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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 13, 1999
PennzEnergy Company
(Exact name of registrant as specified in charter)
Delaware 1-5591 74-1597290
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
Pennzoil Place, P.O. Box 4616, Houston, Texas 77210-4616
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 546-4000
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Item 5. Other Events.
PennzEnergy Company, a Delaware corporation (the "Registrant"), is party to
an Amended and Restated Agreement and Plan of Merger (the "Merger Agreement"),
dated as of May 19, 1999, with Devon Energy Corporation, an Oklahoma
corporation, Devon Delaware Corporation, a Delaware corporation, and Devon
Oklahoma Corporation, an Oklahoma corporation.
On August 13, 1999, the Board of Directors of the Registrant authorized the
PennzEnergy Company Special Severance Plan and the PennzEnergy Company Retention
Plan.
The Registrant has also entered into letter agreements with Mr. Stephen D.
Chesebro' and Mr. Donald A. Frederick that will become effective at the
effective time of the merger (as defined in the Merger Agreement).
The information in exhibits 99.1, 99.2, 99.3 and 99.4 is incorporated by
reference.
Item 7. Financial Statements and Exhibits
The following exhibits are filed herewith:
99.1 PennzEnergy Company Special Severance Plan, as established
effective May 19, 1999.
99.2 PennzEnergy Company Retention Plan, as established effective
May 19, 1999.
99.3 Form of Letter Agreement, dated August 13, 1999, between the
Company and Stephen D. Chesebro'.
99.4 Form of Letter Agreement, dated August 13, 1999, between the
Company and Donald A. Frederick.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PENNZENERGY COMPANY
Date: August 17, 1999 By: /s/ James L. Pate
--------------------
James L. Pate
Chairman of the Board
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EXHIBIT 99.1
PENNZENERGY COMPANY
SPECIAL SEVERANCE PLAN
(As Established Effective May 19, 1999)
INTRODUCTION
PennzEnergy Company considers the prevention of the loss of employees and
the avoidance of distraction of employees as a result of the transaction
("Transaction") contemplated by that certain Amended and Restated Agreement and
Plan of Merger by and among Devon Energy Corporation, Devon Delaware
Corporation, Devon Oklahoma Corporation and PennzEnergy Company, dated as of May
19, 1999, to be essential to protecting and enhancing the best interests of
PennzEnergy Company and its shareholders. PennzEnergy Company also believes
that during the pendency of the Transaction and the transition period
thereafter, PennzEnergy Company should be able to receive and rely on
disinterested service from employees regarding the best interests of PennzEnergy
Company and its shareholders without concern that employees might be distracted
or concerned by personal uncertainties and risks.
Accordingly, PennzEnergy Company has determined that appropriate steps
should be taken to assure PennzEnergy Company and its affiliates of the
continued employment and attention and dedication to duty of their employees and
to seek to ensure the availability of their continued service, notwithstanding
the Transaction.
Therefore, in order to fulfill the above purposes, the PennzEnergy Company
Special Severance Plan is hereby established to read as follows:
ARTICLE I
ESTABLISHMENT OF PLAN
As of the Effective Date, PennzEnergy Company hereby establishes a
separation compensation plan to be known as the PennzEnergy Company Special
Severance Plan, as set forth in this document.
ARTICLE II
DEFINITIONS
(a) Board. Prior to the Closing Date, the Board of Directors of
PennzEnergy, and on and after the Closing Date, the Board of Directors of
Devon.
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(b) Closing Date. The closing date of the Transaction, as defined in
Section 1.2 of the Merger Agreement.
(c) Company. Prior to the Closing Date, PennzEnergy, and on and after
the Closing Date, Devon.
(d) Defined Pay. A Participant's compensation for purposes of the
Plan, which is equal to the sum of the Participant's (1) highest annual
base salary or wages during the three calendar years preceding the 2000
calendar year and (2) highest annual bonus earned during the three calendar
years preceding the 1999 calendar year (or, if a Participant did not earn
an annual bonus, or earned only a prorated annual bonus, during such three
calendar years, the Participant's annual bonus for purposes of "Defined
Pay" under the Plan shall be based on the 1999 target annual bonus for such
Participant's salary grade).
(e) Devon. Devon Energy Corporation, an Delaware corporation.
(f) Effective Date. May 19, 1999.
(g) Employee. Any full-time salaried or hourly nonunion employee of an
Employer. The term shall exclude all individuals (1) retained as
independent contractors and (2) non-United States citizens working outside
the United States.
(h) Employer. The Company and each Subsidiary.
(i) Merger Agreement. The Amended and Restated Agreement and Plan of
Merger by and among Devon Energy Corporation, Devon Delaware Corporation,
Devon Oklahoma Corporation and PennzEnergy Company, dated as of May 19,
1999.
(j) Participant. An individual who is designated as such pursuant to
Section 3.1.
(k) PennzEnergy. PennzEnergy Company, a Delaware corporation.
(l) Plan. The PennzEnergy Company Special Severance Plan.
(m) Severance Benefit. A benefit to which a Participant may become
entitled pursuant to Article IV hereof.
(n) Subsidiary. Any corporation or other entity in which the Company,
directly or indirectly, holds a majority of the voting power or profits or
capital interest of such entity.
(o) Transaction. For purposes of this Plan, that certain transaction
contemplated by the Merger Agreement.
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ARTICLE III
ELIGIBILITY
3.1 Participation. Any individual who is an Employee of an Employer on
the Effective Date shall be a Participant in the Plan; provided, however, that,
the foregoing notwithstanding, no Employee shall be a Participant in this Plan
who:
(i) Immediately prior to the Effective Date, is exempt grade E5 or
higher; or
(ii) Is offered and accepts employment with Pennzoil-Quaker State
Company prior to termination of employment with PennzEnergy Company as
defined in Section 4.2 of the Plan.
3.2 Duration of Participation. A Participant shall cease to be a
Participant in the Plan as a result of an amendment or termination of the Plan
complying with Article VII of the Plan, or when he or she ceases to be an
Employee of any Employer, unless, at the time he or she ceases to be an
Employee, such Participant is entitled to payment of a Severance Benefit as
provided in the Plan. A Participant entitled to payment of a Severance Benefit
or any other amounts under the Plan shall remain a Participant in the Plan until
the full amount of the Severance Benefit and any other amounts payable under the
Plan have been paid to the Participant.
ARTICLE IV
SEVERANCE BENEFITS
4.1 Right to Severance Benefit. A Participant shall be entitled to
receive from his or her Employer Severance Benefits in accordance with Section
4.3 if the Participant's employment by an Employer shall terminate in any
circumstance specified in Section 4.2(a), whether the termination is voluntary
or involuntary.
4.2 Termination of Employment.
(a) Terminations That Give Rise to Severance Benefits Under The Plan.
(i) Except as set forth in subsection (b) below, any termination
of employment with an Employer by action of the Employer or any of its
affiliates (excluding any transfer to another Employer, but treating
as a termination of employment the sale of any assets or the stock of
the Participant's Employer, unless a plan covering the Participant
with benefits equivalent to those payable hereunder is adopted by the
entity that thereafter employs the Participant), at any time on or
after the Closing Date and before the second anniversary of the
Closing Date, shall entitle a Participant to a Severance Benefit in
accordance with Section 4.3.
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(ii) If, at any time on or after the Closing Date and before the
second anniversary of the Closing Date, a Participant's duties,
responsibilities or annual base salary or bonus opportunity or hourly
wages or employee benefits as an Employee are diminished or reduced in
any material respect in comparison to the duties, responsibilities and
annual base salary, bonus opportunity, incentive compensation
opportunity or hourly wages or employee benefits enjoyed by the
Participant immediately prior to the Closing Date, the Participant may
terminate his or her employment within 90 days of the occurrence of
such reduction and be entitled to a Severance Benefit in accordance
with Section 4.3; provided, however, that the Participant provides the
Company written notice of the occurrence of such reduction and the
Company does not cure the reduction within 15 days of its receipt of
such written notice from the Participant.
(iii) If, at any time on or after the Closing Date and before the
second anniversary of the Closing Date, a Participant is required to be
based at a location more than 30 miles from the location where the
Participant was based and performed services immediately prior to the
Closing Date, the Participant may terminate his or her employment
within 90 days of the notice of such relocation and be entitled to a
Severance Benefit in accordance with Section 4.3.
(b) Terminations That Do Not Give Rise to Severance Benefits Under The
Plan. If a Participant's employment is terminated for "Cause" (as defined
in this subsection (b)), voluntarily by the Participant in the absence of
any event described in subsection (a)(ii) or (iii) of this Section 4.2, or
due to death or disability prior to an event described in Section 4.2(a),
then the Participant shall not be entitled to a Severance Benefit under the
Plan. A termination for Cause shall have occurred if a Participant is
terminated because of:
(i) the continued failure of the Participant to perform
substantially the Participant's duties with the Employer (other than
any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to the Participant which specifically identifies the manner
in which the Company believes that the Participant has not
substantially performed the Participant's duties and the Participant is
provided 15 days to cure such failure following such notice; or
(ii) the engaging by the Participant in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the
Company.
4.3 Severance Benefits. If a Participant's employment is terminated in
circumstances entitling the Participant to a Severance Benefit as provided in
Section 4.2(a), subject to Section 4.6, the Participant's Employer or the
Company shall pay the cash lump sum amounts, periodic cash severance payments,
continued benefits coverage and outplacement services, which collectively shall
constitute such Participant's Severance Benefits under the Plan, as follows:
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Benefit Computation of Benefit
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Vacation Pay Earned and accrued vacation pay paid on a bi-
weekly basis commencing after termination.
Periodic Cash Severance Commencing after his or her Vacation Pay has
been exhausted, a Participant shall receive a
periodic cash severance in the form of bi-weekly
payments, with each such payment equal to 1/26th
of the Participant's Defined Pay ("Bi-Weekly
Payments"), for a period based on such
Participant's grade level and years of service
with the Employer, as follows:
(i) Exempt Grade X1 and Above.
A Participant exempt grade X1 or above shall
receive Bi-Weekly Payments over a period of whole
and partial months equal to the sum of (1) and (2)
below, as follows:
(1) Whole Years of Service: Based on whole years
of service, such Participant shall receive Bi-
Weekly Payments for the following number of
months:
Years of Service Months
---------------- ------
1 year 13
2 years 14
3 years 15
4 years 16
5 years 17
6 years 18
7 years 19
8 years 20
9 years 21
10 years 22
11 years 23
12 years 24
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(2) Partial Year of Service: For a partial year of
service, such Participant shall receive Bi-Weekly
Payments over a period equal to 1/12 of a month
for each whole and partial month of such partial
year of service.
The foregoing notwithstanding, (x) no Participant
under this clause (i) shall be entitled to more
than 24 months of Bi-Weekly Payments; (y) a
Participant under this clause (i) with less than
one complete year of service in total with the
Employer shall receive Bi-Weekly Payments for 12
months; and (z) a Participant's service prior to a
two-year "Break In Service" (as defined in the
Company's qualified defined contribution plan,
hereinafter "Break") shall be disregarded.
(ii) Exempt Grade 5.
An exempt grade 5 Participant shall receive a
number of Bi-Weekly Payments that is equal to one-
half of the sum of four weeks for each year or
part thereof of service (disregarding any service
prior to a two-year Break); provided, however,
that in no event shall such Participant receive
less than 12 months of Bi-Weekly Payments.
(iii) All Other Participants (Exempt Grade 4 and
Below).
A Participant who is neither exempt grade 5 nor
exempt grade X1 or above shall receive a number of
Bi-Weekly Payments that is equal to one-half of
the sum of three weeks for each year or part
thereof of service (disregarding any service prior
to a two-year Break); provided, however, that in
no event shall such Participant receive no less
than three Bi-Weekly Payments.
Medical/Dental For the period during which Vacation Pay and
Periodic Cash Severance is paid, continued
coverage under medical benefits arrangements
substantially similar to
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those in effect immediately prior to the Closing
Date at no greater cost to Participant than that
applicable immediately prior to the Closing Date.
Life Insurance For the period during which Vacation Pay and
Periodic Cash Severance is paid, continued
coverage under life insurance arrangements
substantially similar to those in effect
immediately prior to the Closing Date at no
greater cost to Participant than that applicable
immediately prior to the Closing Date.
AD&D For the period during which Vacation Pay and
Periodic Cash Severance is paid, continued
coverage under Accidental Death and Dismemberment
insurance substantially similar to that in effect
immediately prior to the Closing Date at no
greater cost to Participant than that applicable
immediately prior to the Closing Date.
401(k)/Retirement Plan For the period during which Vacation Pay and
Periodic Cash Severance is paid, continued
participation in the Company's tax qualified
defined benefit and defined contribution plans,
and correlative excess benefit programs, on the
same basis as existed immediately prior to the
Closing Date. The determination of age and years
of service of Participants for purposes of the
"age 52 and 10 years of service" and "20 years of
service" early retirement benefits under the
qualified defined benefit plan shall include the
period during which Vacation Pay and Periodic Cash
Severance is paid.
Stock Options Any stock options held by the Participant
immediately prior to the Closing Date shall become
fully vested and exercisable as of the Closing
Date and remain outstanding for the remainder of
each such option's term (unless sooner terminated
for reasons other than termination of employment).
Conditional Stock Units Any conditional stock units held by the
Participant immediately prior to the Closing Date
shall become matured units as of the Closing Date,
but shall be distributable at the end of the 5-
year term under the applicable plan or program
under which such units were granted.
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Outplacement (i) For Participants exempt grade 5 and above,
outplacement services for a period of 6 months
with the option, if the Participant remains
unemployed at the end of the first six months, for
up to an additional six months of such services on
a month to month basis and (ii) for all other
Participants, outplacement services determined by
grade level consistent with the current practice
of the Company.
Notwithstanding any provision of this Plan to the contrary, a
Participant's Severance Benefits under the Section 4.3 shall be reduced by any
severance benefits payable to such Participant outside of this Plan in
connection with the Transaction.
4.4 Other Benefits Payable. The benefits payable hereunder shall be
payable in addition to, and not in lieu of, all other accrued or vested or
earned but deferred compensation, rights, options or other benefits that may be
owed to a Participant upon or following termination, including, but not limited
to, earned but unused vacation, amounts or benefits payable under any bonus or
other compensation plan, stock option plan, stock ownership plan, stock purchase
plan, life insurance plan, health plan, disability plan or similar or successor
plan; provided, however, that the benefits payable under this Plan shall be
reduced by any severance pay or pay in lieu of notice required to be paid to
such Participant under applicable law. Solely with respect to the Transaction,
the Plan shall supersede and replace any severance pay plan, program or
arrangement that may previously have been adopted by any Employer but only as
such applies to an Employee, including the Company's Executive Severance Plan
and Change in Control Retention/Severance Plan, but not any individual
employment agreement between the Employer and any Employee. Benefits payable
under this Plan shall be reduced by any cash severance benefits payable under
any individual employment contract, change of control agreement or other
severance arrangement, as well as payments made by the Company pursuant to the
Worker Adjustment and Retraining Notification Act of 1988 ("WARN").
4.5 Payment Obligation Absolute. The obligations of the Employers to pay
or provide the Severance Benefits described in Section 4.3 shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
an Employer may have against any Participant. In no event shall a Participant
be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to or benefits provided to a Participant under
any of the provisions of the Plan, nor shall the amount of any payment hereunder
be reduced by any compensation earned by or benefits provided to a Participant
as a result of employment by another employer.
4.6 Release. Notwithstanding any provision to the contrary, the payment
or receipt of Severance Benefits (excluding Vacation Pay) described in Section
4.3 shall be contingent upon the Participant's execution and return of a valid
release and waiver of claims ("Release") in the form attached as Exhibit A
hereto, and the expiration of the Release's 7-day revocation period.
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ARTICLE V
PARTICIPATING EMPLOYERS
The Plan shall be deemed adopted by any Subsidiary of the Company.
Each Subsidiary shall be an Employer hereunder and the provisions of the Plan
shall be fully applicable to the Employees of that Subsidiary who are
Participants pursuant to Section 3.1.
ARTICLE VI
SUCCESSOR TO EMPLOYER.
The Plan shall bind any successor of an Employer, substantially all
its assets or substantially all its businesses (whether direct or indirect, by
purchase, merger, consolidation or otherwise), in the same manner and to the
same extent that the Employer would be obligated under the Plan 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 Plan, the Company
shall require such successor expressly and unconditionally to assume and agree
to perform an Employer's obligations under this Plan, in the same manner and to
the same extent that the Employer would be required to perform if no such
succession had taken place. The term "Employer," as used in the Plan, shall
mean the Employer as hereinbefore defined and any successor or assignee to the
business or assets which by reason hereof becomes bound by this Plan.
ARTICLE VII
DURATION, AMENDMENT AND TERMINATION
7.1 Duration. If the Transaction has not occurred, the Plan shall
continue until amended or terminated by the Company. If the Transaction occurs,
the Plan shall continue in full force and effect and shall not terminate or
expire until all Participants who become entitled to any payments hereunder
shall have received such payments in full.
7.2 Termination and Amendment. The Plan shall be subject to amendment,
change, substitution, deletion, revocation or termination (collectively,
"Amendment") by the Company at any time prior to the Closing Date other than at
the request of a third party who has taken steps reasonably calculated to effect
the Transaction unless such third party request is a favorable or beneficial
Amendment for the Participants and is agreed to by the Company. On and after
the Closing Date, the Plan shall not be subject to Amendment in any respect
which adversely affects the rights of a Participant without the consent of that
Participant.
7.3 Form of Amendment. The form of any amendment of the Plan shall be a
written instrument signed by any person authorized to sign by the Board. An
amendment of the Plan in accordance with the terms hereof shall automatically
effect a corresponding amendment to all Participants' rights hereunder.
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ARTICLE VIII
MISCELLANEOUS
8.1 Employment Status. This Plan does not constitute a contract of
employment or impose on the Participant's Employer any obligation to retain the
Participant as an Employee, to change or not change the status of the
Participant's employment, or to change the Company's policies or those of its
Subsidiaries regarding termination of employment.
8.2 Administration. The Plan shall be administered (i) prior to the
Closing Date, by the Chairman of the Board and any individual or individuals to
whom he has delegated certain administrative responsibilities and (ii) on and
after the Closing Date, by the Chairman of the Board, the Chief Executive
Officer of the Company and any individual or individuals to whom they have
delegated certain administrative responsibilities (as applicable in each case,
the "Plan Administrator"). The Plan Administrator shall have the power to make
reasonable rules and regulations required in the administration of the Plan and
to make all determinations necessary for the Plan's administration, except those
determinations which the Plan requires others to make. The Plan Administrator
shall have full and complete authority to construe and interpret the Plan
whenever necessary to carry out its intent and purpose and to facilitate its
administration. In the exercise of such discretionary powers, the Plan
Administrator shall treat all Participants uniformly and equitably under the
Plan. The Plan Administrator shall have the exclusive right to make all
determinations hereunder regarding the participation and eligibility of
Employees for benefits, including, but not limited to, making determinations as
to the eligibility, the amount and benefits payable, the time at which benefits
cease to be payable, and other comparable issues, and the Plan Administrator's
good faith interpretation of the Plan shall be binding and conclusive on all
parties. Any dispute as to the eligibility, type, amount or duration of
benefits under the Plan shall be resolved as provided in Section 8.3 of the
Plan, with such resolution binding and final on all parties to the dispute. No
action may be brought for benefits provided under this Plan or any amendment or
novation thereof, or to enforce any right hereunder, until after the
administrative procedures set forth in Section 8.3 of the Plan have been
exhausted.
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8.3 Claim Procedure. If an Employee or former Employee makes a written
request alleging a right to receive benefits under this Plan or alleging a right
to receive an adjustment in benefits being paid under the Plan, the Company
shall treat it as a claim for benefits. All claims for benefits under the Plan
shall be sent to the Plan Administrator and must be received within 30 days
after termination of employment. If the Plan Administrator determines that any
individual who has claimed a right to receive benefits, or different benefits,
under the Plan is not entitled to receive all or any part of the benefits
claimed, the Plan Administrator will inform the claimant in writing of his
determination and the reasons therefore in terms calculated to be understood by
the claimant. The notice will be sent within 90 days of the claim unless the
Plan Administrator determines additional time, not exceeding 90 days, is needed.
The notice shall make specific reference to the pertinent Plan provisions on
which the denial is based, and describe any additional material or information
that is necessary. Such notice shall, in addition, inform the claimant what
procedure the claimant should follow to take advantage of the review procedures
set forth below in the event the claimant desires to contest the denial of the
claim. The claimant may within 90 days thereafter submit in writing to the
Company a notice that the claimant contests the denial of his or her claim by
the Plan Administrator and desires a further review. The Company shall within
60 days thereafter review the claim and authorize the claimant to appear
personally and review pertinent documents and submit issues and comments
relating to the claim to the persons responsible for making the determination on
behalf of the Company. The Company will render its final decision with specific
reasons therefore in writing and will transmit it to the claimant within 60 days
of the written request for review, unless the Company determines additional
time, not exceeding 60 days, is needed.
8.4 Withholding. All amounts payable pursuant to the terms of this Plan
shall be subject to reduction for any and all applicable federal, state or local
income and employment taxes and any other withholdings required to be made
therefrom at law.
8.5 Right of Recovery. The Company shall have the right to recover any
payment made to an Employee in excess of the amount to which the Employee is
entitled under the terms of this Plan. Such recovery may be from the Employee
or his or her beneficiary thereby enriched.
8.6 Spendthrift Provisions. No benefit, right or interest of any person
hereunder shall be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, seizure, attachment, or legal,
equitable, or other process, or be liable for, or subject to, the debts,
liabilities, or other obligations of such person, except as expressly authorized
or required by the Plan or otherwise required by a law enforceable with respect
to the Plan as determined in the sole and absolute discretion of the Plan
Administrator.
8.7 Validity and Severability. The invalidity or unenforceability of any
provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
8.8 Governing Law. To the extent not preempted by federal law, the
validity, interpretation, construction and performance of the Plan shall in all
respects be governed by the laws of the State of Delaware, without reference to
principles of conflict of law.
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EXHIBIT A
PENNZENERGY COMPANY SPECIAL SEVERANCE PLAN
RELEASE AND WAIVER OF CLAIMS
In connection with the anticipated merger by and among Devon Energy
Corporation, Devon Delaware Corporation, Devon Oklahoma Corporation and
PennzEnergy Company ("Transaction"), the undersigned employee ("Employee") is
eligible for Severance Benefits under the PennzEnergy Company Special Severance
Plan (the "Plan").
In consideration of the agreement of PennzEnergy Company, and, on and
after the closing date of the Transaction, Devon Energy Corporation
(collectively or individually, as applicable, "Company") to provide Employee the
benefits, payments and other items described in the Plan, some of which are in
addition to anything to which he/she is already entitled and the receipt and
sufficiency of which are hereby acknowledged, Employee hereby knowingly and
voluntarily releases and forever discharges PennzEnergy Company, Devon Energy
Corporation, Devon Delaware Corporation, Devon Oklahoma Corporation, Pennzoil-
Quaker State Company, and their officers, directors, agents, servants, and
employees, their successors, assigns, and insurers, and their parents,
subsidiaries and affiliates, and any and all persons, firms, organizations, and
corporations from any and all damages, losses, causes of action, expenses,
demands, liabilities, and claims on behalf of Employee, Employee's heirs,
executors, administrators, and assigns with respect to all matters relating to
Company and Employee hereby accepts the severance benefits and other items
described in full settlement of all such damages, losses, causes of action,
expenses, demands, liabilities, and claims Employee now has or may have with
respect to such matters, as evidenced by Employee's execution of this release
and waiver of claims agreement ("Release").
This Release includes, but is not limited to, claims arising under the
Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in
Employment Act, as amended; the Older Workers' Benefit Protection Act of 1990,
as amended; the Civil Rights Act of 1866, as amended; the Civil Rights Act of
1991; the Rehabilitation Act of 1973, as amended; the Americans with
Disabilities Act of 1990; the Worker Adjustment and Retraining Notification Act
of 1988; the Pregnancy Discrimination Act of 1978; the Equal Pay Act; the
Employee Retirement Income Security Act of 1974, as amended; the Family and
Medical Leave Act of 1993; the Fair Labor Standards Act; the Occupational Health
and Safety Act; the Texas Commission on Human Rights Act; the Texas Labor Code;
and any claims for breach of contract, tort, including, but not limited to,
fraudulent inducement or misrepresentation, defamation, slander, wrongful
termination or other retaliation claims in connection with workers' compensation
claims or whistleblower status or any claim under any other state or federal
statute or regulation, in equity or at common law.
Further, by accepting the payments described, Employee agrees not to
sue Company or the related persons and entities described above. Employee
affirms and agrees that his/her employment relationship has ended and waives all
rights in connection with such relationship except
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to vested benefits and the payments and benefits described in this Release.
Employee acknowledges that Company has not promised him/her continued employment
nor represented that Employee will be rehired in the future. In addition, in
signing this Release, Employee expressly represents that no promise or agreement
which is not expressed in this Release has been made to him/her and that
Employee is relying on his/her own judgment in signing this Release and is not
relying on any statement or representation of Company, its affiliates or any of
their agents. Employee acknowledges that Employee is signing with full knowledge
and consent which was not procured through fraud, duress or mistake and that
this Release has not had the effect of misleading or failing to inform Employee.
Employee shall have forty-five (45) days to decide whether to sign
this Release and be bound by its terms. Employee shall have the right to revoke
or cancel this Release within seven (7) days after Employee has signed it. This
cancellation or revocation can be accomplished by delivery of a written
notification to Company. In the event that this Release is canceled or revoked,
Company shall have no obligation to furnish the payments described in this
Release. EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS BEEN ADVISED IN WRITING TO
CONSULT WITH AN ATTORNEY PRIOR TO SIGNING THIS RELEASE AND HAS HAD AN ADEQUATE
OPPORTUNITY TO SEEK ADVICE OF HIS/HER OWN CHOOSING. Employee acknowledges that
he/she has read this Release, has had an opportunity to ask questions and have
it explained to him/her and that Employee understands that this Release will
have the effect of knowingly and voluntarily waiving any action Employee might
pursue, including breach of contract, personal injury, retaliation,
discrimination on the basis of race, age, gender, national origin, or disability
and any other claims arising prior to the date of this Release. Further,
Company agrees to Release Employee from all claims arising out of his/her
employment with Company.
Employee acknowledges that payment of Severance Benefits by Company is
not an admission by Company or its officers, directors, agents, servants, and
employees, their successors, assigns, and insurers, and their parents,
subsidiaries and affiliates, that they engaged in any wrongful or unlawful act
or violated any federal or state law or regulation.
Should any of the provisions set forth in this Release be determined
to be invalid by a court, agency or other tribunal of competent jurisdiction, it
is agreed such determination shall not affect the enforceability of other
provisions of this Release.
Employee acknowledges that this Release sets forth the entire
understanding and agreement between Employee and Company concerning the subject
matter of this Release and supersedes any prior or contemporaneous oral and/or
written agreements or representations, if any, between Employee and Company.
The purpose of the arrangements described in this Release is to arrive
at a mutually agreeable and amicable basis upon which to separate Employee's
employment with Company. Employee and Company agree to refrain from any
criticisms or disparaging comments about each other or in any way relating to
Employee's employment with or separation from Company.
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<PAGE>
Furthermore, Employee agrees that he/she has returned or will return
immediately, and will maintain in strictest confidence and not use in any way,
any proprietary, confidential, or other nonpublic information or documents
relating to the business and affairs of Company and its affiliates. For the
purposes of this Release, "proprietary, confidential or other nonpublic
information" shall mean any information concerning Company or its affiliates
which Employee developed or learned through his/her employment and which is not
generally known or available outside of Company. Such information, without
limitation, includes information, written or otherwise, regarding Company's
earnings, expenses, material sources, equipment sources, customers and
prospective customers, business plans, strategies, practices and procedures,
prospective and executed contracts, maps, computer files and other business
arrangements. Employee acknowledges and agrees that all records, papers,
reports, computer programs, strategies, documents (including, without
limitation, memoranda, notes, files and correspondence), opinions, evaluations,
inventions, ideas, technical data, products, services, processes, procedures,
and interpretations that are, or have been, produced by Employee or any other
employee, officer, director, agent, contractor, or representative of Company
whether provided in written or printed form, or orally, all comprise
confidential and proprietary business information. Employee understands and
agrees that in the event of any breach of this provision, or threatened breach,
by Employee, Company may, in its discretion, discontinue any or all payments
provided for in the Plan and recover any and all payments already made and
Company shall be entitled to apply to a court of competent jurisdiction for such
relief by way of specific performance, restraining order, injunction or
otherwise as may be appropriate to ensure compliance with this provision.
Employee further agrees that the existence and all terms of this
Release shall be kept strictly confidential and that any disclosure to anyone
for any purpose whatsoever (save and except disclosure to Employee's spouse,
financial advisors or institutions for financial statement purposes, attorney,
or as required by law) by Employee or his/her agents, representatives, heirs,
children, spouse, employees or spokespersons shall be a breach of this Release
and Company may elect either to cease performance hereunder or enforce this
Release; provided, however, in the event Company believes a breach of
confidentiality has occurred, Employee will be given notice and thirty (30) days
to respond.
Should Employee be contacted or served with legal process seeking to
compel Employee to disclose any such information, Employee agrees to notify
Company's General Counsel immediately, in order that Company may seek to resist
such process if it so chooses. If Employee is called upon to serve as a witness
or consultant in or with respect to any potential litigation, litigation, or
regulatory proceeding, Employee agrees to cooperate with Company to the full
extent permitted by law, and Company agrees that any such call shall be with
reasonable notice, shall not unnecessarily interfere with Employee's later
employment, and shall provide for payment for Employee's time and costs expended
in such matters.
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This Release shall be governed by and construed in accordance with the
laws of the State of Texas, and where applicable, the laws of the United States.
- ------------------------- -----------------------------
Employee Signature Company Representative
- ------------------------- -----------------------------
Date Signed Date Signed
- -------------------------
Employee Printed Name
4
<PAGE>
EXHIBIT 99.2
PENNZENERGY COMPANY
RETENTION PLAN
(As Established Effective May 19, 1999)
1. Purpose. The purpose of the PennzEnergy Company Retention Plan is to
(i) ensure the continued employment of all salaried and non-union hourly
employees of the PennzEnergy Company and its subsidiaries through the closing
date of the transaction contemplated by that certain Amended and Restated
Agreement and Plan of Merger by and among Devon Energy Corporation, Devon
Delaware Corporation, Devon Oklahoma Corporation and PennzEnergy Company, dated
as of May 19, 1999, and (ii) secure the continued services of certain key
employees through the earlier of November 30, 1999 or 60 days after the
transaction closing date.
2. Definitions.
(a) Base Salary. An Employee's annual base salary or wages with an
Employer in effect on the day immediately preceding the Effective Date,
including any salary reduction contributions made by such Employee under a
plan or arrangement designed to meet the requirements of Sections 125 and
401(k) of the Internal Revenue Code of 1986, as amended, or any non-
qualified deferred compensation plan or arrangement of the Company, but
excluding any payments made under the Plan and the Special Severance Plan.
(b) Board. Prior to the Closing Date, the Board of Directors of
PennzEnergy, and on and after the Closing Date, the Board of Directors of
Devon.
(c) Cause. Either (i) the continued failure of the Employee to perform
substantially the Employee's duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the Employee
which specifically identifies the manner in which the Company believes that
the Employee has not substantially performed the Employee's duties; or (ii)
the engaging by the Employee in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.
(d) Closing Date. The closing date of the Transaction, as defined in
Section 1.2 of the Merger Agreement.
(e) Company. Prior to the Closing Date, PennzEnergy, on and after the
Closing Date, Devon.
(f) Devon. Devon Energy Corporation, an Delaware corporation.
<PAGE>
(g) Effective Date. May 19, 1999.
(h) Employee. Any full-time salaried or non-union hourly employee of an
Employer, excluding, however, any individual who is (i) retained as an
independent contractor, (ii) a non-United States citizen working outside the
United States or (iii) exempt grade E5 or higher.
(i) Employer. The Company and each Subsidiary.
(j) Employment. Employment with an Employer.
(k) Key Employee. An Employee designated by the Chairman of the Board
or his designee as eligible to receive the "Retention Payment" under Section
5 of the Plan.
(l) Merger Agreement. The Amended and Restated Agreement and Plan of
Merger by and among Devon Energy Corporation, Devon Delaware Corporation,
Devon Oklahoma Corporation and PennzEnergy Company, dated as of May 19,
1999.
(m) Plan. The PennzEnergy Company Retention Plan.
(n) Special Severance Plan. The PennzEnergy Company Special Severance
Plan.
(o) PennzEnergy. PennzEnergy Company, a Delaware corporation.
(p) Subsidiary. Any corporation or other entity in which the Company,
directly or indirectly, holds a majority of the voting power or profits or
capital interest of such entity.
(q) Transaction. For purposes of this Plan, that certain transaction
contemplated by the Merger Agreement.
3. Continued Employment. The Company shall, subject to Section 12 of the
Plan, provide a commitment of continued Employment to each Employee as of the
Effective Date through the Closing Date in the same or similar position held on
the day immediately preceding the Effective Date and each such Employee shall
continue to earn his or her Base Salary during such Employment, payable in
accordance with the Company's normal payroll practices. In the event the Company
terminates an Employee, other than for Cause, the Company shall pay such
Employee his or her Base Salary through the Closing Date in addition to (and not
as a reduction or offset to any other severance or termination benefits
otherwise payable to such Employee) any benefits to which the Employee is
otherwise entitled under this Plan and the Special Severance Plan.
4. Retention Bonus. The Company shall pay to an Employee who (i) continues
his or her Employment through the Closing Date or (ii) is terminated by the
Company, other than for Cause, an annual bonus (in lieu of, and not in addition
to, any amount otherwise payable as an
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annual bonus, excluding any benefits provided in Section 5 of the Plan and the
Special Severance Plan) in an amount equal to 150% of the 1999 target bonus for
such Employee's salary grade under the Company's 1999 Annual Incentive Plan or
applicable Pay For Performance Plan, without regard to the Company's performance
in 1999 ("Retention Bonus"). An Employee who voluntarily terminates his or her
Employment, or whose Employment is terminated by reason of death or disability,
prior to the Closing Date shall not receive the Retention Bonus. The Retention
Bonus shall be paid in a lump sum cash payment no later than 10 working days
after the later of the Closing Date or the expiration of the 7-day revocation
period of the Release described in Section 6 of the Plan.
5. Retention Payment. In recognition and furtherance of the important
goal of retaining certain Key Employees to assist with and facilitate the
Transaction, the Company desires to provide an additional financial incentive to
such Key Employees to remain with the Company. Therefore, in addition to (and
not in lieu of) any other benefits under the Plan and the Special Severance
Plan, the Company shall pay to a Key Employee who agrees to continue his or her
Employment until the earlier of (i) November 30, 1999 or (ii) 60 days after the
Closing Date ("Retention Period") a payment equal to six (6) months of such Key
Employee's Base Salary ("Retention Payment"). The above notwithstanding, a Key
Employee who is terminated by the Company, other than due to Cause, prior to the
end of the Retention Period shall receive his or her full Retention Payment.
Any Key Employee who voluntarily terminates his or her Employment, or whose
Employment is terminated by death or disability, prior to November 30, 1999
shall receive a prorated Retention Payment equal to the amount of the Key
Employee's Retention Payment multiplied by a fraction, (i) the numerator of
which is the number of days employed during the period commencing on June 1,
1999 and ending on the date of termination of his or her Employment and (ii) the
denominator of which is 180; provided, however, the Company consents to such
early termination date. The Retention Payment (whether a full or prorated
payment) will be made in a lump sum cash payment no later than 10 working days
after the later of the end of the Retention Period or the expiration of the 7-
day revocation period of the Release described in Section 6 of the Plan. The
Retention Payment under this Section 5 will not be considered or otherwise
included for purposes of determining benefits provided to a Key Employee under
any other plan, agreement or program of the Company.
6. Release. Notwithstanding any provision to the contrary, payment of
the Retention Bonus and Retention Payment under Sections 4 and 5 of the Plan
shall be contingent upon the Employee's execution and return of a valid release
and waiver of claims ("Release") in the form attached as Exhibit A hereto, and
the expiration of the Release's 7 day revocation period. The Employee will be
required to enter into a separate Release with respect to both the Retention
Bonus and Retention Payment as a condition for receiving either benefit under
the Plan. The second such Release, if applicable, shall be in addition to, and
shall not supersede, the previous Release.
7. Other Benefits Payable. Except as otherwise provided, the benefits
payable hereunder shall be payable in addition to, and not in lieu of, all other
accrued or vested or earned but deferred compensation, rights, options or other
benefits that may be owed to an Employee upon or
3
<PAGE>
following termination, including, but not limited to, earned but unused
vacation, amounts or benefits payable under any bonus or other compensation
plan, stock option plan, stock ownership plan, stock purchase plan, life
insurance plan, health plan, disability plan or similar or successor plan.
8. Payment Obligation Absolute. The obligations of the Company or
Employers to pay or provide the benefits described in the Plan shall be absolute
and unconditional and shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company or an Employer may have against any Employee, subject to
Section 15 of the Plan. In no event shall an Employee be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to or benefits provided to an Employee under any of the provisions of
the Plan, nor shall the amount of any payment hereunder be reduced by any
compensation earned by or benefits provided to an Employee as a result of
employment by another employer.
9. Death of Employee. If an Employee entitled to a benefit under this
Plan dies before receipt of any benefits to which he or she is entitled under
the Plan, such benefit shall be paid to the Employee's spouse or, if none, to
the Employee's estate.
10. Amendment and Termination. If the Transaction has not occurred, the
Plan shall continue until amended or terminated by the Company. If the
Transaction occurs, the Plan shall continue in full force and effect and shall
not terminate or expire until all Participants who become entitled to any
payments hereunder shall have received such payments in full.
The Plan shall be subject to amendment, change, substitution, deletion,
revocation or termination (collectively, "Amendment") by the Company at any time
prior to the Closing Date other than at the request of a third party who has
taken steps reasonably calculated to effect the Transaction unless such third
party request is a favorable or beneficial Amendment for the Employees and is
agreed to by the Company. On and after the Closing Dates, the Plan shall not be
subject to Amendment in any respect which adversely affects the rights of an
Employee without the consent of that Employee.
The form of any Amendment of the Plan shall be a written instrument signed
by any person authorized to sign by the Board. An Amendment of the Plan in
accordance with the terms hereof shall automatically effect a corresponding
amendment to all Employees' rights hereunder.
This Plan shall automatically terminate after payment of all benefits
payable to all Employees or their Beneficiaries under the Plan.
11. Administration. The Plan shall be administered (i) prior to
the Closing Date, by the Chairman of the Board and any individual or individuals
to whom he has delegated certain administrative responsibilities and (ii) on and
after the Closing Date, by the Chairman of the Board, the Chief Executive
Officer of the Company and any individual or individuals to whom they have
delegated certain administrative responsibilities (as applicable in each case,
the "Plan
4
<PAGE>
Administrator"). The Plan Administrator shall have the power to make reasonable
rules and regulations required in the administration of the Plan and to make all
determinations necessary for the Plan's administration, except those
determinations which the Plan requires others to make. The Plan Administrator
shall have full and complete authority to construe and interpret the Plan
whenever necessary to carry out its intent and purpose and to facilitate its
administration. In the exercise of such discretionary powers, the Plan
Administrator shall treat all Employees uniformly and equitably under the Plan.
The Plan Administrator shall have the exclusive right to make all determinations
hereunder regarding the participation and eligibility of Employees for benefits,
including, but not limited to, making determinations as to the eligibility, the
amount and benefits payable, the time at which benefits cease to be payable, and
other comparable issues, and the Plan Administrator's good faith interpretation
of the Plan shall be binding and conclusive on all parties. Any dispute as to
the eligibility, type, amount or duration of benefits under the Plan shall be
resolved as provided in Section 14 of the Plan, with such resolution binding and
final on all parties to the dispute. No action may be brought for benefits
provided under this Plan or any amendment or novation thereof, or to enforce any
right hereunder, until after the administrative procedures set forth in Section
14 of the Plan have been exhausted.
12. Termination of Employment; Employment Status. Notwithstanding any
other provision of the Plan, the Company shall at all times prior to and on and
after the Closing Date have the right to terminate an Employee, with or without
Cause. The Plan does not constitute a contract of employment or impose on the
Company or any Employer any obligation to retain the Employee as an Employee, to
change or not change the status of the Employee's Employment, or to change the
policies of the Company or of its Subsidiaries regarding termination of
Employment.
13. Withholding. All amounts payable pursuant to the terms of this Plan
shall be subject to reduction for any and all applicable federal, state or local
income and employment taxes and any other withholdings required to be made
therefrom at law.
14. Claim Procedure. If an Employee or former Employee makes a written
request alleging a right to receive benefits under this Plan or alleging a right
to receive an adjustment in benefits being paid under the Plan, the Company
shall treat it as a claim for benefits. All claims for benefits under the Plan
shall be sent to the Plan Administrator and must be received within 30 days
after termination of employment. If the Plan Administrator determines that any
individual who has claimed a right to receive benefits, or different benefits,
under the Plan is not entitled to receive all or any part of the benefits
claimed, Plan Administrator will inform the claimant in writing of his
determination and the reasons therefore in terms calculated to be understood by
the claimant. The notice will be sent within 90 days of the claim unless the
Plan Administrator determines additional time, not exceeding 90 days, is needed.
The notice shall make specific reference to the pertinent Plan provisions on
which the denial is based, and describe any additional material or information
that is necessary. Such notice shall, in addition, inform the claimant what
procedure the claimant should follow to take advantage of the review procedures
set forth below in the event the claimant desires to contest the denial of the
claim. The claimant may within 90 days thereafter submit in writing to the
Company a notice that the claimant contests the denial of his or her claim by
the Plan
5
<PAGE>
Administrator and desires a further review. The Company shall within 60 days
thereafter review the claim and authorize the claimant to appear personally and
review pertinent documents and submit issues and comments relating to the claim
to the persons responsible for making the determination on behalf of the
Company. The Company will render its final decision with specific reasons
therefore in writing and will transmit it to the claimant within 60 days of the
written request for review, unless the Company determines additional time, not
exceeding 60 days, is needed.
15. Right of Recovery. The Company shall have the right to recover any
payment made to an Employee in excess of the amount to which the Employee is
entitled under the terms of this Plan. Such recovery may be from the Employee
or the Beneficiary thereby enriched.
16. Spendthrift Provisions. No benefit, right or interest of any person
hereunder shall be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, seizure, attachment, or legal,
equitable, or other process, or be liable for, or subject to, the debts,
liabilities, or other obligations of such person, except as expressly authorized
or required by the Plan or otherwise required by a law enforceable with respect
to the Plan as determined in the sole and absolute discretion of the Plan
Administrator.
17. Governing Law. To the extent not preempted by federal law, the
validity, interpretation, construction and performance of the Plan shall in all
respects be governed by the laws of the State of Delaware, without reference to
principles of conflict of law.
18. Validity and Severability. The invalidity or unenforceability of any
provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
19. Captions. The captions contained herein are inserted only as a matter
of convenience and for reference and in no way define, limit, enlarge or
describe the scope or intent of the Plan, and in no way shall affect the Plan or
the construction of any provisions thereof.
20. No Duplicate Benefits. No Employee shall be entitled to benefits under
the Plan for more than one position. The benefits payable shall be the highest
level of benefits to which the Employee is entitled by virtue of his title.
6
<PAGE>
EXHIBIT A
PENNZENERGY COMPANY RETENTION PLAN
RELEASE AND WAIVER OF CLAIMS
In connection with the anticipated merger by and among Devon Energy
Corporation, Devon Delaware Corporation, Devon Oklahoma Corporation and
PennzEnergy Company ("Transaction"), the undersigned employee ("Employee") is
eligible for a [Retention Bonus][Retention Payment] under the PennzEnergy
Company Retention Plan (the "Plan").
In consideration of the agreement of PennzEnergy Company and, on and
after the closing date of the Transaction, Devon Energy Corporation
(collectively or individually, as applicable, "Company") to pay Employee the
[Retention Bonus][Retention Payment] under the Plan, the receipt and sufficiency
of which are hereby acknowledged, Employee hereby knowingly and voluntarily
releases and forever discharges PennzEnergy Company, Devon Energy Corporation,
Devon Delaware Corporation, Devon Oklahoma Corporation, Pennzoil-Quaker State
Company, and their officers, directors, agents, servants, and employees, their
successors, assigns, and insurers, and their parents, subsidiaries and
affiliates, and any and all persons, firms, organizations, and corporations from
any and all damages, losses, causes of action, expenses, demands, liabilities,
and claims on behalf of Employee, Employee's heirs, executors, administrators,
and assigns with respect to all matters relating to Company and Employee hereby
accepts this payment in full settlement of all such damages, losses, causes of
action, expenses, demands, liabilities, and claims Employee now has or may have
with respect to such matters, as evidenced by Employee's execution of this
release and waiver of claims agreement ("Release").
This Release includes, but is not limited to, claims arising under the
Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in
Employment Act, as amended; the Older Workers' Benefit Protection Act of 1990,
as amended; the Civil Rights Act of 1866, as amended; the Civil Rights Act of
1991; the Rehabilitation Act of 1973, as amended; the Americans with
Disabilities Act of 1990; the Worker Adjustment and Retraining Notification Act
of 1988; the Pregnancy Discrimination Act of 1978; the Equal Pay Act; the
Employee Retirement Income Security Act of 1974, as amended; the Family and
Medical Leave Act of 1993; the Fair Labor Standards Act; the Occupational Health
and Safety Act; the Texas Commission on Human Rights Act; the Texas Labor Code;
and any claims for breach of contract, tort, including, but not limited to,
fraudulent inducement or misrepresentation, defamation, slander, wrongful
termination or other retaliation claims in connection with workers' compensation
claims or whistleblower status or any claim under any other state or federal
statute or regulation, in equity or at common law.
Further, by accepting the payments described, Employee agrees not to
sue Company or the related persons and entities described above. Employee
acknowledges that Company has not promised him/her continued employment nor
represented that Employee will be rehired in the future. In addition, in
signing this Release, Employee expressly represents that no promise or agreement
<PAGE>
which is not expressed in this Release has been made to Employee and that he/she
is relying on his/her own judgment in signing this Release and is not relying on
any statement or representation of Company, its affiliates or any of their
agents. Employee acknowledges that he/she is signing this Release with full
knowledge and consent which was not procured through fraud, duress or mistake
and that this Release has not had the effect of misleading or failing to inform
Employee.
Employee shall have forty-five (45) days to decide whether to sign
this Release and be bound by its terms. Employee shall have the right to revoke
or cancel this Release within seven (7) days after he/she has signed it. This
cancellation or revocation can be accomplished by delivery of a written
notification to Company. In the event that this Release is canceled or revoked,
Company shall have no obligation to furnish the payments described in this
Release. EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS BEEN ADVISED IN WRITING TO
CONSULT WITH AN ATTORNEY PRIOR TO SIGNING THIS RELEASE AND HAS HAD AN ADEQUATE
OPPORTUNITY TO SEEK ADVICE OF HIS/HER OWN CHOOSING. Employee acknowledges that
he/she has read this Release, has had an opportunity to ask questions and have
it explained to him/her and that he/she understands that this Release will have
the effect of knowingly and voluntarily waiving any action Employee might
pursue, including breach of contract, personal injury, retaliation,
discrimination on the basis of race, age, gender, national origin, or disability
and any other claims arising prior to the date of this Release. Further,
Company agrees to release Employee from all claims arising out of his/her
employment with Company.
Employee acknowledges that payment of this [Retention Bonus][Retention
Payment] by Company is not an admission by Company or its officers, directors,
agents, servants, and employees, their successors, assigns, and insurers, and
their parents, subsidiaries and affiliates that they engaged in any wrongful or
unlawful act or violated any federal or state law or regulation.
Should any of the provisions set forth in this Release be determined
to be invalid by a court, agency or other tribunal of competent jurisdiction, it
is agreed such determination shall not affect the enforceability of other
provisions of this Release.
Employee acknowledges that this Release sets forth the entire
understanding and agreement between Employee and Company concerning the subject
matter of this Release and supersedes any prior or contemporaneous oral and/or
written agreements or representations, if any, between Employee and Company.
Employee further agrees that the existence and all terms of this
Release shall be kept strictly confidential and that any disclosure to anyone
for any purpose whatsoever (save and except disclosure to Employee's spouse,
financial advisors or institutions for financial statement purposes, attorney,
or as required by law) by Employee or his/her agents, representatives, heirs,
children, spouse, employees or spokespersons shall be a breach of this Release
and Company may elect either to cease performance hereunder or enforce this
Release; provided, however, in the event Company believes a breach of
confidentiality has occurred, Employee will be given notice and thirty (30) days
to respond.
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<PAGE>
Should Employee be contacted or served with legal process seeking to
compel him/her to disclose any such information, Employee agrees to notify
Company's General Counsel immediately, in order that Company may seek to resist
such process if it so chooses. If Employee is called upon to serve as a witness
or consultant in or with respect to any potential litigation, litigation, or
regulatory proceeding, Employee agrees to cooperate with Company to the full
extent permitted by law, and Company agrees that any such call shall be with
reasonable notice, shall not unnecessarily interfere with Employee's later
employment, and shall provide for payment for Employee's time and costs expended
in such matters.
This Release shall be governed by and construed in accordance with the
laws of the State of Texas, and where applicable, the laws of the United States.
- --------------------------- ---------------------------------
Employee Signature Company Representative
- --------------------------- ---------------------------------
Date Signed Date Signed
- ---------------------------
Employee Printed Name
3
<PAGE>
EXHIBIT 99.3
August 13, 1999
Mr. Stephen D. Chesebro'
5473 Sugar Hill Drive
Houston, Texas 77056
Dear Steve:
In connection with your anticipated separation from PennzEnergy
Company (the "Company") and in consideration of your service to the Company, you
and Company have agreed to the terms and conditions as contained in this letter
agreement ("Agreement") and the attachment to this Agreement ("Attachment")
concerning your separation from employment which you and the Company believe
will occur on the close of business of the date occurring sixty (60) days after
the closing date ("Closing Date") of the transaction occurring pursuant to that
certain Amended and Restated Agreement and Plan of Merger by and among Devon
Energy Corporation, Devon Delaware Corporation, Devon Oklahoma Corporation and
PennzEnergy Company, dated as of May 19, 1999. You agree to remain employed by
the Company until the date occurring sixty (60) days after the Closing Date
(your "Separation Date") and the Company agrees to employ you under the terms
and conditions of your employment as currently in place.
In consideration of Company's agreement to provide the benefits,
payments, and other items described in the Attachment, a substantial portion of
which are in addition to anything to which you are already entitled and the
receipt and sufficiency of which are hereby acknowledged:
1. Release. Effective on the Separation Date, you agree to release
and forever discharge the Company, its officers, directors, agents,
servants, and employees, their successors, assigns, and insurers and their
parents, subsidiaries and affiliates, and any and all other persons, firms,
organizations, and corporations (except as provided in this Agreement and
the Attachment), from any and all damage, losses, causes of action,
expenses, demands, liabilities, and claims on behalf of yourself, your
heirs, executors, administrators, and assigns with respect to all matters
relating to the Company and you hereby accept the cash payments, benefits,
and other items described herein in full settlement of all such damages,
losses, causes of action, expenses, demands, liabilities, and claims you
now have or may have with respect to such matters.
<PAGE>
This release includes, but is not limited to, claims arising
under the Age Discrimination in Employment Act, the Older Workers' Benefit
Protection Act, Title VII of the Civil Rights Act of 1964, the Americans
with Disabilities Act, the Family and Medical Leave Act, the Texas Labor
Code, any state or federal statute, regulation or common law pertaining to
"whistleblowers," claims for breach of contract, tort or personal injury of
any sort, and any claim under any other state or federal statute or
regulation, in equity or at common law. Further, by accepting the payments
described in the Attachment, you agree not to sue the Company or the
related persons and entities described above. You affirm and agree that
your employment relationship will end on your Separation Date, and you
withdraw unequivocally, completely, and finally from your employment, you
resign all positions, titles, responsibilities and authority as an officer
or employee of the Company and its affiliates and waive all rights in
connection with such relationship except to vested benefits and the
payments and benefits described in the Attachment. You agree that is
Agreement is valid, fair, adequate and reasonable, was entered into with
your full knowledge and consent, and was not procured through fraud, duress
or mistake. You shall have twenty-one (21) days to decide whether to sign
the Agreement and be bound by its terms. You shall have the right to
revoke or cancel it within seven (7) days after you have signed it. This
cancellation or revocation can be accomplished by delivery of a written
notification to me. In the event that this Agreement is canceled or
revoked, the Company shall have no obligation to furnish the payments and
benefits described herein and in the Attachment, except for vacation pay
described in paragraph 1 of the Attachment, office space and secretarial
assistance as described in paragraph 14 of the Attachment, and any rights
to the Company's Retirement Plan, Savings and Investment Plan, stock
options and conditional stock awards that are vested as of your Separation
Date. You acknowledge that you have been advised in writing to consult
with an attorney prior to signing this Agreement and have had an adequate
opportunity to seek advice of your own choosing. You acknowledge that you
have read this Agreement, have had an opportunity to ask questions and have
it explained to you and that you understand that the Agreement will have
the effect of knowingly and voluntarily waiving any action you might
pursue, including breach of contract, personal injury, retaliation,
discrimination on the basis of race, age, sex, national origin, or
disability and any other claims arising prior to the date of the Agreement.
2. Consulting Agreement. You hereby agree to provide consulting
services to the Company for the period commencing as of your Separation
Date and ending as of the second anniversary of your Separation Date. The
services you provide shall be as an independent contractor and shall be
with respect to those matters with which you are suitably experienced and
knowledgeable by reason of your education, training, and background and
your prior employment with the Company, including litigation matters. You
agree to cooperate and freely consult with the Company, its management,
board or directors, attorneys and other representatives upon request from
time to time and at any time respecting any matters relating to the
Company, its business or properties, including, without limitation, any
loss contingencies, disputes, investigations, litigation or other
proceedings or problems affecting the Company. The Company and you agree
to work out reasonable
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accommodations for the provision of such consulting services so that they
do not unreasonably interfere with any of your other personal affairs or
business endeavors. No services shall be requested of you except by the
Chairman of the Board of Directors or Chief Executive Officer of the
Company.
The Company will reimburse you for any reasonable travel or other
business expenses incurred in connection with providing such consulting
services, but you shall not be entitled to any other compensation for
consulting other than that described in this Agreement and the Attachment
thereto.
3. Noncompete Agreement. You hereby agree that, during the period
commencing as of your Separation Date and ending as of the second
anniversary of your Separation Date, in the areas of Azerbaijan, Kuwait,
the Raton Basin in Colorado and New Mexico, and for businesses related to
carbon dioxide (CO2) transportation, marketing, processing, and tertiary
recovery projects in the Permian Basin of West Texas and Southeast New
Mexico (the "Relevant Geographic Area") you will not (i) accept employment
or render service to any person that is engaged in a business directly
competitive with the business then engaged in by the Company or any of its
affiliates or (ii) enter into or take part in or lend your name as
principal, director, officer, executive, independent contractor, partner or
advisor, or accept employment for any purpose that would be competitive
with the business of the Company or any of its affiliates (all of the
foregoing activities are collectively referred to as the "Prohibited
Activity"); provided, however, you may serve as a director of a business
that is competitive with the Company in the Relevant Geographic Area, if
you and such business agree that you cannot and will not as a director act
or otherwise advise that business on any matter involving the Relevant
Geographic Area.
It shall not be considered a violation of this Agreement for you
to be a passive investor in any enterprise that might be viewed as a
competitor of the Company.
In addition to all other remedies at law or in equity which the
Company may have for breach of a provision of this paragraph 3, it is
agreed that in the event of any breach or attempted or threatened breach of
any such provision, the Company shall be entitled, upon application to any
court of proper jurisdiction, to a temporary restraining order or
preliminary injunction (without the necessity of (i) proving irreparable
harm, (ii) establishing that monetary damages are inadequate or (iii)
posting any bond with respect thereto) against you prohibiting such breach
or attempted or threatened breach by proving only the existence of such
breach or attempted or threatened breach. If the provisions of this
paragraph 3 should ever be deemed to exceed the time, geographic or
occupational limitations permitted by the applicable law, you and the
Company agree that such provisions shall be and are hereby reformed to the
maximum time, geographic or occupational limitations permitted by the
applicable law.
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You acknowledge, agree and stipulate that: (i) the terms and
provisions of this agreement are reasonable and constitute an otherwise
enforceable agreement to which the terms and provisions of this paragraph
are ancillary or a part of as contemplated by Tex. Bus. & Com. Code Ann.
(S)(S) 15.50-15.52, or any successor provisions; (ii) the consideration
provided by the Company under this agreement is not illusory; and (iii) the
consideration given by the Company under this agreement, gives rise to the
Company's interest in restraining and prohibiting you from engaging in the
Prohibited Activity within the Relevant Geographic Area as provided under
this paragraph 3, and your covenant not to engage in the Prohibited
Activity within the Relevant Geographic Area pursuant to this paragraph 3
is designed to enforce your consideration (or return promises). The
failure of the agreements in this paragraph shall not constitute a breach
of this Agreement.
If the Company initiates a judicial proceeding against you to
enforce this paragraph 3 and the Company does not prevail in whole or part,
the Company shall pay your reasonable attorney's fees.
4. Confidentiality Agreement. You agree to hold for the benefit of
the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliates, and their respective
businesses, which shall have been obtained by you during your employment by
the Company or any of its affiliates and which shall not be or become
public knowledge (other than acts by you or representatives of you in
violation of this Agreement or the other terms and conditions of your
employment by the Company). You agree that you will not, without the prior
written consent of the Company or as may be otherwise required by law or
legal process, communicate or divulge any such secret or confidential
information, knowledge or data relating to the Company or any of its
affiliates and their respective businesses to anyone other than the Company
and those designated by it.
5. Benefits Under All Other Agreements, Arrangements, and Plans. You
hereby agree that the benefits, payments and other items described in this
Agreement and the Attachment supersede, replace, and are in lieu of any and
all benefits, payments or other items that may have been due to you under
any other agreements, arrangements or plans with, or of, the Company,
except as otherwise provided herein and in the Attachment.
You and the Company further agree that the benefits, payments and
other items described in this Agreement and the Attachment do not result in
an excess parachute payment within the meaning of Section 280G of the
Internal Revenue Code ("Code") and do not result in the imposition of the
excise tax under Code Section 4999. The failure of the agreements in the
prior sentence shall not constitute a breach of this Agreement.
Accordingly, you and the Company agree to reflect this treatment on the
appropriate federal income tax returns and you agree that your 1999 return
shall be prepared by Arthur Andersen LLP. The expenses incurred with
respect to your 1999 return insofar as they relate to Section 280G of the
Code shall be borne by the Company.
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6. Resignation Letter. You agree that a condition to the
effectiveness of this Agreement is your execution and prompt return to the
Company of the executed resignation letter attached to this Agreement as
Exhibit A to be effective as of your Separation Date concerning officer,
director and other positions held by you in the Company or its affiliates.
7. Indemnification and Insurance. In accordance with the laws of the
State of Delaware, and in compliance with and pursuant to the express terms
of Paragraph 1 of Article VII of the bylaws of the Company, the Company
agrees to indemnify you and to advance expenses incurred by you. The
Company also agrees that you will continue to receive liability insurance
for your services to the Company for so long as and to the maximum extent
that any other officer or director of the Company receives coverage.
8. Remedies. The Company shall have the right to sue in law or in
equity for injunctions, specific performance or damages, but shall have no
right of offset against amounts or benefits payable by the Company pursuant
to the Agreement or otherwise.
The purpose of the arrangements described in this Agreement and the
Attachment is to arrive at a mutually agreeable and amicable basis upon which to
separate your employment with the Company. You and the Company agree to refrain
from any criticisms or disparaging comments about each other or in any way
relating to your employment with or separation from the Company. Furthermore,
you agree that you have returned or will return immediately, and to maintain in
strictest confidence and not to use in any way, any proprietary, confidential,
or other non-public information or documents relating to the business and
affairs of the Company and its affiliates. You agree to refer all media,
shareholder and investment or financial community inquiries regarding the
Company to the Company without comment or other response to such inquiry.
You further agree that the existence and all terms of this Agreement,
including the terms and conditions contained in the Attachment, shall be kept
strictly confidential and that any disclosure to anyone for any purpose
whatsoever (save and except disclosure to your spouse, to financial institutions
as part of a financial statement, to immediate family members and/or heirs, to
financial, tax and legal advisors, or as required by law) by you or your agents,
representatives, heirs, children, spouse, employees or spokespersons shall be a
breach of this Agreement.
Nothing in this Agreement shall preclude you from providing
information if required by law or if mandated by subpoena or a court to do so.
The Agreement and its provisions shall not be disclosed by the Company to anyone
other than its Board of Directors, its legal counsel and its accountants,
without your prior written approval, unless otherwise required by law; provided,
however, that the Company may disclose the terms of the Agreement and the
Attachment to such of its employees or other advisors as may be reasonably
necessary.
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This Agreement has been approved by the Board of Directors of the
Company.
This Agreement shall be conditioned upon the occurrence of the Closing
Date and shall be null and void if the Closing Date does not occur by December
31, 1999.
Very truly yours,
James L. Pate
Chairman of the Board
AGREED TO AND ACCEPTED this
_____ day of ___________, 1999
- -----------------------------
Stephen D. Chesebro'
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Attachment to the Agreement dated August 2, 1999
1. VACATION
You will be paid a lump sum cash payment, subject to applicable FICA
and income tax withholding obligations, as soon as is practicable after your
Separation Date, for all your 1999 earned vacation days, less any vacation days
taken in 1999, plus all of your accrued vacation days through your Separation
Date.
2. SALARY, RETENTION BONUS AND RETENTION PAYMENT
You will receive your regular base salary, paid in biweekly amounts
equal to $23,076.92, subject to applicable FICA and income tax withholding
obligations, until your Separation Date.
Upon your Separation Date, you will receive within 10 days thereafter
an amount equal to 150% of your 1999 target bonus, or $585,000, in a lump-sum
cash payment ("Retention Bonus"), subject to applicable FICA and income tax
withholding obligations. This Retention Bonus shall be in lieu of any other
bonus or similar type of payment you may have otherwise been or become eligible
to receive during 1999.
Upon your Separation Date, in addition to your regular base salary,
you will also receive within 10 days thereafter a lump-sum cash payment of
$300,000 ("Retention Payment"), subject to applicable FICA and income tax
withholding obligations.
3. NONCOMPETE AND CONSULTING AGREEMENTS
In return for your agreement to be bound by the noncompete and
consulting agreements in the Agreement, you will receive within 10 days after
your Separation Date separate and additional compensation a lump-sum cash
payment of $1,200,000, subject to applicable tax withholding obligations.
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4. DEFERRED COMPENSATION AGREEMENT
Commencing in the first month following your Separation Date, you will
receive benefits under your Deferred Compensation Agreement, dated as of April
2, 1999 ("DCA"), equal to a monthly amount of $28,500, reduced by (i) any
benefits provided to you under the Company's tax-qualified defined benefit plan
or related defined benefit portion of the Company's excess benefit plan, (ii)
your prior employer benefit of $5,063 per month and (iii) your social security
benefits, and subject to applicable FICA and income tax withholding obligations,
for your life, in accordance with the terms and conditions your DCA. Should you
predecease your spouse, your spouse will receive benefits under your DCA equal
to a monthly amount of $14,250, reduced by your prior employer surviving spouse
benefit of $2,513.50 per month and social security benefits and subject to
applicable income tax withholding obligations, for her life, subject to the
terms and conditions of your DCA. All benefits under your DCA will paid on a
monthly basis.
5. MEDICAL AND DENTAL COVERAGE
Subject to your payment of applicable premiums, in accordance with the
terms and conditions of your DCA and for so long as you and your spouse receive
benefits under your DCA, beginning as of your Separation Date, you and your
spouse will be entitled to reimbursement of medical and dental expenses under
the PennzEnergy Company Medical Expenses Reimbursement Plan, formerly the
Pennzoil Company Medical Expense Reimbursement Plan (copy attached hereto as
Exhibit B), to the same extent as if your coverage under such plan as of the
date hereof had continued in full force and effect.
6. LIFE INSURANCE AND AD&D
You will have a thirty-one (31) day period after the end of your
Separation Date to convert the balance of your employee life insurance,
according to the terms and conditions in effect at that time. In addition, AD&D
may be converted, according to the terms and conditions in effect at that time.
Application must be made to the insurance company. It will be your
responsibility to complete the conversion process if you so desire.
7. STD/LTD
Short-and long-term disability coverage are not in effect after your
Separation Date.
8. RETIREMENT PLAN
You will receive a letter from the Benefits Department at a later date
after your Separation Date outlining your retirement benefit and related
conditions.
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<PAGE>
9. SAVINGS AND INVESTMENT PLAN AND RELATED PORTION OF EXCESS BENEFIT PLAN
ACCOUNT
Your employee accounts under the Company's Savings and Investment Plan
are 100% vested. Employer matching accounts under the Savings and Investment
Plan and the related portion of your Excess Benefit Agreement balance will be
vested as of the Closing Date and will be distributed according to provisions of
the plan and agreement. The forms that you must complete to receive a
distribution from the plan and agreement will be mailed to you at a later date.
10. STOCK OPTIONS
All of your stock options granted prior to 1999 are fully vested as a
result of the transaction occurring pursuant to that certain Agreement and Plan
of Merger, dated as of April 14, 1998, among Pennzoil Company, Pennzoil Products
Company, Downstream Merger Company and Quaker State Corporation
("Pennzoil/Quaker State Agreement"). All of your stock options granted in 1999
will be fully vested as of your Separation Date. Your vested stock options will
remain outstanding for the remainder of their ten-year term subject to the terms
of the applicable stock option agreement. Your stock options outstanding as of
the date of the Agreement are set forth in Schedule A attached hereto.
11. CONDITIONAL STOCK AWARD
All of your conditional stock units are "Matured Units" as a result of
the transaction occurring pursuant to the Pennzoil/Quaker State Agreement. All
of your Matured Units will continue to be payable under the normal payment
schedule provided under the applicable awards. Your conditional stock units
outstanding as of the date of the Agreement are set forth in Schedule A attached
hereto.
12. SALARY CONTINUATION PLAN
Your participation in the Salary Continuation Plan is terminated as of
your Separation Date.
13. DIRECTORS AND OFFICERS LIABILITY COVERAGE
You will continue to be covered under the Company's directors and
officers liability policy for events occurring prior to your Separation Date.
14. OFFICE SPACE
In accordance with Paragraph 20 of your Employment Agreement with the
Company, dated as of February 10, 1997, as amended July 1, 1997, the Company
will continue its obligation to provide to you reimbursement for the cost of
office space and secretarial assistance on the basis consistent with that
provided to you by your former employer through December 31, 2000; provided,
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however, that in no event shall the provisions of such office space and
secretarial assistance exceed $35,000 in during any 12-month period.
15. TAX PROTECTION AGREEMENT
Your Tax Protection Agreement with the Company will be preserved and
remain in force after your Separation Date.
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EXHIBIT 99.4
August 13, 1999
Mr. Donald A. Frederick
1706 Beacon Cove Court
Katy, Texas 77450
Dear Don:
In connection with your anticipated separation from PennzEnergy
Company (the "Company") and in consideration of your service to the Company, you
and Company have agreed to the terms and conditions as contained in this letter
agreement ("Agreement") and the attachment to this Agreement ("Attachment")
concerning your separation from employment as of the close of business on
December 31, 1999 ("Separation Date").
In consideration of the Company's agreement to provide the benefits,
payments, and other items described in the Attachment, which are in addition to
anything to which you are already entitled and the receipt and sufficiency of
which are hereby acknowledged, you hereby release and forever discharge the
Company, its officers, directors, agents, servants, and employees, their
successors, assigns, and insurers (except you shall retain all rights to (i)
coverage, if any, under director's and officer's fiduciary errors and omissions
and other liability insurance policies that by their terms would apply to your
acts and omissions while serving the Company, its subsidiaries and affiliates,
and their respective officers, directors, agents, servants, employees, and their
successors and assigns, and (ii) any indemnification arrangements with the
Company (including pursuant to the Company's Bylaws) that applies to your
service to the Company, its subsidiaries and affiliates), and their parents,
subsidiaries and affiliates, and any and all other persons, firms,
organizations, and corporations from any and all damages, losses, causes of
action, expenses, demands, liabilities, and claims on behalf of yourself, your
heirs, executors, administrators, and assigns with respect to all matters
relating to the Company and you hereby accept the cash payments, benefits, and
other items described herein in full settlement of all such damages, losses,
causes of action, expenses, demands, liabilities, and claims you now have or may
have with respect to such matters.
This release includes, but is not limited to, claims arising under the
Age Discrimination in Employment Act, the Older Workers' Benefit Protection Act,
Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act,
the Family and Medical Leave Act, the Texas Labor Code, any state or federal
statute, regulation or common law pertaining to "whistleblowers," claims for
breach of contract, tort or personal injury of any sort, and any claim under any
other state or federal statute or regulation, in equity or at common law.
Further, by accepting the payments described in the Attachment, you agree not to
sue Company or the related
<PAGE>
persons and entities described above. You affirm and agree that your employment
relationship will end on your Separation Date, and you withdraw unequivocally,
completely, and finally from your employment, you resign all positions, titles,
responsibilities and authority as an officer or employee of the Company and its
affiliates and waive all rights in connection with such relationship except to
vested benefits and the payments and benefits described in the Attachment. You
agree that this Agreement is valid, fair, adequate and reasonable, was entered
into with your full knowledge and consent, and was not procured through fraud,
duress or mistake. You shall have twenty-one (21) days to decide whether to sign
the Agreement and be bound by its terms. You shall have the right to revoke or
cancel it within seven (7) days after you have signed it. This cancellation or
revocation can be accomplished by delivery of a written notification to me. In
the event that this Agreement is canceled or revoked, the Company shall have no
obligation to furnish the payments and benefits described herein and in the
Attachment, except for vacation pay described in paragraph 1 of the Attachment
and any rights to the Company's Retirement Plan, Savings and Investment Plan,
stock options and conditional stock awards that are vested as of your Separation
Date. You acknowledge that you have been advised in writing to consult with an
attorney prior to signing this Agreement and have had an adequate opportunity to
seek advice of your own choosing. You acknowledge that you have read this
Agreement, have had an opportunity to ask questions and have it explained to you
and that you understand that the Agreement will have the effect of knowingly and
voluntarily waiving any action you might pursue, including breach of contract,
personal injury, retaliation, discrimination on the basis of race, age, sex,
national origin, or disability and any other claims arising prior to the date of
the Agreement.
You hereby agree that the benefits, payments and other items described
in this Agreement and the Attachment supersede, replace, and are in lieu of any
and all benefits, payments or other items that may have been due to you under
any other agreements, arrangements or plans with, or of, the Company, except as
otherwise provided herein and in the Attachment.
You and the Company further agree that the benefits, payments and
other items described in this Agreement and the Attachment do not result in an
excess parachute payment within the meaning of Section 280G of the Internal
Revenue Code ("Code") and do not result in the imposition of the excise tax
under Code Section 4999. Accordingly, you and the Company agree to reflect this
treatment on the appropriate federal income tax returns.
The purpose of the arrangements described in this Agreement and the
Attachment is to arrive at a mutually agreeable and amicable basis upon which to
separate your employment with the Company. You and the Company agree to refrain
from any criticisms or disparaging comments about each other or in any way
relating to your employment with or separation from the Company. Furthermore,
you agree that you have returned or will return immediately, and to maintain in
strictest confidence and not to use in any way, any proprietary, confidential,
or other non-public information or documents relating to the business and
affairs of the Company and its affiliates. You agree to refer all media,
shareholder and investment or financial community inquiries regarding the
Company to the Company without comment or other response to such inquiry.
You further agree that the existence and all terms of this Agreement,
including the terms and conditions contained in the Attachment, shall be kept
strictly confidential and that any
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<PAGE>
disclosure to anyone for any purpose whatsoever (save and except disclosure to
your spouse, to financial institutions as part of a financial statement, to
immediate family members and/or heirs, to financial, tax and legal advisors, or
as required by law) by you or your agents, representatives, heirs, children,
spouse, employees or spokespersons shall be a breach of this Agreement and the
Company may elect to cease performance hereunder or enforce this Agreement from
further performance hereunder.
Very truly yours,
_______________________________
James L. Pate
Chairman of the Board
AGREED TO AND ACCEPTED this
_____ day of __________________, 1999
______________________________________
Donald A. Frederick
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<PAGE>
Attachment to the Agreement dated August 13, 1999
1. VACATION
You will be paid on a biweekley basis, subject to applicable FICA and
income tax withholding obligations and any other applicable deductions,
beginning on the day immediately following your Separation Date, all your 1999
earned vacation days, less any vacation days taken in 1999, plus all of your
accrued vacation days through your Separation Date.
2. SALARY, RETENTION BONUS AND RETENTION PAYMENT
You will receive your regular base salary, paid in biweekly amounts
equal to $14,053.85, subject to applicable FICA and income tax withholding
obligations and any other applicable deductions, until your Separation Date.
This will be without regard to adjustments which may be made in your reporting
relationship or duty assignments from the Closing Date, as defined below,
through your Separation Date.
As soon as reasonably practicable after the closing date ("Closing
Date") of the transaction occurring pursuant to that certain Amended and
Restated Agreement and Plan of Merger by and among Devon Energy Corporation,
Devon Delaware Corporation, Devon Oklahoma Corporation and PennzEnergy Company,
dated as of May 19, 1999, under the PennzEnergy Company Retention Plan (the
"Retention Plan") you will receive an amount equal to 150% of your 1999 target
bonus pursuant to the Company's 1999 Annual Incentive Plan, or $328,860, in a
lump-sum cash payment ("Retention Bonus"), subject to applicable FICA and income
tax withholding obligations and any other applicable deductions. This Retention
Bonus shall be in lieu of any other bonus or similar type of payment you may
have otherwise been or become eligible to receive during 1999.
In addition, you have been designated a "Key Employee" under the
Retention Plan. As soon as reasonably practicable after the earlier of (i)
November 30, 1999 or (ii) 60 days after the Closing Date, you will receive a
lump-sum cash payment of $182,700 under such plan, subject to applicable FICA
and income tax withholding obligations and any other applicable deductions.
3. SEVERANCE PAYMENTS
You will be paid on a biweekly basis during the period beginning on
the day after the end of the period during which you are paid for your vacation
days and ending eighteen (18) months later, periodic severance payments, with
each payment equal to $23,491.81, subject to applicable FICA and income tax
withholding obligations and any other applicable deductions.
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4. MEDICAL AND DENTAL COVERAGE
Subject to your payment of applicable premiums, during the period
beginning immediately following your Separation Date and ending at the end of
eighteen (18) month period during which you are being paid your periodic
severance payments ("Severance Period") you will be eligible to participate in
medical and dental coverage generally available to all PennzEnergy Company
salaried employees and the coverage under the PennzEnergy Company Medical
Expenses Reimbursement Plan (formerly the Pennzoil Company Medical Expenses
Reimbursement Plan); provided, however, that the excess of the coverage benefits
under the Medical Expenses Reimbursement Plan over your regular medical and
dental coverage benefits shall not exceed in the aggregate $45,000 during such
period.
At the end of your Severance Period, you will have the option to
continue your medical and dental benefits for up to eighteen (18) months under
COBRA. A complete explanation of the coverage and premium schedule will be
mailed to you prior to the expiration of your Severance Period.
5. LIFE INSURANCE AND AD&D
Subject to your payment of applicable premiums, during the Severance
Period you will be able to participate in the life insurance program coverage
and AD&D coverage generally available to all PennzEnergy Company salaried
employees. You will have a thirty-one (31) day period after the end of the
Severance Period to convert the balance of your employee life insurance,
according to the terms and conditions in effect at that time. In addition, AD&D
may be converted, according to the terms and conditions in effect at that time.
Application must be made to the insurance company. It will be your
responsibility to complete the conversion process if you so desire.
6. STD/LTD
Short-and long-term disability coverage are not in effect after your
Separation Date.
7. RETIREMENT PLAN BENEFITS
You will be entitled under the Company's Retirement Plan and your
Excess Benefit Agreement to an estimated retirement benefit payable at age 65 of
$3,077 per month for your life or, in the alternative, $1,183 per month for your
life with payments beginning March 2002. No spousal benefits will be available
without a further reduction in your retirement benefit. You will receive a
letter from the Benefits Department at a later date after your Separation Date
outlining your retirement benefits and related conditions under the retirement
plan and agreement.
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8. SAVINGS AND INVESTMENT PLAN AND RELATED EXCESS BENEFIT AGREEMENT
Your employee accounts under the Savings and Investment Plan are 100%
vested. Your employer matching accounts under the Company's Savings and
Investment Plan and the related amount under your Excess Benefit Agreement will
be vested as of the Closing Date and will be distributed according to provisions
of the plan and excess benefit agreement. The forms that you must complete to
receive a distribution from the Plans will be mailed to you at a later date.
9. STOCK OPTIONS
All of your stock options granted prior to 1999 are fully vested as a
result of the transaction occurring pursuant to that certain Agreement and Plan
of Merger, dated as of April 14, 1998, among Pennzoil Company, Pennzoil Products
Company, Downstream Merger Company and Quaker State Corporation
("Pennzoil/Quaker State Agreement"). All of your stock options granted in 1999
will be fully vested as of your Separation Date. Your vested stock options will
remain outstanding for the remainder of their ten-year term subject to the terms
of the applicable stock option agreement.
10. CONDITIONAL STOCK AWARD
All of your conditional stock units are "Matured Units" as a result of
the transaction occurring pursuant to the Pennzoil/Quaker State Agreement. All
of your Matured Units will continue to be payable under the normal payment
schedule provided under the applicable awards.
11. SALARY CONTINUATION PLAN, SUPPLEMENTAL DISABILITY PLAN AND SUPPLEMENTAL
LIFE INSURANCE PLAN
Your participation in the Salary Continuation Plan, Supplemental
Disability Plan and Supplemental Life Insurance Plan is terminated as of your
Separation Date.
12. TAX PROTECTION AGREEMENT
Your Tax Protection Agreement with the Company will be preserved and
remain in force after your Separation Date.
13. OUTPLACEMENT SERVICE
In lieu of outplacement services, as soon as reasonably practicable
after your Separation Date, you will receive a lump-sum cash payment of $35,000,
subject to applicable FICA and income tax withholding obligations and any other
applicable deductions.
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