EXHIBIT 10.1
FORM OF OFFICER SEVERANCE AND RETENTION BONUS AGREEMENT
This Officer Severance and Retention Bonus Agreement ("Agreement") is made
and entered into as of this ____ day of June, 1999, by and between Titan
Resources I, Inc., a Delaware corporation (the "Company"), and
_________________________, an individual currently residing in Midland, Texas
("Officer").
RECITALS
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The Board of Directors of the Company (the "Board") has determined that it
is in the best interest of the Company to assure that the Company will have the
continued dedication of Officer, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below). The Board believes it is
imperative to diminish the inevitable distraction of Officer by virtue of the
personal uncertainties and risks created by a pending or threatened Change of
Control, to encourage Officer's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide Officer with compensation and benefit arrangements upon a Change of
Control which ensures that such compensation and benefits are competitive with
other corporations.
AGREEMENT
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Now, therefore, in consideration of Officer's continued employment by the
Company and execution of a General Release materially in the form attached
hereto as Exhibit A (the "General Release"), as well as the promises, covenants
and obligations contained herein, the Company and Officer agree as follows:
1. Severance, Retention Bonus and Other Benefits.
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(a) Severance Payment. Upon the occurrence of a Termination Event
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(as defined in Paragraph 2) and Officer's execution of the General
Release --
(i) the Company or its successor shall pay Officer an amount
equal to Officer's Annual Base Salary (as defined in Paragraph 2)
multiplied by 3.0, payable as a lump sum cash payment within 30 business
days after the date of execution of the General Release;
(ii) if Officer was participating in a life insurance and/or
disability benefit plan maintained by an Employer as of [his/her]
Termination Date, such coverage will be continued at the same cost, if any,
charged to similarly situated active employees under such plans for a
period of eighteen months following the Termination Date or, if earlier,
the date as of which Officer obtains other employment. Officer shall
immediately notify the Company upon obtaining other employment;
(iii) if Officer was participating in a hospital, surgical,
medical or dental benefit plan maintained by an Employer as of [his/her]
Termination Date and if Officer elects to continue such coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), Officer
will be reimbursed the premiums paid to continue such coverage under COBRA
until the date as of which Officer obtains other employment. Officer shall
immediately notify the Company upon obtaining other employment; and
(iv) the Company shall pay all reasonable legal fees and
expenses promptly as they are incurred by Officer in seeking to obtain or
enforce any right or benefit provided by
this Agreement other than fees or expenses incurred in connection with any
challenge by Officer to the enforceability of the General Release.
(b) Retention Bonus Payment. In the event that Officer does not
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receive a payment pursuant to Subparagraph 1(a), is employed by the Company
or any successor thereto (or an affiliate of the Company or any successor
thereto) until the Retention Date, and executes the General Release, the
Company or its successor shall:
(i) pay Officer an amount equal to Officer's Annual Base Salary
(as defined in Paragraph 2) multiplied by 3.0, payable as a lump sum cash
payment within 5 business days after the date of execution of the General
Release; and
(ii) pay all reasonable legal fees and expenses promptly as they
are incurred by Officer in seeking to obtain or enforce any right or
benefit provided by this Agreement other than fees or expenses incurred in
connection with any challenge by Officer to the enforceability of the
General Release.
(c) Option Extension. In the event of a Change of Control, the
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Company or any successor thereto (or an affiliate of the Company or any
successor thereto) shall take all such action as may be necessary or
appropriate to amend any option to purchase Titan common stock held by
Officer to provide that such option will not terminate as a result of or in
connection with Officer's termination of employment with the Company or any
successor thereto (or an affiliate of the Company or any successor thereto)
for reasons other than Cause, but may continue to be exercised following
such termination of employment until the date on which such options
otherwise would terminate or expire.
2. Definitions.
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(a) "Annual Base Salary," as determined on the Termination Date or
Retention Date, as the case may be, shall be equal to the greater of (i)
the annual base salary payable to Officer by the Company or any successor
thereto (or any affiliate of the Company or a successor thereto) as of the
date of the earliest Change of Control to occur during the eighteen-month
period prior to the Termination Date or Retention Date plus any bonuses or
special incentive payments received by Officer from the Company or any
successor thereto (or any affiliate of the Company or a successor thereto)
during the twelve-month period prior to such Change of Control, determined
prior to reduction for any employee-elected salary reduction contributions
made to an employer-sponsored plan pursuant to Section 401(k) or 125 of the
Internal Revenue Code of 1986, as amended (the "Code"), or (ii) the annual
base salary payable to Officer by the Company or any successor thereto (or
any affiliate of the Company or a successor thereto) as of the Termination
Date or Retention Date plus any bonuses or special incentive payments
received by Officer from the Company or any successor thereto (or an
affiliate of the Company or a successor thereto) during the twelve-month
period prior to the Termination Date or Retention Date, determined prior to
reduction for any employee-elected salary reduction contributions made to
an employer-sponsored plan pursuant to Section 401(k) or 125 of the Code.
(b) "Cause" as used herein with respect to Officer's termination of
employment shall include any of the following: (A) Officer's conviction of,
or plea of nolo contendere to, any felony of theft, fraud, embezzlement or
violent crime causing substantial harm to the Company or its
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affiliates; (B) the willful and continued failure by Officer to
substantially perform Officer's duties with the Company (other than such
failure resulting from Officer's incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered
to Officer by the Chief Executive Officer of the Company and the Board,
which specifically identifies the manner in which the Chief Executive
Officer and the Board believes that Officer has not substantially performed
Officer's duties or (C) the willful engaging by Officer in misconduct which
is materially injurious to the interests of the Company or any successor
thereto (or any affiliate of the Company or a successor thereto). For
purposes of this Paragraph, no act, or failure to act, on Officer's part
shall be considered "willful" unless done, or omitted to be done, by
Officer not in good faith and without reasonable belief that Officer's
action or omission was in the best interest of the Company. Notwithstanding
the foregoing, Officer shall not be deemed to have been terminated for
cause unless and until there shall have been delivered to Officer a copy of
a notice of termination from the Chief Executive Officer of the Company and
the Board, after (x) reasonable notice to Officer, (y) an opportunity for
Officer, together with Officer's counsel (the reasonable fees of which the
Company shall pay promptly as incurred), to be heard before the Board,
finding that, in the good faith opinion of the Board, Officer was guilty of
conduct set forth above in clauses (A), (B) or (C) of the first sentence of
this Subparagraph and specifying the particulars thereof in detail, and (z)
in the case of conduct set forth in clauses (B) and (C), a period of not
less than 60 days to remedy same.
(c) A "Change of Control" shall be deemed to have occurred for
purposes of this Agreement if (i) individuals who, as of the date hereof,
constitute the Board of Directors of Titan (the "Incumbent Board") cease
for any reason to constitute at least 51% of such Board of Directors,
provided that any person becoming a director subsequent to the date hereof
whose election, or nomination for election by the stockholders of Titan was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board; (ii) the
stockholders of Titan approve a reorganization, merger or consolidation ,
in each case, with respect to which persons who were the stockholders of
the Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of
directors of the reorganized , merged or consolidated company's then
outstanding voting securities, or of a liquidation or dissolution of Titan
or the sale of all or substantially all of the assets of Titan; (iii) Titan
sells, leases or exchanges or agrees to sell, lease or exchange all or
substantially all of its assets to any other person or entity, or (iv)
Titan is to be dissolved and liquidated.
(d) The "Retention Date" shall mean the last day of the Retention
Period.
(e) The "Retention Period" shall be the period commencing on the date
of the first Change of Control to occur after the execution of this
Agreement and ending on the first anniversary of such Change of Control
date.
(f) The "Termination Date" shall mean the date of the termination of
Officer's employment in connection with a Termination Event.
(g) A "Termination Event" shall be deemed to have occurred if:
(i) at any time within the Retention Period:
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(A) the Company or any successor thereto (or an affiliate of
the Company or any successor thereto) shall terminate Officer's
employment for any reason other than for Cause; or
(B) Officer shall voluntarily terminate [his/her] employment
with the Company or any successor thereto (or an affiliate of the
Company or any successor thereto) for "Good Reason." For
purposes of this Agreement, "Good Reason" shall mean any of the
following (without Officer's express written consent):
(1) A material change in the nature or scope of
Officer's duties from those engaged in by Officer
immediately prior to the date on which a Change of Control
occurs;
(2) A reduction in Officer's annual base salary from
that provided to [him/her] immediately prior to the date on
which the Change of Control occurs;
(3) A material diminution in Officer's eligibility to
participate in or in the benefits provided to Officer under
any bonus, stock option or other incentive compensation
plans or employee welfare and pension benefit plans
(including medical, dental, life insurance, retirement and
long-term disability plans) from that provided to [him/her]
immediately prior to the date on which the Change of Control
occurs; or
(4) Any required relocation of Officer of more than
[thirty] miles from the location where Officer was based and
performed services on the date of this Agreement (including
any required business travel in excess of the greater of 90
days per year or the level of business travel of Officer for
the year prior to the most recent Change of Control);
or
(ii Officer and the Company, or any successor thereto, shall
fail to reach an agreement on or prior to the date of closing of a
transaction that constitutes a Change of Control as to the terms of
Officer's employment following such Change of Control, which terms are
acceptable to Officer in [his/her] sole discretion.
(h) "Titan" means Titan Exploration, Inc., a Delaware Corporation, or
any successor thereto.
3. Gross-Up Payment. Notwithstanding any provision in this Agreement to
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the contrary, if it shall be determined that any payment, distribution or
transfer of property or rights thereto by the Company or any successor thereto
to or for the benefit of Officer (whether paid, payable, distributed,
distributable, transferred or transferable pursuant to the terms of this
Agreement or otherwise, including but not limited to the acceleration of vesting
of stock options), but determined without regard to any additional payments
required pursuant to this Paragraph 3 (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any interest or penalties are incurred by Officer with
respect to such excise tax (such excise tax, together with any such interest and
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penalties, hereinafter collectively referred to as the "Excise Tax"), then the
Officer shall be entitled to receive an additional payment from the Company or
its successor (a "Gross-Up Payment") in an amount such that after payment by
Officer of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, Officer retains an amount of Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
4. Notices. For purposes of this Agreement, notices and all other
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communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company to: Titan Resources I, Inc.
500 West Texas, Suite 500
Midland, Texas 79701
If to Officer to: ___________________________
___________________________
___________________________
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
5. Applicable Law. This contract is entered into under, and shall be
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governed for all purposes by, the laws of the State of Texas.
6. Severability. If a court of competent jurisdiction determines that
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any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
7. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
8. Withholding. The Company or any affiliate of the Company employing
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Officer shall withhold from any amount payable to Officer pursuant to this
Agreement or from other remuneration payable to Officer, and shall remit to the
appropriate governmental authority if required by applicable law, any income,
employment or other tax such entity is required by applicable law to so withhold
from and remit on behalf of Officer and any other amounts authorized in writing
by Officer.
9. No Continued Employment and Effect of Agreement. This Agreement shall
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not enlarge or otherwise affect the terms of Officer's employment with the
Company, and the Company or an affiliate employing Officer may terminate
[his/her] employment as freely and with the same effect as if this Agreement had
not been established. This Agreement is the sole and exclusive program of
severance and retention bonus benefits provided to Officer. It is intended that
any and all other representations, agreements or descriptions of similar
benefits be superseded hereby with respect to Officer; provided, however, that
nothing herein is intended to modify or affect in any way the terms of any
written employment agreement
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signed between the Company and Officer. No oral or written representation or
promise concerning severance or retention bonus pay which is inconsistent with
the provisions of this Agreement shall have any force or effect.
10. Assignment.
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(a) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder, except as provided in the
remainder of this Paragraph 10. Without limiting the foregoing, Officer's
right to receive payments hereunder shall not be assignable or
transferable, whether by pledge, creation of a security interest or
otherwise, other than a transfer by [his/her] will or by the laws of
descent or distribution, and in the event of any attempted assignment or
transfer contrary to this Paragraph 10 the Company shall have no liability
to pay any amount so attempted to be assigned or transferred. This
Agreement shall inure to the benefit of and be enforceable by Officer's
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
(b) The Company may: (x) as long as it remains obligated with respect
to this Agreement, cause its obligations hereunder to be performed by a
subsidiary or subsidiaries for which Officer performs services, in whole or
in part; (y) assign this Agreement and its rights hereunder in whole, but
not in part, to any corporation with or into which it may hereafter merge
or consolidate or to which it may transfer all or substantially all of its
assets, if said corporation shall by operation of law or expressly in
writing assume all liabilities of the Company hereunder as fully as if it
has been originally named the Company herein; but may not otherwise assign
this Agreement or its rights hereunder. Subject to the foregoing, this
Agreement shall inure to the benefit of and be enforceable by the Company's
successors and assigns.
11. Modifications. This Agreement shall not be varied, altered, modified,
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canceled, changed or in any way amended except by mutual agreement of the
parties in a written instrument executed by the parties hereto or their legal
representatives.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year first above written.
TITAN RESOURCES I, INC.
By:_________________________________
Name:____________________________
Title:___________________________
OFFICER
____________________________________
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EXHIBIT A
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GENERAL RELEASE AGREEMENT
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NOTICE: If you wish to accept the Severance or Retention Bonus Payment, you must
return an executed copy of this form to the Company by the close of business on
the forty-fifth day after the Termination Event or the expiration of the
Retention Period, whichever is applicable, as defined in the Officer Severance
and Retention Bonus Agreement between you and Titan Resources I, Inc.
GENERAL RELEASE: In consideration of the Severance or Retention Bonus Payment
(Payment) to be made to me under the Titan Resources I, Inc. Severance and
Retention Bonus Agreement (the Agreement), I hereby release, acquit, and forever
discharge (i) Titan Resources I, Inc. and any parent, subsidiary, affiliated
entity, successors or assigns (the Company), and (ii) the stockholders,
officers, directors, employees, agents, representatives, and fiduciaries of the
Company (collectively the Released Parties), from any and all claims,
liabilities, demands, and causes of action of whatever kind or character,
whether vicarious, derivative, or direct, that I now have or claim against them
connected in any way to the Agreement or any claim for benefits under the
Agreement, or my employment, continuation of employment, or, if applicable,
termination of employment with any of the Released Parties, or with any other
act, conduct, or omission of any of the Released Parties, including but not
limited to claims arising under any federal, state, or local laws relating to
the employment relationship, including the Age Discrimination in Employment Act.
This General Release does not waive rights or claims that may arise after the
date this General Release is executed. Further in consideration of the Payment
to be made to me under the Agreement, I acknowledge and agree that the Released
Parties may recover from me any loss, including attorney's fees and costs of
defending against any claim brought by me, they may incur arising out of my
breach of this General Release.
I understand that I may revoke my acceptance of this General Release by so
notifying the Company within seven days of the date I execute this General
Release. I further understand that if I do not timely revoke my acceptance,
this General Release is final and binding, and I agree not to challenge its
enforceability. If I do challenge the enforceability of this General Release, I
agree initially to tender to the Company the Payment made under the Agreement,
and invite the Company to retain such money and agree with me to cancel this
General Release. In the event the Company accepts my offer, the Company shall
retain such money and this General Release will be void. In the event the
Company does not accept my offer, the Company shall place such money in an
escrow account pending the resolution of any dispute as to whether this General
Release shall be set aside and/or otherwise rendered unenforceable.
I have read and fully understand all of the provisions of this General
Release. I acknowledge that none of the Released Parties have made any promise
or representation to me that is not set out in this General Release, and that in
executing this General Release I am not relying on any such promise or
representation but instead am relying solely on my own judgment. I further
acknowledge that my execution of this General Release is knowing and voluntary,
that I have had a reasonable time to consider its terms, and that I have been
advised to consult with an attorney about this General Release.
Date signed:______________________ ____________________________
Signature of Employee
Date signed:______________________ ____________________________
Witness
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