary to reimburse the Employee
in full for all expenses (including all attorneys' fees and legal expenses)
incurred by the Employee in enforcing any of the obligations of the Company
under this Agreement.
7. NO MITIGATION. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by
Enterra, the Company or any of the Company's Subsidiaries or Affiliates and for
which the Employee may qualify.
9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES.
(a) The severance plan or policy, if any, applicable to employees
of the Company or any Subsidiary which employs the Employee, and any other
severance payments required by employment contracts or statutes or provided
under government programs may provide compensation and benefits to the Employee
upon events which also constitute a Termination upon a Change of Control as
defined in this Agreement. In such event, Employee shall be entitled only to
the largest cash compensation provided for under any of such agreements, plans,
policies, statutes or programs and the maximum benefit continuance provided for
under any of such
8
agreements, plans, policies, statues or programs, and the payments referred to
in Section 3 hereof shall be reduced to the extent necessary to effect such
coordination of benefits.
(b) Except as specifically set forth in (a) above, the Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Employee or others.
(c) Employee alone, and not Enterra, the Company or any
Subsidiary, shall be responsible for the payment of all taxes in respect of the
payments to be made and benefits to be provided under this Agreement.
10. SETTLEMENT OF ALL DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating
to any provision of this Agreement or the Employee's Termination upon a Change
of Control shall be settled by arbitration in the City of Houston, Texas, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, one of whom shall
be selected by the Company, one of whom shall be selected by the Employee and
the third of whom shall be selected by the other two arbitrators. Each
arbitrator selected as provided herein is required to be or have been a director
or an executive officer of a corporation whose shares of common stock were
listed during at least one year of such service on the New York Stock Exchange
or the American Stock Exchange or quoted on the National Association of
Securities Dealers Automated Quotations System. Any award entered by the
arbitrators shall be final, binding and nonappealable and judgment may be
entered thereon by any party in accordance with applicable law in any court of
competent jurisdiction. This arbitration provision shall be specifically
enforceable. The fees of the American Arbitration Association and the
arbitrators and any expenses relating to the conduct of the arbitration shall be
paid by the Company.
(b) The party or parties challenging the right of the Employee to
the benefits of this Agreement shall in all circumstances have the burden of
proof.
11. TERM OF AGREEMENT. This Agreement shall commence as of the
date first written above and shall continue in effect until the earlier of (i)
March 31, 1998 or such earlier date upon which the Employee ceases to be in the
employ of the Company or any Subsidiary thereof for any
9
reason other than a Termination Upon a Change of Control, or (ii) 24 months
after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the
obligations of the parties hereunder arising after a Change of Control shall
continue in effect until such obligations are satisfied or have expired.
12. NOTICES. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and may be delivered personally or mailed by overnight express
courier service, as follows:
If to the Company, to:
Enterra Corporation
0000 Xxxxx Xxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
XXX
Attention: The Chairman
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
XXX
Attention: Xxxxx X. Xxxx, Esq.
If to the Employee, to:
Xxxxx Xxxxxxx Xxxx
Rest Harrow
Benty Xxxxx Xxxx
Willaston
Cheshire
England
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, on the next business
day in the case of overnight express courier service or when actually received
if sent in any other fashion.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS XX XXX XXXXX XX
00
XXXXXXXX, XXXXXX XXXXXX OF AMERICA, WITHOUT GIVING EFFECT TO
SUCH STATE'S CONFLICT OF LAWS PROVISIONS.
14. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT.
(a) This Agreement supersedes all prior agreements and sets forth
the entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by (i) the Employee and (ii) after approval by
the directors of the Company and, in writing, by the chief executive officer of
Enterra, by a duly authorized director of the Company other than the Employee.
The provisions of this Agreement may provide for payments to the Employee under
certain compensation, bonus or stock option plans under circumstances where such
plans would not provide for payment thereof. It is the specific intention of
the parties that the provisions of this Agreement shall supersede any provisions
to the contrary in such plans, and such plans shall be deemed to have been
amended to correspond with this Agreement without further action by the Company
or Enterra.
(b) Nothing in this Agreement shall be construed as giving the
Employee any right to be retained in the employ of Enterra, the Company or any
Subsidiary of either.
(c) The Employee acknowledges that from time to time, Enterra, the
Company and their Subsidiaries may establish, maintain and distribute employee
manuals or handbooks or personnel policy manuals, and officers or other
representatives thereof may make written or oral statements relating to
personnel policies and procedures. Such manuals, handbooks and statements are
intended only for general guidance. No policies, procedures or statements of
any nature by or on behalf of Enterra, the Company or any Subsidiary of either
(whether written or oral, and whether or not contained in any employee manual or
handbook or personnel policy manual), and no acts or practices of any nature,
shall be construed to modify this Agreement.
(d) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of the Employee and the Company hereunder
shall not be assignable in whole or in part by the Company.
15. SEVERABILITY. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or
11
unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
16. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the
Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, including without limitation any delay
by the Employee in delivering a Notice of Termination pursuant to Section 2
hereof after an event has occurred which would, if the Employee had resigned,
have constituted a Termination upon a Change of Control pursuant to Section
1(l)(ii) of this Agreement.
17. MISCELLANEOUS. All section headings are for convenience
only. This Agreement may be executed in several counterparts, each of which
shall be an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the other
counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
The COMMON SEAL of )
PIPELINE INDUCTION HEAT )
LIMITED was hereunto )
affixed in the presence )
of:- )
/s/ Xxxxx Xxxxx
Director
Secretary
SIGNED SEALED and DELIVERED )
by the said XXXXX XXXXXXX ) /s/ Xxxxx X. Xxxx
XXXX in the presence of:- )
12
SEVERANCE AGREEMENT
Agreement made as of February 8, 1990 between Enterra Corporation, a
Delaware corporation (the "Company"), and Xxxxxx X. Xxxxx (the "Employee").
WHEREAS, the Employee is presently employed by the Company as its
Senior Vice President - Finance and Chief Financial Officer;
WHEREAS, the Company considers it essential to xxxxxx the employment
of well qualified key management personnel for the Company and its subsidiaries,
and, in this regard, the board of directors of the Company recognizes that, as
is the case with many publicly held corporations, the possibility of a change in
control of the Company may exist and that such possibility, and the uncertainty
and questions which it may raise among management, may result in the departure
or distraction of key management personnel to the detriment of the Company;
WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the management of the Company and its
Subsidiaries to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a change in
control of the Company, although no such change is now contemplated; and
WHEREAS, in order to induce the Employee to remain in the employ of
the Company, the Company agrees that the Employee shall receive the compensation
and benefits set forth in this Agreement in the event his employment with the
Company is terminated subsequent to a "Change of Control" (as defined in Section
1 hereof) of the Company as a cushion against the financial and career impact on
the Employee of any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
l. DEFINITIONS. For all purposes of this Agreement, the following
terms shall have the meanings specified in this Section unless the context
clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Base Salary" shall mean the total cash remuneration earned by
the Employee on an annualized basis in all capacities with the Company and its
Subsidiaries, including any compensation the payment of which has been deferred
pursuant to a salary reduction or deferral plan (including a 401(k) plan, other
than company matching contributions) or agreement, but exclusive of any cash
payments made to him under the Company's Bonus Plan, or any contributions made
for his benefit to the Company's 401(k) Plan or CRC-Xxxxx Plan.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed
the "Beneficial Owner" of securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for payment, purchase or exchange;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including without limitation pursuant to any agreement, arrangement
or understanding, whether or not in writing; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of any
security under this subsection (ii) as a result of an oral or
written agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of
2
the General Rules and Regulations under the Exchange Act, and (B) is
not then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except,
pursuant to a revocable proxy as described in the proviso to
subsection (ii) above or the May 2, 1986 option agreement between
Shamrock Holdings, Inc. and the shareholders known as the "SGS
Group" or their successors) or disposing of any voting securities of
the Company;
PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of any securities acquired through such Person's participation in good faith in
a firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(d) "Board" shall mean the board of directors of the Company.
(e) "Bonus Plan" shall mean the Company's Management Incentive
Bonus Plan, as in effect immediately prior to a Change of Control.
(f) "Change of Control" shall be deemed to have taken place if (i)
any Person (except the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, any Person or
entity organized, appointed or established by the Company for or pursuant to the
terms of any such employee benefit plan, or an Exempted Person), together with
all Affiliates and Associates of such Person acting in concert as described in
Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the
aggregate of 30% or more of the Common Stock of the Company then outstanding
within the meaning of Rule 13d-3 promulgated under the Exchange Act.
(g) "CRC-Xxxxx Plan" shall mean the CRC-Xxxxx Money Purchase
Pension Plan, as in effect immediately prior to a Change of Control.
(h) "Exempted Person" shall mean any of Shamrock Holdings of
California, Inc., a Delaware corporation
3
("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock
Holdings"), or any Affiliate or Associate of shamrock or Shamrock Holdings.
"Exempted Person" shall not include transferees from any Exempted Person except
where such transferees are Affiliates or Associates of shamrock or Shamrock
Holdings.
(i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in
effect immediately prior to a Change of Control.
(j) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the Employee's 65th birthday.
(k) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(l) "Stock Plan" shall mean the Company's Stock Option Plan or any
successor plan thereto, as in effect immediately prior to a Change of Control.
(m) "Subsidiary" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
(n) "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.
(o) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.
(p) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within two years after a Change of Control
either:
(i) initiated by the Company for any reason other than (x)
the Employee's continuous injury or incapacity for a period of six
consecutive months, (y) for "cause," which shall mean
misappropriation of funds, habitual insobriety, substance abuse,
conviction of a crime involving moral turpitude, or gross negligence
in the performance of his duties, which gross negligence has had a
material adverse effect on the business, operations, assets,
properties or financial condition of the Company and its
Subsidiaries taken as a whole, or (z) by reason of the occurrence of
the Normal Retirement Date; or
4
(ii) initiated by the Employee following one or more of the
following occurrences:
(A) a significant reduction by the Company or its
Subsidiaries of the authority, duties or responsibilities of
the Employee immediately prior to the Change of Control;
(B) any removal of the Employee from or any failure to
re-elect the Employee to the officer positions with the
Company and its Subsidiaries held by him immediately prior to
the Change of Control, except in connection with promotions to
higher office or in connection with consolidations among the
Company's Subsidiaries where the Employee is elected to
similar positions in the successor company or companies;
(C) a reduction by the Company in the Employee's Base
Salary as in effect immediately prior to the Change of
Control;
(D) revocation or any modification (except as may be
required in the normal course of business in light of any
requirement of or change in federal law or regulations) of the
Bonus Plan, 401(k) Plan or CRC-Xxxxx Plan, or any action taken
pursuant to the terms of such plans, which materially (x)
reduces the opportunity to receive compensation under any
of such plans of equivalent amounts received by the Employee
during the two fiscal years immediately preceding the Change
of Control, subject to the right of the Board to establish in
a manner consistent with past practice prior to the Change of
Control reasonable goals under such plans, (y) reduces the
compensation payable to the Employee under any of such
plans but which does not effect comparable reductions in the
compensation payable to the other participants in such plans,
or (z) increases the compensation payable to other
participants in any of such plans but which does not effect
corresponding increases in the amount of compensation
payable to the Employee; or
(E) a transfer of the Employee, without his express
written consent, to a location which is outside the general
metropolitan area in which his principal place of business
5
immediately preceding the Change of Control may be located, or
which is otherwise an unreasonable commuting distance from the
Employee's principal residence at the date of the Change of
Control.
2. NOTICE OF TERMINATION. Any Termination upon a Change of
Control shall be communicated by a Notice of Termination to the other party
hereto given in accordance with Section 14 hereof. 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) briefly
summarizes the facts and circumstances deemed to provide a basis for termination
of the Employee's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall not be more than 15 days after the giving of
such notice).
3. SEVERANCE COMPENSATION UPON TERMINATION.
(a) Subject to the provisions of Section 10 hereof and to
adjustment as provided in paragraph (b) below and Section 9(a), in the event of
the Employee's Termination upon a Change of Control, the Company shall pay to
the Employee, within fifteen days after the Termination Date (or as soon as
possible thereafter in the event that the procedures set forth in Section 10(b)
hereof cannot be completed within 15 days), an amount in cash equal to two times
the sum of paragraphs (i) and (ii) below:
(i) The Employee's Base Salary in effect either immediately
prior to the Termination of Employment or immediately prior to the
Change of Control, whichever is higher; and
(ii) The average of the annual bonuses earned by the Employee
under the Bonus Plan in the two fiscal years immediately prior to
such Termination of Employment.
(b) In the event the Employee's Normal Retirement Date would occur
prior to twenty-four months after the Termination Date, the aggregate cash
amount determined as set forth in (a) above shall be reduced by multiplying it
by a fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 730. No payments shall be due Employee in the event that the
Normal Retirement Date has been reached prior to the Termination Date.
6
4. OTHER PAYMENTS. Subject to the provisions of Section 10
hereof, in the event of the Employee's Termination upon a Change of Control, the
Company shall:
(a) pay to the Employee within fifteen days after the Termination
Date, unless the Employee has exercised such options and rights, an amount equal
to the excess, if any, of the aggregate fair market value of the shares of the
Company's Common Stock subject to all stock options and stock appreciation
rights outstanding and unexercised immediately prior to the Termination Date,
whether vested or unvested, granted to the Employee under the Stock Plan, over
the aggregate exercise price of all such stock options. For purposes of this
paragraph, fair market value shall mean the highest of (x) the closing price of
the Company's Common Stock on the business day immediately preceding the
Termination Date, if such Common Stock is publicly traded at such date, (y) if
such Common stock is not publicly traded at the Termination Date, the value
determined by an independent appraiser, such appraiser to be selected by the
Employee and to be reasonably satisfactory to the Company (the fees and expenses
of such appraiser to be borne by the Company), or (z) the highest per share
price of the Company's Common stock paid (in connection with the Change of
Control or at any time thereafter) by the Person or group whose acquisition of
shares of Common Stock of the Company has given rise to a Change of Control;
(b) to the extent permitted by applicable law, continue or cause
to be continued until 24 months after the Termination Date, on the cost-sharing
basis (if any) in effect immediately prior to the Change of Control, medical,
dental and life insurance benefits (and, at the option of the Employee,
disability insurance benefits) substantially equivalent in all material respects
to those furnished by the Company and its subsidiaries to the Employee
immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the
Employee's Normal Retirement Date would have occurred prior to 24 months after
the Termination Date, the obligation of the Company to provide such benefits
shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER,
HOWEVER, that the obligation of the Company to provide such benefits shall
cease at such time as the Employee is employed on a full time basis by a
corporation not owned or controlled by the Employee that provides the Employee,
on substantially the same cost-sharing basis (if any) between the Company and
the Employee in effect immediately prior to the Change of Control, with medical,
dental, life and disability insurance benefits substantially equivalent in all
material respects to those furnished by the Company and its subsidiaries to the
Employee immediately prior to the Change of Control;
7
(c) for vesting purposes only, in the event of a Termination upon
a Change of Control occurring prior to the Normal Retirement Date, credit the
Employee with the lesser of (i) two additional "years of service" (as defined in
the Company's 401(k) Plan) or (ii) the period of time from the Termination Date
to the Normal Retirement Date under each of the Company's 401(k) Plan and
CRC-Xxxxx Plan, in addition to the years of service that would have otherwise
been calculated by reference solely to the Termination Date, it being understood
that benefits in respect of the two additional years of service shall be paid to
the Employee under the Company's 401(k) Plan or CRC-Xxxxx Plan, and that the
Company shall, to the extent necessary to provide the Employee the additional
benefits intended hereby, amend the 401(k) Plan or CRC-Xxxxx Plan or pay such
additional benefits outside the plan as may be necessary; and
(d) permit the Employee to continue the use of his Company car, if
any, without any cost for a period of six months thereafter. Thereafter, the
Employee shall return the car to the Company unless, in the case of a car owned
by the Company, the Employee elects to purchase the car from the Company at the
net book value thereof at the date of the purchase or, in the case of a car
leased by the Company, the Employee pays the Company, as such amounts become due
and payable, all rental payments charged to the Company for the use of such car
for the remainder of the lease therefore.
5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event
of a Termination upon a Change of Control, and subject to the provisions of
Section 10 hereof, all restrictions remaining on the Termination Date on the
restricted shares, if any, received by the Employee, pursuant to the Stock Plan
shall lapse, and said shares shall thereupon be owned by the Employee free and
clear of all restrictions of any nature whatsoever, except those, if any, under
applicable federal and state securities laws.
6. ENFORCEMENT.
(a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within
the respective time periods provided therein, the Company shall pay to the
Employee, in addition to the payment of any other sums provided in this
Agreement, interest, compounded daily, on any amount remaining unpaid from the
date payment is required under section 3, 4 or 5, as appropriate, until paid to
the Employee, at the rate from time to time announced by Xxxxx Fargo Bank, N.A.
as its "prime rate" plus 2%, each change in such rate to take effect on the
effective date of the change in such prime rate.
8
(b) It is the intent of the parties that the Employee not be
required to incur any expenses associated with the enforcement of his rights
under this Agreement by arbitration, litigation or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Employee hereunder. Accordingly, the Company
shall pay the Employee on demand the amount necessary to reimburse the Employee
in full for all expenses (including all attorneys' fees and legal expenses)
incurred by the Employee in enforcing any of the obligations of the Company
under this Agreement.
7. NO MITIGATION. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company or any of its Subsidiaries or Affiliates and for which the Employee may
qualify.
9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES.
(a) The severance plan or policy, if any, applicable to employees
of Enterra or the Subsidiary which employs the Employee, and any other severance
payments required by applicable statutes or provided under government programs
may provide compensation and benefits to Employee upon events which also
constitute a Termination upon a Change of Control as defined in this Agreement.
In such event, Employee shall be entitled only to the largest cash compensation
provided for under any of such agreements, plans, policies, statutes or programs
and the maximum benefit continuance provided for under any of such agreements,
plans, policies, statues or programs, and the payments referred to in Section 3
hereof shall be reduced to the extent necessary to effect such coordination of
benefits.
(b) Except as specifically set forth in (a) above, the Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Employee or others.
(c) Employee alone, and not the Company or any Subsidiary, shall
be responsible for the payment of all
9
federal, state and local taxes in respect of the payments to be made and
benefits to be provided under this Agreement.
10. CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined as set forth herein that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and that it would be economically advantageous to
the Company to reduce the Payment to avoid or reduce the taxation of excess
parachute payments under Section 4999 of the Code, the aggregate present value
of amounts payable or distributable to or for the benefit of the Employee
pursuant to this Agreement (such payments or distributions pursuant to this
Agreement are hereinafter referred to as "Agreement Payments") shall be reduced
(but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an
amount expressed in present value which maximizes the aggregate present value of
Agreement Payments without causing any Payment to be subject to the taxation
under Section 4999 of the Code. For purposes of this Section 10, present value
shall be determined in accordance with Sect ion 280G(d) (4) of the Code.
(b) All determinations to be made under this Section 10 shall be
made by Peat Marwick Main & Co., or the Company's independent public accountant
immediately prior to the Change of Control if other than Peat Marwick Main & Co.
(the "Accounting Firm"), which firm shall use its best efforts to provide its
determinations and any supporting calculations both to the Company and the
Employee within 10 days of the Termination Date. Any such determination by the
Accounting Firm shall be binding upon the Company and the Employee. The Company
shall in its sole discretion determine which and how much of the Agreement
Payments shall be eliminated or reduced consistent with the requirements of this
Section 10. Within five days after the Company's determination, the Company
shall pay (or cause to be paid) or distribute (or cause to be distributed) to or
for the benefit of the Employee such amounts as are then due to the Employee
under this Agreement.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Agreement Payments, as the case may be, will have
been made by the Company which should not have been made
10
("Overpayment") or that additional Agreement Payments which have not been made
by the Company could have been made ("Underpayment"), in each case, consistent
with the calculations required to be made hereunder. Within two years after the
Termination of Employment, the Accounting Firm shall review the determination
made by it pursuant to the preceding paragraph. In the event that the Accounting
Firm determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Employee which the Employee shall
repay to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f) (2) of the Code (the "Federal Rate"); PROVIDED,
HOWEVER, that no amount shall be payable by the Employee to the Company if and
to the extent such payment would not reduce the amount which is subject to
taxation under Section 4999 of the Code. In the event that the Accounting Firm
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee together with
interest at the Federal Rate.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above shall
be borne solely by the Company. The Company agrees to indemnify and hold
harmless the Accounting Firm of and from any and all claims, damages and
expenses of any nature resulting from or relating to its determinations pursuant
to subsections (b) and (c) above, except for claims, damages or expenses
resulting from the gross negligence or willful misconduct of the Accounting
Firm.
11. SETTLEMENT OF ALL DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating
to any provision of this Agreement or the Employee's Termination upon a Change
of Control shall be settled by arbitration in the City of Houston, Texas, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom shall
be selected by the Company and the Employee, respectively, and the third of whom
shall be selected by the other two arbitrators. Each arbitrator selected as
provided herein is required to be or have been a director or an executive
officer of a corporation whose shares of common stock were listed during at
least one year of such service on the New York Stock Exchange or the American
Stock Exchange or quoted on the National Association of Securities Dealers
Automated Quotations System. Any award entered by the arbitrators shall be
final, binding and nonappealable and judgment may be entered thereon by any
party in accordance with applicable law in any court of
11
competent jurisdiction. This arbitration provision shall be specifically
enforceable. The fees of the American Arbitration Association and the
arbitrators and any expenses relating to the conduct of the arbitration shall be
paid by the Company.
(b) The party or parties challenging the right of the Employee to
the benefits of this Agreement shall in all circumstances have the burden of
proof.
12. TERM OF AGREEMENT. This Agreement shall commence as of the
date first written above and shall continue in effect until the earlier of (i)
the date upon which the Employee ceases to be in the employ of the Company or
any Subsidiary thereof for any reason other than a Termination Upon a Change of
Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED,
HOWEVER, that all of the obligations of the parties hereunder arising after a
Change of Control shall continue in effect until such obligations are satisfied
or have expired.
13. SUCCESSOR COMPANY. The Company shall require any successor
or successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession or successions had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such succession shall be
a breach of this Agreement. As used in this Agreement, the Company shall mean
the Company as hereinbefore defined and any such successor or successors to its
business and/or assets, jointly and severally.
14. NOTICE. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:
If to the Company, to:
Enterra Corporation
0000 Xxxxx Xxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
12
Attention: The Chairman
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
If to the Employee, to:
Xxxxxx X. Xxxxx
00000 Xxxxxxxxx
Xxxxxxx, XX 00000
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY
CONFLICT OF LAWS PROVISIONS.
16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT.
(a) This Agreement supersedes all prior agreements (including,
without limitation, the severance agreement dated February 9, 1989 which is
hereby terminated) and sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment executed by the
Employee and approved by the board and executed on the Company's behalf by a
duly authorized officer. The provisions of this Agreement may provide for
payments to the Employee under certain compensation or bonus plans (including
without limitation the Stock Plan, the Bonus Plan, the 401(k) Plan and the
CRC-Xxxxx Plan) under circumstances where such plans would not provide for
payment thereof. It is the specific intention of the parties that the provisions
of this Agreement shall supersede any provisions to the contrary in such plans,
and such plans shall be deemed to have been amended to correspond with this
Agreement without further action by the Company or the Board.
13
(b) Nothing in this Agreement shall be construed as giving the
Employee any right to be retained in the employ of the Company or any of its
Subsidiaries.
(c) The Employee acknowledges that from time to time, the Company
and its subsidiaries may establish, maintain and distribute employee manuals or
handbooks or personnel policy manuals, and officers or other representatives of
the Company or its Subsidiaries may make written or oral statements relating to
personnel policies and procedures. Such manuals, handbooks and statements are
intended only for general guidance. No policies, procedures or statements of any
nature by or on behalf of the Company or its Subsidiaries (whether written or
oral, and whether or not contained in any employee manual or handbook or
personnel policy manual), and no acts or practices of any nature, shall be
construed to modify this Agreement.
(d) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of the Employee and the Company hereunder
shall not be assignable in whole or in part by the Company.
17. SEVERABILITY. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or application.
18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the
Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in exercising
any right, remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof, including without limitation any delay by the
Employee in delivering a Notice of Termination pursuant to Section 2 hereof
after an event has occurred which would, if the Employee had resigned, have
constituted a Termination upon a Change of Control pursuant to Section 1(p)(ii)
of this Agreement.
19. MISCELLANEOUS. All section headings are for convenience
only. This Agreement may be executed in several
14
counterparts, each of which is an original. It shall not be necessary in making
proof of this Agreement or any counterpart hereof to produce or account for any
of the other counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
Attest: ENTERRA CORPORATION
/s/ Xxxxxx X. Xxxxxxx By:/s/ Xxxxxx X. XxXxxxxx
------------------------------- --------------------------------
Asst. Secretary Xxxxxx X. XxXxxxxx
President and Chief
Executive Officer
/s/ Gay Xxxxxx /s/ Xxxxxx X. Xxxxx
------------------------------- ----------------------------------
Witness Xxxxxx X. Xxxxx
15
SEVERANCE AGREEMENT
Agreement made as of February 8, 1990 between Enterra Corporation, a
Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxx (the "Employee").
WHEREAS, the Employee is presently employed by Key Oilfield Supply &
Rentals Ltd., a "Subsidiary" (as defined in Section 1 hereof), as its President
and Chief Operating Officer;
WHEREAS, the Company considers it essential to xxxxxx the employment
of well qualified key management personnel for the Company and its Subsidiaries,
and, in this regard, the board of directors of the Company recognizes that, as
is the case with many publicly held corporations, the possibility of a change in
control of the Company may exist and that such possibility, and the uncertainty
and questions which it may raise among management, may result in the departure
or distraction of key management personnel to the detriment of the Company;
WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the management of the Company and its
Subsidiaries to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a change in
control of the Company, although no such change is now contemplated; and
WHEREAS, in order to induce the Employee to remain in the employ of
the Subsidiary, the Company agrees that the Employee shall receive the
compensation and benefits set forth in this Agreement in the event his
employment with the Company is terminated subsequent to a "Change of Control"
(as defined in Section 1 hereof) of the Company as a cushion against the
financial and career impact on the Employee of any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. For all purposes of this Agreement, the following
terms shall have the meanings specified in this Section unless the context
clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Base Salary" shall mean the total cash remuneration earned by the
Employee on an annualized basis in all capacities with the Company and its
Subsidiaries, including any compensation the payment of which has been deferred
pursuant to a salary reduction or deferral plan (including a 401(k) plan, other
than company matching contributions) or agreement, but exclusive of any cash
payments made to him under the Company's Bonus Plan, or any contributions made
for his benefit to the Company's 401(k) Plan or CRC-Xxxxx Plan.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of securities
tendered pursuant to a tender or exchange offer made by such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for payment, purchase or exchange;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including without limitation pursuant to any agreement, arrangement or
understanding, whether or not in writing; PROVIDED, HOWEVER, that a
Person shall not be deemed the "Beneficial Owner" of any security
under this subsection (ii) as a result of an oral or written
agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding (A) arises solely from a
revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of
2
the General Rules and Regulations under the Exchange Act, and (B) is
not then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except, pursuant to a
revocable proxy as described in the proviso to subsection (ii) above
or the May 2, 1986 option agreement between Shamrock Holdings, Inc.
and the shareholders known as the "SGS Group" or their successors) or
disposing of any voting securities of the Company;
PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of any securities acquired through such Person's participation in good faith in
a firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(d) "Board" shall mean the board of directors of the Company.
(e) "Bonus Plan" shall mean the Company's Management Incentive Bonus
Plan, as in effect immediately prior to a Change of Control.
(f) "Change of Control" shall be deemed to have taken place if (i)
any Person (except the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, any Person or
entity organized, appointed or established by the Company for or pursuant to the
terms of any such employee benefit plan, or an Exempted Person), together with
all Affiliates and Associates of such Person acting in concert as described in
Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the
aggregate of 30% or more of the Common Stock of the Company then outstanding
within the meaning of Rule 13d-3 promulgated under the Exchange Act.
(g) "CRC-Xxxxx Plan" shall mean the CRC-Xxxxx Money Purchase Pension
Plan, as in effect immediately prior to a Change of Control.
(h) "Exempted Person" shall mean any of Shamrock Holdings of
California, Inc., a Delaware corporation
3
("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock
Holdings"), or any Affiliate or Associate of Shamrock or Shamrock Holdings.
"Exempted Person" shall not include transferees from any Exempted Person except
where such transferees are Affiliates or Associates of Shamrock or Shamrock
Holdings.
(i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect
immediately prior to a Change of Control.
(j) "Normal Retirement Date" shall mean the first day of the calendar
month coincident with or next following the Employee's 65th birthday.
(k) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(l) "Stock Plan" shall mean the Company's Stock Option Plan or any
successor plan thereto, as in effect immediately prior to a Change of Control.
(m) "Subsidiary" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
(n) "Termination Date" shall mean the date of receipt of the Notice
of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.
(o) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.
(p) "Termination upon a Change of Control" shall mean a Termination
of Employment upon or within two years after a Change of Control either:
(i) initiated by the Company for any reason other than (x) the
Employee's continuous illness, injury or incapacity for a period of
six consecutive months, (y) for "cause," which shall mean
misappropriation of funds, habitual insobriety, substance abuse,
conviction of a crime involving moral turpitude, or gross negligence
in the performance of his duties, which gross negligence has had a
material adverse effect on the business, operations, assets,
properties or financial condition of the Company and its Subsidiaries
taken as a whole, or (z) by reason of the occurrence of the Normal
Retirement Date; or
4
(ii) initiated by the Employee following one or more of the
following occurrences:
(A) a significant reduction by the Company or its
Subsidiaries of the authority, duties or responsibilities of the
Employee immediately prior to the Change of Control;
(B) any removal of the Employee from or any failure to re-
elect the Employee to the officer positions with the Company and
its Subsidiaries held by him immediately prior to the Change of
Control, except in connection with promotions to higher office or
in connection with consolidations among the Company's
Subsidiaries where the Employee is elected to similar positions
in the successor company or companies;
(C) a reduction by the Company in the Employee's Base
Salary as in effect immediately prior to the Change of Control;
(D) revocation or any modification (except as may be
required in the normal course of business in light of any
requirement of or change in federal law or regulations) of the
Bonus Plan, 401(k) Plan or CRC-Xxxxx Plan, or any action taken
pursuant to the terms of such plans, which materially (x) reduces
the opportunity to receive compensation under any of such plans
of equivalent amounts received by the Employee during the two
fiscal years immediately preceding the Change of Control, subject
to the right of the Board to establish in a manner consistent
with past practice prior to the Change of Control reasonable
goals under such plans, (y) reduces the compensation payable to
the Employee under any of such plans but which does not effect
comparable reductions in the compensation payable to the other
participants in such plans, or (z) increases the compensation
payable to other participants in any of such plans but which does
not effect corresponding increases in the amount of compensation
payable to the Employee; or
(E) a transfer of the Employee, without his express written
consent, to a location which is outside the general metropolitan
area in which his principal place of business
5
immediately preceding the Change of Control may be located, or
which is otherwise an unreasonable commuting distance from the
Employee's principal residence at the date of the Change of
Control.
2. NOTICE OF TERMINATION. Any Termination upon a Change of Control
shall be communicated by a Notice of Termination to the other party hereto given
in accordance with Section 14 hereof. 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) briefly summarizes the
facts and circumstances deemed to provide a basis for termination of the
Employee's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall not be more than 15 days after the giving of
such notice).
3. SEVERANCE COMPENSATION UPON TERMINATION.
(a) Subject to the provisions of Section 10 hereof and to adjustment
as provided in paragraph (b) below and Section 9(a), in the event of the
Employee's Termination upon a Change of Control, the Company shall pay to the
Employee, within fifteen days after the Termination Date (or as soon as possible
thereafter in the event that the procedures set forth in Section 10(b) hereof
cannot be completed within 15 days), an amount in cash equal to two times the
sum of paragraphs (i) and (ii) below:
(i) The Employee's Base Salary in effect either immediately
prior to the Termination of Employment or immediately prior to the
Change of Control, whichever is higher; and
(ii) The average of the annual bonuses earned by the Employee
under the Bonus Plan in the two fiscal years immediately prior to such
Termination of Employment.
(b) In the event the Employee's Normal Retirement Date would occur
prior to twenty-four months after the Termination Date, the aggregate cash
amount determined as set forth in (a) above shall be reduced by multiplying it
by a fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 730. No payments shall be due Employee in the event that the
Normal Retirement Date has been reached prior to the Termination Date.
6
4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof,
in the event of the Employee's Termination upon a Change of Control, the Company
shall:
(a) pay to the Employee within fifteen days after the Termination
Date, unless the Employee has exercised such options and rights, an amount equal
to the excess, if any, of the aggregate fair market value of the shares of the
Company's Common Stock subject to all stock options and stock appreciation
rights outstanding and unexercised immediately prior to the Termination Date,
whether vested or unvested, granted to the Employee under the Stock Plan, over
the aggregate exercise price of all such stock options. For purposes of this
paragraph, fair market value shall mean the highest of (x) the closing price of
the Company's Common Stock on the business day immediately preceding the
Termination Date, if such Common Stock is publicly traded at such date, (y) if
such Common Stock is not publicly traded at the Termination Date, the value
determined by an independent appraiser, such appraiser to be selected by the
Employee and to be reasonably satisfactory to the Company (the fees and expenses
of such appraiser to be borne by the Company), or (z) the highest per share
price of the Company's Common Stock paid (in connection with the Change of
Control or at any time thereafter) by the Person or group whose acquisition of
shares of Common Stock of the Company has given-rise to a Change of Control;
(b) to the extent permitted by applicable law, continue or cause to
be continued until 24 months after the Termination Date, on the cost-sharing
basis (if any) in effect immediately prior to the Change of Control, medical,
dental and life insurance benefits (and, at the option of the Employee,
disability insurance benefits) substantially equivalent in all material respects
to those furnished by the Company and its Subsidiaries to the Employee
immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the
Employee's Normal Retirement Date would have occurred prior to 24 months after
the Termination Date, the obligation of the Company to provide such benefits
shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER,
HOWEVER, that the obligation of the Company to provide such benefits shall cease
at such time as the Employee is employed on a full time basis by a corporation
not owned or controlled by the Employee that provides the Employee, on
substantially the same cost-sharing basis (if any) between the Company and the
Employee in effect immediately prior to the Change of Control, with medical,
dental, life and disability insurance benefits substantially equivalent in all
material respects to those furnished by the Company and its Subsidiaries to the
Employee immediately prior to the Change of Control;
7
(c) for vesting purposes only, in the event of a Termination upon a
Change of Control occurring prior to the Normal Retirement Date, credit the
Employee with the lesser of (i) two additional "years of service" (as defined in
the Company's 401(k) Plan) or (ii) the period of time from the Termination Date
to the Normal Retirement Date under each of the Company's 401(k) Plan and CRC-
Xxxxx Plan, in addition to the years of service that would have otherwise been
calculated by reference solely to the Termination Date, it being understood that
benefits in respect of the two additional years of service shall be paid to the
Employee under the Company's 401(k) Plan or CRC-Xxxxx Plan, and that the Company
shall, to the extent necessary to provide the Employee the additional benefits
intended hereby, amend the 401(k) Plan or CRC-Xxxxx Plan or pay such additional
benefits outside the plan as may be necessary; and
(d) permit the Employee to continue the use of his Company car, if
any, without any cost for a period of six months thereafter. Thereafter, the
Employee shall return the car to the Company unless, in the case of a car owned
by the Company, the Employee elects to purchase the car from the Company at the
net book value thereof at the date of the purchase or, in the case of a car
leased by the Company, the Employee pays the Company, as such amounts become due
and payable, all rental payments charged to the Company for the use of such car
for the remainder of the lease therefore.
5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a
Termination upon a Change of Control, and subject to the provisions of Section
10 hereof, all restrictions remaining on the Termination Date on the restricted
shares, if any, received by the Employee, pursuant to the Stock Plan shall
lapse, and said shares shall thereupon be owned by the Employee free and clear
of all restrictions of any nature whatsoever, except those, if any, under
applicable federal and state securities laws.
6. ENFORCEMENT.
(a) In the event that the Company shall fail or refuse to make payment
of any amounts due the Employee under Sections 3, 4 and 5 hereof within the
respective time periods provided therein, the Company shall pay to the Employee,
in addition to the payment of any other sums provided in this Agreement,
interest, compounded daily, on any amount remaining unpaid from the date payment
is required under Section 3, 4 or 5, as appropriate, until paid to the Employee,
at the rate from time to time announced by Xxxxx Fargo Bank, N.A. as its "prime
rate" plus 2%, each change in such rate to take effect on the effective date of
the change in such prime rate.
8
(b) It is the intent of the parties that the Employee not be required
to incur any expenses associated with the enforcement of his rights under this
Agreement by arbitration, litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Employee hereunder. Accordingly, the Company shall pay the
Employee on demand the amount necessary to reimburse the Employee in full for
all expenses (including all attorneys' fees and legal expenses) incurred by the
Employee in enforcing any of the obligations of the Company under this
Agreement.
7. NO MITIGATION. The Employee shall not be required to mitigate the
amount of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Employee's continuing or future participation in or rights under
any benefit, bonus, incentive or other plan or program provided by the Company
or any of its Subsidiaries or Affiliates and for which the Employee may qualify.
9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES.
(a) The severance plan or policy, if any, applicable to employees of
Enterra or the Subsidiary which employs the Employee, and any other severance
payments required by applicable statutes or provided under government programs
may provide compensation and benefits to Employee upon events which also
constitute a Termination upon a Change of Control as defined in this Agreement.
In such event, Employee shall be entitled only to the largest cash compensation
provided for under any of such agreements, plans, policies, statutes or programs
and the maximum benefit continuance provided for under any of such agreements,
plans, policies, statues or programs, and the payments referred to in Section 3
hereof shall be reduced to the extent necessary to effect such coordination of
benefits.
(b) Except as specifically set forth in (a) above, the Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Employee or others.
(c) Employee alone, and not the Company or any Subsidiary, shall be
responsible for the payment of all
9
federal, state and local taxes in respect of the payments to be made and
benefits to be provided under this Agreement.
10. CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined as set forth herein that any payment or
distribution by the Company to or for the benefit or the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and that it would be economically advantageous to
the Company to reduce the Payment to avoid or reduce the taxation-of excess
parachute payments under Section 4999 of the Code, the aggregate present value
of amounts payable or distributable to or for the benefit of the Employee
pursuant to this Agreement (such payments or distributions pursuant to this
Agreement are hereinafter referred to as "Agreement Payments") shall be reduced
(but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an
amount expressed in present value which maximizes the aggregate present value of
Agreement Payments without causing any Payment to be subject to the taxation
under Section 4999 of the Code. For purposes of this Section 10, present value
shall be determined in accordance with Section 280G(d)(4) of the Code.
(b) All determinations to be made under this Section 10 shall be
made by Peat Marwick Main & Co., or the Company's independent public accountant
immediately prior to the Change of Control if other than Peat Marwick Main & Co.
(the "Accounting Firm"), which firm shall use its best efforts to provide its
determinations and any supporting calculations both to the Company and the
Employee within 10 days of the Termination Date. Any such determination by the
Accounting Firm shall be binding upon the Company and the Employee. The Company
shall in its sole discretion determine which and how much of the Agreement
Payments shall be eliminated or reduced consistent with the requirements of this
Section 10. Within five days after the Company's determination, the Company
shall pay (or cause to be paid) or distribute (or cause to be distributed) to or
for the benefit of the Employee such amounts as are then due to the Employee
under this Agreement.
(c) As a result of the uncertainty in the application of Section 280G
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Agreement Payments, as the case may be, will have
been made by the Company which should not have been made
10
("Overpayment") or that additional Agreement Payments which have not been made
by the Company could have been made ("Underpayment"), in each case, consistent
with the calculations required to be made hereunder. Within two years after the
Termination of Employment, the Accounting Firm shall review the determination
made by it pursuant to the preceding paragraph. In the event that the Accounting
Firm determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Employee which the Employee shall
repay to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f) (2) of the Code (the "Federal Rate"); PROVIDED,
HOWEVER, that no amount shall be payable by the Employee to the Company if and
to the extent such payment would not reduce the amount which is subject to
taxation under Section 4999 of the Code. In the event that the Accounting Firm
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee together with
interest at the Federal Rate.
(d) All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company. The Company agrees to indemnify and hold harmless the
Accounting Firm of and from any and all claims, damages and expenses of any
nature resulting from or relating to its determinations pursuant to subsections
(b) and (c) above, except for claims, damages or expenses resulting from the
gross negligence or willful misconduct of the Accounting Firm.
11. SETTLEMENT OF ALL DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating to
any provision of this Agreement or the Employee's Termination upon a Change of
Control shall be settled by arbitration in the City of Houston, Texas, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom shall
be selected by the Company and the Employee, respectively, and the third of whom
shall be selected by the other two arbitrators. Each arbitrator selected as
provided herein is required to be or have been a director or an executive
officer of a corporation whose shares of common stock were listed during at
least one year of such service on the New York Stock Exchange or the American
Stock Exchange or quoted on the National Association of Securities Dealers
Automated Quotations System. Any award entered by the arbitrators shall be
final, binding and nonappealable and judgment may be entered thereon by any
party in accordance with applicable law in any court of
11
competent jurisdiction. This arbitration provision shall be specifically
enforceable. The fees of the American Arbitration Association and the
arbitrators and any expenses relating to the conduct of the arbitration shall be
paid by the Company.
(b) The party or parties challenging the right of the Employee to the
benefits of this Agreement shall in all circumstances have the burden of proof.
12. TERM OF AGREEMENT. This Agreement shall commence as of the date
first written above and shall continue in effect until the earlier of (i) the
date upon which the Employee ceases to be in the employ of the Company or any
Subsidiary thereof for any reason other than a Termination Upon a Change of
Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED,
HOWEVER, that all of the obligations of the parties hereunder arising after a
Change of Control shall continue in effect until such obligations are satisfied
or have expired.
13. SUCCESSOR COMPANY. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession or successions had taken place. Failure of.the Company to
obtain such agreement prior to the effectiveness of any such succession shall be
a breach of this Agreement. As used in this Agreement, the Company shall mean
the Company as hereinbefore defined and any such successor or successors to its
business and/or assets, jointly and severally.
14. NOTICE. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:
If to the Company, to:
Enterra Corporation
0000 Xxxxx Xxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
12
Attention: The Chairman
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
If to the Employee, to:
Xxxxxx X. Xxxxxx
000 Xxxxxxx Xxxxxxx Xxxxx, XX
Xxxxxxx, Xxxxxxx X0X0X0
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY
CONFLICT OF LAWS PROVISIONS.
16. CONTENTS OF AGREEMENT. AMENDMENT AND ASSIGNMENT.
(a) This Agreement supersedes all prior agreements and sets forth the
entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by the Employee and approved by the board and
executed on the Company's behalf by a duly authorized officer. The provisions
of this Agreement may provide for payments to the Employee under certain
compensation or bonus plans (including without limitation the Stock Plan, the
Bonus Plan, the 401(k) Plan and the CRC-Xxxxx Plan) under circumstances where
such plans would not provide for payment thereof. It is the specific intention
of the parties that the provisions of this Agreement shall supersede any
provisions to the contrary in such plans, and such plans shall be deemed to have
been amended to correspond with this Agreement without further action by the
Company or the Board.
13
(b) Nothing in this Agreement shall be construed as giving the
Employee any right to be retained in the employ of the Company or any of its
Subsidiaries.
(c) The Employee acknowledges that from time to time, the Company and
its subsidiaries may establish, maintain and distribute employee manuals or
handbooks or personnel policy manuals, and officers or other representatives of
the Company or its Subsidiaries may make written or oral statements relating to
personnel policies and procedures. Such manuals, handbooks and statements are
intended only for general guidance. No policies, procedures or statements of any
nature by or on behalf of the Company or its Subsidiaries (whether written or
oral, and whether or not contained in any employee manual or handbook or
personnel policy manual), and no acts or practices of any nature, shall be
construed to modify this Agreement.
(d) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of the Employee and the Company hereunder
shall not be assignable in whole or in part by the Company.
17. SEVERABILITY. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the
Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in exercising
any right, remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof, including without limitation any delay by the
Employee in delivering a Notice of Termination pursuant to Section 2 hereof
after an event has occurred which would, if the Employee had resigned, have
constituted a Termination upon a Change of Control pursuant to Section 1(p) (ii)
of this Agreement.
19. MISCELLANEOUS. All section headings are for convenience only.
This Agreement may be executed in several counterparts, each of which is an
original. It shall not be
14
necessary in making proof of this Agreement or any counterpart hereof to produce
or account for any of the other counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
Attest: ENTERRA CORPORATION
/s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. XxXxxxxx
------------------------------ --------------------------------
Secretary Xxxxxx X. XxXxxxxx
President and Chief
Executive Officer
/s/ X. Xxxxxxx /s/ X. X. Xxxxxx
------------------------------ --------------------------------
Witness Xxxxxx X. Xxxxxx
15
SEVERANCE AGREEMENT
Agreement made as of February 8, 1990 between Enterra Corporation, a
Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxxx (the "Employee").
WHEREAS, the Employee is presently employed by the Company as its Vice
President, Controller and Treasurer;
WHEREAS, the Company considers it essential to xxxxxx the employment
of well qualified key management personnel for the Company and its Subsidiaries,
and, in this regard, the board of directors of the Company recognizes that, as
is the case with many publicly held corporations, the possibility of a change in
control of the Company may exist and that such possibility, and the uncertainty
and questions which it may raise among management, may result in the departure
or distraction of key management personnel to the detriment of the Company;
WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the management of the Company and its
Subsidiaries to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a change in
control of the Company, although no such change is now contemplated; and
WHEREAS, in order to induce the Employee to remain in the employ of
the Company, the Company agrees that the Employee shall receive the compensation
and benefits set forth in this Agreement in the event his employment with the
Company is terminated subsequent to a "Change of Control" (as defined in Section
1 hereof) of the Company as a cushion against the financial and career impact on
the Employee of any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. For all purposes of this Agreement, the following
terms shall have the meanings specified in this Section unless the context
clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(b) "Base Salary" shall mean the total cash remuneration earned by the
Employee on an annualized basis in all capacities with the Company and its
Subsidiaries, including any compensation the payment of which has been deferred
pursuant to a salary reduction or deferral plan (including a 401(k) plan, other
than company matching contributions) or agreement, but exclusive of any cash
payments made to him under the Company's Bonus Plan, or any contributions made
for his benefit to the Company's 401(k) Plan or CRC-Xxxxx Plan.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of securities
tendered pursuant to a tender or exchange offer made by such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for payment, purchase or exchange;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including without limitation pursuant to any agreement, arrangement or
understanding, whether or not in writing; PROVIDED, HOWEVER, that a
Person shall not be deemed the "Beneficial Owner" of any security
under this subsection (ii) as a result of an oral or written
agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding (A) arises solely from a
revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange
Act, and (B) is not then reportable by
2
such Person on Schedule 13D under the Exchange Act (or any comparable
or successor report); or
(iii) that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except, pursuant to a
revocable proxy as described in the proviso to subsection (ii) above
or the May 2, 1986 option agreement between Shamrock Holdings, Inc.
and the shareholders known as the "SGS Group" or their successors) or
disposing of any voting securities of the Company;
PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of any securities acquired through such Person's participation in good faith in
a firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(d) "Board" shall mean the board of directors of the Company.
(e) "Bonus Plan" shall mean the Company's Management Incentive Bonus
Plan, as in effect immediately prior to a Change of Control.
(f) "Change of Control" shall be deemed to have taken place if (i)
any Person (except the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, any Person or
entity organized, appointed or established by the Company for or pursuant to the
terms of any such employee benefit plan, or an Exempted Person), together with
all Affiliates and Associates of such Person acting in concert as described in
Section 14(d)(2) of the Exchange Act, shall become the Beneficial Owner in the
aggregate of 30% or more of the Common Stock of the Company then outstanding
within the meaning of Rule 13d-3 promulgated under the Exchange Act.
(g) "CRC-Xxxxx Plan" shall mean the CRC-Xxxxx Money Purchase Pension
Plan, as in effect immediately prior to a Change of Control.
(h) "Exempted Person" shall mean any of Shamrock Holdings of
California, Inc., a Delaware corporation ("Shamrock"), Shamrock Holdings, Inc.,
a Delaware corporation ("Shamrock Holdings"), or any Affiliate or
3
Associate of Shamrock or Shamrock Holdings. "Exempted Person" shall not include
transferees from any Exempted Person except where such transferees are
Affiliates or Associates of Shamrock or Shamrock Holdings.
(i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect
immediately prior to a Change of Control.
(j) "Normal Retirement Date" shall mean the first day of the calendar
month coincident with or next following the Employee's 65th birthday.
(k) "Person" shall mean any individual, firm, corporation,
Partnership or other entity.
(l) "Stock Plan" shall mean the Company's Stock Option Plan or any
successor plan thereto, as in effect immediately prior to a Change of Control.
(m) "Subsidiary" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
(n) "Termination Date" shall mean the date of receipt of the Notice
of Termination described in Section 2 hereof or any later date Specified
therein, as the case may be.
(o) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.
(p) "Termination upon a Change of Control" shall mean a Termination
of Employment upon or within two years after a Change of Control either:
(i) initiated by the Company for any reason other than (x) the
Employee's continuous illness, injury or incapacity for a period of
six consecutive months, (y) for "cause," which shall mean
misappropriation of funds, habitual insobriety, substance abuse,
conviction of a crime involving moral turpitude, or gross negligence
in the performance of his duties, which gross negligence has had a
material adverse effect on the business, operations, assets,
properties or financial condition of the Company and its Subsidiaries
taken as a whole, or (z) by reason of the occurrence of the Normal
Retirement Date; or
(ii) initiated by the Employee following one or more of the
following occurrences:
4
(A) a significant reduction by the Company or its
Subsidiaries of the authority, duties or responsibilities of the
Employee immediately prior to the Change of Control;
(B) any removal of the Employee from or any failure to re-
elect the Employee to the officer positions with the Company and
its Subsidiaries held by him immediately prior to the Change of
Control, except in connection with promotions to higher office or
in connection with consolidations among the Company's
Subsidiaries where the Employee is elected to similar positions
in the successor company or companies;
(C) a reduction by the Company in the Employee's Base
Salary as in effect immediately prior to the Change of Control;
(D) revocation or any modification (except as may be
required in the normal course of business in light of any
requirement of or change in federal law or regulations) of the
Bonus Plan, 401(k) Plan or CRC-Xxxxx Plan, or any action taken
pursuant to the terms of such plans, which materially (x) reduces
the opportunity to receive compensation under any of such plans
of equivalent amounts received by the Employee during the two
fiscal years immediately preceding the Change of Control, subject
to the right of the Board to establish in a manner consistent
with past practice prior to the Change of Control reasonable
goals under such plans, (y) reduces the compensation payable to
the Employee under any of such plans but which does not effect
comparable reductions in the compensation payable to the other
participants in such plans, or (z) increases the compensation
payable to other participants in any of such plans but which does
not effect corresponding increases in the amount of compensation
payable to the Employee; or
(E) a transfer of the Employee, without his express written
consent, to a location which is outside the general metropolitan
area in which his principal place of business immediately
preceding the Change of Control may be located, or which is
otherwise an
5
unreasonable commuting distance from the Employee's principal
residence at the date of the Change of Control.
2. NOTICE OF TERMINATION. Any Termination upon a Change of Control
shall be communicated by a Notice of Termination to the other party hereto given
in accordance with Section 14 hereof. 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) briefly summarizes the
facts and circumstances deemed to provide a basis for termination of the
Employee's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall not be more than 15 days after the giving of
such notice).
3. SEVERANCE COMPENSATION UPON TERMINATION.
(a) Subject to the provisions of Section 10 hereof and to adjustment
as provided in paragraph (b) below and Section 9(a), in the event of the
Employee's Termination upon a Change of Control, the Company shall pay to the
Employee, within fifteen days after the Termination Date (or as soon as possible
thereafter in the event that the procedures set forth in Section 10(b) hereof
cannot be completed within 15 days), an amount in cash equal to two times the
sum of paragraphs (i) and (ii) below:
(i) The Employee's Base Salary in effect either immediately
prior to the Termination of Employment or immediately prior to the
Change of Control, whichever is higher; and
(ii) The average of the annual bonuses earned by the Employee
under the Bonus Plan in the two fiscal years immediately prior to such
Termination of Employment.
(b) In the event the Employee's Normal Retirement Date would occur
prior to twenty-four months after the Termination Date, the aggregate cash
amount determined as set forth in (a) above shall be reduced by multiplying it
by a fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 730. No payments shall be due Employee in the event that the
Normal Retirement Date has been reached prior to the Termination Date.
6
4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof,
in the event of the Employee's Termination upon a Change of Control, the Company
shall:
(a) pay to the Employee within fifteen days after the Termination
Date, unless the Employee has exercised such options and rights, an amount equal
to the excess, if any, of the aggregate fair market value of the shares of the
Company's Common Stock subject to all stock options and stock appreciation
rights outstanding and unexercised immediately prior to the Termination Date,
whether vested or unvested, granted to the Employee under the Stock Plan, over
the aggregate exercise price of all such stock options. For purposes of this
paragraph, fair market value shall mean the highest of (x) the closing price of
the Company's Common Stock on the business day immediately preceding the
Termination Date, if such Common Stock is publicly traded at such date, (y) if
such Common Stock is not publicly traded at the Termination Date, the value
determined by an independent appraiser, such appraiser to be selected by the
Employee and to be reasonably satisfactory to the Company (the fees and expenses
of such appraiser to be borne by the Company), or (z) the highest per share
price of the Company's Common Stock paid (in connection with the Change of
Control or at any time thereafter) by the Person or group whose acquisition of
shares of Common Stock of the Company has given rise to a Change of Control;
(b) to the extent permitted by applicable law, continue or cause to be
continued until 24 months after the Termination Date, on the cost-sharing basis
(if any) in effect immediately prior to the Change of Control, medical, dental
and life insurance benefits (and, at the option of the Employee, disability
insurance benefits) substantially equivalent in all material respects to those
furnished by the Company and its Subsidiaries to the Employee immediately prior
to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal
Retirement Date would have occurred prior to 24 months after the Termination
Date, the obligation of the Company to provide such benefits shall cease at the
Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the
obligation of the Company to provide such benefits shall cease at such time as
the Employee is employed on a full time basis by a corporation not owned or
controlled by the Employee that provides the Employee, on substantially the same
cost-sharing basis (if any) between the Company and the Employee in effect
immediately prior to the Change of Control, with medical, dental, life and
disability insurance benefits substantially equivalent in all material respects
to those furnished by the Company and its Subsidiaries to the Employee
immediately prior to the Change of Control;
7
(c) for vesting purposes only, in the event of a Termination upon a
Change of Control occurring prior to the Normal Retirement Date, credit the
Employee with the lesser of (i) two additional "years of service" (as defined in
the Company's 401(k) Plan) or (ii) the period of time from the Termination Date
to the Normal Retirement Date under each of the Company's 401(k) Plan and CRC-
Xxxxx Plan, in addition to the years of service that would have otherwise been
calculated by reference solely to the Termination Date, it being understood that
benefits in respect of the two additional years of service shall be paid to the
Employee under the Company's 401(k) Plan or CRC-Xxxxx Plan, and that the Company
shall, to the extent necessary to provide the Employee the additional benefits
intended hereby, amend the 401(k) Plan or CRC-Xxxxx Plan or pay such additional
benefits outside the plan as may be necessary; and
(d) permit the Employee to continue the use of his Company car, if
any, without any cost for a period of six months thereafter. Thereafter, the
Employee shall return the car to the Company unless, in the case of a car owned
by the Company, the Employee elects to purchase the car from the Company at the
net book value thereof at the date of the purchase or, in the case of a car
leased by the Company, the Employee pays the Company, as such amounts become due
and payable, all rental payments charged to the Company for the use of such car
for the remainder of the lease therefore.
5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a
Termination upon a Change of Control, and subject to the provisions of Section
10 hereof, all restrictions remaining on the Termination Date on the restricted
shares, if any, received by the Employee, pursuant to the Stock Plan shall
lapse, and said shares shall thereupon be owned by the Employee free and clear
of all restrictions of any nature whatsoever, except those, if any, under
applicable federal and state securities laws.
6. ENFORCEMENT.
(a) In the event that the Company shall fail or refuse to make payment
of any amounts due the Employee under Sections 3, 4 and 5 hereof within the
respective time periods provided therein, the Company shall pay to the Employee,
in addition to the payment of any other sums provided in this Agreement,
interest, compounded daily, on any amount remaining unpaid from the date payment
is required under Section 3, 4 or 5, as appropriate, until paid to the Employee,
at the rate from time to time announced by Xxxxx Fargo Bank, N.A. as its "prime
rate" plus 2%, each change in such rate to take effect on the effective date of
the change in such prime rate.
8
(b) It is the intent of the parties that the Employee not be required
to incur any expenses associated with the enforcement of his rights under this
Agreement by arbitration, litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Employee hereunder. Accordingly, the Company shall pay the
Employee on demand the amount necessary to reimburse the Employee in full for
all expenses (including all attorneys' fees and legal expenses) incurred by the
Employee in enforcing any of the obligations of the Company under this
Agreement.
7. NO MITIGATION. The Employee shall not be required to mitigate the
amount of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company or any of its Subsidiaries or Affiliates and for which the Employee may
qualify.
9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES.
(a) The severance plan or policy, if any, applicable to employees of
Enterra or the Subsidiary which employs the Employee, and any other severance
payments required by applicable statutes or provided under government programs
may provide compensation and benefits to Employee upon events which also
constitute a Termination upon a Change of Control as defined in this Agreement.
In such event, Employee shall be entitled only to the largest cash compensation
provided for under any of such agreements, plans, policies, statutes or programs
and the maximum benefit continuance provided for under any of such agreements,
plans, policies, statues or programs, and the payments referred to in Section 3
hereof shall be reduced to the extent necessary to effect such coordination of
benefits.
(b) Except as specifically set forth in (a) above, the Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Employee or others.
(c) Employee alone, and not the Company or any Subsidiary, shall be
responsible for the payment of all
9
federal, state and local taxes in respect of the payments to be made and
benefits to be provided under this Agreement.
10. CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined as set forth herein that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and that it would be economically advantageous to
the Company to reduce the Payment to avoid or reduce the taxation of excess
parachute payments under Section 4999 of the Code, the aggregate present value
of amounts payable or distributable to or for the benefit of the Employee
pursuant to this Agreement (such payments or distributions pursuant to this
Agreement are hereinafter referred to as "Agreement Payments") shall be reduced
(but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an
amount expressed in present value which maximizes the aggregate present value of
Agreement Payments without causing any Payment to be subject to the taxation
under Section 4999 of the Code. For purposes of this Section 10, present value
shall be determined in accordance with Section 280G(d)(4) of the Code.
(b) All determinations to be made under this Section 10 shall be made
by Peat Marwick Main & Co., or the Company's independent public accountant
immediately prior to the Change of Control if other than Peat Marwick Main & Co.
(the "Accounting Firm"), which firm shall use its best efforts to provide its
determinations and any supporting calculations both to the Company and the
Employee within 10 days of the Termination Date. Any such determination by the
Accounting Firm shall be binding upon the Company and the Employee. The Company
shall in its sole discretion determine which and how much of the Agreement
Payments shall be eliminated or reduced consistent with the requirements of this
Section 10. Within five days after the Company's determination, the Company
shall pay (or cause to be paid) or distribute (or cause to be distributed) to or
for the benefit of the Employee such amounts as are then due to the Employee
under this Agreement.
(c) As a result of the uncertainty in the application of Section 280G
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is
10
possible that Agreement Payments, as the case may be, will have been made by the
Company which should not have been made ("Overpayment") or that additional
Agreement Payments which have not been made by the Company could have been made
("Underpayment"), in each case, consistent with the calculations required to be
made hereunder. Within two years after the Termination of Employment, the
Accounting Firm shall review the determination made by it pursuant to the
preceding paragraph. In the event that the Accounting Firm determines that an
Overpayment has been made, any such Overpayment shall be treated for all
purposes as a loan to the Employee which the Employee shall repay to the Company
together with interest at the applicable Federal rate provided for in Section
7872(f) (2) of the Code (the "Federal Rate"); PROVIDED, HOWEVER, that no amount
shall be payable by the Employee to the Company if and to the extent such
payment would not reduce the amount which is subject to taxation under Section
4999 of the Code. In the event that the Accounting Firm determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee together with interest at the
Federal Rate.
(d) All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company. The Company agrees to indemnify and hold harmless the
Accounting Firm of and from any and all claims, damages and expenses of any
nature resulting from or relating to its determinations pursuant to subsections
(b) and (c) above, except for claims, damages or expenses resulting from the
gross negligence or willful misconduct of the Accounting Firm.
11. SETTLEMENT OF ALL DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating to
any provision of this Agreement or the Employee's Termination upon a Change of
Control shall be settled by arbitration in the City of Houston, Texas, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom shall
be selected by the Company and the Employee, respectively, and the third of whom
shall be selected by the other two arbitrators. Each arbitrator selected as
provided herein is required to be or have been a director or an executive
officer of a corporation whose shares of common stock were listed during at
least one year of such service on the New York Stock Exchange or the American
Stock Exchange or quoted on the National Association of Securities Dealers
Automated Quotations System. Any award entered by the arbitrators shall be
final, binding and
11
nonappealable and judgment may be entered thereon by any party in accordance
with applicable law in any court of competent jurisdiction. This arbitration
provision shall be specifically enforceable. The fees of the American
Arbitration Association and the arbitrators and any expenses relating to the
conduct of the arbitration shall be paid by the Company.
(b) The party or parties challenging the right of the Employee to the
benefits of this Agreement shall in all circumstances have the burden of proof.
12. TERM OF AGREEMENT. This Agreement shall commence as of the date
first written above and shall continue in effect until the earlier of (i) the
date upon which the Employee ceases to be in the employ of the Company or any
Subsidiary thereof for any reason other than a Termination Upon a Change of
Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED,
HOWEVER, that all of the obligations of the parties hereunder arising after a
Change of Control shall continue in effect until such obligations are satisfied
or have expired.
13. SUCCESSOR COMPANY. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession or successions had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such succession shall be
a breach of this Agreement. As used in this Agreement, the Company shall mean
the Company as hereinbefore defined and any such successor or successors to its
business and/or assets, jointly and severally.
14. NOTICE. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:
If to the Company, to:
Enterra Corporation
0000 Xxxxx Xxxx Xxxx
00
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: The Chairman
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
If to the Employee, to:
Xxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxx
Xxxxxxx, XX 00000
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY
CONFLICT OF LAWS PROVISIONS.
16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT.
(a) This Agreement supersedes all prior agreements and sets forth the
entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by the Employee and approved by the board and
executed on the Company's behalf by a duly authorized officer. The provisions
of this Agreement may provide for payments to the Employee under certain
compensation or bonus plans (including without limitation the Stock Plan, the
Bonus Plan, the 401(k) Plan and the CRC-Xxxxx Plan) under circumstances where
such plans would not provide for payment thereof. It is the specific intention
of the parties that the provisions of this Agreement shall supersede any
provisions to the contrary in such plans, and such plans shall be deemed to have
been amended to correspond with this
13
Agreement without further action by the Company or the Board.
(b) Nothing in this Agreement shall be construed as giving the
Employee any right to be retained in the employ of the Company or any of its
Subsidiaries.
(c) The Employee acknowledges that from time to time, the Company and
its subsidiaries may establish, maintain and distribute employee manuals or
handbooks or personnel policy manuals, and officers or other representatives of
the Company or its Subsidiaries may make written or oral statements relating to
personnel policies and procedures. Such manuals, handbooks and statements are
intended only for general guidance. No policies, procedures or statements of any
nature by or on behalf of the Company or its Subsidiaries (whether written or
oral, and whether or not contained in any employee manual or handbook or
personnel policy manual), and no acts or practices of any nature, shall be
construed to modify this Agreement.
(d) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of the Employee and the Company hereunder
shall not be assignable in whole or in part by the Company.
17. SEVERABILITY. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the
Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in exercising
any right, remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof, including without limitation any delay by the
Employee in delivering a Notice of Termination pursuant to Section 2 hereof
after an event has occurred which would, if the Employee had resigned, have
constituted a Termination upon a Change of Control pursuant to Section 1(p) (ii)
of this Agreement.
14
19. MISCELLANEOUS. All section headings are for convenience only.
This Agreement may be executed in several counterparts, each of which is an
original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
Attest: ENTERRA CORPORATION
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. XxXxxxxx
------------------------------ ------------------------------
Secretary Xxxxxx X. XxXxxxxx
President and Chief
Executive Officer
/s/ Gay Xxxxxx /s/ Xxxxxx X. Xxxxxxx
------------------------------ ---------------------------------
Witness Xxxxxx X. Xxxxxxx
15
SEVERANCE AGREEMENT
Agreement made as of November 10, 1993 between Enterra Corporation, a
Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxx, Xx. (the
"Employee").
WHEREAS, the Employee is presently employed by CRC-Xxxxx Pipeline
International, Inc., a "Subsidiary" (as defined in Section 1 hereof), as its
Executive Vice President;
WHEREAS, the Company considers it essential to xxxxxx the employment of
well qualified key management personnel for the Company and its Subsidiaries,
and, in this regard, the board of directors of the Company recognizes that, as
is the case with many publicly held corporations, the possibility of a change in
control of the Company may exist and that such possibility, and the uncertainty
and questions which it may raise among management, may result in the departure
or distraction of key management personnel to the detriment of the Company;
WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the management of the Company and its
Subsidiaries to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a change in
control of the Company, although no such change is now contemplated; and
WHEREAS, in order to induce the Employee to remain in the employ of the
Subsidiary, the Company agrees that the Employee shall receive the compensation
and benefits set forth in this Agreement in the event his employment with the
Company is terminated subsequent to a "Change of Control" (as defined in Section
l hereof) of the Company as a cushion against the financial and career impact on
the Employee of any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth and intending to be legally bound hereby,
the parties hereto agree as follows:
l. DEFINITIONS. For all purposes of this Agreement, the following terms
shall have the meanings
specified in this Section unless the context clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Base Salary" shall mean the total cash remuneration earned by the
Employee on an annualized basis in all capacities with the Company and its
Subsidiaries, including any compensation the payment of which has been deferred
pursuant to a salary reduction or deferral plan (including a 401(k) plan, other
than company matching contributions) or agreement, but exclusive of any cash
payments made to him under the Company's Bonus Plan, or any contributions made
for his benefit to the Company's 401(k) Plan or CRC-Xxxxx Plan.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person
shall not be deemed the "Beneficial Owner" of securities tendered pursuant
to a tender or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
payment, purchase or exchange;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including without
limitation pursuant to any agreement, arrangement or understanding, whether
or not in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the
"Beneficial Owner" of any security under this subsection (ii) as a result
of an oral or written agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (A) arises solely
from a revocable
2
proxy given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (B) is not
then reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except, pursuant to a
revocable proxy as described in the proviso to subsection (ii) above
or disposing of any voting securities of the Company;
PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of any securities acquired through such Person's participation in good faith in
a firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(d) "Board" shall mean the board of directors of the Company.
(e) "Bonus Plan" shall mean the Company's Management Incentive Bonus
Plan, as in effect immediately prior to a Change of Control.
(f) "Change of Control" shall be deemed to have taken place if any
Person (except the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any subsidiary of the Company, any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such employee benefit plan, or an Exempted Person), together with all
Affiliates and Associates of such Person acting in concert as described in
Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the
aggregate of 30% or more of the Common Stock of the Company then outstanding
within the meaning of Rule 13d-3 promulgated under the Exchange Act.
(g) "CRC-Xxxxx Plan" shall mean the CRC-Xxxxx Money Purchase Pension
Plan, as in effect immediately prior to a Change of Control.
(h) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect
immediately prior to a Change of Control.
3
(i) "Normal Retirement Date" shall mean the first day of the calendar
month coincident with or next following the Employee's 65th birthday.
(j) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(k) "Stock Plan" shall mean the Company's Stock Option Plan or any
successor plan thereto, as in effect immediately prior to a Change of Control.
(l) "Subsidiary" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
(m) "Termination Date" shall mean the date of receipt of the Notice
of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.
(n) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.
(o) "Termination upon a Change of Control" shall mean a Termination
of Employment upon or within two years after a Change of Control either:
(i) initiated by the Company for any reason other than (x) the
Employee's continuous illness, injury or incapacity for a period of six
consecutive months, (y) for "cause," which shall mean misappropriation of
funds, habitual insobriety, substance abuse, conviction of a crime
involving moral turpitude, or gross negligence in the performance of his
duties, which gross negligence has had a material adverse effect on the
business, operations, assets, properties or financial condition of the
Company and its Subsidiaries taken as a whole, or (z) by reason of the
occurrence of the Normal Retirement Date; or
(ii) initiated by the Employee following one or more of the
following occurrences:
(A) a significant reduction by the Company or its
Subsidiaries of the authority, duties or responsibilities of the
Employee immediately prior to the Change of Control;
(B) any removal of the Employee from or any failure to
re-elect the Employee to the
4
officer positions with the Company and its Subsidiaries held by
him immediately prior to the Change of Control, except in
connection with promotions to higher office or in connection with
consolidations among the Company's Subsidiaries where the
Employee is elected to similar positions in the successor company
or companies;
(C) a reduction by the Company in the Employee's Base
Salary as in effect immediately prior to the Change of Control;
(D) revocation or any modification (except as may be
required in the normal course of business in light of any
requirement of or change in federal law or regulations) of the
Bonus Plan, 401(k) Plan or CRC-Xxxxx Plan, or any action taken
pursuant to the terms of such plans, which materially (x) reduces
the opportunity to receive compensation under any of such plans
of equivalent amounts received by the Employee during the two
fiscal years immediately preceding the Change of Control, subject
to the right of the Board to establish in a manner consistent
with past practice prior to the Change of Control reasonable
goals under such plans, (y) reduces the compensation payable to
the Employee under any of such plans but which does not effect
comparable reductions in the compensation payable to the other
participants in such plans, or (z) increases the compensation
payable to other participants in any of such plans but which does
not effect corresponding increases in the amount of compensation
payable to the Employee; or
(E) a transfer (other than a transfer to the metropolitan
Tulsa, Oklahoma area as contemplated by Section 1.3 of that
Employment Agreement dated as of January 1, 1993 between the
Employee and CRC-Xxxxx Pipeline International, Inc.) of the
Employee, without his express written consent, to a location
which is outside the general metropolitan area in which his
principal place of business immediately preceding the Change of
Control may be located, or which is otherwise an unreasonable
commuting distance from the Employee's principal residence at the
date of the Change of Control.
5
2. NOTICE OF TERMINATION. Any Termination upon a Change of Control
shall be communicated by a Notice of Termination to the other party hereto given
in accordance with Section 14 hereof. 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) briefly summarizes the
facts and circumstances deemed to provide a basis for termination of the
Employee's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall not be more than 15 days after the giving of
such notice).
3. SEVERANCE COMPENSATION UPON TERMINATION.
(a) Subject to the provisions of Section 10 hereof and to adjustment
as provided in paragraph (b) below and Section 9(a), in the event of the
Employee's Termination upon a Change of Control, the Company shall pay to the
Employee, within fifteen days after the Termination Date (or as soon as possible
thereafter in the event that the procedures set forth in Section 10(b) hereof
cannot be completed within 15 days), an amount in cash equal to two times the
sum of paragraphs (i) and (ii) below:
(i) The Employee's Base Salary in effect either immediately
prior to the Termination of Employment or immediately prior to the
Change of Control, whichever is higher; and
(ii) The average of the annual bonuses earned by the Employee
under the Bonus Plan in the two fiscal years immediately prior to such
Termination of Employment.
(b) In the event the Employee's Normal Retirement Date would occur
prior to twenty-four months after the Termination Date, the aggregate cash
amount determined as set forth in (a) above shall be reduced by multiplying it
by a fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 730. No payments shall be due Employee in the event that the
Normal Retirement Date has been reached prior to the Termination Date.
4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof,
in the event of the Employee's Termination upon a Change of Control, the Company
shall:
(a) pay to the Employee within fifteen days after the Termination
Date, unless the Employee has exercised such
6
options and rights, an amount equal to the excess, if any, of the aggregate fair
market value of the shares of the Company's Common Stock subject to all stock
options and stock appreciation rights outstanding and unexercised immediately
prior to the Termination Date, whether vested or unvested, granted to the
Employee under the Stock Plan, over the aggregate exercise price of all such
stock options. Upon such payment, such options or rights shall terminate. For
purposes of this paragraph, fair market value shall mean the highest of (x) the
closing price of the Company's Common Stock on the business day immediately
preceding the Termination Date, if such Common Stock is publicly traded at such
date, (y) if such Common stock is not publicly traded at the Termination Date,
the value determined by an independent appraiser, such appraiser to be selected
by the Employee and to be reasonably satisfactory to the Company (the fees and
expenses of such appraiser to be borne by the Company), or (z) the highest per
share price of the Company's Common Stock paid (in connection with the Change of
Control or at any time thereafter) by the Person or group whose acquisition of
shares of Common Stock of the Company has given rise to a Change of Control;
(b) to the extent permitted by applicable law, continue or cause to
be continued until 24 months after the Termination Date, on the cost-sharing
basis (if any) in effect immediately prior to the Change of Control, medical,
dental and life insurance benefits (and, at the option of the Employee,
disability insurance benefits) substantially equivalent in all material respects
to those furnished by the Company and its Subsidiaries to the Employee
immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the
Employee's Normal Retirement Date would have occurred prior to 24 months after
the Termination Date, the obligation of the Company to provide such benefits
shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER,
HOWEVER, that the obligation of the Company to provide such benefits shall cease
at such time as the Employee is employed on a full time basis by a corporation
not owned or controlled by the Employee that provides the Employee, on
substantially the same cost-sharing basis (if any) between the Company and the
Employee in effect immediately prior to the Change of Control, with medical,
dental, life and disability insurance benefits substantially equivalent in all
material respects to those furnished by the Company and its Subsidiaries to the
Employee immediately prior to the Change of Control;
(c) for vesting purposes only, in the event of a Termination upon a
Change of Control occurring prior to the Normal Retirement Date, credit the
Employee with the lesser of (i) two additional "years of service" (as defined in
the Company's 401(k) Plan) or (ii) the period of time from the
7
Termination Date to the Normal Retirement Date under each of the Company's
401(k) Plan and CRC-Xxxxx Plan, in addition to the years of service that would
have otherwise been calculated by reference solely to the Termination Date, it
being understood that benefits in respect of the two additional years of service
shall be paid to the Employee under the Company's 401(k) Plan or CRC-Xxxxx Plan,
and that the Company shall, to the extent necessary to provide the Employee the
additional benefits intended hereby, amend the 401(k) Plan or CRC-Xxxxx Plan or
pay such additional benefits outside the plan as may be necessary; and
(d) permit the Employee to receive any car allowance or continue the
use of his Company car, if any, without any cost for a period of six months
thereafter. Thereafter, the Employee shall return the car to the Company unless,
in the case of a car owned by the Company, the Employee elects to purchase the
car from the Company at the net book value thereof at the date of the purchase
or, in the case of a car leased by the Company, the Employee pays the Company,
as such amounts become due and payable, all rental payments charged to the
Company for the use of such car for the remainder of the lease therefor.
5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a
Termination upon a Change of Control, and subject to the provisions of Section
10 hereof, all restrictions remaining on the Termination Date on the restricted
shares, if any, received by the Employee, pursuant to the Stock Plan shall
lapse, and said shares shall thereupon be owned by the Employee free and clear
of all restrictions of any nature whatsoever, except those, if any, under
applicable federal and state securities laws.
6. ENFORCEMENT.
(a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within
the respective time periods provided therein, the Company shall pay to the
Employee, in addition to the payment of any other sums provided in this
Agreement, interest, compounded daily, on any amount remaining unpaid from the
date payment is required under Section 3, 4 or 5, as appropriate, until paid to
the Employee, at the rate from time to time announced by Xxxxx Fargo Bank, N.A.
as its "prime rate" plus 2%, each change in such rate to take effect on the
effective date of the change in such prime rate.
(b) It is the intent of the parties that the Employee not be required
to incur any expenses associated with the enforcement of his rights under this
Agreement by
8
arbitration, litigation or other legal action because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Employee hereunder. Accordingly, the Company shall pay the Employee on
demand the amount necessary to reimburse the Employee in full for all expenses
(including all attorneys' fees and legal expenses) incurred by the Employee in
enforcing any of the obligations of the Company under this Agreement.
7. NO MITIGATION. The Employee shall not be required to mitigate the
amount of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company or any of its Subsidiaries or Affiliates and for which the Employee may
qualify.
9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES.
(a) The severance plan or policy, if any, applicable to employees of
Enterra or the Subsidiary which employs the Employee, and any other severance
payments required by employment agreements or applicable statutes or provided
under government programs may provide compensation and benefits to Employee upon
events which also constitute a Termination upon a Change of Control as defined
in this Agreement. In such event, Employee shall be entitled only to the
largest cash compensation provided for under any of such agreements, plans,
policies, statutes or programs and the maximum benefit continuance provided for
under any of such agreements, plans, policies, statues or programs, and the
payments referred to in Section 3 hereof shall be reduced to the extent
necessary to effect such coordination of benefits.
(b) Except as specifically set forth in (a) above, the Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Employee or others.
(c) Employee alone, and not the Company or any Subsidiary, shall be
responsible for the payment of all federal, state and local taxes in respect of
the payments to be made and benefits to be provided under this Agreement.
10. CERTAIN REDUCTION OF PAYMENTS.
9
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined as set forth herein that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and that it would be economically advantageous to
the Company to reduce the Payment to avoid or reduce the taxation of excess
parachute payments under Section 4999 of the Code, the aggregate present value
of amounts payable or distributable to or for the benefit of the Employee
pursuant to this Agreement (such payments or distributions pursuant to this
Agreement are hereinafter referred to as "Agreement Payments") shall be reduced
(but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an
amount expressed in present value which maximizes the aggregate present value of
Agreement Payments without causing any Payment to be subject to the taxation
under Section 4999 of the Code. For purposes of this Section 10, present value
shall be determined in accordance with Section 280G(d) (4) of the Code.
(b) All determinations to be made under this Section 10 shall be made
by KPMG Peat Marwick, or the Company's independent public accountant immediately
prior to the Change of Control if other than KPMG Peat Marwick (the "Accounting
Firm"), which firm shall use its best efforts to provide its determinations and
any supporting calculations both to the Company and the Employee within 10 days
of the Termination Date. Any such determination by the Accounting Firm shall be
binding upon the Company and the Employee. The Company shall in its sole
discretion determine which and how much of the Agreement Payments shall be
eliminated or reduced consistent with the requirements of this Section 10.
Within five days after the Company's determination, the Company shall pay (or
cause to be paid) or distribute (or cause to be distributed) to or for the
benefit of the Employee such amounts as are then due to the Employee under this
Agreement.
(c) As a result of the uncertainty in the application of Section 280G
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Agreement Payments, as the case may be, will have
been made by the Company which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the Company could have
been made ("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. Within two years after the Termination of
Employment, the Accounting Firm shall review the determination made by it
pursuant to the
10
preceding paragraph. In the event that the Accounting Firm determines that an
Overpayment has been made, any such Overpayment shall be treated for all
purposes as a loan to the Employee which the Employee shall repay to the Company
together with interest at the applicable Federal rate provided for in Section
7872(f)(2) of the Code (the "Federal Rate"); PROVIDED, HOWEVER, that no amount
shall be payable by the Employee to the Company if and to the extent such
payment would not reduce the amount which is subject to taxation under Section
4999 of the Code. In the event that the Accounting Firm determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee together with interest at the
Federal Rate.
(d) All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company. The Company agrees to indemnify and hold harmless the
Accounting Firm of and from any and all claims, damages and expenses of any
nature resulting from or relating to its determinations pursuant to subsections
(b) and (c) above, except for claims, damages or expenses resulting from the
gross negligence or willful misconduct of the Accounting Firm.
11. SETTLEMENT OF ALL DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating to
any provision of this Agreement or the Employee's Termination upon a Change of
Control shall be settled by arbitration in the City of Houston, Texas, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom shall
be selected by the Company and the Employee, respectively, and the third of whom
shall be selected by the other two arbitrators. Each arbitrator selected as
provided herein is required to be or have been a director or an executive
officer of a corporation whose shares of common stock were listed during at
least one year of such service on the New York Stock Exchange or the American
Stock Exchange or quoted on the National Association of Securities Dealers
Automated Quotations System. Any award entered by the arbitrators shall be
final, binding and nonappealable and judgment may be entered thereon by any
party in accordance with applicable law in any court of competent jurisdiction.
This arbitration provision shall be specifically enforceable. The fees of the
American Arbitration Association and the arbitrators and any expenses relating
to the conduct of the arbitration shall be paid by the Company.
11
(b) The party or parties challenging the right of the Employee to the
benefits of this Agreement shall in all circumstances have the burden of proof.
12. TERM OF AGREEMENT. This Agreement shall commence as of the date
first written above and shall continue in effect until the earlier of (i) the
date upon which the Employee ceases to be in the employ of the Company or any
Subsidiary thereof for any reason other than a Termination Upon a Change of
Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED,
HOWEVER, that all of the obligations of the parties hereunder arising after a
Change of Control shall continue in effect until such obligations are satisfied
or have expired.
13. SUCCESSOR COMPANY. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession or successions had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such succession shall be
a breach of this Agreement. As used in this Agreement, the Company shall mean
the Company as hereinbefore defined and any such successor or successors to its
business and/or assets, jointly and severally.
14. NOTICE. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:
If to the Company, to:
Enterra Corporation
00000 Xxxxxxxxx Xxxxxxx
Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: The Chairman
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx xxxxxx
00
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
If to the Employee, to:
Xxxxxxx X. Xxxxxx, Xx.
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the base of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY
CONFLICT OF LAWS PROVISIONS.
16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT.
(a) This Agreement supersedes all prior agreements and sets forth the
entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by the Employee and approved by the board and
executed on the Company's behalf by a duly authorized officer. The provisions
of this Agreement may provide for payments to the Employee under certain
compensation or bonus plans (including without limitation the Stock Plan, the
Bonus Plan, the 401(k) Plan and the CRC-Xxxxx Plan) under circumstances where
such plans would not provide for payment thereof. It is the specific intention
of the parties that the provisions of this Agreement shall supersede any
provisions to the contrary in such plans, and such plans shall be deemed to have
been amended to correspond with this Agreement without further action by the
Company or the Board.
(b) Nothing in this Agreement shall be construed as giving the
Employee any right to be retained in the employ of the Company or any of its
Subsidiaries.
(c) The Employee acknowledges that from time to time, the Company and
its subsidiaries may establish, maintain and distribute employee manuals or
handbooks or
13
personnel policy manuals, and officers or other representatives of the Company
or its Subsidiaries may make written or oral statements relating to personnel
policies and procedures. Such manuals, handbooks and statements are intended
only for general guidance. No policies, procedures or statements of any nature
by or on behalf of the Company or its Subsidiaries (whether written or oral, and
whether or not contained in any employee manual or handbook or personnel policy
manual), and no acts or practices of any nature, shall be construed to modify
this Agreement.
(d) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of the Employee and the Company hereunder
shall not be assignable in whole or in part by the Company.
17. SEVERABILITY. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the
Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in exercising
any right, remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof, including without limitation any delay by the
Employee in delivering a Notice of Termination pursuant to Section 2 hereof
after an event has occurred which would, if the Employee had resigned, have
constituted a Termination upon a Change of Control pursuant to Section 1(o)(ii)
of this Agreement.
19. MISCELLANEOUS. All section headings are for convenience only.
This Agreement may be executed in several counterparts, each of which is an
original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
14
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.
Attest: ENTERRA CORPORATION
/s/ M. Gay Xxxxxx /s/ D. Xxxx Xxxx
----------------------------- By: ------------------------------
Secretary D. Xxxx Xxxx
Chairman, President and
Chief Executive Officer
/s/ Xxxxxxx Xxxxxx /s/ Xxxxxxx X. Xxxxxx, Xx.
----------------------------- By: ------------------------------
Witness Xxxxxxx X. Xxxxxx, Xx.
15
SEVERANCE AGREEMENT
Agreement made as of February 21, 1991 between Enterra
Corporation, a Delaware corporation (the "Company"), and J. Xxxxxx Xxxxxx (the
"Employee").
WHEREAS, the Employee is presently employed by Enterra Oil Field
Services, Ltd., a "Subsidiary" (as defined in Section 1 hereof), as its
President;
WHEREAS, the Company considers it essential to xxxxxx the
employment of well qualified key management personnel for the Company and its
Subsidiaries, and, in this regard, the board of directors of the Company
recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control of the Company may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of key management
personnel to the detriment of the Company;
WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the management of the Company and its
Subsidiaries to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a change in
control of the Company, although no such change is now contemplated; and
WHEREAS, in order to induce the Employee to remain in the employ
of the Subsidiary, the Company agrees that the Employee shall receive the
compensation and benefits set forth in this Agreement in the event his
employment with the Company is terminated subsequent to a "Change of Control"
(as defined in Section 1 hereof) of the Company as a cushion against the
financial and career impact on the Employee of any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
l. DEFINITIONS. For all purposes of this Agreement, the
following terms shall have the meanings specified in this Section unless the
context clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(b) "Base Salary" shall mean the total cash remuneration earned
by the Employee on an annualized basis in all capacities with the Company and
its Subsidiaries, including any compensation the payment of which has been
deferred pursuant to a salary reduction or deferral plan (including a 401(k)
plan, other than company matching contributions) or agreement, but exclusive of
any cash payments made to him under the Company's Bonus Plan, or any
contributions made for his benefit to the Company's 401(k) Plan or CRC-Xxxxx
Plan.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) that such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options,
or otherwise; PROVIDED, HOWEVER, that a Person shall not be
deemed the "Beneficial Owner" of securities tendered pursuant to a
tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities
are accepted for payment, purchase or exchange;
(ii) that such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under
the Exchange Act), including without limitation pursuant to any
agreement, arrangement or understanding, whether or not in
writing; PROVIDED, HOWEVER, that a Person shall not be deemed
the "Beneficial Owner" of any security under this subsection (ii)
as a result of an oral or written agreement, arrangement or
understanding to vote such security if such agreement, arrangement
or understanding (a) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of
2
the General Rules and Regulations under the Exchange Act, and (b)
is not then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding
(whether or not in writing) for the purpose of acquiring, holding,
voting (except, pursuant to a revocable proxy as described in the
proviso to subsection (ii) above or the May 2, 1986 option
agreement between Shamrock Holdings, Inc. and the shareholders
known as the "SGS Group" or their successors) or disposing of any
voting securities of the Company;
PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of any securities acquired through such Person's participation in good faith in
a firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(d) "Board" shall mean the board of directors of the Company.
(e) "Bonus Plan" shall mean the Company's Management Incentive
Bonus Plan, as in effect immediately prior to a Change of Control.
(f) "Change of Control" shall be deemed to have taken place if
(i) any Person (except the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of- the Company, any Person or
entity organized, appointed or established by the Company for or pursuant to the
terms of any such employee benefit plan, or an Exempted Person), together with
all Affiliates and Associates of such Person acting in concert as described in
Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the
aggregate of 30% or more of the Common Stock of the Company then outstanding
within the meaning of Rule 13d-3 promulgated under the Exchange Act.
(g) "CRC-Xxxxx Plan" shall mean the CRC-Xxxxx Money Purchase
Pension Plan, as in effect immediately prior to a Change of Control.
(h) "Exempted Person" shall mean any of Shamrock Holdings of
California, Inc., a Delaware corporation
3
("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock
Holdings"), or any Affiliate or Associate of Shamrock or Shamrock Holdings.
"Exempted Person" shall not include transferees from any Exempted Person except
where such transferees are Affiliates or Associates of Shamrock or Shamrock
Holdings.
(i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in
effect immediately prior to a Change of Control.
(j) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the Employee's 65th birthday.
(k) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(l) "Stock Plan" shall mean the Company's Stock Option Plan or
any successor plan thereto, as in effect immediately prior to a Change of
Control.
(m) "Subsidiary" shall have the meaning ascribed to such term
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
(n) "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.
(o) "Termination of Employment" shall mean the termination of
the Employee's actual employment relationship with the Company.
(p) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within two years after a Change of Control
either:
(i) initiated by the Company for any reason other than
(x) the Employee's continuous illness, injury or incapacity for a
period of six consecutive months, (y) for "cause," which shall
mean misappropriation of funds, habitual insobriety, substance
abuse, conviction of a crime involving moral turpitude, or gross
negligence in the performance of his duties, which gross
negligence has had a material adverse effect on the business,
operations, assets, properties or financial condition of the
Company and its Subsidiaries taken as a whole, or (z) by reason of
the occurrence of the Normal Retirement Date; or
4
(ii) initiated by the Employee following one or more of the
following occurrences:
(A) a significant reduction by the Company or its
Subsidiaries of the authority, duties or responsibilities of
the Employee immediately prior to the Change of Control;
(B) any removal of the Employee from or any failure to
re-elect the Employee to the officer positions with the
Company and its Subsidiaries held by him immediately prior
to the Change of Control, except in connection with
promotions to higher office or in connection with
consolidations among the Company's Subsidiaries where the
Employee is elected to similar positions in the successor
company or companies;
(C) a reduction by the Company in the Employee's Base
Salary as in effect immediately prior to the Change of
Control;
(D) revocation or any modification (except as may be
required in the normal course of business in light of any
requirement of or change in federal law or regulations) of
the Bonus Plan, 401(k) Plan or CRC-Xxxxx Plan, or any action
taken pursuant to the terms of such plans, which materially
(x) reduces the opportunity to receive compensation under
any of such plans of equivalent amounts received by the
Employee during the two fiscal years immediately preceding
the Change of Control, subject to the right of the Board to
establish in a manner consistent with past practice prior to
the Change of Control reasonable goals under such plans,
(y) reduces the compensation payable to the Employee under
any of such plans but which does not effect comparable
reductions in the compensation payable to the other
participants in such plans, or (z) increases the
compensation payable to other participants in any of such
plans but which does not effect corresponding increases in
the amount of compensation payable to the Employee; or
(E) a transfer of the Employee, without his express
written consent, to a location which is outside the general
metropolitan area in which his principal place of business
5
immediately preceding the Change of Control may be
located, or which is otherwise an unreasonable commuting
distance from the Employee's principal residence at the
date of the Change of Control.
2. NOTICE OF TERMINATION. Any Termination upon a Change of
Control shall be communicated by a Notice of Termination to the other party
hereto given in accordance with Section 14 hereof. 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) briefly
summarizes the facts and circumstances deemed to provide a basis for termination
of the Employee's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall not be more than 15 days after the giving of
such notice).
3. SEVERANCE COMPENSATION UPON TERMINATION.
(a) Subject to the provisions of Section 10 hereof and to
adjustment as provided in paragraph (b) below and Section 9(a), in the event of
the Employee's Termination upon a Change of Control, the Company shall pay to
the Employee, within fifteen days after the Termination Date (or as soon as
possible thereafter in the event that the procedures set forth in Section 10(b)
hereof cannot be completed within 15 days), an amount in cash equal to two times
the sum of paragraphs (i) and (ii) below:
(i) The Employee's Base Salary in effect either
immediately prior to the Termination of Employment or immediately
prior to the Change of Control, whichever is higher; and
(ii) The average of the annual bonuses earned by the
Employee under the Bonus Plan in the two fiscal years immediately
prior to such Termination of Employment.
(b) In the event the Employee's Normal Retirement Date would occur
prior to twenty-four months after the Termination Date, the aggregate cash
amount determined as set forth in (a) above shall be reduced by multiplying it
by a fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 730. No payments shall be due Employee in the event that the
Normal Retirement Date has been reached prior to the Termination Date.
6
4. OTHER PAYMENTS. Subject to the provisions of Section 10
hereof, in the event of the Employee's Termination upon a Change of Control, the
Company shall:
(a) pay to the Employee within fifteen days after the Termination
Date, unless the Employee has exercised such options and rights, an amount equal
to the excess, if any, of the aggregate fair market value of the shares of the
Company's Common Stock subject to all stock options and stock appreciation
rights outstanding and unexercised immediately prior to the Termination Date,
whether vested or unvested, granted to the Employee under the Stock Plan, over
the aggregate exercise price of all such stock options. For purposes of this
paragraph, fair market value shall mean the highest of (x) the closing price of
the Company's Common Stock on the business day immediately preceding the
Termination Date, if such Common Stock is publicly traded at such date, (y) if
such Common Stock is not publicly traded at the Termination Date, the value
determined by an independent appraiser, such appraiser to be selected by the
Employee and to be reasonably satisfactory to the Company (the fees and expenses
of such appraiser to be borne by the Company), or (z) the highest per share
price of the Company's Common Stock paid (in connection with the Change of
Control or at any time thereafter) by the Person or group whose acquisition of
shares of Common Stock of the Company has given rise to a Change of Control;
(b) to the extent permitted by applicable law, continue or cause
to be continued until 24 months after the Termination Date, on the cost-sharing
basis (if any) in effect immediately prior to the Change of Control, medical,
dental and life insurance benefits (and, at the option of the Employee,
disability insurance benefits) substantially equivalent in all material respects
to those furnished by the Company and its Subsidiaries to the Employee
immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the
Employee's Normal Retirement Date would have occurred prior to 24 months after
the Termination Date, the obligation of the Company to provide such benefits
shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER,
HOWEVER, that the obligation of the Company to provide such benefits shall
cease at such time as the Employee is employed on a full time basis by a
corporation not owned or controlled by the Employee that provides the Employee,
on substantially the same cost-sharing basis (if any) between the Company and
the Employee in effect immediately prior to the Change of Control, with medical,
dental, life and disability insurance benefits substantially equivalent in all
material respects to those furnished by the Company and its Subsidiaries to the
Employee immediately prior to the Change of Control;
7
(c) for vesting purposes only, in the event of a Termination
upon a Change of Control occurring prior to the Normal Retirement Date, credit
the Employee with the lesser of (i) two additional "years of service" (as
defined in the Company's 401(k) Plan) or (ii) the period of time from the
Termination Date to the Normal Retirement Date under each of the Company's
401(k) Plan and CRC-Xxxxx Plan, in addition to the years of service that would
have otherwise been calculated by reference solely to the Termination Date, it
being understood that benefits in respect of the two additional years of service
shall be paid to the Employee under the Company's 401(k) Plan or CRC-Xxxxx Plan,
and that the Company shall, to the extent necessary to provide the Employee the
additional benefits intended hereby, amend the 401(k) Plan or CRC-Xxxxx Plan or
pay such additional benefits outside the plan as may be necessary; and
(d) permit the Employee to continue the use of his Company
car, if any, without any cost for a period of six months thereafter.
Thereafter, the Employee shall return the car to the Company unless, in the case
of a car owned by the Company, the Employee elects to purchase the car from the
Company at the net book value thereof at the date of the purchase or, in the
case of a car leased by the Company, the Employee pays the Company, as such
amounts become due and payable, all rental payments charged to the Company for
the use of such car for the remainder of the lease therefore.
5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event
of a Termination upon a Change of Control, and subject to the provisions of
Section 10 hereof, all restrictions remaining on the Termination Date on the
restricted shares, if any, received by the Employee, pursuant to the Stock Plan
shall lapse, and said shares shall thereupon be owned by the Employee free and
clear of all restrictions of any nature whatsoever, except those, if any, under
applicable federal and state securities laws.
6. ENFORCEMENT.
(a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within
the respective time periods provided therein, the Company shall pay to the
Employee, in addition to the payment of any other sums provided in this
Agreement, interest, compounded daily, on any amount remaining unpaid from the
date payment is required under Section 3, 4 or 5, as appropriate, until paid to
the Employee, at the rate from time to time announced by Xxxxx Fargo Bank, N.A.
as its "prime rate" plus 2%, each change in such rate to take effect on the
effective date of the change in such prime rate.
8
(b) It is the intent of the parties that the Employee not be
required to incur any expenses associated with the enforcement of his rights
under this Agreement by arbitration, litigation or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Employee hereunder. Accordingly, the Company
shall pay the Employee on demand the amount necessary to reimburse the Employee
in full for all expenses (including all attorneys' fees and legal expenses)
incurred by the Employee in enforcing any of the obligations of the Company
under this Agreement.
7. NO MITIGATION. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company or any of its Subsidiaries or Affiliates and for which the Employee may
qualify.
9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES.
(a) The severance plan or policy, if any, applicable to employees
of Enterra or the Subsidiary which employs the Employee, and any other severance
payments required by applicable statutes or provided under government programs
may provide compensation and benefits to Employee upon events which also
constitute a Termination upon a Change of Control as defined in this Agreement.
In such event, Employee shall be entitled only to the largest cash compensation
provided for under any of such agreements, plans, policies, statutes or programs
and the maximum benefit continuance provided for under any of such agreements,
plans, policies, statues or programs, and the payments referred to in Section 3
hereof shall be reduced to the extent necessary to effect such coordination of
benefits.
(b) Except as specifically set forth in (a) above, the Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Employee or others.
(c) Employee alone, and not the Company or any Subsidiary, shall
be responsible for the payment of all
9
federal, state and local taxes in respect of the payments to be made and
benefits to be provided under this Agreement.
10. CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined as set forth herein
that any payment or distribution by the Company to or for the benefit of the
Employee, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (a "Payment"), would constitute an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), and that it would be economically
advantageous to the Company to reduce the Payment to avoid or reduce the
taxation of excess parachute payments under Section 4999 of the Code, the
aggregate present value of amounts payable or distributable to or for the
benefit of the Employee pursuant to this Agreement (such payments or
distributions pursuant to this Agreement are hereinafter referred to as
"Agreement Payments") shall be reduced (but not below zero) to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present value which
maximizes the aggregate present value of Agreement Payments without causing any
Payment to be subject to the taxation under Section 4999 of the Code. For
purposes of this Section 10, present value shall be determined in accordance
with Section 280G(d) (4) of the Code.
(b) All determinations to be made under this Section 10 shall
be made by Peat Marwick Main & Co., or the Company's independent public
accountant immediately prior to the Change of Control if other than Peat Marwick
Main & Co. (the "Accounting Firm"), which firm shall use its best efforts to
provide its determinations and any supporting calculations both to the Company
and the Employee within 10 days of the Termination Date. Any such determination
by the Accounting Firm shall be binding upon the Company and the Employee. The
Company shall in its sole discretion determine which and how much of the
Agreement Payments shall be eliminated or reduced consistent with the
requirements of this Section 10. Within five days after the Company's
determination, the Company shall pay (or cause to be paid) or distribute (or
cause to be distributed) to or for the benefit of the Employee such amounts as
are then due to the Employee under this Agreement.
(c) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Agreement Payments, as the case
may be, will have been made by the Company which should not have been made
10
("Overpayment") or that additional Agreement Payments which have not been made
by the Company could have been made ("Underpayment"), in each case, consistent
with the calculations required to be made hereunder. Within two years after the
Termination of Employment, the Accounting Firm shall review the determination
made by it pursuant to the preceding paragraph. In the event that the Accounting
Firm determines that an overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Employee which the Employee shall
repay to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code (the "Federal Rate"); PROVIDED,
HOWEVER, that no amount shall be payable by the Employee to the Company if and
to the extent such payment would not reduce the amount which is subject to
taxation under Section 4999 of the Code. In the event that the Accounting Firm
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee together with
interest at the Federal Rate.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above shall
be borne solely by the Company. The Company agrees to indemnify and hold
harmless the Accounting Firm of and from any and all claims, damages and
expenses of any nature resulting from or relating to its determinations pursuant
to subsections (b) and (c) above, except for claims, damages or expenses
resulting from the gross negligence or willful misconduct of the Accounting
Firm.
11. SETTLEMENT OF ALL DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating
to any provision of this Agreement or the Employee's Termination upon a Change
of Control shall be-settled by arbitration in the City of Houston, Texas, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom shall
be selected by the Company and the Employee, respectively, and the third of whom
shall be selected by the other two arbitrators. Each arbitrator selected as
provided herein is required to be or have been a director or an executive
officer of a corporation whose shares of common stock were listed during at
least one year of such service on the New York Stock Exchange or the American
Stock Exchange or quoted on the National Association of Securities Dealers
Automated Quotations System. Any award entered by the arbitrators shall be
final, binding and nonappealable and judgment may be entered thereon by any
party in accordance with applicable law in any court of
11
competent jurisdiction. This arbitration provision shall be specifically
enforceable. The fees of the American Arbitration Association and the
arbitrators and any expenses relating to the conduct of the arbitration shall be
paid by the Company.
(b) The party or parties challenging the right of the Employee
to the benefits of this Agreement shall in all circumstances have the burden of
proof.
12. TERM OF AGREEMENT. This Agreement shall commence as of
the date first written above and shall continue in effect until the earlier of
(i) the date upon which the Employee ceases to be in the employ of the Company
or any Subsidiary thereof for any reason other than a Termination Upon a Change
of Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED,
HOWEVER, that all of the obligations of the parties hereunder arising after a
Change of Control shall continue in effect until such obligations are satisfied
or have expired.
13. SUCCESSOR COMPANY. The Company shall require any
successor or successors (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance satisfactory to the
Employee, to acknowledge expressly that this Agreement is binding upon and
enforceable against the Company in accordance with the terms hereof, and to
become jointly and severally obligated with the Company to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession or successions had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement. As used in this
Agreement, the Company shall mean the Company as hereinbefore defined and any
such successor or successors to its business and/or assets, jointly and
severally.
14. NOTICE. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:
If to the Company, to:
Enterra Corporation
0000 Xxxxx Xxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
12
Attention: The Chairman
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
If to the Employee, to:
J. Xxxxxx Xxxxxx
c/o Enterra Oil Field Services, Ltd.
P. O. Box 2357
Defense Roundabout #109
Rashid Building
Dubai, U.A.E.
or to such other names or address as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY
CONFLICT OF LAWS PROVISIONS.
16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT.
(a) This Agreement supersedes all prior agreements and sets forth
the entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by the Employee and approved by the board and
executed on the Company's behalf by a duly authorized officer. The provisions
of this Agreement may provide for payments to the Employee under certain
compensation or bonus plans (including without limitation the Stock Plan, the
Bonus Plan, the 401(k) Plan and the CRC-Xxxxx Plan) under circumstances where
such plans would not provide for payment thereof. It is the specific intention
of the parties that the provisions of this Agreement shall supersede any
provisions to the contrary in such plans, and such plans shall be deemed to have
been amended to correspond with this
13
Agreement without further action by the Company or the Board.
(b) Nothing in this Agreement shall be construed as giving the
Employee any right to be retained in the employ of the Company or any of its
Subsidiaries.
(c) The Employee acknowledges that from time to time, the
Company and its subsidiaries may establish, maintain and distribute employee
manuals or handbooks or personnel policy manuals, and officers or other
representatives of the Company or its Subsidiaries may make written or oral
statements relating to personnel policies and procedures. Such manuals,
handbooks and statements are intended only for general guidance. No policies,
procedures or statements of any nature by or on behalf of the Company or its
Subsidiaries (whether written or oral, and whether or not contained in any
employee manual or handbook or personnel policy manual), and no acts or
practices of any nature, shall be construed to modify this Agreement.
(d) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of the Employee and the Company hereunder
shall not be assignable in whole or in part by the Company.
17. SEVERABILITY. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or application.
18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred
upon the Employee by this Agreement is intended to be exclusive of any other
right or remedy, and each and every such right or remedy shall be cumulative and
shall be in addition to any other right or remedy given hereunder or now or
hereafter existing at law or in equity. No delay or omission by the Employee in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, including without limitation any delay
by the Employee in delivering a Notice of Termination pursuant to Section 2
hereof after an event has occurred which would, if the Employee had resigned,
have constituted a Termination upon a Change of Control pursuant to Section
1(p)(ii) of this Agreement.
14
19. MISCELLANEOUS. All section headings are for convenience
only. This Agreement may be executed in several counterparts, each of which is
an original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally
bound, have executed this Agreement as of the date first above written.
Attest: ENTERRA CORPORATION
/s/ M. Gay Xxxxxx By: /s/ Xxxxxx X. Xxxxx
------------------------------ ---------------------------------
Secretary Xxxxxx X. Xxxxx
Xx. Vice President and
Chief Financial Officer
/s/ Xxxxxx X. Xxxxxxx /s/ J. Xxxxxx Xxxxxx
------------------------------ -------------------------------------
Witness Xxxxxx Xxxxxx
15
SEVERANCE AGREEMENT
Agreement made as of April 1, 1993 between Pipeline Induction Heat
Limited (the "Company") and Xxxxxxx Xxxxx Xxxxx (the "Employee").
WHEREAS, the Employee is presently employed by the Company as its
Managing Director;
WHEREAS, the Company considers it essential to xxxxxx the employment
of well qualified key management personnel for the Company and, in this regard,
the directors of the Company recognize that, as is the case with many publicly
held corporations, the possibility of a change in control of Enterra Corporation
("Enterra"), the parent of the Company, may exist and that such possibility, and
the uncertainty and questions which it may raise among management of the
Company, may result in the departure or distraction of key management personnel
to the detriment of the Company;
WHEREAS, the directors of the Company, with the concurrence of
Enterra, have determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of key members of the
management of the Company to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the possibility of a
change in control of Enterra or the Company, although no such change is now
contemplated; and
WHEREAS, in order to induce the Employee to remain in the employ of
the Company, the Company agrees that the Employee shall receive the compensation
and benefits set forth in this Agreement in the event his employment with the
Company is terminated subsequent to a "Change of Control" (as defined in Section
1 hereof) of Enterra or the Company as a cushion against the financial and
career impact on the Employee of any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
l. DEFINITIONS. For all purposes of this Agreement, the
following terms shall have the meanings specified in this Section unless the
context clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the U.S. Securities Exchange Act of
1934, as amended (the "Exchange Act").
(b) "Base Salary" shall mean the total cash remuneration earned by
the Employee on an annualized basis in all capacities with the Company and its
Subsidiaries, if any, but exclusive of any cash payments made to him under the
Company's Bonus Plan, if any, or under any type of deferred compensation or
retirement plan;
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed
the "Beneficial Owner" of securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for payment, purchase or exchange;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including without limitation pursuant to any agreement, arrangement
or understanding, whether or not in writing; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of any
security under this subsection (ii) as a result of an oral or
written agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
2
(iii) that are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting or disposing
of any voting securities of Enterra;
PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of any securities acquired through such Person's participation in good faith in
a firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(d) "Bonus Plan" shall mean any Company or Enterra bonus plan in
which the Employee participates, as in effect immediately prior to a Change of
Control.
(e) "Change of Control" shall be deemed to have taken place if (i)
any Person (except Enterra, any Subsidiary of Enterra, any employee benefit plan
of Enterra or of any Subsidiary of Enterra, or any Person or entity organized,
appointed or established by Enterra for or pursuant to the terms of any such
employee benefit plan), together with all Affiliates and Associates of such
Person acting in concert as described in Section 14(d)(2) of the Exchange Act,
shall become the Beneficial Owner in the aggregate of 30% or more of the Common
Stock of Enterra then outstanding within the meaning of Rule 13d-3 promulgated
under the Exchange Act, or (ii) the Company ceases to be controlled, directly or
indirectly, by Enterra, or if it sells all or substantially all of its assets to
a company not so controlled by Enterra.
(f) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the Employee's 65th birthday.
(g) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(h) "Stock Plan" shall mean Enterra's Stock Option Plan or any
successor plan thereto, as in effect immediately prior to a Change of Control.
(i) "Subsidiary" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
(j) "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2
3
hereof or any later date specified therein, as the case may be.
(k) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.
(l) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within two years after a Change of Control
either:
(i) initiated by the Company or Enterra for any reason
other than (x) the Employee's continuous illness, injury or
incapacity for a period of six consecutive months, (y) for "cause,"
which shall mean misappropriation of funds, habitual insobriety,
substance abuse, conviction of a crime involving moral turpitude, or
gross negligence in the performance of his duties, which gross
negligence has had a material adverse effect on the business,
operations, assets, properties or financial condition of the Company
and its Subsidiaries, if any, taken as a whole, or (z) by reason of
the occurrence of the Normal Retirement Date; or
(ii) initiated by the Employee following one or more of the
following occurrences:
(A) a significant reduction by the Company or its
Subsidiaries, if any, of the authority, duties or
responsibilities of the Employee immediately prior to the
Change of Control;
(B) any removal of the Employee from or any failure to
re-elect the Employee to the officer positions with the
Company and its Subsidiaries, if any, held by him immediately
prior to the Change of Control, except in connection with
promotions to higher office or in connection with
consolidations among the Company's Subsidiaries where the
Employee is elected to similar positions in the successor
company or companies;
(C) a reduction by the Company in the Employee's Base
Salary as in effect immediately prior to the Change of
Control;
(D) any revocation or material modification (except as
may be required in the
4
normal course of business in light of any requirement of or
change in applicable law or regulations) of any Bonus Plan or
deferred compensation or retirement plan, or any action taken
pursuant to the terms of any of such plans, which materially
(x) reduces the opportunity to receive compensation under any
of such plans of amounts equivalent to those received by the
Employee during the two fiscal years immediately preceding the
Change of Control, subject to the right of the directors of
the Company or of Enterra to establish in a manner consistent
with past practice prior to the Change of Control reasonable
goals under such plans, (y) reduces the compensation payable
to the Employee under any of such plans but which does not
effect comparable reductions in the compensation payable to
the other participants in such plans, or (z) increases the
compensation payable to other participants in any of such
plans but which does not effect corresponding increases in the
amount of compensation payable to the Employee; or
(E) a transfer of the Employee, without his express
written consent, to a location which is outside the general
metropolitan area in which his principal place of business
immediately preceding the Change of Control may be located, or
which is otherwise an unreasonable commuting distance from the
Employee's principal residence at the date of the Change of
Control.
2. NOTICE OF TERMINATION. Any Termination upon a Change of
Control shall be communicated by a Notice of Termination to the other party
hereto given in accordance with Section 12 hereof. 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) briefly
summarizes the facts and circumstances deemed to provide a basis for termination
of the Employee's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall not be more than 15 days after the giving of
such notice).
5
3. SEVERANCE COMPENSATION UPON TERMINATION.
(a) Subject to the adjustments provided in paragraph (b) below and
Section 9(a) hereof, in the event of the Employee's Termination upon a Change of
Control, the Company shall pay to the Employee, within 15 days after the
Termination Date, an amount in cash equal to two times the sum of paragraphs (i)
and (ii) below:
(i) the Employee's Base Salary in effect either immediately
prior to the Termination of Employment or immediately prior to the
Change of Control, whichever is higher; and
(ii) the average of the annual bonuses earned by the
Employee under any Bonus Plan in the two fiscal years immediately
prior to such Termination of Employment.
(b) In the event the Employee's Normal Retirement Date would occur
prior to 24 months after the Termination Date, the aggregate cash amount
determined as set forth in (a) above shall be reduced by multiplying it by a
fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 730. No payments shall be due Employee in the event that the
Normal Retirement Date has been reached prior to the Termination Date.
4. OTHER PAYMENTS. In the event of the Employee's Termination
upon a Change of Control, the Company shall also:
(a) pay to the Employee within 15 days after the Termination Date,
unless the Employee has exercised such options and rights, an amount equal to
the excess, if any, of the aggregate fair market value of the shares of
Enterra's Common Stock subject to all stock options and stock appreciation
rights outstanding arid unexercised immediately prior to the Termination Date,
whether vested or unvested, granted to the Employee under the Stock Plan, over
the aggregate exercise price of all such stock options. Upon such payment, the
options or rights shall terminate. For purposes of this paragraph, fair market
value shall mean the highest of (x) the closing price of Enterra's Common Stock
on the business day immediately preceding the Termination Date, if such Common
Stock is publicly traded at such date, (y) if such Common Stock is not publicly
traded at the Termination Date, the value determined by an independent
appraiser, such appraiser to be selected by the Employee and to be reasonably
satisfactory to the Company (the fees and expenses of such appraiser to be borne
by the Company), and (z) in respect of a Change of Control under
6
Section 1(e) (i) hereof, the highest per share price of Enterra's Common Stock
paid (in connection with the Change of Control or at any time thereafter) by
the Person or group whose acquisition of shares of Common Stock of Enterra has
given rise to a Change of Control;
(b) to the extent permitted by applicable law, continue or cause
to be continued until 24 months after the Termination Date, on the
cost-sharing basis (if any) in effect immediately prior to the Change of
Control, medical, dental and life insurance benefits (and, at the option of
the Employee, disability insurance benefits) substantially equivalent in all
material respects to those furnished by the Company and its Subsidiaries to
the Employee immediately prior to the Change of Control; PROVIDED, HOWEVER,
that if the Employee's Normal Retirement Date would have occurred prior to 24
months after the Termination Date, the obligation of the Company to provide
such benefits shall cease at the Employee's Normal Retirement Date; and
PROVIDED FURTHER, HOWEVER, that the obligation of the Company to provide such
benefits shall cease at such time as the Employee is employed on a full time
basis by a corporation not owned or controlled by the Employee that provides
the Employee, on substantially the same cost-sharing basis (if any) between
the Company and the Employee in effect immediately prior to the Change of
Control, with medical, dental life and disability insurance benefits
substantially equivalent in all material respects to those furnished by the
Company and its Subsidiaries to the Employee immediately prior to the Change
of Control; and
(c) permit the Employee to receive any car allowance or continue
the use of his Company car, if any, without any cost for a period of six
months thereafter. Thereafter, the Employee shall return the car to the
Company unless, in the case of a car owned by the Company, the Employee
elects to purchase the car from the Company at the net book value thereof at
the date of the purchase or, in the case of a car leased by the Company, the
Employee pays the Company, as such amounts become due and payable, all rental
payments charged to the Company for the use of such car for the remainder of
the lease therefor.
5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event
of a Termination upon a Change of Control, all restrictions remaining on the
Termination Date on the restricted shares, if any, received by the Employee
pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned
by the Employee free and clear of all restrictions of any nature whatsoever,
except those, if any, under applicable U.S. federal and state securities laws.
7
6. ENFORCEMENT.
(a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within
the respective time periods provided therein, the Company shall pay to the
Employee, in addition to the payment of any other sums provided in this
Agreement, interest, compounded daily, on any amount remaining unpaid from the
date payment is required under Section 3, 4 or 5, as appropriate, until paid to
the Employee, at the rate from time to time announced by Xxxxx Fargo Bank, N.A.
as its "prime rate" plus 2%, each change in such rate to take effect on the
effective date of the change in such prime rate.
(b) It is the intent of the parties that the Employee not be
required to incur any expenses associated with the enforcement of his rights
under this Agreement by arbitration, litigation or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Employee hereunder. Accordingly, the Company
shall pay the Employee on demand the amount necessary to reimburse the Employee
in full for all expenses (including all attorneys' fees and legal expenses)
incurred by the Employee in enforcing any of the obligations of the Company
under this Agreement.
7. NO MITIGATION. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by
Enterra, the Company or any of the Company's Subsidiaries or Affiliates and for
which the Employee may qualify.
9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES.
(a) The severance plan or policy, if any, applicable to employees
of the Company or any Subsidiary which employs the Employee, and any other
severance payments required by employment contracts or statutes or provided
under government programs may provide compensation and benefits to the Employee
upon events which also constitute a Termination upon a Change of Control as
defined in this Agreement. In such event, Employee shall be entitled only to
the largest cash compensation provided for under any of such agreements, plans,
policies, statutes or programs and the maximum benefit continuance provided for
under any of such
8
agreements, plans, policies, statues or programs, and the payments referred to
in Section 3 hereof shall be reduced to the extent necessary to effect such
coordination of benefits.
(b) Except as specifically set forth in (a) above, the Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Employee or others.
(c) Employee alone, and not Enterra, the Company or any
Subsidiary, shall be responsible for the payment of all taxes in respect of the
payments to be made and benefits to be provided under this Agreement.
10. SETTLEMENT OF ALL DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating
to any provision of this Agreement or the Employee's Termination upon a Change
of Control shall be settled by arbitration in the City of Houston, Texas, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, one of whom shall
be selected by the Company, one of whom shall be selected by the Employee and
the third of whom shall be selected by the other two arbitrators. Each
arbitrator selected as provided herein is required to be or have been a director
or an executive officer of a corporation whose shares of common stock were
listed during at least one year of such service on the New York Stock Exchange
or the American Stock Exchange or quoted on the National Association of
Securities Dealers Automated Quotations System. Any award entered by the
arbitrators shall be final, binding and nonappealable and judgment may be
entered thereon by any party in accordance with applicable law in any court of
competent jurisdiction. This arbitration provision shall be specifically
enforceable. The fees of the American Arbitration Association and the
arbitrators and any expenses relating to the conduct of the arbitration shall be
paid by the Company.
(b) The party or parties challenging the right of the Employee to
the benefits of this Agreement shall in all circumstances have the burden of
proof.
11. TERM OF AGREEMENT. This Agreement shall commence as of the
date first written above and shall continue in effect until the earlier of (i)
March 31, 1998 or such earlier date upon which the Employee ceases to be in the
employ of the Company or any Subsidiary thereof for any
9
reason other than a Termination Upon a Change of Control, or (ii) 24 months
after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the
obligations of the parties hereunder arising after a Change of Control shall
continue in effect until such obligations are satisfied or have expired.
12. NOTICES. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and may be delivered personally or mailed by overnight express
courier service, as follows:
If to the Company, to:
Enterra Corporation
0000 Xxxxx Xxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
XXX
Attention: The Chairman
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
XXX
Attention: Xxxxx X. Xxxx, Esq.
If to the Employee, to:
Xxxxxxx Xxxxx Xxxxx
Tudor House
Forest Xxxx
Xxxx Xxxx Road
Barrowford Nr. Nelson
Lancashire XX0 0XX
Xxxxxxx
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, on the next business
day in the case of overnight express courier service or when actually received
if sent in any other fashion.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS XX XXX XXXXX XX
00
XXXXXXXX, XXXXXX XXXXXX OF AMERICA, WITHOUT GIVING EFFECT TO
SUCH STATE'S CONFLICT OF LAWS PROVISIONS.
14. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT.
(a) This Agreement supersedes all prior agreements and sets forth
the entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by (i) the Employee and (ii) after approval by
the directors of the Company and, in writing, by the chief executive officer of
Enterra, by a duly authorized director of the Company other than the Employee.
The provisions of this Agreement may provide for payments to the Employee under
certain compensation, bonus or stock option plans under circumstances where such
plans would not provide for payment thereof. It is the specific intention of
the parties that the provisions of this Agreement shall supersede any provisions
to the contrary in such plans, and such plans shall be deemed to have been
amended to correspond with this Agreement without further action by the Company
or Enterra.
(b) Nothing in this Agreement shall be construed as giving the
Employee any right to be retained in the employ of Enterra, the Company or any
Subsidiary of either.
(c) The Employee acknowledges that from time to time, Enterra, the
Company and their Subsidiaries may establish, maintain and distribute employee
manuals or handbooks or personnel policy manuals, and officers or other
representatives thereof may make written or oral statements relating to
personnel policies and procedures. Such manuals, handbooks and statements are
intended only for general guidance. No policies, procedures or statements of
any nature by or on behalf of Enterra, the Company or any Subsidiary of either
(whether written or oral, and whether or not contained in any employee manual or
handbook or personnel policy manual), and no acts or practices of any nature,
shall be construed to modify this Agreement.
(d) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of the Employee and the Company hereunder
shall not be assignable in whole or in part by the Company.
15. SEVERABILITY. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or
11
unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
16. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the
Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, including without limitation any delay
by the Employee in delivering a Notice of Termination pursuant to Section 2
hereof after an event has occurred which would, if the Employee had resigned,
have constituted a Termination upon a Change of Control pursuant to Section
1(l)(ii) of this Agreement.
17. MISCELLANEOUS. All section headings are for convenience
only. This Agreement may be executed in several counterparts, each of which
shall be an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the other
counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
The COMMON SEAL of )
PIPELINE INDUCTION HEAT )
LIMITED was hereunto )
affixed in the presence )
of:- )
/s/ Xxxxxxx Xxxxx
Director
Secretary
SIGNED SEALED and DELIVERED )
by the said XXXXXXX XXXXX )/s/ X. Xxxxx
XXXXX in the presence of:- )
/s/ X. X. Xxxxxx
12
SEVERANCE AGREEMENT
Agreement made as of February 21, 1991 between Enterra Corporation,
a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxxxxx (the
"Employee").
WHEREAS, the Employee is presently employed by Oil Field Rental
Service Company, a "Subsidiary" (as defined in Section 1 hereof), as its
President;
WHEREAS, the Company considers it essential to xxxxxx the employment
of well qualified key management personnel for the Company and its Subsidiaries,
and, in this regard, the board of directors of the Company recognizes that, as
is the case with many publicly held corporations, the possibility of a change in
control of the Company may exist and that such possibility, and the uncertainty
and questions which it may raise among management, may result in the departure
or distraction of key management personnel to the detriment of the Company;
WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the management of the Company and its
Subsidiaries to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a change in
control of the Company, although no such change is now contemplated; and
WHEREAS, in order to induce the Employee to remain in the employ of
the Subsidiary, the Company agrees that the Employee shall receive the
compensation and benefits set forth in this Agreement in the event his
employment with the Company is terminated subsequent to a "Change of Control"
(as defined in Section 1 hereof) of the Company as a cushion against the
financial and career impact on the Employee of any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. For all purposes of this Agreement, the
following terms shall have the meanings specified in this Section unless the
context clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Base Salary" shall mean the total cash remuneration earned by
the Employee on an annualized basis in all capacities with the company and its
Subsidiaries, including any compensation the payment of which has been deferred
pursuant to a salary reduction or deferral plan (including a 401(k) plan, other
than company matching contributions) or agreement, but exclusive of any cash
payments made to him under the company's Bonus Plan, or any contributions made
for his benefit to the Company's 401(k) Plan or CRC-Xxxxx Plan.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed
the "Beneficial Owner" of securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for payment, purchase or exchange;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including without limitation pursuant to any agreement, arrangement
or understanding, whether or not in writing; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of any
security under this subsection (ii) as a result of an oral or
written agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (a) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of
2
the General Rules and Regulations under the Exchange Act, and (b) is
not then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly Or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except,
pursuant to a revocable proxy as described in the proviso to
subsection (ii) above or the May 2, 1986 option agreement between
Shamrock Holdings, Inc. and the shareholders known as the "SGS
Group" or their successors) or disposing of any voting securities of
the Company;
PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of any securities acquired through such Person's participation in good faith in
a firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(d) "Board" shall mean the board of directors of the Company.
(e) "Bonus Plan" shall mean the Company's Management Incentive
Bonus Plan, as in effect immediately prior to a Change of Control.
(f) "Change of control" shall be deemed to have taken place if (i)
any Person (except the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, any Person or
entity organized, appointed or established by the Company for or pursuant to the
terms of any such employee benefit plan, or an Exempted Person), together with
all Affiliates and Associates of such Person acting in concert as described in
Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the
aggregate of 30% or more of the Common Stock of the Company then outstanding
within the meaning of Rule 13d-3 promulgated under the Exchange Act.
(g) "CRC-Xxxxx Plan" shall mean the CRC-Xxxxx Money Purchase
Pension Plan, as in effect immediately prior to a Change of Control.
(h) "Exempted Person" shall mean any of Shamrock
Holdings of California, Inc., a Delaware corporation
3
("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock
Holdings"), or any Affiliate or Associate of Shamrock or Shamrock Holdings.
"Exempted Person" shall not include transferees from any Exempted Person except
where such transferees are Affiliates or Associates of Shamrock or Shamrock
Holdings.
(i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in
effect immediately prior to a Change of Control.
(j) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the Employee's 65th birthday.
(k) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(l) "Stock Plan" shall mean the Company's Stock Option Plan or any
successor plan thereto, as in effect immediately prior to a Change of Control.
(m) "Subsidiary" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
(n) "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.
(o) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.
(p) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within two years after a Change of Control
either:
(i) initiated by the Company for any reason other than (x)
the Employee's continuous illness, injury or incapacity for a period
of six consecutive months, (y) for "cause," which shall mean
misappropriation of funds, habitual insobriety, substance abuse,
conviction of a crime involving moral turpitude, or gross negligence
in the performance of his duties, which gross negligence has had a
material adverse effect on the business, operations, assets,
properties or financial condition of the Company and its
Subsidiaries taken as a whole, or (z) by reason of the occurrence of
the Normal Retirement Date; or
4
(ii) initiated by the Employee following one or more of the
following occurrences:
(A) a significant reduction by the Company or its
Subsidiaries of the authority, duties or responsibilities of the
Employee immediately prior to the Change of Control;
(B) any removal of the Employee from or any failure to
re-elect the Employee to the officer positions with the Company
and its Subsidiaries held by him immediately prior to the Change
of Control, except in connection with promotions to higher office
or in connection with consolidations among the Company's
Subsidiaries where the Employee is elected to similar positions
in the successor company or companies;
(C) a reduction by the Company in the Employee's Base
Salary as in effect immediately prior to the Change of Control;
(D) revocation or any modification (except as may be
required in the normal course of business in light of any
requirement of or change in federal law or regulations) of the
Bonus Plan, 401(k) Plan or CRC-Xxxxx Plan, or any action taken
pursuant to the terms of such plans, which materially (x) reduces
the opportunity to receive compensation under any of such plans
of equivalent amounts received by the Employee during the two
fiscal years immediately preceding the Change of Control, subject
to the right of the Board to establish in a manner consistent
with past practice prior to the Change of Control reasonable
goals under such plans, (y) reduces the compensation payable to
the Employee under any of such plans but which does not effect
comparable reductions in the compensation payable to the other
participants in such plans, or (z) increases the compensation
payable to other participants in any of such plans but which
does not effect corresponding increases in the amount of
compensation payable to the Employee; or
(E) a transfer of the Employee, without his express
written consent, to a location which is outside the general
metropolitan area in which his principal place of business
5
immediately preceding the Change of Control may be located, or
which is otherwise an unreasonable commuting distance from the
Employee's principal residence at the date of the Change of
Control.
2. NOTICE OF TERMINATION. Any Termination upon a Change of
Control shall be communicated by a Notice of Termination to the other party
hereto given in accordance with Section 14 hereof. 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) briefly
summarizes the facts and circumstances deemed to provide a basis for termination
of the Employee's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall not be more than 15 days after the giving of
such notice).
3. SEVERANCE COMPENSATION UPON TERMINATION.
(a) Subject to the provisions of Section 10 hereof and to
adjustment as provided in paragraph (b) below and Section 9(a), in the event of
the Employee's Termination upon a Change of Control, the Company shall pay to
the Employee, within fifteen days after the Termination Date (or as soon as
possible thereafter in the event that the procedures set forth in Section 10(b)
hereof cannot be completed within 15 days), an amount in cash equal to two times
the sum of paragraphs (i) and (ii) below:
(i) The Employee's Base Salary in effect either immediately
prior to the Termination of Employment or immediately prior to the
Change of Control, whichever is higher; and
(ii) The average of the annual bonuses earned by the Employee
under the Bonus Plan in the two fiscal years immediately prior to
such Termination of Employment.
(b) In the event the Employee's Normal Retirement Date would occur
prior to twenty-four months after the Termination Date, the aggregate cash
amount determined as set forth in (a) above shall be reduced by multiplying it
by a fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 730. No payments shall be due Employee in the event that the
Normal Retirement Date has been reached prior to the Termination Date.
6
4. OTHER PAYMENTS. Subject to the provisions of Section 10
hereof, in the event of the Employee's Termination upon a Change of Control, the
Company shall:
(a) pay to the Employee within fifteen days after the Termination
Date, unless the Employee has exercised such options and rights, an amount equal
to the excess, if any, of the aggregate fair market value of the shares of the
Company's Common Stock subject to all stock options and stock appreciation
rights outstanding and unexercised immediately prior to the Termination Date,
whether vested or unvested, granted to the Employee under the Stock Plan, over
the aggregate exercise price of all such stock options. For purposes of this
paragraph, fair market value shall mean the highest of (x) the closing price of
the Company's Common Stock on the business day immediately preceding the
Termination Date, if such Common Stock is publicly traded at such date, (y) if
such Common Stock is not publicly traded at the Termination Date, the value
determined by an independent appraiser, such appraiser to be selected by the
Employee and to be reasonably satisfactory to the Company (the fees and expenses
of such appraiser to be borne by the Company), or (z) the highest per share
price of the Company's Common Stock paid (in connection with the Change of
Control or at any time thereafter) by the Person or group whose acquisition of
shares of Common Stock of the Company has given rise to a Change of Control;
(b) to the extent permitted by applicable law, continue or cause
to be continued until 24 months after the Termination Date, on the cost-sharing
basis (if any) in effect immediately prior to the Change of Control, medical,
dental and life insurance benefits (and, at the option of the Employee,
disability insurance benefits) substantially equivalent in all material respects
to those furnished by the Company and its Subsidiaries to the Employee
immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the
Employee's Normal Retirement Date would have occurred prior to 24 months after
the Termination Date, the obligation of the Company to provide such benefits
shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER,
HOWEVER, that the obligation of the Company to provide such benefits shall
cease at such time as the Employee is employed on a full time basis by a
corporation not owned or controlled by the Employee that provides the Employee,
on substantially the same cost-sharing basis (if any) between the Company and
the Employee in effect immediately prior to the Change of Control, with medical,
dental, life and disability insurance benefits substantially equivalent in all
material respects to those furnished by the Company and its Subsidiaries to the
Employee immediately prior to the Change of Control;
7
(c) for vesting purposes only, in the event of a Termination upon
a Change of Control occurring prior to the Normal Retirement Date, credit the
Employee with the lesser of (i) two additional "years of service" (as defined in
the Company's 401(k) Plan) or (ii) the period of time from the Termination Date
to the Normal Retirement Date under each of the Company's 401(k) Plan and
CRC-Xxxxx Plan, in addition to the years of service that would have otherwise
been calculated by reference solely to the Termination Date, it being understood
that benefits in respect of the two additional years of service shall be paid to
the Employee under the Company's 401(k) Plan or CRC-Xxxxx Plan, and that the
Company shall, to the extent necessary to provide the Employee the additional
benefits intended hereby, amend the 401(k) Plan or CRC-Xxxxx Plan or pay such
additional benefits outside the plan as may be necessary; and
(d) permit the Employee to continue the use of his Company car, if
any, without any cost for a period of six months thereafter. Thereafter, the
Employee shall return the car to the Company unless, in the case of a car owned
by the Company, the Employee elects to purchase the car from the Company at the
net book value thereof at the date of the purchase or, in the case of a car
leased by the Company, the Employee pays the Company, as such amounts become due
and payable, all rental payments charged to the Company for the use of such car
for the remainder of the lease therefore.
5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event
of a Termination upon a Change of Control, and subject to the provisions of
Section 10 hereof, all restrictions remaining on the Termination Date on the
restricted shares, if any, received by the Employee, pursuant to the Stock Plan
shall lapse, and said shares shall thereupon be owned by the Employee free and
clear of all restrictions of any nature whatsoever, except those, if any, under
applicable federal and state securities laws.
6. ENFORCEMENT.
(a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within
the respective time periods provided therein, the Company shall pay to the
Employee, in addition to the payment of any other sums provided in this
Agreement, interest, compounded daily, on any amount remaining unpaid from the
date payment is required under Section 3, 4 or 5, as appropriate, until paid to
the Employee, at the rate from time to time announced by Xxxxx Fargo Bank, N.A.
as its "prime rate" plus 2%, each change in such rate to take effect on the
effective date of the change in such prime rate.
8
(b) It is the intent of the parties that the Employee not be
required to incur any expenses associated with the enforcement of his rights
under this Agreement by arbitration, litigation or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Employee hereunder. Accordingly, the Company
shall pay the Employee on demand the amount necessary to reimburse the Employee
in full for all expenses (including all attorneys' fees and legal expenses)
incurred by the Employee in enforcing any of the obligations of the Company
under this Agreement.
7. NO MITIGATION. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company or any of its Subsidiaries or Affiliates and for which the Employee may
qualify.
9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES.
(a) The severance plan or policy, if any, applicable to employees
of Enterra or the Subsidiary which employs the Employee, and any other severance
payments required by applicable statutes or provided under government programs
may provide compensation and benefits to Employee upon events which also
constitute a Termination upon a Change of Control as defined in this Agreement.
In such event, Employee shall be entitled only to the largest cash compensation
provided for under any of such agreements, plans, policies, statutes or programs
and the maximum benefit continuance provided for under any of such agreements,
plans, policies, statues or programs, and the payments referred to in Section 3
hereof shall be reduced to the extent necessary to effect such coordination of
benefits.
(b) Except as specifically set forth in (a) above, the Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Employee or others.
(c) Employee alone, and not the Company or any Subsidiary, shall
be responsible for the payment of all
9
federal, state and local taxes in respect of the payments to be made and
benefits to be provided under this Agreement.
10. CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined as set forth herein that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 28OG of the Internal Revenue Code of
1986, as amended (the "Code"), and that it would be economically advantageous to
the Company to reduce the Payment to avoid or reduce the taxation of excess
parachute payments under Section 4999 of the Code, the aggregate present value
of amounts payable or distributable to or for the benefit of the Employee
pursuant to this Agreement (such payments or distributions pursuant to this
Agreement are hereinafter referred to as "Agreement Payments") shall be reduced
(but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an
amount expressed in present value which maximizes the aggregate present value of
Agreement Payments without causing any Payment to be subject to the taxation
under Section 4999 of the Code. For purposes of this Section 10, present value
shall be determined in accordance with Section 280G(d)(4) of the Code.
(b) All determinations to be made under this Section 10 shall be
made by Peat Marwick Main & Co., or the Company's independent public accountant
immediately prior to the Change of Control if other than Peat Marwick Main & Co.
(the "Accounting Firm"), which firm shall use its best efforts to provide its
determinations and any supporting calculations both to the Company and the
Employee within 10 days of the Termination Date. Any such determination by the
Accounting Firm shall be binding upon the Company and the Employee. The Company
shall in its sole discretion determine which and how much of the Agreement
Payments shall be eliminated or reduced consistent with the requirements of this
Section 10. Within five days after the Company's determination, the Company
shall pay (or cause to be paid) or distribute (or cause to be distributed) to or
for the benefit of the Employee such amounts as are then due to the Employee
under this Agreement.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Agreement Payments, as the case may be, will have
been made by the Company which should not have been made
10
("Overpayment") or that additional Agreement Payments which have not been made
by the Company could have been made ("Underpayment"), in each case, consistent
with the calculations required to be made hereunder. Within two years after the
Termination of Employment, the Accounting Firm shall review the determination
made by it pursuant to the preceding paragraph. In the event that the Accounting
Firm determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Employee which the Employee shall
repay to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code (the "Federal Rate"); PROVIDED,
HOWEVER, that no amount shall be payable by the Employee to the Company if and
to the extent such payment would not reduce the amount which is subject to
taxation under Section 4999 of the Code. In the event that the Accounting Firm
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee together with
interest at the Federal Rate.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above shall
be borne solely by the Company. The Company agrees to indemnify and hold
harmless the Accounting Firm of and from any and all claims, damages and
expenses of any nature resulting from or relating to its determinations pursuant
to subsections (b) and (c) above, except for claims, damages or expenses
resulting from the gross negligence or willful misconduct of the Accounting
Firm.
Il. SETTLEMENT OF ALL DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating to
any provision of this Agreement or the Employee's Termination upon a Change of
Control shall be settled by arbitration in the City of Houston, Texas, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom shall
be selected by the Company and the Employee, respectively, and the third of whom
shall be selected by the other two arbitrators. Each arbitrator selected as
provided herein is required to be or have been a director or an executive
officer of a corporation whose shares of common stock were listed during at
least one year of such service on the New York Stock Exchange or the American
Stock Exchange or quoted on the National Association of Securities Dealers
Automated Quotations System. Any award entered by the arbitrators shall be
final, binding and nonappealable and judgment may be entered thereon by any
party in accordance with applicable law in any court of
11
competent jurisdiction. This arbitration provision shall be specifically
enforceable. The fees of the American Arbitration Association and the
arbitrators and any expenses relating to the conduct of the arbitration shall be
paid by the Company.
(b) The party or parties challenging the right of the Employee to
the benefits of this Agreement shall in all circumstances have the burden of
proof.
12. TERM OF AGREEMENT. This Agreement shall commence as of the
date first written above and shall continue in effect until the earlier of (i)
the date upon which the Employee ceases to be in the employ of the Company or
any Subsidiary thereof for any reason other than a Termination Upon a Change of
Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED,
HOWEVER, that all of the obligations of the parties hereunder arising after a
Change of Control shall continue in effect until such obligations are satisfied
or have expired.
13. SUCCESSOR COMPANY. The company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession or successions had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such succession shall be
a breach of this Agreement. As used in this Agreement, the Company shall mean
the Company as hereinbefore defined and any such successor or successors to its
business and/or assets, jointly and severally.
14. NOTICE. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:
If to the Company, to:
Enterra Corporation
0000 Xxxxx Xxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
12
Attention: The Chairman
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
If to the Employee, to:
Xxxxxxx X. Xxxxxxxxxx
c/o Oil Field Rental Service Company
P. O. Xxx 0000
Xxxxxxx, XX 00000-0000
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY
CONFLICT OF LAWS PROVISIONS.
16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT.
(a) This Agreement supersedes all prior agreements and sets forth
the entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by the Employee and approved by the board and
executed on the Company's behalf by a duly authorized officer. The provisions
of this Agreement may provide for payments to the Employee under certain
compensation or bonus plans (including without limitation the Stock Plan, the
Bonus Plan, the 401(k) Plan and the CRC-Xxxxx Plan) under circumstances where
such plans would not provide for payment thereof. It is the specific intention
of the parties that the provisions of this Agreement shall supersede any
provisions to the contrary in such plans, and such plans shall be deemed to have
been amended to correspond with this
13
Agreement without further action by the Company or the Board.
(b) Nothing in this Agreement shall be construed as giving the
Employee any right to be retained in the employ of the Company or any of its
Subsidiaries.
(c) The Employee acknowledges that from time to time, the Company
and its subsidiaries may establish, maintain and distribute employee manuals or
handbooks or personnel policy manuals, and officers or other representatives of
the Company or its Subsidiaries may make written or oral statements relating to
personnel policies and procedures. Such manuals, handbooks and statements are
intended only for general guidance. No policies, procedures or statements of any
nature by or on behalf of the Company or its Subsidiaries (whether written or
oral, and whether or not contained in any employee manual or handbook or
personnel policy manual), and no acts or practices of any nature, shall be
construed to modify this Agreement.
(d) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of the Employee and the Company hereunder
shall not be assignable in whole or in part by the Company.
17. SEVERABILITY. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or application.
18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the
Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in exercising
any right, remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof, including without limitation any delay by the
Employee in delivering a Notice of Termination pursuant to Section 2 hereof
after an event has occurred which would, if the Employee had resigned, have
constituted a Termination upon a Change of Control pursuant to Section 1(p)(ii)
of this Agreement.
14
19. MISCELLANEOUS. All section headings are for convenience
only. This Agreement may be executed in several counterparts, each of which is
an original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
Attest: ENTERRA CORPORATION
/s/ M. Gay Xxxxxx By: /s/ Xxxxxx X. Xxxxx
------------------------------ ---------------------------------------
Secretary Xxxxxx X. Xxxxx
Xx. Vice President and
Chief Financial Officer
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------ -------------------------------------
Witness Xxxxxxx X. Xxxxxxxxxx
15
SEVERANCE AGREEMENT
Agreement made as of March 5, 1991 between Enterra Corporation, a
Delaware corporation (the "Company"), and D. Xxxx Xxxx (the "Employee").
WHEREAS, the Employee has previously been employed by CRC-Xxxxx
Pipeline International, Inc., a "Subsidiary" (as defined in Section 1 hereof);
and
WHEREAS, on the date of this Agreement the Employee shall become
employed by the Company as its President and Chief Executive Officer;
WHEREAS, the Company considers it essential to xxxxxx the employment
of well qualified key management personnel for the Company and its Subsidiaries,
and, in this regard, the board of directors of the Company recognizes that, as
is the case with many publicly held corporations, the possibility of a change in
control of the Company may exist and that such possibility, and the uncertainty
and questions which it may raise among management, may result in the departure
or distraction of key management personnel to the detriment of the Company;
WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the management of the Company and its
Subsidiaries to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a change in
control of the Company, although no such change is now contemplated; and
WHEREAS, in order to induce the Employee to remain in the employ of
the Company, the Company agrees that the Employee shall receive the compensation
and benefits set forth in this Agreement in the event his employment with the
Company is terminated subsequent to a "Change of Control" (as defined in Section
1 hereof) of the Company as a cushion against the financial and career impact on
the Employee of any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. For all purposes of this Agreement, the following
terms shall have the meanings
specified in this Section unless the context clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Base Salary" shall mean the total cash remuneration earned by
the Employee on an annualized basis in all capacities with the Company and its
Subsidiaries, including any compensation the payment of which has been deferred
pursuant to a salary reduction or deferral plan (including a 401(k) plan, other
than company matching contributions) or agreement, but exclusive of any cash
payments made to him under the Company's Bonus Plan, or any contributions made
for his benefit to the Company's 401(k) Plan or CRC-Xxxxx Plan.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of securities
tendered pursuant to a tender or exchange offer made by such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for payment, purchase or exchange;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including without limitation pursuant to any agreement, arrangement or
understanding, whether or not in writing; PROVIDED, HOWEVER, that a
Person shall not be deemed the "Beneficial Owner" of any security
under this subsection (ii) as a result of an oral or written
agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding (A) arises solely from a
revocable
2
proxy given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (B) is not
then reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except, pursuant to a
revocable proxy as described in the proviso to subsection (ii) above)
or disposing of any voting securities of the Company;
PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of any securities acquired through such Person's participation in good faith in
a firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(d) "Board" shall mean the board of directors of the Company.
(e) "Bonus Plan" shall mean the Company's Management Incentive Bonus
Plan, as in effect immediately prior to a Change of Control.
(f) "Change of Control" shall be deemed to have taken place if (i)
any Person (except the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, any Person or
entity organized, appointed or established by the Company for or pursuant to the
terms of any such employee benefit plan, or an Exempted Person), together with
all Affiliates and Associates of such Person acting in concert as described in
Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the
aggregate of 30% or more of the Common Stock of the Company then outstanding
within the meaning of Rule 13d-3 promulgated under the Exchange Act.
(g) "CRC-Xxxxx Plan" shall mean the CRC-Xxxxx Money Purchase Pension
Plan, as in effect immediately prior to a Change of Control.
(h) "Exempted Person" shall mean any of Shamrock Holdings of
California, Inc., a Delaware corporation
3
("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock
Holdings"), or any Affiliate or Associate of Shamrock or Shamrock Holdings.
"Exempted Person" shall not include transferees from any Exempted Person except
where such transferees are Affiliates or Associates of Shamrock or Shamrock
Holdings.
(i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect
immediately prior to a Change of Control.
(j) "Normal Retirement Date" shall mean the first day of the calendar
month coincident with or next following the Employee's 65th birthday.
(k) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(l) "Stock Plan" shall mean the Company's Stock Option Plan or any
successor plan thereto, as in effect immediately prior to a Change of Control.
(m) "Subsidiary" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
(n) "Termination Date" shall mean the date of receipt of the Notice
of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.
(o) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.
(p) "Termination upon a Change of Control" shall mean a Termination
of Employment upon or within two years after a Change of Control either:
(i) initiated by the Company for any reason other than (x) the
Employee's continuous illness, injury or incapacity for a period of
twenty-six consecutive weeks, (y) for "cause," as defined in Section
8.3 of the Employment Agreement between the Company and the Employee
of even date herewith (the "Employment Agreement"), or (z) by reason
of the occurrence of the Normal Retirement Date; or
(ii) initiated by the Employee following one or more of the
following occurrences:
(A) a significant reduction by the Company or its
Subsidiaries of the authority,
4
duties or responsibilities of the Employee immediately prior to
the Change of Control;
(B) any removal of the Employee from or any failure to re-
elect the Employee to the officer positions with the Company and
its Subsidiaries held by him immediately prior to the Change of
Control, except in connection with promotions to higher office or
in connection with consolidations among the Company's
Subsidiaries where the Employee is elected to similar positions
in the successor company or companies;
(C) a reduction by the Company in the Employee's Base
Salary as in effect immediately prior to the Change of Control;
(D) revocation or any modification (except as may be
required in the normal course of business in light of any
requirement of or change in federal law or regulations) of the
Bonus Plan, 401(k) Plan or CRC-Xxxxx Plan, or any action taken
pursuant to the terms of such plans, which materially (x) reduces
the opportunity to receive compensation under any of such plans
of equivalent amounts received by the Employee during the two
fiscal years immediately preceding the Change of Control, subject
to the right of the Board to establish in a manner consistent
with past practice prior to the Change of Control reasonable
goals under such plans, (y) reduces the compensation payable to
the Employee under any of such plans but which does not effect
comparable reductions in the compensation payable to the other
participants in such plans, or (z) increases the compensation
payable to other participants in any of such plans but which does
not effect corresponding increases in the amount of compensation
payable to the Employee; or
(E) a transfer of the Employee, without his express written
consent, to a location which is outside the general metropolitan
area in which his principal place of business immediately
preceding the Change of Control may be located, or which is
otherwise an unreasonable commuting distance from the Employee's
principal residence at the date of the Change of Control.
5
2. NOTICE OF TERMINATION. Any Termination upon a Change of Control
shall be communicated by a Notice of Termination to the other party hereto given
in accordance with Section 14 hereof. 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) briefly summarizes the
facts and circumstances deemed to provide a basis for termination of the
Employee's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall not be more than 15 days after the giving of
such notice).
3. SEVERANCE COMPENSATION UPON TERMINATION.
(a) Subject to the provisions of Section 10 hereof and to adjustment
as provided in paragraph (b) below and Section 9(a), in the event of the
Employee's Termination upon a "Change of Control, the Company shall pay to the
Employee, within fifteen days after the Termination Date (or as soon as possible
thereafter in the event that the procedures set forth in Section 10(b) hereof
cannot be completed within 15 days), an amount in cash equal to two times the
sum of paragraphs (i) and (ii) below:
(i) The Employee's Base Salary in effect either immediately
prior to the Termination of Employment or immediately prior to the
Change of Control, whichever is higher; and
(ii) The average of the annual bonuses earned by the Employee
under the Bonus Plan in the two fiscal years immediately prior to such
Termination of Employment.
(b) In the event the Employee's Normal Retirement Date would occur
prior to twenty-four months after the Termination Date, the aggregate cash
amount determined as set forth in (a) above shall be reduced by multiplying it
by a fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 730. No payments shall be due Employee in the event that the
Normal Retirement Date has been reached prior to the Termination Date.
4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof,
in the event of the Employee's Termination upon a Change of Control, the Company
shall:
(a) pay to the Employee within fifteen days after the Termination
Date, unless the Employee has exercised such
6
options and rights, an amount equal to the excess, if any, of the aggregate fair
market value of the shares of the Company's Common Stock subject to all stock
options and stock appreciation rights outstanding and unexercised immediately
prior to the Termination Date, whether vested or unvested, granted to the
Employee under the Stock Plan, over the aggregate exercise price of all such
stock options. For purposes of this paragraph, fair market value shall mean the
highest of (x) the closing price of the Company's Common Stock on the business
day immediately preceding the Termination Date, if such Common Stock is publicly
traded at such date, (y) if such Common Stock is not publicly traded at the
Termination Date, the value determined by an independent appraiser, such
appraiser to be selected by the Employee and to be reasonably satisfactory to
the Company (the fees and expenses of such appraiser to be borne by the
Company), or (z) the highest per share price of the Company's Common Stock paid
(in connection with the Change of Control or at any time thereafter) by the
Person or group whose acquisition of shares of Common Stock of the Company has
given rise to a Change of Control;
(b) to the extent permitted by applicable law, continue or cause to be
continued until 24 months after the Termination Date, on the cost-sharing basis
(if any) in effect immediately prior to the Change of Control, medical, dental
and life insurance benefits (and, at the option of the Employee, disability
insurance benefits) substantially equivalent in all material respects to those
furnished by the Company and its Subsidiaries to the Employee immediately prior
to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal
Retirement Date would have occurred prior to 24 months after the Termination
Date, the obligation of the Company to provide such benefits shall cease at the
Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the
obligation of the Company to provide such benefits shall cease at such time as
the Employee is employed on a full time basis by a corporation not owned or
controlled by the Employee that provides the Employee, on substantially the same
cost-sharing basis (if any) between the Company and the Employee in effect
immediately prior to the Change of Control, with medical, dental, life and
disability insurance benefits substantially equivalent in all material respects
to those furnished by the Company and its Subsidiaries to the Employee
immediately prior to the Change of Control;
(c) for vesting purposes only, in the event of a Termination upon a
Change of Control occurring prior to the Normal Retirement Date, credit the
Employee with the lesser of (i) two additional "years of service" (as defined in
the Company's 401(k) Plan) or (ii) the period of time from the Termination Date
to the Normal Retirement Date under each of
7
the Company's 401(k) Plan and CRC-Xxxxx Plan, in addition to the years of
service that would have otherwise been calculated by reference solely to the
Termination Date, it being understood that benefits in respect of the two
additional years of service shall to the extent permitted by applicable law be
paid to the Employee under the Company's 401(k) Plan or CRC-Xxxxx Plan,, and
that the Company shall, to the extent necessary to provide the Employee the
additional benefits intended hereby, amend the 401(k) Plan or CRC-Xxxxx Plan or
pay such additional benefits outside the plan as may be necessary; and
(d) permit the Employee to continue the use of his Company car, if
any, without any cost for a period of six months thereafter. Thereafter, the
Employee shall return the car to the Company unless, in the case of a car owned
by the Company, the Employee elects to purchase the car from the Company at the
net book value thereof at the date of the purchase or, in the case of a car
leased by the Company, the Employee pays the Company, as such amounts become due
and payable, all rental payments charged to the Company for the use of such car
for the remainder of the lease therefore.
5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a
Termination upon a Change of Control, and subject to the provisions of Section
10 hereof, all restrictions remaining on the Termination Date on the restricted
shares, if any, received by the Employee, pursuant to the Stock Plan shall
lapse, and said shares shall thereupon be owned by the Employee free and clear
of all restrictions of any nature whatsoever, except those, if any, under
applicable federal and state securities laws.
6. ENFORCEMENT.
(a) In the event that the Company shall fail or refuse to make payment
of any amounts due the Employee under Sections 3, 4 and 5 hereof within the
respective time periods provided therein, the Company shall pay to the
Employee, in addition to the payment of any other sums provided in this
Agreement, interest, compounded daily, on any amount remaining unpaid from the
date payment is required under Section 3, 4 or 5, as appropriate, until paid to
the Employee, at the rate from time to time announced by Xxxxx Fargo Bank, N.A.
as its "prime rate" plus 2%, each change in such rate to take effect on the
effective date of the change in such prime rate.
(b) It is the intent of the parties that the Employee not be required
to incur any expenses associated with the enforcement of his rights under this
Agreement by arbitration, litigation or other legal action because the
8
cost and expense thereof would substantially detract from the benefits intended
to be extended to the Employee hereunder. Accordingly, the Company shall pay the
Employee on demand the amount necessary to reimburse the Employee in full for
all expenses (including all attorneys' fees and legal expenses) incurred by the
Employee in enforcing any of the obligations of the Company under this
Agreement.
7. NO MITIGATION. The Employee shall not be required to mitigate the
amount of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company or any of its Subsidiaries or Affiliates and for which the Employee may
qualify.
9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES.
(a) The Employment Agreement, the severance plan or policy, if any,
applicable to employees of the Company or the Subsidiary which employs the
Employee, and any other severance payments required by applicable statutes or
provided under government programs may provide compensation and benefits to
Employee upon events which also constitute a Termination upon a Change of
Control as defined in this Agreement. In such event, Employee shall be entitled
only to the largest cash compensation provided for under any of such agreements,
plans, policies, statutes or programs and the maximum benefit continuance
provided for under any of such agreements, plans, policies, statutes or
programs, and the payments referred to in Section 3 hereof shall be reduced to
the extent necessary to effect such coordination of benefits.
(b) Except as specifically set forth in (a) above, the Company's
obligation to make the payments provided for in this Agreement and otherwise to'
perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Employee or others.
(c) Employee alone, and not the Company or any Subsidiary, shall be
responsible for the payment of all federal, state and local taxes in respect of
the payments to be made and benefits to be provided under this Agreement.
9
10. CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined as set forth herein that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and that it would be economically advantageous to
the Company to reduce the Payment to avoid or reduce the taxation of excels
parachute payments under Section 4999 of the Code, the aggregate present value
of amounts payable or distributable to or for the benefit of the Employee
pursuant to this Agreement (such payments or distributions pursuant to this
Agreement are hereinafter referred to as "Agreement Payments") shall be reduced
(but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an
amount expressed in present value which maximizes the aggregate present value of
Agreement Payments without causing any Payment to be subject to the taxation
under Section 4999 of the Code. For purposes of this Section 10, present value
shall be determined in accordance with Section 280G(d) (4) of the Code.
(b) All determinations to be made under this Section 10 shall be made
by KPMG Peat Marwick, or the Company's independent public accountant immediately
prior to the Change of Control if other than KPMG Peat Marwick (the "Accounting
Firm"), which firm shall use its best efforts to provide its determinations and
any supporting calculations both to the Company and the Employee within 10 days
of the Termination Date. Any such determination by the Accounting Firm shall be
binding upon the Company and the Employee. The Company shall in its sole
discretion determine which and how much of the Agreement Payments shall be
eliminated or reduced consistent with the requirements of this Section 10.
Within five days after the Company's determination, the Company shall pay (or
cause to be paid) or distribute (or cause to be distributed) to or for the
benefit of the Employee such amounts as are then due to the Employee under this
Agreement.
(c) As a result of the uncertainty in the application of Section 280G of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Agreement Payments, as the case may be, will have
been made by the Company which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the Company could have
been made ("Underpayment"), in each case, consistent with the
10
calculations required to be made hereunder. Within two years after the
Termination of Employment, the Accounting Firm shall-review the determination
made by it pursuant to the preceding paragraph. In the event that the Accounting
Firm determines that an overpayment has been made, any such overpayment shall be
treated for all purposes as a loan to the Employee which the Employee shall
repay to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code (the "Federal Rate"); PROVIDED,
HOWEVER, that no amount shall be payable by the Employee to the Company if and
to the extent such payment would not reduce the amount which is subject to
taxation under Section 4999 of the Code. In the event that the Accounting Firm
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee together with
interest at the Federal Rate.
(d) All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company. The Company agrees to indemnify and hold harmless the
Accounting Firm of and from any and all claims, damages and expenses of any
nature resulting from or relating to its determinations pursuant to subsections
(b) and (c) above, except for claims, damages or expenses resulting from the
gross negligence or willful misconduct of the Accounting Firm.
11. SETTLEMENT OF ALL DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating to
any provision of this Agreement or the Employee's Termination upon a Change of
Control shall be settled by arbitration in the City of Houston, Texas, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom shall
be selected by the Company and the Employee, respectively, and the third of whom
shall be selected by the other two arbitrators. Each arbitrator selected as
provided herein is required to be or have been a director or an executive
officer of a corporation whose shares of common stock were listed during at
least one year of such service on the New York Stock Exchange or the American
Stock Exchange or quoted on the National Association of Securities Dealers
Automated Quotations System. Any award entered by the arbitrators shall be
final, binding and nonappealable and judgment may be entered thereon by any
party in accordance with applicable law in any court of competent jurisdiction.
This arbitration provision shall be specifically enforceable. The fees of the
American Arbitration Association and the arbitrators and any expenses
11
relating to the conduct of the arbitration shall be paid by the Company.
(b) The party or parties challenging the right of the Employee to the
benefits of this Agreement shall in all circumstances have the burden of proof.
12. TERM OF AGREEMENT. This Agreement shall commence as of the date
first written above and shall continue in effect until the earlier of (i) the
date upon which the Employee ceases to be in the employ of the Company or any
Subsidiary thereof for any reason other than a Termination upon a Change of
Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED,
HOWEVER, that all of the obligations of the parties hereunder arising after a
Change of Control shall continue in effect until such obligations are satisfied
or have expired.
13. SUCCESSOR COMPANY. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession or successions had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such succession shall be
a breach of this Agreement. As used in this Agreement, the Company shall mean
the Company as hereinbefore defined and any such successor or successors to its
business and/or assets, jointly and severally.
14. NOTICE. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:
If to the Company, to:
Enterra Corporation
0000 Xxxxx Xxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Chairman of the Board
12
With a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxx, Esq.
If to the Employee, to:
D. Xxxx Xxxx
0000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
With a required copy to:
Xxxxxxxxx, Xxxxx & Xxx
0000 Xxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxx III
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section. Any such notice shall be deemed delivered and
effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO
SUCH STATE'S CONFLICT OF LAWS PROVISIONS.
16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT.
(a) This Agreement is intended to be in addition to the provisions of
the Employment Agreement; provided, however, that in the event of a Termination
upon a Change of Control, (i) Sections 5 and 6 of the Employment Agreement, (ii)
Sections 5 and 6 of that employment agreement dated as of February 1, 1988 among
the Company, the Employee and Connect Corporation (the "Prior Employment
Agreement"), and (iii) any similar provisions contained in any agreements
entered into by Employee with CRC-Xxxxx Pipeline International, Inc., a Texas
corporation, or its predecessor by merger, shall terminate and be of no further
force and effect. Subject to the foregoing, this Agreement supersedes all prior
agreements and sets forth the entire understanding between the parties hereto
with respect to the subject matter
13
hereof and cannot be changed, modified, extended or terminated except upon
written amendment executed by the Employee and approved by the board and
executed on the Company's behalf by a duly authorized officer. The provisions
of this Agreement may provide for payments to the Employee under certain
compensation or bonus plans (including without limitation the Stock Plan, the
Bonus Plan, the 401(k) Plan and the CRC-Xxxxx Plan) under circumstances where
such plans would not provide for payment thereof. It is the specific intention
of the parties that the provisions of this Agreement shall supersede any
provisions to the contrary in such plans, and such plans shall be deemed to have
been amended to correspond with this Agreement without further action by the
Company or the Board.
(b) Nothing in this Agreement shall be construed as giving the
Employee any right to be retained in the employ of the Company or any of its
Subsidiaries.
(c) The Employee acknowledges that from time to time, the Company and
its subsidiaries may establish, maintain and distribute employee manuals or
handbooks or personnel policy manuals, and officers or other representatives of
the Company or its Subsidiaries may make written or oral statements relating to
personnel policies and procedures. Such manuals, handbooks and statements are
intended only for general guidance. No policies, procedures or statements of any
nature by or on behalf of the Company or its Subsidiaries (whether written or
oral, and whether or not contained in any employee manual or handbook or
personnel policy manual), and no acts or practices of any nature, shall be
construed to modify this Agreement.
(d) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors and assigns of the parties hereto, except
that the duties and responsibilities of the Employee and the Company hereunder
shall not be assignable in whole or in part by the Company.
17. SEVERABILITY. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the
Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in
14
addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, including without limitation any delay
by the Employee in delivering a Notice of Termination pursuant to Section 2
hereof after an event has occurred which would, if the Employee had resigned,
have constituted a Termination upon a Change of Control pursuant to Section
1(p)(ii) of this Agreement.
19. MISCELLANEOUS. All section headings are for convenience only.
This Agreement may be executed in several counterparts, each of which is an
original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
Attest: ENTERRA CORPORATION
/s/ M. Gay Xxxxxx By: /s/ Xxxxxxx X. Gold
------------------------------ -------------------------------
Secretary Xxxxxxx X. Gold
Chairman of the Board
/s/ Xxxxxx X. Xxxxxxx /s/ D. Xxxx Xxxx
------------------------------ -------------------------------
Witness D. Xxxx Xxxx
15
