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EXHIBIT 10.16
TOREADOR ROYALTY CORPORATION
SEVERANCE AGREEMENT
This Severance Agreement ("Agreement") is made and effective as of the
2nd day of March, 1996, by and between Toreador Royalty Corporation., a
Delaware corporation (the "Company"), and James S. Blair, ("Employee").
W I T N E S S E T H:
WHEREAS, the Company has a limited number of employees; and
WHEREAS, 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 the Employee, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as defined below);
and
WHEREAS, the Board believes it is imperative to diminish the
inevitable distraction of the Employee by virtue of the personal uncertainties
and risks created by a pending or threatened Change of Control, to encourage
the Employee's full attention and dedication to the Company currently and in
the event of any threatened or pending Change of Control, and to provide
Employee with compensation and benefit arrangements upon a Change of Control
which insures that such compensation and benefits are competitive with other
corporations;
NOW, THEREFORE, in consideration of Employee's continued employment by
the Company, as well as the promises, covenants and obligations contained
herein, the Company and Employee agree as follows:
1. Payment of Severance Amount. Upon the occurrence of a
Termination Event (as defined in paragraph 2), the Company shall continue to be
obligated to (i) make payments of Employee's Base Annual Salary (as defined in
paragraph 2) and (ii) provide Employee with benefits under the employee benefit
plans (including, without limitation, life, disability and medical insurance)
provided by the Company at the level provided at the date of the Change of
Control (as defined in paragraph 2), for a period of six months after the date
of the termination constituting such Termination Event (the "Termination
Date").
2. Definitions.
(a) A "Termination Event" shall be deemed to have
occurred if:
(i) The Company or any subsidiary thereof or
successor thereto shall terminate Employee's employment for
any reason other than for Cause within one (1) year following
the occurrence of a Change of Control; or
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(ii) The Employee shall voluntarily terminate his
employment within one (1) year of a Change of Control for
"good reason" upon the occurrence of any one or more of the
following:
(A) A significant and material change in
the nature or scope of the Employee's duties from
those engaged in immediately prior to the date on
which a Change of Control occurs to duties that are,
taken as a whole, inconsistent with Employee's range
and duration of experience;
(B) A reduction in Employee's base
salary from that provided to him or her immediately
prior to the date the Change of Control occurs;
(C) A diminution in Employee's
eligibility to participate in bonus, stock option or
other incentive compensation plans or employee
benefit plans (including medical, dental, life
insurance and long-term disability plans) provided
for employees with comparable duties; and
(D) Any required relocation of Employee
of more than twenty miles from Employee's the current
location (including any required business travel in
excess of the greater of 60 days per year or the
level of business travel of Employee prior to the
most recent Change of Control).
(b) A "Change of Control" shall be deemed to have
occurred if:
(i) the stockholders of the Company shall
approve (A) any merger, consolidation or reorganization of the
Company (a "Transaction") in which the stockholders of the
Company immediately prior to the Transaction would not,
immediately after the Transaction, beneficially own, directly
or indirectly, shares representing in the aggregate more than
50% of all votes to which all stockholders of the corporation
issuing cash or securities in the Transaction (or of its
ultimate parent corporation, if any) would be entitled under
ordinary circumstances in the election of directors, or in
which the members of the Company's Board immediately prior to
the Transaction would not, immediately after the Transaction,
constitute a majority of the board of directors of the
corporation issuing cash or securities in the Transaction (or
of its ultimate parent corporation, if any), (B) any sale,
lease, exchange or other transfer (in one transaction or a
series of related transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the
Company's assets, or (C) any plan or proposal for the
liquidation or dissolution of the Company;
(ii) individuals who constitute the Company's
Board as of the date of adoption of the Plan by the Board (the
"Incumbent Directors") cease for any reason to constitute at
least a majority of the Board; provided, however,
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that for purposes of this subparagraph (ii), any individual
who becomes a Director of the Company subsequent to the date
of adoption of the Plan by the Board, and whose election, or
nomination for election by the Company's stockholders, is
approved by a vote of at least a majority of the Incumbent
Directors who are Directors at the time of such vote, shall be
considered an Incumbent Director; or
(iii) any "person," as that term is defined in
Section 3(a)(9) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any of
its subsidiaries, any employee benefit plan of the Company or
any of its subsidiaries, or any entity organized, appointed or
established by the Company for or pursuant to the terms of
such plan), together with all "affiliates" and "associates"
(as such terms are defined in Rule 12b-2 under the Exchange
Act) of such person (as well as any "Person" or "group" as
those terms are used in Sections 13(d) and 14(d) of the
Exchange Act), shall become the "beneficial owner" or
"beneficial owners" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, of securities of
the Company representing in the aggregate 20% or more of
either (A) the then outstanding shares of Common Stock or (B)
the combined voting power of all then outstanding securities
of the Company having the right under ordinary circumstances
to vote in an election of the Company's Board ("Voting
Securities"), in either such case other than as a result of
acquisitions of such securities directly from the Company.
Notwithstanding the foregoing, a "Change in Control" of the
Company shall not be deemed to have occurred for purposes of
subparagraph (iii) of this paragraph 2(b) solely as the result of an
acquisition of securities by the Company which, by reducing the number
of shares of Common Stock or other Voting Securities outstanding,
increases (i) the proportionate number of shares of Common Stock
beneficially owned by any person to 20% or more of the shares of
Common Stock then outstanding or (ii) the proportionate voting power
represented by the Voting Securities beneficially owned by any person
to 20% or more of the combined voting power of all then outstanding
Voting Securities; provided, however, that if any person referred to
in clause (i) or (ii) of this sentence shall thereafter become the
beneficial owner of any additional shares of Common Stock or other
Voting Securities (other than a result of a stock split, stock
dividend or similar transaction), then a "Change in Control" of the
Company shall be deemed to have occurred for purposes of subparagraph
(iii) of this paragraph 2(b).
(c) "Base Annual Salary" shall, as determined on the
Termination Date, be equal to the greater of (i) Employee's annual
salary excluding bonuses and special incentive payments on the date of
the earliest Change of Control to occur during the eighteen month
period prior to the Termination Date or (ii) Employee's annual salary
excluding bonuses and special incentive payments on the Termination
Date.
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(d) "Cause" as used herein with respect to termination of
Employee's employment shall mean termination for wilful misconduct of
Employee with regard to his employment or the commission of fraud by
Employee against any person.
3. Parachute Payment Limitations. To the extent that any amounts
payable pursuant to this Agreement would result in receipt by Employee of a
"parachute payment" (as such term is defined in section 280G(b)(2)(A) of the
Internal Revenue Code of 1954, as amended (the "Code")), Employee shall be
entitled to receive only that amount of compensation that would result in
Employee's receiving an aggregate present value of all payments in the nature
of compensation received by or for the benefit of Employee from the Company and
its affiliates that are contingent on a change in the ownership or effective
control of the Company or in the ownership of a substantial portion of the
assets of the Company, whether pursuant to this Agreement or any other
arrangement, which is equal to 2.999 times Employee's "base amount" (as such
term is defined in section 280G(b)(3)(A)O of the Code). The foregoing
limitation is intended to provide the Company with the discretion to reduce
payments in the nature of compensation to or for the benefit of Employee that
are contingent on change in the ownership or effective control of the Company
or in the ownership of a substantial portion of the assets of the Company,
under this Agreement and other arrangements, in whatever manner is most
suitable under the circumstances so as to avoid imposition of the sanctions
imposed under sections 280G and 4999 of the Code with respect to "excess
parachute payments" (as such term is defined in section 280G(b)(1) of the
Code); provided, however, that the Company shall have the obligation to
exercise such discretion in a manner that results in the minimization of
federal income tax incidence to Employee.
4. Notices. For purposes of this Agreement, notices and all
other 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: Toreador Royalty Corporation
530 Preston Commons West
8117 Preston Road
Dallas, Texas 75225
Attention: Chairman
If to Employee to: James S. Blair
7318 Craigshire
Dallas, Texas 75231
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 governed for all purposes by, the laws of the State of Texas.
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6. Severability. If a court of competent jurisdiction determines
that 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
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 of Taxes. Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
9. No Employment Agreement. Nothing in this Agreement shall give
employee any rights (or impose any obligations) to continued employment by the
Company or any subsidiary thereof or successor thereto, nor shall it give the
Company any rights (or impose any obligations) with respect to continued
performance of duties by Employee for the Company or any subsidiary thereof or
successor thereto.
10. Assignment.
(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, Employee'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 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 Employee'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 Employee 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, 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.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
TOREADOR ROYALTY CORPORATION
By: /s/ PETER R. VIG
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Peter R. Vig
Chairman and Chief Executive Officer
EMPLOYEE
/s/ JAMES S. BLAIR
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James S. Blair
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