Change in Control

Consulting Agreement- Merger

Hutton Consulting Agreement- Merger

 

EX-10.3 2 dex103.htm EMPLOYMENT AGREEMENT - SIMPSON

Exhibit 10.3

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is entered into this 18th day of November, 2008, but effective December 1, 2008 (the “Effective Date”), between XTO Energy Inc., a Delaware corporation (“XTO Energy”) (XTO Energy and, to the extent applicable, one or more of its subsidiaries, being collectively referred to herein as “Employer”), and Bob R. Simpson, who resides in Fort Worth, Texas (“Employee”).

RECITALS

WHEREAS, Employee and XTO Energy entered into that certain Employment Agreement dated and effective May 16, 2006, which was amended on December 31, 2007 (as amended, the “May 2006 Agreement”); and

WHEREAS, Employee and XTO Energy desire to amend the May 2006 Agreement to amend certain terms and for compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), by executing this Agreement to completely replace the May 2006 Agreement; and

WHEREAS, Employer desires to employ Employee as Chairman of the Board and Founder of XTO Energy and as an officer and/or director of one or more of XTO Energy’s subsidiaries upon the terms and conditions provided herein; and

WHEREAS, Employee desires to be so employed.

STATEMENT OF AGREEMENT

NOW, THEREFORE, in consideration of the above recitals, and for and in consideration of the mutual promises set forth below, the parties agree as follows:

1. Employment. Employer hereby employs Employee as Chairman of the Board and Founder of XTO Energy, and Employee hereby accepts employment with Employer upon the terms and conditions herein stated.

2. Term.

2.1 Initial Term. Subject to the terms and conditions hereof, Employee’s term of employment under this Agreement shall commence as of the Effective Date and continue through November 30, 2009 (the “Initial Term”), subject to the extension provisions of Section 2.2, unless terminated earlier in accordance with the provisions of Section 10.

2.2 Extensions. Beginning with December 1, 2009, the term of this Agreement shall automatically be extended each year on December 1 for one additional year (for example, on December 1, 2009, the term of this Agreement will be extended to November 30, 2010), except that the term of this Agreement shall not be extended automatically if (i) in any year, prior to thirty (30) calendar days before the term is scheduled to be extended automatically, Employer delivers to Employee, or Employee delivers to Employer, written notice that the automatic extension provision of this Section 2.2 shall be inoperative, (ii) a Notice of Termination (as defined in Section 10.5) has been delivered and not withdrawn, or (iii) Employee dies.

 

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2.3 Expiration Date. The term of this Agreement shall expire at the end of the Initial Term or, if extended pursuant to Section 2.2, at the end of the extension period (referred to herein as the “Expiration Date), subject to earlier termination pursuant to Section 10.

3. Position and Duties. Employee shall serve Employer in an executive capacity as Chairman of the Board and Founder of XTO Energy and as an officer and/or director of one or more of XTO Energy’s subsidiaries. Employee’s duties shall include, in addition to those enumerated in the Bylaws of Employer, the following: serving as a director for XTO Energy, setting overall strategic vision for XTO Energy, managing the acquisition and divesture strategy and hedging program, and performing those executive duties as may be directed by the Board of Directors of XTO Energy (the “Board”), including service as an officer and/or director of one or more of XTO Energy’s subsidiaries.

4. Extent of Services. Employee shall devote his best efforts and full business time (with allowances for vacations and sick leave) and attention to furthering the business of Employer, and shall not during the term of this Agreement be engaged in other activities which require such substantial services on the part of Employee that Employee is unable to perform the duties assigned to him by Employer. The foregoing shall not be construed as preventing Employee from maintaining or making investments, or engaging in other business, enterprises or civic, charitable or public service functions, provided such investments, business or enterprises do not require services on the part of Employee that would materially impair, or conflict with, the performance of his duties under this Agreement.

5. Compensation. As his regular compensation for all services rendered by Employee under this Agreement to XTO Energy and its subsidiaries and affiliates, Employer shall pay Employee a salary (the “Base Salary”) of $3,600,000 per annum, payable in substantially equal semimonthly installments during the term hereof. All salary and any other current compensation (if any) paid to Employee shall be subject to such payroll and withholding deductions as are required by the laws of any jurisdiction, federal, state or local, with taxing authority with respect to such salary and other compensation, if any. Base Salary payments hereunder shall not in any way limit or reduce any other obligation of Employer hereunder, and no other compensation, benefit or payment hereunder shall in any way limit or reduce the obligation of Employer to pay Employee’s Base Salary hereunder. It is acknowledged by the parties that Employee’s Base Salary, as well as any incentive compensation and other employee benefits payable pursuant hereto, may be paid or provided by one or more of XTO Energy’s subsidiaries, but shall be the ultimate responsibility of XTO Energy.

6. Incentive Compensation and Other Benefits.

6.1 After December 1, 2008, Employee shall not be entitled to participate in any cash incentive compensation plan.

6.2 On January 2, 2009, Employee shall be granted (a) 110,000 shares of XTO Energy common stock that has no vesting criteria, and (b) 40,000 shares of performance-based XTO Energy common stock with the terms of vesting to be determined by the Compensation Committee of the Board (“Compensation Committee”). If this Agreement is extended pursuant to Section 2.2, a similar grant shall be made to Employee on each January 2 thereafter unless otherwise amended by the parties. The shares referred to in this Section 6.2 that have no vesting criteria shall be granted pursuant to Section 11 of the XTO Energy 2004 Stock Incentive Plan, as amended and restated as of May 20, 2008 (“2004 Plan”), as amended from time to time, or any other similar subsequently adopted equity compensation plans. No other grants shall be made to Employee pursuant to the 2004 Plan or any other similar subsequently adopted equity compensation plans during the term of this Agreement or any extension thereof.

 

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6.3 Employer shall also provide the following employee benefits to Employee during the term of this Agreement:

(a) Life Insurance. Employer will provide Employee with life insurance having a death benefit equal to $3,000,000, which shall be in addition to the life insurance benefit provided to each employee of Employer. Employee shall have the right to designate on each policy the primary and contingent beneficiaries thereunder. To the extent provision of such insurance coverage during the term of this Agreement is taxable to Employee, the provision of such in-kind benefits during a calendar year shall not affect the in-kind benefits to be provided in any other calendar year.

(b) Medical Insurance. Employer shall maintain in full force and effect, and Employee shall be entitled to participate in, any medical or health benefit plan provided by XTO Energy or any of its subsidiaries, subject to the terms and conditions of each such plan. To the extent provision of such insurance coverage or cost reimbursement benefits during the term of this Agreement are taxable to Employee, the provision of such in-kind benefits during a calendar year shall not affect the in-kind benefits to be provided in any other calendar year, unless the insurance coverage or cost reimbursement benefits provide for a limit on the amount of expenses that may be reimbursed under such arrangement over some or all of the period in which such arrangement remains in effect. To the extent Employer directly provides to Employee any cost reimbursement benefits, payment of such benefits shall be made on or before the last day of the calendar year following the calendar year in which such costs are incurred.

(c) Disability. Employer shall maintain in full force and effect, and Employee shall be entitled to receive, such disability insurance protection as is provided to other full-time executives of XTO Energy or any of its subsidiaries, subject to the terms and conditions of any plan or program sponsored by Employer providing such disability insurance protection. To the extent Employer provides such disability insurance coverage during the term of this Agreement, the provision of such in-kind benefits during a calendar year shall not affect the in-kind benefits to be provided, in any other calendar year. To the extent Employer reimburses Employee or pays on Employee’s behalf for such disability insurance coverage, payment or reimbursement of such insurance premiums shall be made on or before the last day of the calendar year following the calendar year in which the premiums are due, and such payment or reimbursement during a calendar year shall not affect the premiums eligible for payment or reimbursement in any other calendar year.

(d) Vacations. Employee shall be entitled to five weeks paid vacation in each calendar year and to compensation in respect of earned but unused vacation days, determined in accordance with Employer’s vacation plan, if such plan so provides. Employee shall also be entitled to all paid holidays given by Employer to the executives of XTO Energy or any of its subsidiaries.

(e) Automobile and Related Expenses. Employee shall be paid a minimum monthly automobile allowance of $4,620 and shall be reimbursed for all fees, tags, insurance premiums and fuel and maintenance expenses regarding such automobile. Reimbursement of such insurance premiums during the term of this Agreement shall be made on or before the last day of the calendar year following the calendar year in which the premiums are due, and such reimbursement during a calendar year shall not affect the premiums eligible for reimbursement in any other calendar year.

 

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(f) Tax Preparation Services. Employer shall prepare, or shall have prepared, federal tax returns for Employee, Employee’s direct family, and entities owned by Employee or Employee’s direct family, at Employer’s cost.

(g) Other Benefits. Employee shall be entitled to all other benefits and to participate in and be covered by all other employee benefit plans, including deferred compensation programs, if any, as are provided to other full-time executive employees of XTO Energy or any of its subsidiaries from time to time.

6.4 Nothing paid to Employee under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the Base Salary payable to Employee pursuant to Section 5. Employer shall not make any changes in any plans or arrangements provided pursuant to this Section 6 that would adversely affect Employee’s rights or benefits thereunder unless such change occurs pursuant to a program applicable to all executives of XTO Energy or any of its subsidiaries and does not result in a proportionately greater reduction in the rights or benefits to Employee as compared with any other executive of XTO Energy or any of its subsidiaries.

7. Covenant of Employee. As a material inducement to Employer to enter into this Agreement, Employee agrees to promptly inform Employer if Employee is the subject of any regulatory agency’s investigation for violation of state or federal securities law or has a judgment against him for violation of these laws in any civil action in any court.

8. Working Facilities and Staff. Employer shall furnish Employee with such facilities, staff and services as are suitable to his position and adequate for the performance of his duties.

9. Expenses. Employer shall pay or reimburse Employee for all reasonable expenses for entertainment, travel, meals, hotel accommodations and fees and the like incurred by him in the interest of the business of Employer, such payment or reimbursement to be made upon submission of an itemized accounting statement by Employee documenting such expenses as may be required by the Code; provided, however, that Employee shall be reimbursed for such expenses, whether or not such expenses are deductible by Employer under the Code. The amount of expenses eligible for reimbursement during a calendar year shall not affect the expenses eligible for reimbursement in any other calendar year. Reimbursement of eligible expenses shall be made on or before the last day of the calendar year following the calendar year in which the expenses were incurred.

10. Termination of Employment.

10.1 Termination of Employment. Notwithstanding any other provision hereof, Employee’s employment hereunder shall terminate, and, except as otherwise specifically provided herein, this Agreement shall terminate:

(a) upon the death of Employee;

(b) upon the disability of Employee, which for the purposes of this Agreement shall be the physical or mental inability of Employee to carry out the normal and usual duties of his employment on a full-time basis for the entire period of six (6) continuous months with the reasonable likelihood, as determined by a majority of the non-employee members of the Board, in their sole discretion, that Employee will be unable to carry out the normal and usual duties of his employment on a full-time basis for the following continuous period of six (6) months; however, Employee may not be terminated for disability if, within thirty (30) days after Notice of Termination (as defined in Section 10.5 below) is given,

 

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Employee shall return to the performance of his duties on a full-time basis and a majority of the non-employee members of the Board shall determine, in their sole discretion, that Employee is capable of carrying out such duties on a full-time basis (subject to the terms of Sections 6.3(c) and 11);

(c) for “Cause” (as defined in Section 10.2 below), upon written notice of termination for Cause given by Employer to Employee after compliance with Section 10.2 below;

(d) for “Good Reason” (as defined in Section 10.3 below), upon written notice of termination given by Employee to Employer;

(e) without “Cause” (as defined in Section 10.2 below), upon written notice of termination given by Employer to Employee;

(f) upon Employee’s “Retirement” (as defined in Section 10.4 below);

(g) upon Employee’s voluntary resignation of employment for any reason other than Good Reason or Retirement; or

(h) on the Expiration Date (subject to the terms of Section 2).

10.2 Cause. Employer shall have Cause to terminate Employee’s employment if Employee (a) willfully and continually fails to substantially perform his duties with Employer (other than a failure resulting from Employee’s disability (as defined in Section 10.1(b) above), which failure continues for a period of at least thirty (30) days after a written notice of demand for substantial performance has been delivered to Employee specifying the manner in which Employee has failed to substantially perform, or (b) willfully engages in illegal conduct, gross misconduct, or a clearly established violation of Employer’s written policies and procedures, which is demonstrably and materially injurious to Employer, monetarily or otherwise; provided, however, that no termination of Employee’s employment shall be for Cause until (x) there shall have been delivered to Employee a written notice authorized by two-thirds (2/3) of the non-employee members of the Board, specifying in detail the particulars of Employee’s conduct which violates either (a) or (b) above, (y) Employee shall have been provided an opportunity to be heard by the non-employee members of the Board (with the assistance of Employee’s counsel if Employee so desires), and (z) a resolution is adopted in good faith by two-thirds (2/3) of such members of the Board confirming such violation (excluding the vote of Employee). No act, nor failure to act, on Employee’s part, shall be considered “willful” unless he has acted or failed to act with an absence of good faith and without a reasonable belief that his action or failure to act was in the best interest of Employer. Notwithstanding anything contained in this Agreement to the contrary, no failure to perform by Employee after Notice of Termination is given by or to Employee shall constitute Cause.

10.3 Good Reason. Employee may terminate his employment hereunder for Good Reason upon the occurrence of any of the following events or conditions:

(a) a material diminution in Employee’s authority, duties, or responsibilities (including reporting responsibilities), except in connection with the termination of his employment for Cause, as a result of his disability or death, or by Employee other than for Good Reason;

(b) a material diminution in Employee’s Base Salary;

 

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(c) Employer’s requiring Employee (without the consent of Employee) to be based at any place outside a twenty-five (25) mile radius of his place of employment immediately prior to such proposed relocation, except for reasonably required travel on Employer’s business which is not materially greater than such travel requirements prior thereto;

(d) any material breach by Employer of any provision of this Agreement; or

(e) any purported termination of Employee’s employment for Cause by Employer which does not otherwise comply with the terms of this Agreement.

Employee must provide notice to Employer of the existence of the condition constituting “Good Reason” within a period not to exceed ninety (90) days of the initial existence of the condition, upon the notice of which Employer must be provided a period of at least thirty (30) days during which it may remedy the condition and not be required to pay the amount. The separation from service must occur within the first two years following the initial existence of one or more of the Good Reason conditions arising without the consent of Employee.

10.4 Retirement. Employee shall be deemed to have terminated his employment with Employer due to his “Retirement” if Employee gives Employer a Notice of Termination that it is Employee’s intent to retire from and terminate his employment with Employer as an employee and to resign all of his officer positions (which may or may not include his retirement as a director of Employer) and if, within the thirty (30) day period immediately following the date of such Notice of Termination, Employer does not provide Employee with written notice in accordance with the procedures set forth in Section 10.2 above that, prior to receipt of Employee’s Notice of Termination, it had grounds to terminate Employee’s employment for Cause. In the event Employer provides Employee with written notice that it had grounds to terminate Employee’s employment for Cause, the procedures set forth in Section 10.2 above shall apply and, if Employer cannot terminate Employee for Cause, Employee shall be deemed to have terminated his employment due to Retirement.

10.5 Notice of Termination. Any termination of Employee’s employment by Employer or by Employee (other than termination as a result of Employee’s death) shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee’s employment under the provision so indicated.

10.6 Date of Termination. “Date of Termination” shall mean the date Employee incurs a “separation from service” as defined by Section 409A of the Code, which shall be (i) if Employee’s employment is terminated by his death, the date of his death, (ii) if Employee’s employment is terminated upon the disability of Employee, thirty (30) days after Notice of Termination is given (provided that, during such thirty (30) day period, Employee shall not have been approved for return to the performance of his duties on a full-time basis by a majority of the non-employee members of the Board as provided in Section 10.1(b) above), (iii) if Employee’s employment is terminated for Cause, the date specified in the Notice of Termination, and (iv) if Employee’s employment is terminated for any other reason, the date on which a Notice of Termination is given; provided that if within thirty (30) days after any Notice of Termination is given the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of

 

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Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties or by a final determination in accordance with Section 23 of this Agreement.

10.7 Severance Benefits. In the event of a Change in Control or a termination of Employee’s employment under this Agreement for any reason, Employee shall have no right to receive any compensation, remuneration, bonus or benefit for any period subsequent to the Date of Termination or the Change in Control, as the case may be, except as may be provided in Sections 11, 12 and 13. In the event that Employee is entitled to receive Severance Benefits pursuant to Section 11 upon a Change in Control, Employee shall not be entitled to receive any other benefits under this Agreement, including, without limitation any Severance Benefits or Retirement Benefits upon the occurrence of any other event that would otherwise have entitled Employee to receive Severance Benefits or Retirement Benefits, including without limitation a subsequent Change in Control or a Termination of Employee’s employment as contemplated by Section 10.1.

11. Compensation Upon Certain Employment Terminations or Change in Control.

11.1 Termination without Cause, for Good Reason, by Death or Disability or Change in Control. If (i) Employee incurs a “separation from service” as defined by Section 409A of the Code (A) by Employer without Cause, (B) by Employee for Good Reason, (C) by Employee’s death or disability, or (ii) there shall occur a Change in Control (as defined in Section 11.5), Employee shall be entitled to the following severance benefits (collectively, “Severance Benefits”):

(a) Employer shall pay to Employee an amount in cash equal to three (3) times the sum of (x) Employee’s Base Salary and (y) two (2) times an amount equal to the greater of Employee’s two most recent regular bonuses paid in the prior twelve (12) months, if any. The amount determined in this paragraph (a) shall be paid on or before ten (10) days after the Date of Termination or forty-five (45) days after the Change in Control, whichever event is applicable.

(b) For a period of eighteen (18) months after Employee’s termination of employment by Employer without Cause, by Employee for Good Reason, or after a Change in Control, Employer shall, at its sole expense, continue on behalf of Employee and his covered dependents and beneficiaries, all medical, dental, vision, and health benefits and insurance coverage that were being provided to Employee at the time of termination of employment. The benefits provided in this Section 11.1(b) shall be no less favorable to Employee, in terms of amounts and deductibles and costs to him, than the coverage provided Employee under the plans providing such benefits at the time of termination. Employer’s obligation hereunder to provide a benefit shall terminate if Employee obtains comparable coverage under a subsequent employer’s benefit plan. For purposes of the preceding sentence, benefits will not be comparable during any waiting period for eligibility for such benefits or during any period during which there is a preexisting condition limitation on such benefits. Employer also shall pay a lump sum equal to the amount of any additional income tax payable by Employee and attributable to the benefits provided under this Section 11.1(b) at the time such tax is imposed upon Employee. In the event that Employee’s participation in any such coverage is barred under the general terms and provisions of the plans and programs under which such coverage is provided, or any such coverage is discontinued or the benefits thereunder are materially reduced, Employer shall provide or arrange to provide Employee with benefits substantially similar to those which Employee was entitled to receive under such coverage immediately prior to the Termination Notice. At the end of the period of coverage set forth above, Employee shall have the

 

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option to have assigned to him at no cost to Employee and with no apportionment of prepaid premiums, any assignable insurance owned by Employer and relating specifically to Employee, and Employee shall be entitled to all health and similar benefits that are or would have been made available to Employee under law.

(c) Employer shall transfer to Employee, within ten (10) days after the Date of Termination or forty-five (45) days after the Change in Control, whichever event is applicable, all right, title or other ownership interest it may have in any automobile then being provided by Employer for use by Employee.

(d) Employer shall transfer to Employee, within ten (10) days after the Date of Termination or forty-five (45) days after the Change in Control, whichever event is applicable, any right, title or ownership in any club memberships provided by Employer for use by Employee.

(e) Employer shall transfer to Employee, within ten (10) days after the Date of Termination or forty-five (45) days after the Change in Control, whichever event is applicable, any right, title or ownership in any life insurance owned by Employer on Employee’s life.

(f) (i) Unless otherwise specifically provided to the contrary in any option agreement, restricted stock agreement, or other agreement relating to equity-type compensation between Employee and Employer, all units, stock options, incentive stock options, performance shares, stock appreciation rights and royalty trust options under the 2004 Plan or any other plan or arrangement (hereafter sometimes referred to as the “Rights”) held by Employee immediately prior to the Date of Termination (without Cause or for Good Reason) or the Change in Control, whichever is applicable, and any such Rights received by Employee after such Date of Termination or the Change in Control, whichever is applicable (whether or not received in exchange for or in substitution for existing Rights), shall immediately become 100% vested and exercisable, and Employee shall become 100% vested in all shares of restricted stock held by or for the benefit of Employee; provided, however, that to the extent Employer is unable to provide for such acceleration of vesting with respect to any such Rights or shares of restricted stock, Employer shall provide in lieu thereof a lump-sum cash payment, within ten (10) days after the Date of Termination or forty-five (45) days after the Change in Control, whichever event is applicable, equal to the difference between the total value of such unaccelerated Rights or shares of restricted stock (the “Stock Rights”) as of the Date of Termination or the Change in Control and the total value if such Stock Rights had accelerated vesting. The value of such accelerated vesting in Employee’s Stock Rights shall be determined by the Compensation Committee in good faith based on a valuation performed by an independent consultant selected by the Compensation Committee; any such Stock Rights which are not in existence at the time of Employee’s Date of Termination or the Change in Control shall be valued as of the date of the Date of Termination (as described herein) or the Change in Control, whichever is applicable.

(ii) Unless otherwise specifically provided to the contrary in any option agreement between Employee and Employer, any previously unexercised options under any such option agreement shall not terminate or be forfeited and shall remain outstanding until the latest date on which the option would otherwise expire

 

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under the terms of such agreement had Employee’s employment not terminated. However, with respect to any option (or portion of an option) for which either (i) Employer is unable to provide for the extension of the post-termination exercise period as provided in the preceding sentence, or (ii) providing for the extension would cause an option (or a portion of an option) to be subject to Section 409A of the Code, then the option (or portion of an option) shall not be so extended and Employer shall make a lump sum cash payment to Employee, within thirty (30) days after the Date of Termination or the Change in Control, whichever event is applicable, equal to the value, as of the Date of Termination or the Change in Control, whichever event is applicable, of the extension of the post-termination exercise periods for all options (or portions of options) which cannot be so extended. The value of such extension shall be determined by the Compensation Committee in good faith based on a valuation performed by an independent consultant selected by the Compensation Committee. Notwithstanding the foregoing, if, in accordance with the foregoing, the post-termination exercise periods of an incentive stock option held by Employee may be extended without causing application of Section 409A of the Code, the extension of such options under this Section 11.1(f)(ii) shall only be applicable if Employee has not exercised such option within three (3) months after Employee’s termination of employment, and, in that event, such options shall immediately convert to nonqualified stock options.

11.2 Retirement. If Employee’s employment is terminated due to Employee’s Retirement, Employee shall be entitled to the following severance benefits (collectively, “Retirement Benefits”) upon his “separation from service” as defined by Section 409A of the Code:

(a) Employer will retain Employee effective as of the Date of Termination for a period of eighteen (18) months (the “Consulting Period”) to render such consulting and advisory services (the “Consulting Services”) as Employer may reasonably request from time to time during the Consulting Period. Employee shall perform the Consulting Services at such times and places as an officer designated by Employer or the Board shall from time to time reasonably request.

(b) As compensation for the Consulting Services, Employee shall receive each month at least the same monthly salary that he was receiving immediately prior to Employee’s retirement (the “Consulting Fee”), which shall be paid in accordance with the customary payroll practices of Employer. Any Consulting Fee payment payable to Employee hereunder in respect of any calendar month during which the Consulting Period ends prior to the end of such calendar month shall be prorated based on the ratio of the number of days in such calendar month during which Employee is retained as a consultant hereunder to the number of days in such calendar month.

(c) Employee shall receive $10,000 per calendar month as part of the Consulting Fee during the Consulting Period for the purposes of (i) the use of office space and office equipment, and (ii) expenses incurred by Employee in rendering the Consulting Services during the Consulting Period, which shall include without limitation travel, lodging, meals, and car rentals or taxi fares when out of town, long distance telephone calls to or for Employer, facsimile transmissions charges, and mailing expenses incurred by Employee in rendering the Consulting Services.

 

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(d) Employer and Employee shall enter into a consulting agreement. Employee shall be an independent contractor in performing the Consulting Services, with authority to select the means and method of performing the Consulting Services. Employee shall not be an employee or agent of Employer. Unless otherwise specifically authorized by the consulting agreement, Employee shall have no authority to transact any business or make any representations or promises in the name of Employer.

(e) The consulting arrangement created by this Section 11.2 (i) shall terminate automatically upon the death of Employee; and (ii) shall terminate automatically at the expiration of the Consulting Period. Upon a termination of the consulting arrangement, neither of the parties hereto shall have any further duty or obligation under this Section 11.2; provided, however, that termination of the consulting arrangement shall not affect the duties and obligations set forth in the other sections of this Agreement.

(f) As of the Date of Termination (for Retirement), Employee shall be eligible for retiree medical coverage comparable to the coverage provided to retirees under Employer’s retiree medical program as in effect on such Date of Termination, and as such program may be changed from time to time, on the same terms and conditions as similarly situated former employees.

(g) (i) Unless otherwise specifically provided to the contrary in any option agreement between Employee and Employer, any option that was granted to Employee at least eighteen (18) months prior to the Date of Termination (for Retirement) shall immediately become one-hundred percent (100%) vested and exercisable on the Date of Termination (for Retirement) and shall be exercisable by Employee for the remaining term of the option; provided, however, that to the extent Employer is unable to provide for such acceleration of vesting with respect to any such option, Employer shall provide in lieu thereof a lump-sum cash payment, within thirty (30) days after the Date of Termination, equal to the difference between the total value of such unaccelerated option as of the Date of Termination and the total value of the option if such option had been vested as of the Date of Termination. The value of such accelerated vesting of Employee’s unvested options shall be determined by the Compensation Committee in good faith based on a valuation performed by an independent consultant selected by the Compensation Committee.

(ii) Unless otherwise specifically provided to the contrary in any option agreement or restricted or performance share award agreement between Employee and Employer, any previously unexercised options, whether vested or not (other than options governed by Section 11.2(g)(i) above), and any unvested restricted or performance shares that are outstanding on the Date of Termination (for Retirement) shall not terminate or be forfeited and shall remain outstanding until the latest date on which the option or restricted or performance shares would otherwise expire under the terms of such agreement had Employee’s employment not terminated. In addition, after the Date of Termination (for Retirement), unvested options and restricted or performance shares shall continue to vest, and once vested options shall continue to be exercisable, for the remaining term of the grant as if Employee’s employment had not terminated. However, with respect to any option or restricted or performance share grant (or portion thereof) for which either (i) Employer is unable to provide for the extension of the post-termination vesting and exercise periods as provided in the preceding sentences, or (ii) providing for such

 

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extensions would cause an option or restricted or performance share grant (or a portion thereof) to be subject to Section 409A of the Code, then such option or restricted or performance share grant (or portion thereof) shall not be so extended, and Employer shall make a lump-sum cash payment to Employee, within thirty (30) days after the Date of Termination, equal to the value as of the Date of Termination of the extension of the post-termination vesting and exercise periods for all options or restricted or performance share grants (or portions thereof) which cannot be so extended. The value of such extension shall be determined by the Compensation Committee in good faith based on a valuation performed by an independent consultant selected by the Compensation Committee. Notwithstanding the foregoing, if, in accordance with the foregoing, the post-termination vesting and exercise periods of an incentive stock option held by Employee may be extended without causing application of Section 409A of the Code, the extension of such options under this Section 11.2(g)(ii) shall only be applicable if Employee has not exercised such option within three (3) months after Employee’s termination of employment, and, in that event, such options shall immediately convert to nonqualified stock options.

11.3 Other Terminations. If Employee’s employment shall be terminated (i) by Employer for Cause, or (ii) by Employee without Good Reason and not due to Retirement, Employer shall pay Employee (x) his Base Salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and (y) the vested portion of any incentive compensation plan to which Employee is entitled in accordance with the terms of such plan.

11.4 Disability. During any period that Employee fails to perform his duties hereunder as a result of incapacity due to physical or mental illness (“Disability Period”), Employee shall continue to receive his Base Salary at the rate then in effect for such period until his employment is terminated pursuant to Section 10.1(b) hereof, provided that payments so made to Employee during the Disability Period shall be reduced by the sum of the amounts, if any, payable to Employee prior to the time of any such payment under disability benefit plans of Employer and which were not previously applied to reduce any Base Salary payment.

11.5 Change in Control.

(a) For purposes of this Agreement, a “Change in Control” shall mean the occurrence of one or more of the following events as objectively determined based upon all of the facts and circumstances without the exercise of discretion by the Board: (i) a Change in Ownership of Employer; (ii) a Change in Effective Control of Employer; or (iii) a Change in the Ownership of a Substantial Portion of the Assets of Employer. For purposes hereof:

(i) “Acting as a Group” shall mean “acting as a group” as such phrase is defined under Section 409A of the Code and the regulations or other guidance issued thereunder.

(ii) “Change in Ownership” shall mean that any one person or more than one person Acting as a Group acquires ownership of stock of Employer that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of Employer; provided, however, that if any one person or more than one person Acting as a Group, is considered to own more than 50% of the total fair market value or total voting

 

11


power of the stock of Employer, the acquisition of any additional stock by the same person or persons shall not be considered a Change in Ownership or a Change in Effective Control.

(iii) “Change in Effective Control” shall mean that either:

(1) any one person or more than one person Acting as a Group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of the stock of Employer possessing 35% or more of the total voting power of the stock of Employer; or

(2) a majority of members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election, provided that for purposes of this paragraph (2) Employer refers solely to the “relevant corporation” (as such term is defined in Section 409A of the Code and the regulations or other guidance issued thereunder) for which no other corporation is a majority shareholder.

Notwithstanding the foregoing, if any one person or more than one person Acting as a Group, is considered to effectively control Employer, the acquisition of additional control by the same person or persons shall not be considered to cause a Change in Effective Control.

(iv) “Change in the Ownership of a Substantial Portion of the Assets” shall mean any one person or more than one person Acting as a Group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from Employer that have a total Gross Fair Market Value equal to more than 40% of the total Gross Fair Market Value of all of the assets of Employer immediately prior to such acquisition or acquisitions.

A Change in the Ownership of a Substantial Portion of the Assets shall not be deemed to have occurred if Employer assets are transferred to:

(1) a shareholder of Employer (immediately before the asset transfer) in exchange for or with respect to its stock;

(2) an entity, 50% or more of the total value of voting power of which is owned, directly or indirectly, by Employer;

(3) a person, or more than one person Acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of Employer; or

(4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in paragraph (iv)(3).

For purposes of this paragraph and except as otherwise provided, a person’s status is determined immediately after the transfer of assets.

 

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For purposes of this Section 11.5(a), “Gross Fair Market Value” shall mean the value of Employer’s assets, or the value of Employer’s assets being disposed of, determined without regard to any liabilities associated with such assets.

(b) Notwithstanding anything herein to the contrary, under no circumstances will a change in the constitution of the board of directors of any subsidiary, a change in the beneficial ownership of any subsidiary, the merger or consolidation of a subsidiary with any other entity, the sale of all or substantially all of the assets of any subsidiary or the liquidation or dissolution of any subsidiary constitute a “Change in Control” under this Agreement.

11.6 No Mitigation. Employee shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by Employee as the result of employment by another employer after the Date of Termination, or otherwise.

11.7 No Other Compensation. Employee agrees that the compensation and benefits set forth in this Section 11 constitute the entire amount of consideration provided to him under this Agreement, and that he will not seek any further compensation for any other claimed damage, costs, severance, income, or attorney’s or arbitrator’s fees. If Employee receives any compensation or benefits in accordance with this Section 11, he expressly waives any right to participate in or receive any benefits or payments under any severance plan or program offered by or on behalf of Employer.

11.8 Release. Employer may condition payment of amounts due under this Section 11 upon the receipt of a release and covenant not to sue or pursue arbitration in a form reasonably satisfactory to Employer, the terms of which shall not conflict with this Agreement.

11.9 Code Section 409A; Delay of Payments.

(a) The terms of this Agreement have been designed to comply with the requirements of Section 409A of the Code, as amended, where applicable, and shall be interpreted and administered in a manner consistent with such intent. Notwithstanding anything to the contrary in this Agreement, (i) if upon the date of Employee’s termination of employment with Employer, Employee is a “specified employee” within the meaning of Section 409A of the Code, and the deferral of any amounts otherwise payable under this Agreement as a result of Employee’s termination of employment is necessary in order to prevent any accelerated or additional tax to Employee under Section 409A of the Code, then Employer will defer the payment of any such amounts hereunder until the date that is six (6) months following the date of Employee’s termination of employment with Employer at which time any such delayed amounts will be paid to Employee in a single lump sum, with interest from the date otherwise payable at the prime rate as published in The Wall Street Journal on the date of Employee’s termination of employment with Employer, and (ii) if any other payments of money or other benefits due to Employee hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code.

(b) In the event that a payment is made under the terms of this Agreement such that Section 409A of the Code applies and Employee is assessed a penalty and interest on

 

13


such payment, Employer, upon receipt of written notice from Employee of the assessment, shall reimburse Employee for the amount of the assessed penalty and interest on such payment. Employee shall notify Employer and such claim shall be handled in the same manner as provided in Sections 13.3 and 13.4 for the Excise Tax. Any payment made pursuant to this Section 11.9(b) shall be made not later than December 31 of Employee’s taxable year following the taxable year in which such additional taxes or interest are remitted by Employee

12. XTO Energy’s Guarantee of Severance Benefits.

12.1 In the event Employee becomes entitled to receive Severance Benefits under Section 11.1 above and Employee’s employer fails to pay or provide such Severance Benefits, XTO Energy shall assume the obligation of such employer to pay or provide such Severance Benefits. In consideration of XTO Energy’s assumption of the obligation to pay or provide such Severance Benefits provided under this Agreement, XTO Energy shall be subrogated to any recovery (irrespective of whether there is recovery from the third party of the full amount of all claims against the third party) or right to recovery of either Employee or his legal representative against Employer or any person or entity. Employee or his legal representative shall cooperate in doing what is reasonably necessary to assist XTO Energy in exercising such rights, including but not limited to notifying XTO Energy of the institution of any claim against a third party and notifying the third party and the third party’s insurer, if any, of XTO Energy’s subrogation rights. Neither Employee nor his legal representative shall do anything after a loss to prejudice such rights.

12.2 In its sole discretion, XTO Energy reserves the right to prosecute an action in the name of Employee or his legal representative against any third parties potentially liable to Employee. XTO Energy shall have the absolute discretion to settle subrogation claims on any basis it deems appropriate under the circumstances. If Employee or his legal representative initiates a lawsuit against any third parties potentially liable to Employee, XTO Energy shall not be responsible for any attorneys’ fees or court costs that may be incurred in such liability claim.

12.3 XTO Energy shall be entitled, to the extent of any payments made to or on behalf of Employee or a dependent of Employee, to be paid first from the proceeds of any settlement or judgment that may result from the exercise of any rights of recovery asserted by or on behalf of Employee or his legal representative against any person or entity legally responsible for the injury for which such payment was made. XTO Energy shall be reimbursed by Employee or his legal representative an amount of money equal to all sums paid by XTO Energy under this Agreement to or on behalf of Employee and all expenses, costs and attorneys’ fees incurred by XTO Energy in connection with the prosecution and collection of XTO Energy’s subrogation interest. The right is also hereby given XTO Energy to receive directly from Employer or any third party(ies), attorney(s) or insurance company(ies) an amount equal to the amount paid to or on behalf of Employee.

13. Excise Taxes.

13.1 In the event it shall be determined that any payment or distribution of any type by Employer to or for the benefit of Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are collectively referred to as the “Excise Tax”), then the amount of the Total Payments, shall be reduced, so that the aggregate present value of all payments in the nature of compensation to (or for the benefit of) Employee which are contingent on a change of control (as defined in Section 280G(b)(2)(A) of the Code) is

 

14


the maximum amount of payments that could be made, without the imposition of the excise tax under Section 4999 of the Code. To the extent the Total Payments must be reduced in accordance with this Article VI, the Company shall retain cash amounts that are otherwise payable to Employee, and, if necessary, the Company shall retain such other amounts, in its discretion, which would otherwise be payable to Employee.

13.2 All determinations required to be made under this Section 13 shall be made by an independent accounting firm retained by Employer on the date of the Change in Control (the “Accounting Firm”), which shall provide detailed supporting calculations both to Employer and Employee within fifteen (15) business days of the Payment Date, if applicable, or such earlier time as is requested by Employer. If the Accounting Firm determines that no Excise Tax is payable by Employee, it shall furnish Employee with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. Any determination by the Accounting Firm shall be binding upon Employer and Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that such Accounting Firm may miscalculate the maximum amount of Total Payments Employee may receive under Section 13.1 with imposition of an excise tax under Code Section 4999; if such miscalculation results in the imposition of an excise tax on Employee, any Excise Tax amounts that Employee is required to pay shall be referred to as an “Underpayment.” In the event that Employer exhausts its remedies pursuant to Section 13.3 and Employee thereafter is required to make a payment of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment and Employer shall pay to Employee an amount (the “Indemnification Amount”) such that, after payment by Employee of all taxes (including additional excise taxes under said Section 4999 and any interest and penalties imposed with respect to any taxes) imposed upon the Indemnification Amount, Employee retains an amount equal to the Underpayment. Employer shall pay the Indemnification Amount to Employee as soon as practicable after determination of Employee’s liability for the Underpayment.

13.3 Employee shall notify Employer in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by Employee of any Underpayment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Employee is notified in writing of such claim and shall apprise Employer of the nature of such claim and the date on which such claim is requested to be paid. Employee shall not pay such claim prior to the expiration of the thirty (30)-day period following the date on which he gives such notice to Employer (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If Employer notifies Employee in writing prior to the expiration of such period that it desires to contest such claim, Employee shall (w) give Employer any information reasonably requested by Employer relating to such claim, (x) take such action in connection with contesting such claim as Employer shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by Employer, (y) cooperate with Employer in good faith in order to effectively contest such claim, and (z) permit Employer to participate in any proceedings relating to such claim, provided, however, that Employer shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Employee harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 13.3, Employer shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Employee to pay the tax claimed and sue for a refund, or contest the claim in any permissible manner, and Employee agrees

 

15


to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as Employer shall determine; provided, however, that if Employer directs Employee to pay such claim and sue for a refund, Employer shall advance the amount of such payment to Employee, on an interest-free basis and shall indemnify and hold Employee harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, Employer’s control of the contest shall be limited to issues with respect to which any Underpayment would be payable hereunder and Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

13.4 If, after the receipt by Employee of an amount advanced by Employer pursuant to Section 13.3, Employee becomes entitled to receive any refund with respect to such claim, Employee shall (subject to Employer’s complying with the requirements of Section 13.3) promptly pay to Employer the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Employee of an amount advanced by Employer pursuant to Section 13.3, a determination is made that Employee shall not be entitled to any refund with respect to such claim and Employer does not notify Employee in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of any Underpayment required to be paid.

14. Counsel Fees and Indemnification.

14.1 In the event Employer or Employee is required to employ legal counsel to enforce the performance of this Agreement or recover damages because of any breach of this Agreement, the prevailing party shall be entitled to recover from the other party reasonable attorneys’ fees and the reimbursement of all necessary expenses, court costs and arbitration fees.

14.2 Employer shall indemnify and hold Employee harmless to the maximum extent permitted by law against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys’ fees and costs incurred by Employee, in connection with the defense of, or as a result of any action or proceeding or any appeal from any action or proceeding, in which Employee is made or is threatened to be made a party by reason that Employee is or was an officer or director of XTO Energy or any of its subsidiaries or affiliates (for purposes of this Section 14.1, “Claims”), regardless of whether such action or proceeding is one brought by or in the right of XTO Energy or any of its subsidiaries or affiliates, to procure a judgment in their favor (or other than by or in the right of XTO Energy or any of its subsidiaries or affiliates). This indemnification shall apply to Claims made against Employee after he is no longer employed by Employer or to Claims made against Employee’s estate after his death.

14.3 The undertakings of Section 14.1 above are independent of, and shall not be limited or prejudiced by, the undertakings of Section 14.2 above. This indemnification shall be in addition to and not in lieu of the indemnifications contained in that certain Indemnification Agreement between Employer and Employee dated November 15, 2005, as amended.

15. Notices. All notices, requests, demands and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given and acknowledged by written

 

16


receipt, or on the seventh day after mailing if mailed (return receipt requested), postage prepaid and properly addressed as follows:

 

XTO Energy/Employer:

  

XTO Energy Inc.

  

810 Houston Street

  

Fort Worth, Texas 76102

  

Attention: Board of Directors

Employee:

  

Bob R. Simpson

  

6501 Haig Point Court

  

Fort Worth, Texas 76132

Any party may change its address for purposes of this Section 15 by giving the other party written notice of the new address in the manner set forth above.

16. Successors of Employer. Employer will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Employer, by agreement in form and substance satisfactory to Employee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that Employer would be required to perform it if no such succession had taken place. Failure of Employer to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Employee to compensation from Employer in the same amount and on the same terms as Employee would be entitled hereunder if Employee terminated his employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, “Employer” shall mean the Employer as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 16 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

17. Assignment; Binding Effect. Employee may not assign his rights or delegate his duties or obligations hereunder without the written consent of Employer. 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. If Employee should die while any amounts would still be payable to him hereunder as if he had continued to live, all such amounts, unless other provided herein, shall be paid in accordance with the terms of this Agreement to his designee or, if there be no such designee, to his estate.

18. Amendment; Waiver. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by Employee or his legal representative and such officer as may be specifically designated by the Board of Employer. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

19. Invalid Provisions. Should any portion of this Agreement be adjudged or held to be invalid, unenforceable or void, such holding shall not have the effect of invalidating or voiding the remainder of this Agreement and the parties hereby agree that the portion so held invalid, unenforceable or void shall, if possible, be deemed amended or reduced in scope, or otherwise be stricken from this Agreement to the extent required for the purposes of validity and enforcement thereof.

20. 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 instrument.

 

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21. Governing Law. This Agreement shall be governed by and construed under the laws of the State of Texas.

22. Captions and Gender. The use of captions and section headings herein is for purposes of convenience only and shall not effect the interpretation or substance of any provisions contained herein. Similarly, the use of the masculine gender with respect to pronouns in this Agreement is for purposes of convenience and includes either sex who may be a signatory.

23. Dispute Resolution. Any dispute, controversy or claim arising out of or in relation to or in connection with this Agreement, including without limitation any dispute as to the construction, validity, interpretation, enforceability or breach of this Agreement, shall be exclusively and finally settled by arbitration, and any party may submit such dispute, controversy or claim, including a claim for indemnification under this Section 23, to arbitration.

(a) Arbitrators. The arbitration shall be heard and determined by one arbitrator, who shall be impartial and who shall be selected by mutual agreement of the parties; provided, however, that if the dispute involves more than $2,000,000, then the arbitration shall be heard and determined by three (3) arbitrators. If three (3) arbitrators are necessary as provided above, then (i) each side shall appoint an arbitrator of its choice within thirty (30) days of the submission of a notice of arbitration and (ii) the party-appointed arbitrators shall in turn appoint a presiding arbitrator of the tribunal within thirty (30) days following the appointment of the last party-appointed arbitrator. If (x) the parties cannot agree on the sole arbitrator, (y) one party refuses to appoint its party-appointed arbitrator within said thirty (30) day period or (z) the party-appointed arbitrators cannot reach agreement on a presiding arbitrator of the tribunal, then the appointing authority for the implementation of such procedure shall be the Senior United States District Judge for the Northern District of Texas, who shall appoint an independent arbitrator who does not have any financial interest in the dispute, controversy or claim. If the Senior United States District Judge for the Northern District of Texas refuses or fails to act as the appointing authority within ninety (90) days after being requested to do so, then the appointing authority shall be the Chief Executive Officer of the American Arbitration Association, who shall appoint an independent arbitrator who does not have any financial interest in the dispute, controversy or claim. All decisions and awards by the arbitration tribunal shall be made by majority vote.

(b) Proceedings. Unless otherwise expressly agreed in writing by the parties to the arbitration proceedings:

(i) The arbitration proceedings shall be held in Fort Worth, Texas, at a site chosen by mutual agreement of the parties, or if the parties cannot reach agreement on a location within thirty (30) days of the appointment of the last arbitrator, then at a site chosen by the arbitrator(s);

(ii) The arbitrator(s) shall be and remain at all times wholly independent and impartial;

(iii) The arbitration proceedings shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as amended from time to time;

 

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(iv) Any procedural issues not determined under the arbitral rules selected pursuant to item (iii) above shall be determined by the law of the place of arbitration, other than those laws which would refer the matter to another jurisdiction;

(v) The costs of the arbitration proceedings (including attorneys’ fees and costs) shall be borne in the manner determined by the arbitrator(s);

(vi) The decision of the arbitrator(s) shall be reduced to writing; final and binding without the right of appeal; the sole and exclusive remedy regarding any claims, counterclaims, issues or accounting presented to the arbitrator(s); made and promptly paid in United States dollars free of any deduction or offset; and any costs or fees incident to enforcing the award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement;

(vii) The award shall include interest from the date of any breach or violation of this Agreement, as determined by the arbitral award, and from the date of the award until paid in full, at 6% per annum; and

(viii) Judgment upon the award may be entered in any court having jurisdiction over the person or the assets of the party owing the judgment or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

(c) Injunction. Notwithstanding the preceding provisions of this Section 23, the parties acknowledge that either of them may seek emergency or temporary or permanent injunctive relief or a restraining order, including costs and attorneys’ fees incurred in connection with such action, but absolutely no other relief, in any court of competent jurisdiction. All other disputes, claims and remedies shall be settled by arbitration in accordance with this Section 23.

(d) Acknowledgment of Parties. Each party acknowledges that he or she or it has voluntarily and knowingly entered into an agreement to arbitration under this Section by executing this Agreement.

24. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes any and all prior and contemporaneous promises, agreements and representations not set forth in this Agreement including, but not limited to, as of the Effective Date, the Original Agreement. This Agreement may not be amended except by a mutual written agreement signed by all parties or their legal representatives; provided, however, that the terms of any cash incentive compensation plan or stock option plan established by Employer subsequent to the date hereof in accordance with terms previously outlined by Employer shall automatically become part of this Agreement when established.

25. Survival of Certain Provisions. Notwithstanding any other provision of this Agreement to the contrary, the provisions of Sections 11 through 24 of this Agreement shall survive the termination of this Agreement.

 

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IN WITNESS WHEREOF, Employer and Employee have executed and delivered this Agreement as of the date written above.

 

XTO ENERGY INC.

By:

 

/s/ Karen S. Wilson

 

Karen S. Wilson

 

Vice President – Human Resources

 

EMPLOYEE:

/s/ Bob R. Simpson

Bob R. Simpson

 

20

 

 

 

EX-10.32 10 dex1032.htm AMENDED AGREEMENT RE CHANGE IN CONTROL - SIMPSON

Exhibit 10.32

XTO ENERGY INC.

AMENDED AND RESTATED AGREEMENT FOR GRANT

This Amended and Restated Agreement for Grant (this “Agreement”) is executed and effective on the 18th day of November, 2008, by and between XTO ENERGY INC., a Delaware corporation (the “Company”), and BOB R. SIMPSON (the “Executive”).

RECITALS

A. The Company and the Executive entered into that certain Agreement for Grant of Performance Shares (the “Agreement for Grant”) dated as of February 20, 2001, to provide that performance shares would be granted to the Executive in the event of a Change in Control of the Company, which Agreement was amended on May 24, 2001, and later amended and restated to provide for a lump-sum cash payment in lieu of performance shares effective as of October 15, 2004, and later amended on November 21, 2006 and December 31, 2007.

B. The Company and the Executive desire to amend and restate the Agreement for Grant for compliance with Section 409A of the Code (as defined below).

WITNESSETH:

WHEREAS, the Board of Directors of the Company and the Compensation Committee (as hereinafter defined) recognize that the current business environment makes it difficult to attract and retain highly qualified key employees unless a certain degree of security can be offered to such individuals against organizational and personnel changes which frequently follow a Change in Control (as defined below) of a corporation; and

WHEREAS, even rumors of acquisitions or mergers may cause key employees to consider major career changes in an effort to ensure financial security for themselves and their families; and

WHEREAS, the Company desires to ensure fair treatment of its key employees in the event of a Change in Control and to allow them to make critical career decisions without undue time pressure and financial uncertainty; and

WHEREAS, the Company recognizes that its key employees will be involved in evaluating or negotiating any offers, proposals or other transactions which could result in a Change in Control of the Company and believes that it is in the best interest of the Company and its stockholders for such key employees to be in a position, free from personal, financial and employment considerations, to assess objectively and pursue aggressively the interests of the Company and its stockholders in making these evaluations and carrying on such negotiations; and

 

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NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligations contained herein, the Company and the Executive agree as follows:

ARTICLE I

DEFINITIONS

As used herein, the following words and phrases shall have the following respective meanings unless the context clearly indicates otherwise.

1.1 Board. The Board of Directors of the Company.

1.2 Change in Control. A “Change in Control” shall mean the occurrence of one or more of the following events as objectively determined based upon all of the facts and circumstances without the exercise of discretion by the Board: (i) a Change in Ownership of the Company; (ii) a Change in Effective Control of the Company; or (iii) a Change in the Ownership of a Substantial Portion of the Assets of the Company. For purposes hereof:

(a) “Acting as a Group” shall mean “acting as a group” as such phrase is defined under Section 409A of the Code and the regulations or other guidance issued thereunder.

(b) “Change in Ownership” shall mean that any one person or more than one person Acting as a Group acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company; provided, however, that if any one person or more than one person Acting as a Group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of any additional stock by the same person or persons shall not be considered a Change in Ownership or a Change in Effective Control.

(c) “Change in Effective Control” shall mean that either:

(1) any one person or more than one person Acting as a Group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of the stock of the Company possessing 35% or more of the total voting power of the stock of the Company; or

(2) a majority of members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election, provided that for purposes of this paragraph (2) the Company refers solely to the “relevant corporation” (as such term is defined in Section 409A of the Code and the regulations or other guidance issued thereunder) for which no other corporation is a majority shareholder.

 

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Notwithstanding the foregoing, if any one person or more than one person Acting as a Group, is considered to effectively control the Company, the acquisition of additional control by the same person or persons shall not be considered to cause a Change in Effective Control.

(d) “Change in the Ownership of a Substantial Portion of the Assets” shall mean any one person or more than one person Acting as a Group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total Gross Fair Market Value equal to more than 40% of the total Gross Fair Market Value of all of the assets of the Company immediately prior to such acquisition or acquisitions.

A Change in the Ownership of a Substantial Portion of the Assets shall not be deemed to have occurred if Company assets are transferred to:

(1) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;

(2) an entity, 50% or more of the total value of voting power of which is owned, directly or indirectly, by the Company;

(3) a person, or more than one person Acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company; or

(4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in sub-paragraph (d)(3).

For purposes of this paragraph and except as otherwise provided, a person’s status is determined immediately after the transfer of assets.

(e) For purposes of this Section 1.2, “Gross Fair Market Value” shall mean the value of the Company’s assets, or the value of the Company’s assets being disposed of, determined without regard to any liabilities associated with such assets.

Notwithstanding anything herein to the contrary, under no circumstances will a change in the constitution of the board of directors of any Subsidiary, a change in the beneficial ownership of any Subsidiary, the merger or consolidation of a Subsidiary with any other entity, the sale of all or substantially all of the assets of any Subsidiary or the liquidation or dissolution of any Subsidiary constitute a “Change in Control” under this Plan.

For purposes of this Agreement, if the Executive’s employment with the Company is terminated by the Company other than for “Cause” (as defined in the Second Amended and Restated XTO Energy Inc. Management Group Employee Severance Protection Plan (the “Severance Plan”)) prior to the date on which a Change in Control occurs, and it is reasonably demonstrated that such termination (i) was at the request of a third party who has taken steps

 

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reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with a Change in Control, then for all purposes hereof, such termination shall be deemed to have occurred immediately following a Change in Control.

1.3 Common Stock. The common stock, par value $0.01 per share, which the Company is currently authorized to issue or may in the future be authorized to issue, or any securities into which or for which the common stock of the Company may be converted or exchanged, as the case may be.

1.4 Compensation Committee. The Compensation Committee of the Board of Directors of the Company.

1.5 Fair Market Value. The closing market price on the date of the Change in Control or on the next business day, if such date is not a business day, or if no trading occurred on such date, then on the first day preceding such date on which trading occurred, of a share of Common Stock traded on the New York Stock Exchange, or any other public securities market selected by the Compensation Committee; provided, however, that, if shares of Common Stock shall not have been traded on the New York Stock Exchange or other public securities market for more than 10 days immediately preceding such date or if deemed appropriate by the Compensation Committee for any other reason, the Fair Market Value of shares of Common Stock shall be as determined by the Compensation Committee in such other manner as it may deem appropriate.

ARTICLE II

PAYMENT UPON CHANGE IN CONTROL

2.1 Cash Payment. The Company shall pay to the Executive, in one lump-sum cash payment within five (5) days after the date of the Change in Control, an amount equal to the Fair Market Value of 833,333 shares of Common Stock as of the date of the Change in Control.

2.2 Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, stock split, reverse stock split, rights offering, reorganization, merger, consolidation, split-up, spin-off, split-off, combination, subdivision, repurchase, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event affects the fair value of the Common Stock such that an adjustment is necessary to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, then the Compensation Committee shall adjust the number of shares of Common Stock stated in Section 2.1 above so that the fair value of such Common Stock immediately after the transaction or event is equal to the fair value of such Common Stock immediately prior to the transaction or event. Such adjustments shall be made in accordance with the rules of any securities exchange, stock market, or stock quotation system to which the Company is subject. Notwithstanding the foregoing, no such adjustment shall be made or authorized to the extent that such adjustment would cause the Plan or any Award to violate Section 409A of the Code (as defined below).

 

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2.3 No Set-off of Amounts Payable Hereunder. The Company’s obligations hereunder also shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive.

2.4 Payment Reduction. In the event it shall be determined that any payment or distribution of any type by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”), 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 with respect to such excise tax (such excise tax, together with any such interest and penalties, are collectively referred to as the “Excise Tax”), then the amount of the Total Payments, shall be reduced, so that the aggregate present value of all payments in the nature of compensation to (or for the benefit of) the Executive which are contingent on a change of control (as defined in Section 280G(b)(2)(A) of the Code) is the maximum amount of payments that could be made, without the imposition of the excise tax under Section 4999 of the Code. To the extent the Total Payments must be reduced in accordance with this Section 2.4, the Company shall retain cash amounts that are otherwise payable to the Executive, and, if necessary, the Company shall retain such other amounts, in its discretion, which would otherwise be payable to the Executive. The provisions of Section 13 of Executive’s employment agreement (as amended) shall apply for all purposes (and are incorporated herein by reference) with respect to any benefits receivable by Executive under the Agreement including (i) the calculation and limitation of the Total Payments Executive is to receive under the Agreement, (ii) the calculation of the Excise Tax that may be imposed on Executive with respect to such Total Payments, (iii) the calculation of any Underpayment and Indemnification Amount with respect to any Underpayment related to benefits under the Agreement, and (iv) the time for payment of any such amounts by the Company; for these purposes all defined terms in Section 13 shall apply for all purposes of the Agreement in connection with Executive’s benefits under the Agreement.

2.5 Compliance with Section 409A of the Code. Notwithstanding any other provision in this Agreement to the contrary, if and to the extent this Agreement provides for nonqualified deferred compensation, this Agreement is intended to be exempt from or otherwise satisfy the provisions of Section 409A of the Code. Without in any way limiting the effect of the foregoing, in the event that Section 409A of the Code requires that any special terms, provision or conditions be included in this Agreement, then such terms, provisions and conditions shall, to the extent practicable, be deemed to be made a part of this Agreement, and notwithstanding any provision in Section 4.2 to the contrary, this Agreement shall be reformed in such manner as the Board determines is appropriate to be exempt from or otherwise comply with Section 409A of the Code. In the event that this Agreement shall be deemed not to comply with Section 409A of the Code, then neither the Company, the Board, nor its or their designees or agents shall be liable to the Executive for actions, decisions or determinations made in good faith. Further, the Executive has reviewed this Agreement with, and is relying solely on, his tax advisors as to the tax consequences of this Agreement, including the application of any taxes and penalties described in Section 409A of the Code; based on such review the Executive understands and agrees that notwithstanding the actions, decisions or determinations made in good faith by the Company, the Board, or their designees or agents, this Agreement may be deemed not to comply

 

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with Section 409A of the Code, and the Executive understands and agrees that, in such case, any payment described herein may be subject to the taxes and penalties described in Section 409A of the Code.

ARTICLE III

SUCCESSORS TO COMPANY

This Agreement shall bind any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, in the same manner and to the same extent that the Company would be obligated under this Agreement if no succession had taken place. In the case of any transaction in which a successor would not, by the foregoing provision or by operation of law, be bound by this Agreement, the Company shall require such successor expressly and unconditionally to assume and agree to perform the Company’s obligations under this Agreement, in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach hereof and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled hereunder. As used herein, “the Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Article III or which otherwise becomes bound by all the terms and provisions hereof by operation of law.

ARTICLE IV

DURATION AND AMENDMENT

4.1 Duration. This Agreement shall continue in effect until (1) the Executive’s employment is terminated, either by the Executive or by the Company, except as provided in the last paragraph of Section 1.2, or (2) the Agreement is terminated in accordance with Section 4.2. If a Change in Control occurs, this Agreement shall continue in full force and effect, and shall not terminate or expire, until after the Executive shall have received all of benefits to which he is entitled hereunder in full.

4.2 Amendment or Termination. This Agreement may not be amended or terminated except by a mutual written agreement signed by all parties.

ARTICLE V

MISCELLANEOUS

5.1 Notices. All notices, requests, demands and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given and acknowledged by written receipt, or on the seventh day after mailing if mailed (return receipt requested), postage prepaid and properly addressed as follows:

 

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Company:

  

XTO Energy Inc.

  

810 Houston Street

  

Fort Worth, Texas 76102

  

Attention: Board of Directors

Executive:

  

Bob R. Simpson

  

6501 Haig Point Court

  

Fort Worth, Texas 76132

Any party may change its address for purposes of this Section 5.1 by giving the other party written notice of the new address in the manner set forth above.

5.2 Assignment; Binding Effect. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by any party without the prior written consent of the other party. This Agreement is binding upon and inures to the benefit of Executive and Company and their respective heirs, personal representatives and permitted successors and assigns.

5.3 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Texas.

5.4 Waiver. Any waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach thereof or of any other provision of this Agreement.

5.5 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes any and all prior and contemporaneous promises, agreements and representations not set forth in this Agreement.

5.6 Severability. Should any one or more of the provisions hereof be determined to be illegal or unenforceable, all other provisions hereof shall be given effect separately therefrom and shall not be affected thereby.

5.7 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.

5.8 Dispute Resolution. Any dispute, controversy or claim arising out of or in relation to or connection to this Agreement, including without limitation any dispute as to the construction, validity, interpretation, enforceability or breach of this Agreement, shall be exclusively and finally settled by arbitration, and any party may submit such dispute, controversy or claim to arbitration.

 

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(a) Arbitrator. The arbitration shall be heard and determined by one arbitrator, who shall be impartial and who shall be selected by mutual agreement of the parties. If the parties cannot agree on the arbitrator, then the appointing authority for the implementation of such procedure shall be the Chief Executive Officer of the American Arbitration Association, who shall appoint an independent arbitrator who does not have any financial interest in the dispute, controversy or claim.

(b) Proceedings. Unless otherwise expressly agreed in writing by the parties to the arbitration proceedings:

(i) The arbitration proceedings shall be held in Fort Worth, Texas, at a site chosen by mutual agreement of the parties, or if the parties cannot reach agreement on a location within thirty (30) days of the appointment of the arbitrator, then at a site chosen by the arbitrator;

(ii) The arbitrator shall be and remain at all times wholly independent and impartial;

(iii) The arbitration proceedings shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as amended from time to time;

(iv) Any procedural issues not determined under the arbitral rules selected pursuant to item (iii) above shall be determined by the law of the place of arbitration, other than those laws which would refer the matter to another jurisdiction;

(v) The costs of the arbitration proceedings (including attorneys’ fees and costs) shall be borne in the manner determined by the arbitrator;

(vi) The decision of the arbitrator shall be reduced to writing; final and binding without the right of appeal; the sole and exclusive remedy regarding any claims, counterclaims, issues or accounting presented to the arbitrator; made and promptly paid in United States dollars free of any deduction or offset; and any costs or fees incident to enforcing the award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement;

(vii) The award shall include interest from the date of any breach or violation of this Agreement, as determined by the arbitral award, and from the date of the award until paid in full, at 12% per annum; and

(viii) Judgment upon the award may be entered in any court having jurisdiction over the person or the assets of the party owing the judgment or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

 

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(c) Acknowledgment of Parties. Each party acknowledges that he or she or it has voluntarily and knowingly entered into an agreement to arbitration under this Section by executing this Agreement.

5.9 Employment Status. This Agreement does not constitute a contract of employment or impose on the Company any obligation to retain the Executive as an employee.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the day and year above written.

 

XTO ENERGY INC.

By:

 

/s/ Karen S. Wilson

Name:

 

Karen S. Wilson

Title:

 

Vice President – Human Resources

 

EXECUTIVE

/s/ Bob R. Simpson

Bob R. Simpson

 

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EX-99.1 3 dex991.htm CONSULTING AGREEMENT, BOB R. SIMPSON

Exhibit 99.1

EXECUTION COPY

CONSULTING AGREEMENT

This Consulting Agreement (this “Agreement”), dated December 13, 2009, by and among XTO Energy Inc., a Delaware corporation (the “Company”), Exxon Mobil Corporation, a New Jersey corporation (“Parent”), and Bob R. Simpson (“Consultant”), shall be effective as of the Effective Date (as hereinafter defined).

RECITALS

WHEREAS, the Company, Parent and ExxonMobil Investment Corporation, a wholly owned subsidiary of Parent (“Merger Sub”), have entered into an Agreement and Plan of Merger, dated as of the 13th day of December, 2009 (the “Merger Agreement”), pursuant to which Merger Sub will be merged with and into the Company (the “Merger”) and, as a result of which, the Company will become a wholly-owned subsidiary of Parent; and

WHEREAS, as a material incentive for Parent and Company to execute the Merger Agreement, and subject to the consummation of the Merger, Consultant shall retire from employment with, and shall cease to serve as a director and owner of, the Company and of all of its subsidiaries (the “Resignation”), effective as of the Effective Time (as defined in the Merger Agreement), and Consultant will thereafter be retained by the Company as a consultant, subject to the terms and provisions of this Agreement; and

WHEREAS, in order to protect the goodwill and purchase of the Company, Consultant agrees and acknowledges that the non-competition covenant and the restriction on disclosure of the Company’s Confidential Information (defined below), as set forth in Section 10 hereafter, are essential to the continued growth and stability of the Company’s business and necessary to protect the Company’s purchased goodwill.

STATEMENT OF AGREEMENT

NOW, THEREFORE, in consideration of the above recitals, and for and in consideration of the mutual promises set forth below and in the Merger Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Effective Date. The “Effective Date” shall mean the date on which occurs the Effective Time. In the event that the Effective Time does not occur, this Agreement shall not become effective, and Consultant shall continue as an employee and director of the Company, pursuant to the terms and conditions of the employment agreement by and between the Company and Consultant, dated as of November 18, 2008 and effective on December 1, 2008, as amended on each of September 16, 2009 and December 13, 2009 (the “Original Agreement”).

 

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2. Consulting Period. The Company hereby engages Consultant as a consultant, subject to the terms and provisions of this Agreement, for the period commencing at the Effective Time and ending on the later of (i) the first anniversary of the Effective Date or (ii) if Parent and Consultant, in consultation with the Company, mutually agree prior to such first anniversary to extend the term of this Agreement, the second anniversary of the Effective Date (the “Consulting Period”). Notwithstanding the foregoing, the Consulting Period shall be subject to earlier termination pursuant to Section 7 hereof.

3. Consulting Services. Consultant shall render such consulting and advisory services (the “Consulting Services”) during the Consulting Period as the Company may reasonably request from time to time upon reasonable prior notice. During the Consulting Period Consultant shall devote his efforts and attention to the business of the Company on a full time basis, consistent with Consultant’s pattern and level of activity prior to the Effective Date. Consultant’s Consulting Services shall be related to such matters as determined from time to time by the executive officer of Parent charged with principal oversight of the Company, including, without limitation, Consulting Services in connection with the management and integration of the various entities and businesses of the Company and its subsidiaries; provided, however, that such duties shall be reasonably related to the duties performed by Consultant as of the date hereof. Consultant shall devote his best efforts, skill and attention to the performance of such Consulting Services, which may include travel reasonably required in the performance of such Consulting Services with the use of Company aircraft (for business travel only). Consultant shall be an independent contractor in providing the Consulting Services.

4. Consulting Fee, Completion Bonus and Parent Share Grant.

4.1 As compensation for the Consulting Services, Consultant shall receive a fee of $1,800,000 (the “Consulting Fee”), which shall be paid in substantially equal semi-monthly installments during the Consulting Period, subject to Consultant’s continued services as a consultant hereunder as of each payment date and compliance with the covenants under Section 10, unless otherwise provided herein.

4.2 Parent agrees to grant Consultant (i) a cash bonus equal to $1,800,000 which shall be paid in a lump sum on the date that is twelve (12) months following the Effective Date and (ii) if the Consulting Period is extended pursuant to Section 2, a cash bonus equal to $1,800,000 which shall be paid in a lump sum on the date that is twenty-four (24) months following the Effective Date (each such bonus, a “Completion Bonus”), in each case subject to Consultant’s continued service through the applicable payment date and compliance with this Agreement, including the covenants under Section 10, through such payment date.

4.3 Parent agrees to grant Consultant restricted shares or restricted stock units of Parent common stock with a fair market value of $3,600,000 as of the Effective Date (“Parent Share Grant”), with the number of shares covered by such grant to be determined based on the closing price of Parent’s common stock on the Effective Date. Such restricted shares or units shall vest (i) 50% on the date that is twelve (12) months following the Effective Date, subject to Consultant’s continued services as a consultant

 

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hereunder and compliance with Section 10 through such vesting date and (ii) 50% on the date that is twenty-four (24) months following Effective Date subject to Consultant’s compliance with Section 10 or, if the Consulting Period is extended pursuant to Section 2, thirty-six (36) months following the Effective Date, subject to Consultant’s continued services as Consultant through the date that is twenty-four (24) months following the Effective Date and compliance with Section 10 through the date that is thirty-six (36) months following Effective Date.

5. Other Compensation and Benefits.

5.1 The Company and Parent hereby acknowledge and agree that no later than five (5) days after the Effective Date, the Company shall make a lump sum cash payment to Consultant in an amount equal to $10,800,000 (the “Closing Payment”). In addition, the Company shall pay to Consultant a cash amount equal to the lesser of $24,750,000 and the dollar amount which when added to the sum of (1) the value (determined based on the fair market value as of the Effective Date of the shares of Company common stock) of those performance shares granted to Consultant which will vest as of the Effective Time, (2) the intrinsic value of the unvested options to acquire the Company’s common stock granted to Consultant which will vest as of the Effective Time (i.e., the excess of the value, determined as provided above, of the shares of the Company’s common stock underlying such unvested options over the aggregate exercise price of such options), (3) the Closing Payment and (4) the fair market value as of the Effective Date of the shares of Company common stock received by Consultant pursuant to the Amended and Restated Agreement for Grant between Consultant and the Company, dated November 18, 2008 (as amended), equals 270% of Consultant’s “base amount,” as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), as mutually determined by the Company and Parent in good faith prior to the Effective Date consistent with information provided to Parent prior to the date hereof (the total amount payable under this sentence, the “Retention Payment”). The Retention Payment shall be paid to Consultant in two (2) substantially equal installments on the dates that are six (6) and twelve (12) months after the Effective Date, subject to Consultant’s continued services as a consultant hereunder through the applicable payment date unless otherwise provided herein.

5.2 The Company and Parent hereby acknowledge and agree that (i) all of Consultant’s stock options, restricted shares, performance shares and other equity or equity-based awards (collectively, “Equity Awards”) to acquire shares of the Company’s common stock that were outstanding immediately prior to the Effective Time shall be converted into Equity Awards to acquire shares of Parent common stock as of the Effective Time, pursuant to the terms and conditions set forth in the Merger Agreement, and all such Equity Awards shall become fully vested (and in the case of stock options, fully exercisable) as of the Effective Time and (ii) any options to purchase the Company’s common stock that are converted into options to purchase Parent common stock pursuant to the immediately preceding sentence shall remain outstanding through their scheduled expiration date, notwithstanding Consultant’s retirement or the termination of the Consulting Period for any reason prior to such scheduled expiration date.

 

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5.3 The Company shall transfer to Consultant, within ten (10) days after the Effective Date, all right, title or other ownership interest the Company may have in (i) any club memberships in the name of Consultant provided by the Company immediately prior to the Effective Date for use by Consultant and (ii) any life insurance owned by the Company on Consultant’s life immediately prior to the Effective Date, if permitted under the terms of such memberships and policies or otherwise permitted by the relevant organizations and insurance companies.

5.4 During the Consulting Period, Consultant shall be entitled to (i) occupy the office in the Company’s headquarters building that he occupied immediately prior to the Effective Date, (ii) retain the parking space at the Company’s headquarters that he was assigned immediately prior to the Effective Date and (iii) receive administrative assistant services of the same type and to the same extent as such services were provided to him immediately prior the Effective Date and be permitted to select his administrative assistant.

5.5 As of the Effective Date, Consultant and his eligible dependents shall receive retiree medical coverage under Parent’s retiree health plan.

5.6 Except as otherwise set forth in this Section 5, Consultant shall not be eligible to participate in any employee benefit plans sponsored or maintained by the Company or Parent; provided, however, that nothing herein shall adversely affect Consultant’s right to receive his vested benefits under any such plan maintained by the Company in respect of his services as an employee of the Company.

6. Expenses. Upon presentation of documentation reasonably acceptable to the Company with a copy to the Parent officer charged with expense review for the Company, the Company shall reimburse Consultant for all reasonable expenses incurred by Consultant in connection with the performance of the Consulting Services (“Expenses”) in accordance with the Company’s expense reimbursement policy in effect from time to time; provided, however, that any expense in excess of $5,000 shall require prior approval by the Parent officer charged with expense review for the Company.

7. Termination of Consulting Period.

7.1 Termination of Consulting Period. Notwithstanding any other provision hereof, the Consulting Period and Consultant’s services as a consultant hereunder shall terminate, and, except as otherwise specifically provided herein, this Agreement shall terminate:

(a) upon the death or disability of Consultant;

(b) for “Cause” (as defined in Section 7.2 below), upon a Notice of Termination given by the Company to Consultant after compliance with Section 7.4 below;

 

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(c) for “Good Reason” (as defined in Section 7.3 below), upon a Notice of Termination given by Consultant to the Company after compliance with Section 7.4 below;

(d) without “Cause,” upon a Notice of Termination given by the Company to Consultant after compliance with Section 7.4 below;

(e) upon Consultant’s voluntary resignation for any reason other than Good Reason, upon a Notice of Termination given by Consultant to the Company after compliance with Section 7.4 below; or

(f) on the expiration date of the Consulting Period.

7.2 Cause. The Company shall have Cause to terminate the Consulting Period if Consultant (a) willfully and continually fails to substantially perform the Consulting Services (other than a failure resulting from Consultant’s illness or disability, as determined by the Parent Management Committee (the “Committee”) in good faith), which failure continues for a period of at least thirty (30) days after a written notice of demand for substantial performance has been delivered to Consultant specifying the manner in which Consultant has failed to substantially perform, (b) breaches the provisions of Section 10 or (c) willfully engages in illegal conduct, gross misconduct, or a clearly established violation of the Company’s written policies and procedures (which shall be provided upon request), which is demonstrably injurious to the Company, monetarily or otherwise; provided, however, that no termination of the Consulting Period shall be for Cause until (x) there shall have been delivered to Consultant a written notice authorized by two-thirds (2/3) of the members of the Committee, specifying in detail the particulars of Consultant’s conduct which violates either (a), (b) or (c) above, (y) Consultant shall have been provided an opportunity to be heard by the members of the Committee (with the assistance of Consultant’s counsel if Consultant so desires), and (z) a resolution is adopted in good faith by two-thirds (2/3) of such members of the Committee confirming such violation. No act, nor failure to act, on Consultant’s part, shall be considered “willful” unless he has acted or failed to act with an absence of good faith and without a reasonable belief that his action or failure to act was in the best interest of the Company. Notwithstanding anything contained in this Agreement to the contrary, no failure to perform by Consultant after Notice of Termination is given by or to Consultant shall constitute Cause.

7.3 Good Reason. Consultant may terminate the Consulting Period for Good Reason upon the occurrence of a material breach by the Company of any provision of this Agreement, which shall include, without limitation, any failure of the Company or Parent, as applicable, to make timely payment of the amounts or benefits due, or to otherwise satisfy its obligations pursuant to, Section 5 hereof. Consultant must provide notice to the Company of the existence of the condition constituting “Good Reason” within

 

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a period not to exceed ninety (90) days after the initial existence of the condition, upon the notice of which the Company must be provided a period of at least thirty (30) days during which it may remedy the condition and, if such condition is so remedied within such period, Consultant shall not have the right to terminate the Consulting Period for Good Reason.

7.4 Notice of Termination. Any termination of the Consulting Period by the Company or by Consultant (other than termination as a result of Consultant’s death) shall be communicated by written Notice of Termination to the other parties hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice setting forth the specific termination provision in this Agreement relied upon and describing in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Consulting Period under the provision so indicated.

7.5 Date of Termination. “Date of Termination” shall mean the date on which the Consulting Period terminates, which shall be, if Consultant is terminated (i) by his death, the date of his death, (iii) for Cause, the date specified in the Notice of Termination, (iv) upon the expiration date of the Consulting Period, the last day of the Consulting Period, and (v) for any other reason, the date specified in the Notice of Termination, which date shall, in the case of a resignation by Consultant, be no later than thirty (30) days after the Notice of Termination is given.

8. Benefits Upon Certain Terminations.

8.1 Termination without Cause, for Good Reason or upon Consultant’s Death or Disability. Upon a termination of the Consulting Period (i) by the Company without Cause (including any termination by the Company due to Consultant’s disability), (ii) by Consultant for Good Reason or (iii) by reason of Consultant’s death, Consultant shall be entitled to the following payments and benefits: the Company shall pay to Consultant a lump sum cash payment, within ten (10) days after the Date of Termination, in an amount equal to the sum of (x) if such termination occurs prior to the first anniversary of the Effective Date, the unpaid Consulting Fee that would have been paid for periods following termination of the Consulting Period through the first anniversary of the Effective Date and if such termination occurs after the first anniversary of the Effective Date and the Consulting Period has been extended as provided in Section 2, the unpaid Consulting Fee that would have been paid for periods following termination of the Consulting Period through the second anniversary of the Effective Date, (y) the Completion Bonus, if not previously paid and (z) the unpaid portion of the Retention Payment. For the avoidance of doubt, the Parent Share Grant shall vest only as provided in Section 4.3.

8.2 Termination for Any Reason. Upon the termination of the Consulting Period for any reason, (i) the Company shall pay or provide to Consultant, within ten (10) days after the Date of Termination, (x) any accrued but unpaid portion of the Consulting Fee for periods prior to termination of the Consulting Period, (y) any incurred but unpaid or unreimbursed Expenses and (z) any amounts

 

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or benefits required to be paid or provided to Consultant pursuant to Sections 5.1 and 5.2 hereof, and (ii) the provisions of Sections 5.5 and 5.6 hereof shall continue to apply.

8.3 No Mitigation. Consultant shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking employment or otherwise, and the amount of any payment or other benefit provided for under this Agreement shall not be reduced by any compensation earned by Consultant as the result of employment after the termination of the Consulting Period, or otherwise.

8.4 Section 409A of the Code; Delay of Payments. The terms of this Agreement have been designed to comply with or be exempt from the requirements of Section 409A of the Code, where applicable, and shall be interpreted and administered in a manner consistent with such intent. Notwithstanding anything to the contrary in this Agreement, (i) if upon the Date of Termination, Consultant is a “specified employee” within the meaning of Section 409A of the Code, and the deferral of any amounts otherwise payable under this Agreement as a result of Consultant’s termination is necessary in order to prevent any accelerated or additional tax to Consultant under Section 409A of the Code, then the Company will defer the payment of any such amounts hereunder until the date that is six (6) months following the Date of Termination, at which time any such delayed amounts will be paid to Consultant in a lump sum, with interest from the date otherwise payable at the prime rate as published in The Wall Street Journal on the Date of Termination and (ii) if any other payments of money or other benefits due to Consultant hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code. To the extent required to avoid an accelerated or additional tax under Section 409A of the Code, amounts reimbursable to Consultant under this Agreement shall be paid to Consultant on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to Consultant) during any one year may not affect amounts reimbursable or provided in any subsequent year.

9. Parent’s Guarantee of Payment and Benefits. In the event that Consultant is entitled to receive any payment or benefit under this Agreement from the Company and the Company fails to make or provide such payment or benefit, Parent shall promptly satisfy the obligation of the Company to make or provide such payment or benefit.

10. Confidentiality, Non-Competition and Intellectual Property. For purposes of this Section 10, the Company shall be construed to include the Company, Parent and their respective subsidiaries and affiliates. In consideration of the premises and mutual promises contained herein, and for other good and valuable consideration, including substantial amounts obtained as a result of the Merger, the receipt and adequacy of which are hereby acknowledged, and in recognition of the confidential information, trade secrets, contracts, relationships, and goodwill concerning the Business (defined below) conducted by the Company and affiliates that has been

 

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acquired by Consultant by reason of his employment in, operation and ownership of, leadership in, and training from Company regarding the Business, the use or disclosure of which would cause Company substantial loss, including diminishment of the purchased goodwill that is the subject of the Merger Agreement, and would place the Company at a competitive disadvantage, the parties hereby agree as follows:

10.1 During the Consulting Period, the Company agrees to provide, and Consultant will acquire, certain Confidential Information of the Company. In return for the consideration, compensation and benefits referenced in this Agreement, during the Consulting Period with the Company and at all times thereafter, Consultant shall maintain in strict confidence and not disclose to third parties or use in any task, work or business (except on behalf of the Company), during the Consulting Period and thereafter, any proprietary or Confidential Information regarding the Company and/or his work with the Company, including without limitation, trade secrets, information regarding the Company’s processes, clients, client information, loan portfolio information, computer programs and/or records, software programs, reports, intellectual property, price points, cost structures, acquisition, expansion, marketing, financial and other business strategies, information and plans, compilations of data, confidential information developed by consultants and contractors, employee information, manuals, memoranda, projections, reserve line information, exploration techniques, acquisition targets, reserve information and targets, marketing information, transportation techniques, processing strategies, and minutes (“Confidential Information”), without the express written permission of the Committee. Consultant’s confidentiality obligation shall include, but not be limited to, any Confidential Information to which Consultant has access, had access, will have access, or received in connection with his prior employment by Company, and any information designated as confidential by the Company. Company and Consultant acknowledge and agree that the Confidential Information is continually evolving and changing and that some new Confidential Information will be needed by Consultant and provided by the Company for the first time in the course of the Consulting Period. Upon the termination of Consultant’s assignment with the Company (for whatever reason), he shall immediately return to the Company all Confidential Information and all copies thereof obtained by Consultant, or his employees or agents. The parties acknowledge that the Company would not retain Consultant’s consulting services or provide him with access to its Confidential Information without the covenants and promises contained in this Section 10. Consultant expressly acknowledges the trade secret status of the Confidential Information and agrees that his access to such Confidential Information constitutes a protectable business interest of the Company. Notwithstanding the foregoing restrictions, Consultant may disclose any Confidential Information (i) to the extent required by an order of any court or other governmental authority, but in each case only after the Committee has been so notified and has had the opportunity, if possible, to obtain reasonable protection for such information in connection with such disclosure or (ii) that becomes publicly known or made generally available to the public without breach of this Agreement by Consultant.

10.2 During the period commencing on the Effective Date and ending on the later of (i) the second anniversary of the Effective Date or (ii) if the Consulting Period has been extended as provided in Section 2, the third anniversary of the Effective Date (the “Restricted Period”) and in order, inter alia, to protect the Company’s interest in the Confidential Information and the significant

 

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goodwill purchased through the Merger, to ensure the continued viability of the Company, and specifically in order to protect the unique strategic business model and good will purchased by Company from Consultant, Consultant shall not engage in Competition (as defined below) with the Company. For purposes of this Agreement, “Competition” by Consultant shall mean Consultant directly or indirectly being engaged in, or otherwise directly or indirectly being employed by; rendering advice, services or assistance to; acting as a consultant or lender to; being a director, officer, employee, principal, licensor, trustee, broker, agent, stockholder, member, owner, joint venturer or partner of; or permitting his name to be used in connection with the activities of any other business or organization which competes, directly or indirectly, with the business of the Company in or around the North Sea, within any state in the United States, or any other country in which the Company is engaged, or in which such engagement has been actively planned on or prior to the last day of the Consulting Period, in the “Business” as the same shall be constituted at any time during or following his engagement but which shall expressly include the acquisition, development, exploitation, and exploration of both proven oil and gas properties and unproven properties and in the production, processing, marketing, and transportation of oil and natural gas (collectively, the “Business”); provided, that, it shall not be a violation of this Section 10.2 for Consultant to become the registered or beneficial owner of up to one percent (1%) of any class of the capital stock of a competing corporation registered under the Securities Exchange Act of 1934, as amended, provided that Consultant does not actively participate in the business of such corporation until such time as this covenant expires. Consultant expressly acknowledges, agrees, and understands that, given the nature of the Business, Consultant’s prior leadership and ownership role with the Company, and the Company’s emphasis on field expansion and the exploitation and expansion of oil and gas properties, the foregoing geographic and temporal limitations are reasonable and narrowly tailored to protect the Company’s purchased goodwill.

10.3 Without limiting the generality of the foregoing restrictions in this Section 10, during the Restricted Period, Consultant agrees that he will not, directly or indirectly, for his benefit or for the benefit of any other person, firm or entity, do any of the following:

(a) solicit from or seek to do Business with any customer or potential customer doing or projected to do Business with the Company of the same or of a similar nature to the Business conducted between the Company and such customer during Consultant’s prior employment with Company or his consultancy with Company;

(b) solicit or seek to hire any employee or consultant of the Company or in any other manner attempt directly or indirectly to influence, induce, or encourage any employee or consultant of the Company to leave the employment or consultancy of the Company, nor shall he use or disclose to any person, partnership, entity, association, or corporation any information concerning the names, addresses, or personal telephone numbers of any employees or consultants of the Company;

 

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(c) hire, retain, do business with, consult with, solicit, or in any other manner attempt directly or indirectly to influence, induce, or encourage any customer, vendor, or business partner of the Company to abandon, reduce, or materially change its business relationship with the Company; or

(d) otherwise interfere with the Business or accounts of the Company, including the making of any statements or comments of a defamatory or disparaging nature to third parties regarding the Company or its officers, directors, personnel, products or services.

10.4 Consultant acknowledges that: (i) this Agreement is being entered into in connection with the consummation of the transactions contemplated by the Merger Agreement, (ii) that Consultant’s agreement to the terms set forth herein are a critical inducement to the Company’s entering into the Merger Agreement, (iii) that the services that have been and will be rendered by him to the Company are of a special and unique character, which gives this Agreement a particular value to the Company, the loss of which may not be reasonably or adequately compensated for by damages in an action at law, and (iv) that a material breach or threatened breach by him of any of the provisions contained in this Section 10 will cause the Company irreparable injury. Consultant therefore agrees that, in addition to any other remedies that the Company may have under this Agreement or otherwise, the Company shall be entitled to enforce this Section 10 by applying for injunctive relief from any court of competent jurisdiction without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security and without giving notice to the maximum extent permitted by law.

10.5 Consultant further acknowledges and agrees that due to the uniqueness of his services and confidential nature of the information he will possess, as well as his unique role as director and owner of the Company prior to the Merger, the covenants set forth herein are reasonable and necessary for the protection of the Confidential Information and the purchased goodwill of the Company, and it is the intent of the parties hereto that, if in the opinion of any court of competent jurisdiction, any provision set forth in this Section 10 is not reasonable in any respect, such court shall have the right, power and authority to modify any and all such provisions as to the court’s determination to the extent necessary to be reasonable and enforceable, and such modification shall be incorporated herein by reference and treated as the provision had been agreed to between the parties. Subject to the foregoing, if any term, phrase, clause, paragraph, restriction, covenant, or agreement contained in this Section 10 is held to be invalid or unenforceable, the same shall be deemed (and it is hereby agreed that the same is meant to be) severable and shall not defeat or impair the remaining provisions hereof.

10.6 Consultant agrees that all intellectual property, including, without limitation, copyrights, patents, applications for patents, trade secrets, know-how, designs, methods, technical information, formulae, research and development data and information, customer lists, business plans, marketing plans, trademarks, trade names, service marks and other competitive data and information that was or will be conceived, created, developed, written, prepared, authored, or revised by me alone or with others during the course of performing work for the Company, whether before or after the date hereof (collectively, the “Work Product”), shall belong

 

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exclusively to the Company and shall, to the extent possible, be considered a work made by me for hire for the Company within the meaning of Title 17 of the United States Code. To the extent the Work Product may not be considered work made for hire by Consultant, Consultant agrees to assign, and automatically assign to the Company, without any requirement of further consideration, all rights, title, and interest he may have in such Work Product. Upon request of the Company, Consultant shall take such further actions and shall cooperate in good faith with the Company to obtain protection for such Work Product, including execution and delivery of instruments of conveyance, as may be appropriate to give full and proper effect to my assignment to the Company, and the execution of such documents as may be necessary to obtain protection for such Work Product, including without limitation, execution of documents to assist the Company in obtaining copyright registration or patent on all such works of creation that are copyrightable or patentable.

10.7 Consultant agrees that, notwithstanding anything to the contrary contained here in or in any other agreement between Consultant and the Company extant as of the Effective Date, in the event of any breach or threatened breach of the provisions of this Section 10 by Consultant, Consultant shall forfeit his entitlement to all amounts and grants provided under Section 4 and Section 8.1, and the Company shall be entitled to terminate any payments or grants then owing to Executive under such Sections.

10.8 Notwithstanding anything to the contrary contained in this Section 10, oil or gas interests in which Consultant participates as of the date hereof that (i) have been properly recorded prior to the date hereof and (ii) are disclosed to Parent prior to the Effective Date, shall not be deemed to constitute a breach of Consultant’s covenants under this Section 10.

11. Indemnification.

11.1 The Company and Parent shall indemnify and hold Consultant harmless to the maximum extent permitted by law against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys’ fees and costs incurred by Consultant, in connection with the defense of, or as a result of any action or proceeding or any appeal from any action or proceeding, in which Consultant is made or is threatened to be made a party by reason that Consultant is or was a consultant to, the Company or any of its subsidiaries or affiliates (for purposes of this Section 11.1, “Claims”), to the same extent that directors and officers of the Company are indemnified by the Company under the Company’s by-laws as in effect from time to time.

11.2 This indemnification shall be in addition to and not in lieu of the indemnifications contained in the Merger Agreement and that certain Indemnification Agreement between the Company and Consultant dated November 15, 2005, as amended, which indemnifications apply with respect to Consultant’s roles with the Company prior to the Effective Date and shall continue in effect to the extent provided in the Merger Agreement and such Indemnification Agreement.

 

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12. Notices. All notices, requests, demands and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given and acknowledged by written receipt, or on the seventh (7th) day after mailing if mailed (return receipt requested), postage prepaid and properly addressed as follows:

 

The Company:

  

XTO Energy Inc.

810 Houston Street

Fort Worth, Texas 76102

  

Attention: Board of Directors

Parent:

  

Exxon Mobil Corporation

  

5959 Las Colinas Boulevard

  

Irving, Texas 75039

  

Attention: Board of Directors

Consultant:

  

At the address contained in the

Company’s personnel files.

Any party may change its address for purposes of this Section 12 by providing the other parties with written notice of the new address in the manner set forth above.

13. Successors of the Company or Parent. The Company and Parent shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company or Parent, as applicable, by agreement in form and substance satisfactory to Consultant, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company or Parent would be required to perform it if no such succession had taken place. Failure of the Company or Parent, as applicable, to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Consultant to compensation in the same amount and on the same terms as Consultant would be entitled hereunder if Consultant terminated the Consulting Period for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. Except as provided under Section 10, as used in this Agreement, (i) the “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets and (ii) “Parent” shall mean Parent as hereinbefore defined and any successor to its business and/or assets. In addition, a successor shall also include any other person or entity which otherwise becomes bound by all of the terms and provisions of this Agreement by operation of law.

14. Assignment; Binding Effect. Consultant may not assign his rights or delegate his duties or obligations hereunder without the written consent of the Company and Parent. This Agreement shall inure to the benefit of and be enforceable by Consultant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Consultant dies while any amounts would still be payable to him hereunder as if he had continued to live, all such amounts, unless other provided herein, shall be paid in accordance with the terms of this Agreement to his designee or, if there be no such designee, to his estate.

 

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15. Amendment; Waiver. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by Consultant or his legal representative and such officer(s) as may be specifically designated by the Company and Parent. No waiver by a party hereto at any time of any breach by another party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

16. Invalid Provisions. Should any portion of this Agreement be adjudged or held to be invalid, unenforceable or void, such holding shall not have the effect of invalidating or voiding the remainder of this Agreement and the parties hereby agree that the portion so held invalid, unenforceable or void shall, if possible, be deemed amended or reduced in scope, or otherwise be stricken from this Agreement to the extent required for the purposes of validity and enforcement thereof.

17. 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 instrument.

18. Governing Law Enforcement and Disputes. This Agreement will be governed by and construed in accordance with the laws of the State of Texas, without reference to conflicts of law rules, and without regard to its location of execution or performance. Jurisdiction and venue for any claim or cause of action arising under this Agreement shall be exclusively in the state or federal courts located in Dallas, Texas. Each party waives its right to a jury trial in any court action arising between the parties, whether under this Agreement or otherwise related to this Agreement, and whether made by claim, counterclaim, third-party claim or otherwise. The Agreement of each party to waive its right to a jury trial shall be binding on its successors or assigns.

19. Captions. The use of captions and section headings herein is for purposes of convenience only and shall not affect the interpretation or substance of any provisions contained herein.

20. Tax Matters.

20.1 All amounts payable to Consultant hereunder shall be subject to applicable reporting and withholding.

 

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20.2 Consultant agrees, upon the request of the Company and/or the Parent, to provide any reasonable assistance to the Parent and/or the Company required to demonstrate that Consultant’s services under this Agreement qualified as services by an independent contractor and all appropriate taxes with respect to any amounts paid hereunder (including but not limited to self-employment and income tax payments) have been paid.

21. Entire Agreement. Except as otherwise provided herein, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes any and all prior and contemporaneous promises, agreements and representations not set forth in this Agreement including, without limitation, the Original Agreement, as of the Effective Date. Consultant agrees that if the Merger is consummated, (i) Consultant’s employment will terminate at the Effective Date, (ii) any changes coincident to his change from executive to consultant including, without limitation, his termination of employment, will not constitute Good Reason or termination without Cause (as those terms are defined in the Original Agreement) for purposes of the Original Agreement, (iii) the Original Agreement shall be null and void as of the Effective Date and (iv) Consultant shall not be entitled to any benefits and protections under the Company’s Third Amended and Restated Management Group Employee Severance Protection Plan (as amended) or any similar plans or arrangements in effect prior to the Effective Date, whether or not Consultant was or is designated as a participant in such plans or arrangements and Consultant hereby waives all benefits and protections provided under such plans and arrangements.

22. Survival of Certain Provisions. Notwithstanding any other provision of this Agreement to the contrary, the provisions of Sections 8 through 22 hereof shall survive the termination or expiration of the Consulting Period or this Agreement.

[Signature page follows]

 

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IN WITNESS WHEREOF, the Company, Parent and Consultant have executed and delivered this Agreement as of the date written above.

 

XTO ENERGY INC.

By:

 

/s/ Vaughn O. Vennerberg, II

 

Name: Vaughn O. Vennerberg, II

 

Title: President

EXXON MOBIL CORPORATION

By:

 

/s/ William M. Colton

 

Name: William M. Colton

 

Title: Vice President

CONSULTANT:

By:

 

/s/ Bob R. Simpson

 

Bob R. Simpson

 

15

 

EX-99.2 4 dex992.htm CONSULTING AGREEMENT, KEITH A. HUTTON

Exhibit 99.2

EXECUTION COPY

CONSULTING AGREEMENT

This Consulting Agreement (this “Agreement”), dated December 13, 2009, by and among XTO Energy Inc., a Delaware corporation (the “Company”), Exxon Mobil Corporation, a New Jersey corporation (“Parent”), and Keith A. Hutton (“Consultant”), shall be effective as of the Effective Date (as hereinafter defined).

RECITALS

WHEREAS, the Company, Parent and ExxonMobil Investment Corporation, a wholly owned subsidiary of Parent (“Merger Sub”), have entered into an Agreement and Plan of Merger, dated as of the 13th day of December, 2009 (the “Merger Agreement”), pursuant to which Merger Sub will be merged with and into the Company (the “Merger”) and, as a result of which, the Company will become a wholly-owned subsidiary of Parent; and

WHEREAS, as a material incentive for Parent and Company to execute the Merger Agreement, and subject to the consummation of the Merger, Consultant shall retire from employment with, and shall cease to serve as a director and owner of, the Company and of all of its subsidiaries (the “Resignation”), effective as of the Effective Time (as defined in the Merger Agreement), and Consultant will thereafter be retained by the Company as a consultant, subject to the terms and provisions of this Agreement; and

WHEREAS, in order to protect the goodwill and purchase of the Company, Consultant agrees and acknowledges that the non-competition covenant and the restriction on disclosure of the Company’s Confidential Information (defined below), as set forth in Section 10 hereafter, are essential to the continued growth and stability of the Company’s business and necessary to protect the Company’s purchased goodwill.

STATEMENT OF AGREEMENT

NOW, THEREFORE, in consideration of the above recitals, and for and in consideration of the mutual promises set forth below and in the Merger Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Effective Date. The “Effective Date” shall mean the date on which occurs the Effective Time. In the event that the Effective Time does not occur, this Agreement shall not become effective, and Consultant shall continue as an employee and director of the Company, pursuant to the terms and conditions of the employment agreement by and between the Company and Consultant, dated as of November 18, 2008 and effective on December 1, 2008, as amended on December 13, 2009 (the “Original Agreement”).

 

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2. Consulting Period. The Company hereby engages Consultant as a consultant, subject to the terms and provisions of this Agreement, for the period commencing at the Effective Time and ending on the later of (i) the first anniversary of the Effective Date or (ii) if Parent and Consultant, in consultation with the Company, mutually agree prior to such first anniversary to extend the term of this Agreement, the second anniversary of the Effective Date (the “Consulting Period”). Notwithstanding the foregoing, the Consulting Period shall be subject to earlier termination pursuant to Section 7 hereof.

3. Consulting Services. Consultant shall render such consulting and advisory services (the “Consulting Services”) during the Consulting Period as the Company may reasonably request from time to time upon reasonable prior notice. During the Consulting Period Consultant shall devote his efforts and attention to the business of the Company on a full time basis, consistent with Consultant’s pattern and level of activity prior to the Effective Date. Consultant’s Consulting Services shall be related to such matters as determined from time to time by the executive officer of Parent charged with principal oversight of the Company, including, without limitation, Consulting Services in connection with the management and integration of the various entities and businesses of the Company and its subsidiaries; provided, however, that such duties shall be reasonably related to the duties performed by Consultant as of the date hereof. Consultant shall devote his best efforts, skill and attention to the performance of such Consulting Services, which may include travel reasonably required in the performance of such Consulting Services with the use of Company aircraft (for business travel only). Consultant shall be an independent contractor in providing the Consulting Services.

4. Consulting Fee, Completion Bonus and Parent Share Grant.

4.1 As compensation for the Consulting Services, Consultant shall receive a fee of $700,000 (the “Consulting Fee”), which shall be paid in substantially equal semi-monthly installments during the Consulting Period, subject to Consultant’s continued services as a consultant hereunder as of each payment date and compliance with the covenants under Section 10, unless otherwise provided herein.

4.2 Parent agrees to grant Consultant (i) a cash bonus equal to $700,000 which shall be paid in a lump sum on the date that is twelve (12) months following the Effective Date and (ii) if the Consulting Period is extended pursuant to Section 2, a cash bonus equal to $700,000 which shall be paid in a lump sum on the date that is twenty-four (24) months following the Effective Date (each such bonus, a “Completion Bonus”), in each case subject to Consultant’s continued service through the applicable payment date and compliance with this Agreement, including the covenants under Section 10, through such payment date.

4.3 Parent agrees to grant Consultant restricted shares or restricted stock units of Parent common stock with a fair market value of $1,400,000 as of the Effective Date (“Parent Share Grant”), with the number of shares covered by such grant to be determined based on the closing price of Parent’s common stock on the Effective Date. Such restricted shares or units shall vest (i) 50% on the date that is twelve (12) months following the Effective Date, subject to Consultant’s continued services as a consultant

 

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hereunder and compliance with Section 10 through such vesting date and (ii) 50% on the date that is twenty-four (24) months following Effective Date subject to Consultant’s compliance with Section 10 or, if the Consulting Period is extended pursuant to Section 2, thirty-six (36) months following the Effective Date, subject to Consultant’s continued services as Consultant through the date that is twenty-four (24) months following the Effective Date and compliance with Section 10 through the date that is thirty-six (36) months following Effective Date.

5. Other Compensation and Benefits.

5.1 The Company shall pay to Consultant a cash amount equal to the lesser of $10,913,662 and the dollar amount which when added to the sum of (1) the value (determined based on the fair market value as of the Effective Date of the shares of Company common stock) of those performance shares granted to Consultant which will vest as of the Effective Time, (2) the intrinsic value of the unvested options to acquire the Company’s common stock granted to Consultant which will vest as of the Effective Time (i.e., the excess of the value, determined as provided above, of the shares of the Company’s common stock underlying such unvested options over the aggregate exercise price of such options), and (3) the fair market value as of the Effective Date of the shares of Company common stock received by Consultant pursuant to the Amended and Restated Agreement for Grant between Consultant and the Company, dated November 18, 2008 (as amended), equals 270% of Consultant’s “base amount,” as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), as mutually determined by the Company and Parent in good faith prior to the Effective Date consistent with information provided to Parent prior to the date hereof (the total amount payable under this sentence, the “Retention Payment”). The Retention Payment shall be paid to Consultant in two (2) substantially equal installments on the dates that are six (6) and twelve (12) months after the Effective Date, subject to Consultant’s continued services as a consultant hereunder through the applicable payment date unless otherwise provided herein.

5.2 The Company and Parent hereby acknowledge and agree that all of Consultant’s stock options, restricted shares, performance shares and other equity or equity-based awards (collectively, “Equity Awards”) to acquire shares of the Company’s common stock that were outstanding immediately prior to the Effective Time shall be converted into Equity Awards to acquire shares of Parent common stock as of the Effective Time, pursuant to the terms and conditions set forth in the Merger Agreement, and all Equity Awards to acquire shares of the Company’s common stock granted prior to November 2009 shall become fully vested (and, in the case of stock options, fully exercisable) as of the Effective Time. Any Equity Awards that are converted into Equity Awards to acquire shares of Parent common stock pursuant to the immediately preceding sentence, but that do not vest in accordance with the immediately preceding sentence (the “Unvested Awards”), shall vest on the first anniversary of the Effective Date, subject to Consultant’s continued service as a consultant hereunder to the vesting date, unless otherwise provided herein. The Company and Parent hereby acknowledge and agree that all of Consultant’s options to purchase the Company’s common stock that are converted into options to purchase Parent common stock pursuant to the first sentence of this Section 5.2 shall remain outstanding through their

 

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scheduled expiration date, notwithstanding Consultant’s retirement or the termination of the Consulting Period for any reason prior to such scheduled expiration date. To the extent that the terms of any plan or agreement relating to any Equity Award conflict with any of the provisions in this Section 5.2, the terms of this Section 5.2 shall supersede the terms of such plan or agreement and shall be deemed to amend such terms in the manner provided above.

5.3 The Company shall transfer to Consultant, within ten (10) days after the Effective Date, all right, title or other ownership interest the Company may have in (i) any club memberships in the name of Consultant provided by the Company immediately prior to the Effective Date for use by Consultant and (ii) any life insurance owned by the Company on Consultant’s life immediately prior to the Effective Date, if permitted under the terms of such memberships and policies or otherwise permitted by the relevant organizations and insurance companies.

5.4 During the Consulting Period, Consultant shall be entitled to (i) occupy the office in the Company’s headquarters building that he occupied immediately prior to the Effective Date, (ii) retain the parking space at the Company’s headquarters that he was assigned immediately prior to the Effective Date and (iii) receive administrative assistant services of the same type and to the same extent as such services were provided to him immediately prior the Effective Date and be permitted to select his administrative assistant.

5.5 As of the Effective Date, Consultant and his eligible dependents shall receive retiree medical coverage under Parent’s retiree health plan.

5.6 Except as otherwise set forth in this Section 5, Consultant shall not be eligible to participate in any employee benefit plans sponsored or maintained by the Company or Parent; provided, however, that nothing herein shall adversely affect Consultant’s right to receive his vested benefits under any such plan maintained by the Company in respect of his services as an employee of the Company.

6. Expenses. Upon presentation of documentation reasonably acceptable to the Company with a copy to the Parent officer charged with expense review for the Company, the Company shall reimburse Consultant for all reasonable expenses incurred by Consultant in connection with the performance of the Consulting Services (“Expenses”) in accordance with the Company’s expense reimbursement policy in effect from time to time; provided, however, that any expense in excess of $5,000 shall require prior approval by the Parent officer charged with expense review for the Company.

 

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7. Termination of Consulting Period.

7.1 Termination of Consulting Period. Notwithstanding any other provision hereof, the Consulting Period and Consultant’s services as a consultant hereunder shall terminate, and, except as otherwise specifically provided herein, this Agreement shall terminate:

(a) upon the death or disability of Consultant;

(b) for “Cause” (as defined in Section 7.2 below), upon a Notice of Termination given by the Company to Consultant after compliance with Section 7.4 below;

(c) for “Good Reason” (as defined in Section 7.3 below), upon a Notice of Termination given by Consultant to the Company after compliance with Section 7.4 below;

(d) without “Cause,” upon a Notice of Termination given by the Company to Consultant after compliance with Section 7.4 below;

(e) upon Consultant’s voluntary resignation for any reason other than Good Reason, upon a Notice of Termination given by Consultant to the Company after compliance with Section 7.4 below; or

(f) on the expiration date of the Consulting Period.

7.2 Cause. The Company shall have Cause to terminate the Consulting Period if Consultant (a) willfully and continually fails to substantially perform the Consulting Services (other than a failure resulting from Consultant’s illness or disability, as determined by the Parent Management Committee (the “Committee”) in good faith), which failure continues for a period of at least thirty (30) days after a written notice of demand for substantial performance has been delivered to Consultant specifying the manner in which Consultant has failed to substantially perform, (b) breaches the provisions of Section 10 or (c) willfully engages in illegal conduct, gross misconduct, or a clearly established violation of the Company’s written policies and procedures (which shall be provided upon request), which is demonstrably injurious to the Company, monetarily or otherwise; provided, however, that no termination of the Consulting Period shall be for Cause until (x) there shall have been delivered to Consultant a written notice authorized by two-thirds (2/3) of the members of the Committee, specifying in detail the particulars of Consultant’s conduct which violates either (a), (b) or (c) above, (y) Consultant shall have been provided an opportunity to be heard by the members of the Committee (with the assistance of Consultant’s counsel if Consultant so desires), and (z) a resolution is adopted in good faith by two-thirds (2/3) of such members of the Committee confirming such violation. No act, nor failure to act, on Consultant’s part, shall be considered “willful” unless he has acted or failed to act with an absence of good faith and without a reasonable belief that his action

 

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or failure to act was in the best interest of the Company. Notwithstanding anything contained in this Agreement to the contrary, no failure to perform by Consultant after Notice of Termination is given by or to Consultant shall constitute Cause.

7.3 Good Reason. Consultant may terminate the Consulting Period for Good Reason upon the occurrence of a material breach by the Company of any provision of this Agreement, which shall include, without limitation, any failure of the Company or Parent, as applicable, to make timely payment of the amounts or benefits due, or to otherwise satisfy its obligations pursuant to, Section 5 hereof. Consultant must provide notice to the Company of the existence of the condition constituting “Good Reason” within a period not to exceed ninety (90) days after the initial existence of the condition, upon the notice of which the Company must be provided a period of at least thirty (30) days during which it may remedy the condition and, if such condition is so remedied within such period, Consultant shall not have the right to terminate the Consulting Period for Good Reason.

7.4 Notice of Termination. Any termination of the Consulting Period by the Company or by Consultant (other than termination as a result of Consultant’s death) shall be communicated by written Notice of Termination to the other parties hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice setting forth the specific termination provision in this Agreement relied upon and describing in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Consulting Period under the provision so indicated.

7.5 Date of Termination. “Date of Termination” shall mean the date on which the Consulting Period terminates, which shall be, if Consultant is terminated (i) by his death, the date of his death, (iii) for Cause, the date specified in the Notice of Termination, (iv) upon the expiration date of the Consulting Period, the last day of the Consulting Period, and (v) for any other reason, the date specified in the Notice of Termination, which date shall, in the case of a resignation by Consultant, be no later than thirty (30) days after the Notice of Termination is given.

8. Benefits Upon Certain Terminations.

8.1 Termination without Cause, for Good Reason or upon Consultant’s Death or Disability. Upon a termination of the Consulting Period (i) by the Company without Cause (including any termination by the Company due to Consultant’s disability), (ii) by Consultant for Good Reason or (iii) by reason of Consultant’s death, Consultant shall be entitled to the following payments and benefits: (A) the Company shall pay to Consultant a lump sum cash payment, within ten (10) days after the Date of Termination, in an amount equal to the sum of (x) if such termination occurs prior to the first anniversary of the Effective Date, the unpaid Consulting Fee that would have been paid for periods following termination of the Consulting Period through the first anniversary of the Effective Date and if such termination occurs after the first anniversary of the Effective Date and the Consulting Period has been

 

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extended as provided in Section 2, the unpaid Consulting Fee that would have been paid for periods following termination of the Consulting Period through the second anniversary of the Effective Date, (y) the Completion Bonus, if not previously paid and (z) the unpaid portion of the Retention Payment and (B) the Unvested Awards shall immediately vest in full. For the avoidance of doubt, the Parent Share Grant shall vest only as provided in Section 4.3.

8.2 Termination for Any Reason. Upon the termination of the Consulting Period for any reason, (i) the Company shall pay or provide to Consultant, within ten (10) days after the Date of Termination, (x) any accrued but unpaid portion of the Consulting Fee for periods prior to termination of the Consulting Period, (y) any incurred but unpaid or unreimbursed Expenses and (z) any amounts or benefits required to be paid or provided to Consultant pursuant to Sections 5.1 and 5.2 hereof, and (ii) the provisions of Sections 5.5 and 5.6 hereof shall continue to apply.

8.3 No Mitigation. Consultant shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking employment or otherwise, and the amount of any payment or other benefit provided for under this Agreement shall not be reduced by any compensation earned by Consultant as the result of employment after the termination of the Consulting Period, or otherwise.

8.4 Section 409A of the Code; Delay of Payments. The terms of this Agreement have been designed to comply with or be exempt from the requirements of Section 409A of the Code, where applicable, and shall be interpreted and administered in a manner consistent with such intent. Notwithstanding anything to the contrary in this Agreement, (i) if upon the Date of Termination, Consultant is a “specified employee” within the meaning of Section 409A of the Code, and the deferral of any amounts otherwise payable under this Agreement as a result of Consultant’s termination is necessary in order to prevent any accelerated or additional tax to Consultant under Section 409A of the Code, then the Company will defer the payment of any such amounts hereunder until the date that is six (6) months following the Date of Termination, at which time any such delayed amounts will be paid to Consultant in a lump sum, with interest from the date otherwise payable at the prime rate as published in The Wall Street Journal on the Date of Termination and (ii) if any other payments of money or other benefits due to Consultant hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code. To the extent required to avoid an accelerated or additional tax under Section 409A of the Code, amounts reimbursable to Consultant under this Agreement shall be paid to Consultant on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to Consultant) during any one year may not affect amounts reimbursable or provided in any subsequent year.

 

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9. Parent’s Guarantee of Payment and Benefits. In the event that Consultant is entitled to receive any payment or benefit under this Agreement from the Company and the Company fails to make or provide such payment or benefit, Parent shall promptly satisfy the obligation of the Company to make or provide such payment or benefit.

10. Confidentiality, Non-Competition and Intellectual Property. For purposes of this Section 10, the Company shall be construed to include the Company, Parent and their respective subsidiaries and affiliates. In consideration of the premises and mutual promises contained herein, and for other good and valuable consideration, including substantial amounts obtained as a result of the Merger, the receipt and adequacy of which are hereby acknowledged, and in recognition of the confidential information, trade secrets, contracts, relationships, and goodwill concerning the Business (defined below) conducted by the Company and affiliates that has been acquired by Consultant by reason of his employment in, operation and ownership of, leadership in, and training from Company regarding the Business, the use or disclosure of which would cause Company substantial loss, including diminishment of the purchased goodwill that is the subject of the Merger Agreement, and would place the Company at a competitive disadvantage, the parties hereby agree as follows:

10.1 During the Consulting Period, the Company agrees to provide, and Consultant will acquire, certain Confidential Information of the Company. In return for the consideration, compensation and benefits referenced in this Agreement, during the Consulting Period with the Company and at all times thereafter, Consultant shall maintain in strict confidence and not disclose to third parties or use in any task, work or business (except on behalf of the Company), during the Consulting Period and thereafter, any proprietary or Confidential Information regarding the Company and/or his work with the Company, including without limitation, trade secrets, information regarding the Company’s processes, clients, client information, loan portfolio information, computer programs and/or records, software programs, reports, intellectual property, price points, cost structures, acquisition, expansion, marketing, financial and other business strategies, information and plans, compilations of data, confidential information developed by consultants and contractors, employee information, manuals, memoranda, projections, reserve line information, exploration techniques, acquisition targets, reserve information and targets, marketing information, transportation techniques, processing strategies, and minutes (“Confidential Information”), without the express written permission of the Committee. Consultant’s confidentiality obligation shall include, but not be limited to, any Confidential Information to which Consultant has access, had access, will have access, or received in connection with his prior employment by Company, and any information designated as confidential by the Company. Company and Consultant acknowledge and agree that the Confidential Information is continually evolving and changing and that some new Confidential Information will be needed by Consultant and provided by the Company for the first time in the course of the Consulting Period. Upon the termination of Consultant’s assignment with the Company (for whatever reason), he shall immediately return to the Company all Confidential Information and all copies thereof obtained by Consultant, or his employees or agents. The parties acknowledge that the Company would not retain Consultant’s consulting services or provide him with access to its Confidential Information without the covenants and promises contained in this Section 10. Consultant expressly acknowledges the trade secret status of the Confidential Information and agrees that his access to such Confidential Information constitutes a protectable business interest of the Company. Notwithstanding the foregoing restrictions,

 

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Consultant may disclose any Confidential Information (i) to the extent required by an order of any court or other governmental authority, but in each case only after the Committee has been so notified and has had the opportunity, if possible, to obtain reasonable protection for such information in connection with such disclosure or (ii) that becomes publicly known or made generally available to the public without breach of this Agreement by Consultant.

10.2 During the period commencing on the Effective Date and ending on the later of (i) the second anniversary of the Effective Date or (ii) if the Consulting Period has been extended as provided in Section 2, the third anniversary of the Effective Date (the “Restricted Period”) and in order, inter alia, to protect the Company’s interest in the Confidential Information and the significant goodwill purchased through the Merger, to ensure the continued viability of the Company, and specifically in order to protect the unique strategic business model and good will purchased by Company from Consultant, Consultant shall not engage in Competition (as defined below) with the Company. For purposes of this Agreement, “Competition” by Consultant shall mean Consultant directly or indirectly being engaged in, or otherwise directly or indirectly being employed by; rendering advice, services or assistance to; acting as a consultant or lender to; being a director, officer, employee, principal, licensor, trustee, broker, agent, stockholder, member, owner, joint venturer or partner of; or permitting his name to be used in connection with the activities of any other business or organization which competes, directly or indirectly, with the business of the Company in or around the North Sea, within any state in the United States or any other country in which the Company is engaged, or in which such engagement has been actively planned on or prior to the last day of the Consulting Period, in the “Business” as the same shall be constituted at any time during or following his engagement but which shall expressly include the acquisition, development, exploitation, and exploration of both proven oil and gas properties and unproven properties and in the production, processing, marketing, and transportation of oil and natural gas (collectively, the “Business”); provided, that, it shall not be a violation of this Section 10.2 for Consultant to become the registered or beneficial owner of up to one percent (1%) of any class of the capital stock of a competing corporation registered under the Securities Exchange Act of 1934, as amended, provided that Consultant does not actively participate in the business of such corporation until such time as this covenant expires. Consultant expressly acknowledges, agrees, and understands that, given the nature of the Business, Consultant’s prior leadership and ownership role with the Company, and the Company’s emphasis on field expansion and the exploitation and expansion of oil and gas properties, the foregoing geographic and temporal limitations are reasonable and narrowly tailored to protect the Company’s purchased goodwill.

10.3 Without limiting the generality of the foregoing restrictions in this Section 10, during the Restricted Period, Consultant agrees that he will not, directly or indirectly, for his benefit or for the benefit of any other person, firm or entity, do any of the following:

(a) solicit from or seek to do Business with any customer or potential customer doing or projected to do Business with the Company of the same or of a similar nature to the Business conducted between the Company and such customer during Consultant’s prior employment with Company or his consultancy with Company;

 

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(b) solicit or seek to hire any employee or consultant of the Company or in any other manner attempt directly or indirectly to influence, induce, or encourage any employee or consultant of the Company to leave the employment or consultancy of the Company, nor shall he use or disclose to any person, partnership, entity, association, or corporation any information concerning the names, addresses, or personal telephone numbers of any employees or consultants of the Company;

(c) hire, retain, do business with, consult with, solicit, or in any other manner attempt directly or indirectly to influence, induce, or encourage any customer, vendor, or business partner of the Company to abandon, reduce, or materially change its business relationship with the Company; or

(d) otherwise interfere with the Business or accounts of the Company, including the making of any statements or comments of a defamatory or disparaging nature to third parties regarding the Company or its officers, directors, personnel, products or services.

10.4 Consultant acknowledges that: (i) this Agreement is being entered into in connection with the consummation of the transactions contemplated by the Merger Agreement, (ii) that Consultant’s agreement to the terms set forth herein are a critical inducement to the Company’s entering into the Merger Agreement, (iii) that the services that have been and will be rendered by him to the Company are of a special and unique character, which gives this Agreement a particular value to the Company, the loss of which may not be reasonably or adequately compensated for by damages in an action at law, and (iv) that a material breach or threatened breach by him of any of the provisions contained in this Section 10 will cause the Company irreparable injury. Consultant therefore agrees that, in addition to any other remedies that the Company may have under this Agreement or otherwise, the Company shall be entitled to enforce this Section 10 by applying for injunctive relief from any court of competent jurisdiction without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security and without giving notice to the maximum extent permitted by law.

10.5 Consultant further acknowledges and agrees that due to the uniqueness of his services and confidential nature of the information he will possess, as well as his unique role as director and owner of the Company prior to the Merger, the covenants set forth herein are reasonable and necessary for the protection of the Confidential Information and the purchased goodwill of the Company, and it is the intent of the parties hereto that, if in the opinion of any court of competent jurisdiction, any provision set forth in this Section 10 is not reasonable in any respect, such court shall have the right, power and authority to modify any and all such provisions as to the court’s determination to the extent necessary to be reasonable and enforceable, and such modification shall be incorporated herein by reference and treated as the provision had been agreed to between the parties. Subject to the foregoing, if any term, phrase, clause, paragraph, restriction, covenant, or agreement contained in this Section 10 is held to be invalid or unenforceable, the same shall be deemed (and it is hereby agreed that the same is meant to be) severable and shall not defeat or impair the remaining provisions hereof.

 

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10.6 Consultant agrees that all intellectual property, including, without limitation, copyrights, patents, applications for patents, trade secrets, know-how, designs, methods, technical information, formulae, research and development data and information, customer lists, business plans, marketing plans, trademarks, trade names, service marks and other competitive data and information that was or will be conceived, created, developed, written, prepared, authored, or revised by me alone or with others during the course of performing work for the Company, whether before or after the date hereof (collectively, the “Work Product”), shall belong exclusively to the Company and shall, to the extent possible, be considered a work made by me for hire for the Company within the meaning of Title 17 of the United States Code. To the extent the Work Product may not be considered work made for hire by Consultant, Consultant agrees to assign, and automatically assign to the Company, without any requirement of further consideration, all rights, title, and interest he may have in such Work Product. Upon request of the Company, Consultant shall take such further actions and shall cooperate in good faith with the Company to obtain protection for such Work Product, including execution and delivery of instruments of conveyance, as may be appropriate to give full and proper effect to my assignment to the Company, and the execution of such documents as may be necessary to obtain protection for such Work Product, including without limitation, execution of documents to assist the Company in obtaining copyright registration or patent on all such works of creation that are copyrightable or patentable.

10.7 Consultant agrees that, notwithstanding anything to the contrary contained here in or in any other agreement between Consultant and the Company extant as of the Effective Date, in the event of any breach or threatened breach of the provisions of this Section 10 by Consultant, Consultant shall forfeit his entitlement to all amounts and grants provided under Section 4 and Section 8.1, and the Company shall be entitled to terminate any payments or grants then owing to Executive under such Sections.

10.8 Notwithstanding anything to the contrary contained in this Section 10, oil or gas interests in which Consultant participates as of the date hereof that (i) have been properly recorded prior to the date hereof and (ii) are disclosed to Parent prior to the Effective Date, shall not be deemed to constitute a breach of Consultant’s covenants under this Section 10.

11. Indemnification.

11.1 The Company and Parent shall indemnify and hold Consultant harmless to the maximum extent permitted by law against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys’ fees and costs incurred by Consultant, in connection with the defense of, or as a result of any action or proceeding or any appeal from any action or proceeding, in which Consultant is made or is threatened to be made a party by reason that Consultant is or was a consultant to, the Company or

 

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any of its subsidiaries or affiliates (for purposes of this Section 11.1, “Claims”), to the same extent that directors and officers of the Company are indemnified by the Company under the Company’s by-laws as in effect from time to time.

11.2 This indemnification shall be in addition to and not in lieu of the indemnifications contained in the Merger Agreement and that certain Indemnification Agreement between the Company and Consultant dated November 15, 2005, as amended, which indemnifications apply with respect to Consultant’s roles with the Company prior to the Effective Date and shall continue in effect to the extent provided in the Merger Agreement and such Indemnification Agreement.

12. Notices. All notices, requests, demands and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given and acknowledged by written receipt, or on the seventh (7th) day after mailing if mailed (return receipt requested), postage prepaid and properly addressed as follows:

 

The Company:

  

XTO Energy Inc.

810 Houston Street

Fort Worth, Texas 76102

  

Attention: Board of Directors

Parent:

  

Exxon Mobil Corporation

  

5959 Las Colinas Boulevard

  

Irving, Texas 75039

  

Attention: Board of Directors

Consultant:

  

At the address contained in the

Company’s personnel files.

Any party may change its address for purposes of this Section 12 by providing the other parties with written notice of the new address in the manner set forth above.

13. Successors of the Company or Parent. The Company and Parent shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company or Parent, as applicable, by agreement in form and substance satisfactory to Consultant, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company or Parent would be required to perform it if no such succession had taken place. Failure of the Company or Parent, as applicable, to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Consultant to compensation in the same amount and on the same terms as Consultant would be entitled hereunder if Consultant terminated the Consulting Period for Good Reason, except that for

 

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purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. Except as provided under Section 10, as used in this Agreement, (i) the “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets and (ii) “Parent” shall mean Parent as hereinbefore defined and any successor to its business and/or assets. In addition, a successor shall also include any other person or entity which otherwise becomes bound by all of the terms and provisions of this Agreement by operation of law.

14. Assignment; Binding Effect. Consultant may not assign his rights or delegate his duties or obligations hereunder without the written consent of the Company and Parent. This Agreement shall inure to the benefit of and be enforceable by Consultant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Consultant dies while any amounts would still be payable to him hereunder as if he had continued to live, all such amounts, unless other provided herein, shall be paid in accordance with the terms of this Agreement to his designee or, if there be no such designee, to his estate.

15. Amendment; Waiver. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by Consultant or his legal representative and such officer(s) as may be specifically designated by the Company and Parent. No waiver by a party hereto at any time of any breach by another party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

16. Invalid Provisions. Should any portion of this Agreement be adjudged or held to be invalid, unenforceable or void, such holding shall not have the effect of invalidating or voiding the remainder of this Agreement and the parties hereby agree that the portion so held invalid, unenforceable or void shall, if possible, be deemed amended or reduced in scope, or otherwise be stricken from this Agreement to the extent required for the purposes of validity and enforcement thereof.

17. 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 instrument.

18. Governing Law Enforcement and Disputes. This Agreement will be governed by and construed in accordance with the laws of the State of Texas, without reference to conflicts of law rules, and without regard to its location of execution or performance. Jurisdiction and venue for any claim or cause of action arising under this Agreement shall be exclusively in the state or federal courts located in Dallas, Texas. Each party waives its right to a jury trial in any court action arising between the parties, whether under this Agreement or otherwise related to this Agreement, and whether made by claim, counterclaim, third-party claim or otherwise. The Agreement of each party to waive its right to a jury trial shall be binding on its successors or assigns.

 

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19. Captions. The use of captions and section headings herein is for purposes of convenience only and shall not affect the interpretation or substance of any provisions contained herein.

20. Tax Matters.

20.1 All amounts payable to Consultant hereunder shall be subject to applicable reporting and withholding.

20.2 Consultant agrees, upon the request of the Company and/or the Parent, to provide any reasonable assistance to the Parent and/or the Company required to demonstrate that Consultant’s services under this Agreement qualified as services by an independent contractor and all appropriate taxes with respect to any amounts paid hereunder (including but not limited to self-employment and income tax payments) have been paid.

21. Entire Agreement. Except as otherwise provided herein, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes any and all prior and contemporaneous promises, agreements and representations not set forth in this Agreement including, without limitation, the Original Agreement, as of the Effective Date. Consultant agrees that if the Merger is consummated, (i) Consultant’s employment will terminate at the Effective Date, (ii) any changes coincident to his change from executive to consultant including, without limitation, his termination of employment, will not constitute Good Reason or termination without Cause (as those terms are defined in the Original Agreement) for purposes of the Original Agreement, (iii) the Original Agreement shall be null and void as of the Effective Date and (iv) Consultant shall not be entitled to any benefits and protections under the Company’s Third Amended and Restated Management Group Employee Severance Protection Plan (as amended) or any similar plans or arrangements in effect prior to the Effective Date, whether or not Consultant was or is designated as a participant in such plans or arrangements and Consultant hereby waives all benefits and protections provided under such plans and arrangements.

22. Survival of Certain Provisions. Notwithstanding any other provision of this Agreement to the contrary, the provisions of Sections 8 through 22 hereof shall survive the termination or expiration of the Consulting Period or this Agreement.

[Signature page follows]

 

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IN WITNESS WHEREOF, the Company, Parent and Consultant have executed and delivered this Agreement as of the date written above.

 

XTO ENERGY INC.

By:

 

/s/ Vaughn O. Vennerberg, II

 

Name: Vaughn O. Vennerberg, II

 

Title: President

EXXON MOBIL CORPORATION

By:

 

/s/ William M. Colton

 

Name: William M. Colton

 

Title: Vice President

CONSULTANT:

By:

 

/s/ Keith A. Hutton

 

Keith A. Hutton

 

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