<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________________to ______________________
Commission File Number: 0-20100
BELDEN & BLAKE CORPORATION
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(Exact name of registrant as specified in its charter)
Ohio 34-1686642
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5200 Stoneham Road
North Canton, Ohio 44720
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(Address of principal executive offices) (Zip Code)
(330) 499-1660
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [ ] No
Number of common shares of Belden & Blake Corporation
Outstanding as of October 31, 1996 11,169,081
<PAGE> 2
BELDEN & BLAKE CORPORATION
INDEX
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<TABLE>
<CAPTION>
Page
----
PART I Financial Information:
- ------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1996 and 1
December 31, 1995
Consolidated Statements of Operations for the three and 3
nine months ended September 30, 1996 and 1995
Consolidated Statements of Shareholders' Equity for the 4
nine months ended September 30, 1996 and the years ended
December 31, 1995 and 1994
Consolidated Statements of Cash Flows for the nine 5
months ended September 30, 1996 and 1995
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 7
and Results of Operations
PART II Other Information
- -------
Item 6. Exhibits and Reports on Form 8-K 15
</TABLE>
<PAGE> 3
BELDEN & BLAKE CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
================ ================
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 11,293 $ 12,322
Accounts receivable, net 28,534 28,123
Inventories 9,575 9,253
Deferred income taxes 2,771 2,254
Other current assets 1,170 2,198
---------------- ----------------
Total current assets 53,343 54,150
PROPERTY AND EQUIPMENT
Oil and gas properties (successful efforts method) 255,395 235,344
Gas gathering systems 25,842 25,416
Land, buildings, machinery and equipment 30,529 29,977
---------------- ----------------
311,766 290,737
Less accumulated depreciation, depletion
and amortization 79,526 59,209
---------------- ----------------
PROPERTY AND EQUIPMENT, NET 232,240 231,528
OTHER ASSETS 10,817 11,620
---------------- ----------------
$ 296,400 $ 297,298
================ ================
</TABLE>
The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes generally required by generally accepted accounting principles for
complete financial statements.
See accompanying notes.
1
<PAGE> 4
BELDEN & BLAKE CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
================ ================
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 7,941 $ 11,004
Accrued expenses 20,651 23,811
Current portion of long-term liabilities 4,337 1,976
---------------- ----------------
Total current liabilities 32,929 36,791
LONG-TERM LIABILITIES
Bank and other long-term debt 60,204 67,223
Senior notes 31,111 35,000
Convertible subordinated debentures 6,800 6,800
Other 1,451 1,500
---------------- ----------------
99,566 110,523
DEFERRED INCOME TAXES 11,042 7,693
SHAREHOLDERS' EQUITY
Common stock without par value; $.10 stated value
per share; authorized 50,000,000 shares; issued
and outstanding 11,169,081 and 11,136,496 shares 1,117 1,114
Preferred stock without par value; $100 stated value
per share; authorized 8,000,000 shares;
issued and outstanding 24,000 shares 2,400 2,400
Paid in capital 126,712 126,063
Retained earnings 22,698 12,820
Unearned portion of restricted stock (64) (106)
---------------- ----------------
TOTAL SHAREHOLDERS' EQUITY 152,863 142,291
---------------- ----------------
$ 296,400 $ 297,298
================ ================
</TABLE>
The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes generally required by generally accepted accounting principles for
complete financial statements.
See accompanying notes.
2
<PAGE> 5
BELDEN & BLAKE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
============== ============== ============== ==============
<S> <C> <C> <C> <C>
REVENUES
Oil and gas sales $ 19,075 $ 12,949 $ 57,265 $ 31,924
Gas marketing and gathering 9,835 9,212 31,624 26,916
Oilfield sales and service 7,661 6,200 18,583 12,455
Interest and other 813 1,674 2,554 2,088
-------------- -------------- -------------- --------------
37,384 30,035 110,026 73,383
EXPENSES
Production expense 4,712 3,725 13,197 8,263
Production taxes 748 659 2,259 1,432
Cost of gas and gathering expense 8,221 7,507 26,348 22,759
Oilfield sales and service 6,832 5,587 16,984 11,654
Exploration expense 1,548 1,579 4,421 3,392
General and administrative expense 1,193 1,052 3,806 3,066
Interest expense 1,763 1,561 5,587 4,013
Depreciation, depletion and amortization 7,240 5,469 21,941 12,845
-------------- -------------- -------------- --------------
32,257 27,139 94,543 67,424
-------------- -------------- -------------- --------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 5,127 2,896 15,483 5,959
Provision for income taxes 1,502 1,063 5,031 2,195
-------------- -------------- -------------- --------------
INCOME FROM CONTINUING OPERATIONS 3,625 1,833 10,452 3,764
LOSS FROM DISCONTINUED OPERATIONS (439) (678) (439) (954)
-------------- -------------- -------------- --------------
NET INCOME $ 3,186 $ 1,155 $ 10,013 $ 2,810
============== ============== ============== ==============
PER COMMON SHARE:
CONTINUING OPERATIONS $ 0.32 $ 0.18 $ 0.92 $ 0.45
DISCONTINUED OPERATIONS (0.04) (0.07) (0.04) (0.12)
-------------- -------------- -------------- --------------
NET INCOME $ 0.28 $ 0.11 $ 0.88 $ 0.33
============== ============== ============== ==============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 11,171 9,741 11,168 7,993
============== ============== ============== ==============
</TABLE>
See accompanying notes.
3
<PAGE> 6
<TABLE>
<CAPTION>
BELDEN & BLAKE CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands)
UNEARNED
COMMON COMMON PREFERRED PAID IN RETAINED RESTRICTED
SHARES STOCK STOCK CAPITAL EARNINGS STOCK TOTAL
======== =========== =========== ============ ========== =========== =============
<S> <C> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1994 7,053 $ 706 $ 2,400 $ 69,865 $ 4,216 $ (330) $ 76,857
Stock issued 32 3 385 388
Net income 3,843 3,843
Preferred stock dividend (180) (180)
Restricted stock 129 105 234
- --------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1994 7,085 709 2,400 70,379 7,879 (225) 81,142
Stock issued 4,028 403 55,264 55,667
Net income 5,121 5,121
Preferred stock dividend (180) (180)
Stock options exercised 2 -- 25 25
Employee stock bonus 22 2 251 253
Restricted stock 144 119 263
- --------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1995 11,137 1,114 2,400 126,063 12,820 (106) 142,291
Net income 10,013 10,013
Preferred stock dividend (135) (135)
Stock options exercised 2 -- 31 31
Employee stock bonus 26 2 419 421
Restricted stock 4 1 195 42 238
Other 4 4
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(UNAUDITED)
SEPTEMBER 30, 1996 11,169 $ 1,117 $ 2,400 $ 126,712 $ 22,698 $ (64) $ 152,863
====================================================================================================================
</TABLE>
See accompanying notes.
4
<PAGE> 7
<TABLE>
<CAPTION>
BELDEN & BLAKE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
NINE MONTHS ENDED SEPTEMBER 30
--------------------------------------
1996 1995
---------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 10,013 $ 2,810
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 21,941 13,261
Loss on disposal of property and equipment 393 183
Deferred income taxes 2,832 1,140
Deferred compensation and stock grants 840 790
Change in operating assets and liabilities, net of
effects of purchases of businesses:
Accounts receivable and other operating assets 791 (11,237)
Inventories (322) 943
Accounts payable and accrued expenses (1,449) 7,009
---------------- -----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 35,039 14,899
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses, net of cash acquired (4,490) (90,098)
Proceeds from property and equipment disposals 2,128 183
Additions to property and equipment (24,269) (14,042)
Increase in other assets (500) (1,076)
---------------- -----------------
NET CASH USED IN INVESTING ACTIVITIES (27,131) (105,033)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving line of credit and long-term debt 12,105 66,000
Repayment of long-term debt and other obligations (20,907) (17,268)
Proceeds from sale of common stock -- 59,438
Common stock placement cost -- (3,579)
Preferred stock dividends (135) (135)
---------------- -----------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (8,937) 104,456
---------------- -----------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,029) 14,322
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 12,322 3,649
---------------- -----------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 11,293 $ 17,971
================ =================
CASH PAID DURING THE PERIOD FOR:
INTEREST $ 6,472 $ 3,936
INCOME TAXES 1,069 599
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of assets in exchange for long-term obligations -- 15,394
</TABLE>
See accompanying notes.
5
<PAGE> 8
BELDEN & BLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(UNAUDITED)
SEPTEMBER 30, 1996
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(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Belden
& Blake Corporation (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine month periods ended September 30, 1996
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1996. For further information, refer to the consolidated
financial statements and footnotes included in the Company's annual report on
Form 10-K for the year ended December 31, 1995.
(2) ACQUISITIONS
In July 1996, the Company acquired working interests averaging 40% in
17 producing wells, four proved undeveloped locations and 7,000 undeveloped
leasehold acres in Ohio from North American Gas Investment Trust for $1.2
million. The Company operates the wells and owns the remaining working
interests. The interests acquired had estimated proved developed reserves of 0.6
Bcf (billion cubic feet) of natural gas and 53,000 Bbls (barrels) of oil at
January 1, 1996.
In August 1996, the Company acquired working interests in 209 wells in
Ohio from various NYLife Energy Investors partnerships for $2.5 million. The
Company has operated the wells on behalf of the NYLife partnerships since 1990.
The interests acquired had estimated proved developed reserves of 3.5 Bcf of
natural gas and 152,000 Bbls of oil at July 1, 1996.
In September 1996, the Company acquired a 100% working interest in 97
natural gas wells and a 23 mile, ten inch pipeline in the Shrewsbury Field
located in northwestern Kentucky for $560,000. The wells had estimated proved
developed gas reserves at July 1, 1996, of 1.9 Bcf.
(3) CHANGE IN ACCOUNTING PRINCIPLE
In March 1995, the Financial Accounting Standards Board issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. Statement 121 also addresses the
accounting for long-lived assets that are expected to be disposed of. The
Company adopted Statement 121 in the first quarter of 1996. The Company's
estimate of undiscounted cash flows indicated that such carrying amounts of
assets are expected to be recovered. However, it is possible that the estimates
may change in the future resulting in the write-down of assets to fair value.
6
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
------------------------------------------------------
(4) SALE OF TAX CREDIT PROPERTIES
In February and March 1996, the Company sold certain interests that
qualify for the nonconventional fuel source tax credit. The interests were sold
in two separate transactions for approximately $750,000 and $100,000,
respectively, in cash and a volumetric production payment under which 100% of
the cash flow from the properties will go to the Company until approximately
11.7 Bcf and 3.4 Bcf, respectively, of gas has been produced and sold. In
addition to receiving 100% of the cash flow from the properties, the Company
will receive quarterly incentive payments based on production from the
interests. The Company has the option to repurchase the interests at a future
date.
(5) HEDGING ACTIVITIES
As a result of certain 1995 acquisitions, the Company has several
contracts to sell gas at indexed prices. The Company may, from time to time,
partially hedge these contract prices by selling futures contracts on the NYMEX.
The Company began partially hedging its gas price exposure in January 1996. For
the first half of 1996, the Company incurred a $258,000 pretax loss on its
hedging activities due to rapidly rising gas prices during the period. At
September 30, 1996, the Company did not have any open futures contracts.
(6) DISCONTINUED OPERATIONS
The Company made the decision to sell Engine Power Systems, Inc. (EPS),
a wholly-owned subsidiary, in September 1995. To date, the Company has been
unsuccessful finding a buyer for EPS despite an active marketing effort. In
September 1996, the Company revised its estimate of the loss on discontinuance
of EPS and recognized an additional charge of $675,000 ($439,000 net of tax
benefit) to write-down various assets and inventories to estimated realizable
value and to establish a provision for estimated costs of asset disposals and
future losses related to EPS.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
RESULTS OF OPERATIONS - THIRD QUARTERS OF 1996 AND 1995 COMPARED
OIL AND GAS SALES. Oil and gas sales increased $6.1 million (47%) in
the third quarter of 1996 compared to the same period of 1995 due to an increase
in oil and gas volumes sold and a higher average price paid for the Company's
oil and gas.
Oil volumes increased 16,000 Bbls (10%) from 165,000 Bbls in the third
quarter of 1995 to 181,000 Bbls in the third quarter of 1996 resulting in an
increase in oil sales of approximately $265,000. Gas volumes increased 1.4 Bcf
(29%) from 4.9 Bcf in the third quarter of 1995 to 6.3 Bcf in the third quarter
of 1996 resulting in an increase in gas sales of approximately $3.0 million.
These volume increases were primarily due to production from properties acquired
and wells drilled in 1995 and 1996.
The average price paid for the Company's oil increased from $16.27 per
barrel in the third quarter of 1995 to $20.14 per barrel in the third quarter of
1996 which increased oil sales by approximately $700,000. The average price paid
for the Company's natural gas increased $.35 per Mcf
7
<PAGE> 10
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS (CONTINUED)
---------------------------------
(thousand cubic feet) to $2.46 per Mcf in the third quarter of 1996 compared to
the third quarter of 1995 which increased gas sales in the third quarter of 1996
by approximately $2.2 million.
GAS MARKETING AND GATHERING REVENUE. Gas marketing and gathering
revenue increased $623,000 (7%) from $9.2 million in the third quarter of 1995
to $9.8 million in the third quarter of 1996 due to an increase in the volume of
gas purchased from third parties and resold, an increase in the average selling
price of gas and an increase in gas gathering revenues.
OILFIELD SALES AND SERVICE REVENUE. Oilfield sales and service revenue
increased $1.5 million (24%) from $6.2 million in the third quarter of 1995 to
$7.7 million in the third quarter of 1996. This increase was primarily due to
increased third party oilfield service revenue.
INTEREST AND OTHER REVENUE. Interest and other revenue decreased
$861,000 (51%) from $1.7 million in the third quarter of 1995 to $813,000 in the
third quarter of 1996 due to the recognition in the third quarter of 1995 of
anticipated proceeds from contract rejection claims that were filed in the
bankruptcy proceedings of Columbia Gas Transmission Corporation partially offset
by income in 1996 from incentive production payments associated with certain
properties operated by Ward Lake.
PRODUCTION EXPENSE. Production expense increased $1.0 million (26%)
from $3.7 million in the third quarter of 1995 to $4.7 million in the third
quarter of 1996. This increase was largely due to the increased production
discussed above. The average production cost in the third quarter of 1995 and
1996 remained consistent at $.64 per Mcfe (equivalent Mcf of natural gas).
PRODUCTION TAXES. Production taxes increased $89,000 (14%) from
$659,000 in the third quarter of 1995 to $748,000 in the third quarter of 1996.
This increase was primarily due to the increased production volumes discussed
above.
COST OF GAS AND GATHERING EXPENSE. Cost of gas and gathering expense
increased $714,000 (10%) from $7.5 million in the third quarter of 1995 to $8.2
million in the third quarter of 1996 due to an increase in volumes of gas
purchased from third parties and an increase in the cost of gas.
OILFIELD SALES AND SERVICE EXPENSE. Oilfield sales and service expense
increased $1.2 million (22%) from $5.6 million in the third quarter of 1995 to
$6.8 million in the third quarter of 1996 primarily as a result of the increased
cost of goods sold associated with the increased sales described above.
EXPLORATION EXPENSE. Exploration expense in the third quarter of
1996 was consistent with the third quarter of 1995.
GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
increased $141,000 (13%) from $1.1 million in the third quarter of 1995 to $1.2
million in the third quarter of 1996 primarily due to an increase in franchise
taxes and an increase in estimated profit sharing and bonuses for 1996.
INTEREST EXPENSE. Interest expense increased $202,000 (13%) from $1.6
million in the third quarter of 1995 to $1.8 million in the third quarter of
1996. This increase was primarily due to higher average debt balances incurred
to finance the 1995 acquisitions.
8
<PAGE> 11
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS (CONTINUED)
------------------------------------
DEPRECIATION, DEPLETION AND AMORTIZATION. Depreciation, depletion and
amortization increased by $1.7 million (32%) from $5.5 million in the third
quarter of 1995 to $7.2 million in the third quarter of 1996. Depletion expense
increased $1.3 million (31%) from $4.2 million in the third quarter of 1995 to
$5.5 million in the third quarter of 1996. This increase was primarily due to
the increased production volumes described above. Depletion per Mcfe increased
from $.72 per Mcfe in the third quarter of 1995 to $.75 per Mcfe in the third
quarter of 1996. This increase was primarily the result of proved reserves added
through acquisitions and drilling at a higher cost per Mcfe.
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES. Income from
continuing operations before income taxes increased $2.2 million (77%) from $2.9
million in the third quarter of 1995 to $5.1 million in the third quarter of
1996. The operating income from the oil and gas operations segment increased
$1.7 million (47%) from $3.8 million in the third quarter of 1995 to $5.5
million in the third quarter of 1996. The increase was attributable to the items
discussed above. The operating income from the oilfield sales and service
segment increased $190,000 (55%) from $348,000 in the third quarter of 1995 to
$538,000 in the third quarter of 1996.
INCOME FROM CONTINUING OPERATIONS. Income from continuing operations
increased $1.8 million (98%) from $1.8 million in the third quarter of 1995 to
$3.6 million in the third quarter of 1996. This increase in income from
continuing operations was primarily the result of the items discussed above.
Provision for income taxes from continuing operations increased $439,000 (41%)
from $1.1 million in the third quarter of 1995 to $1.5 million in the third
quarter of 1996. This increase was attributable to an increase in income from
continuing operations before income taxes partially offset by a decrease in the
effective tax rate. Income from continuing operations on a per share basis
increased from $.18 per share in the third quarter of 1995 to $.32 per share in
the third quarter of 1996. This increase was primarily the result of the factors
discussed above.
LOSS FROM DISCONTINUED OPERATIONS. Loss from discontinued operations
was $1.1 million ($678,000 net of tax benefit or $.07 per share) in the third
quarter of 1995 compared to $675,000 ($439,000 net of tax benefit or $.04 per
share) in the third quarter of 1996. In September 1996, the Company revised its
estimate of the loss on discontinuance of EPS and recognized an additional
charge to write-down various assets and inventories to estimated realizable
value and to establish a provision for estimated costs of asset disposals and
future losses related to EPS.
RESULTS OF OPERATIONS - NINE MONTHS OF 1996 AND 1995 COMPARED
OIL AND GAS SALES. Oil and gas sales increased $25.3 million (79%) in
the first nine months of 1996 compared to the same period of 1995 due to an
increase in oil and gas volumes sold and a higher average price paid for the
Company's oil and gas.
Oil volumes increased 132,000 Bbls (32%) from 407,000 Bbls in the first
nine months of 1995 to 539,000 Bbls in the first nine months of 1996 resulting
in an increase in oil sales of approximately $2.2 million. Gas volumes increased
7.5 Bcf (68%) from 11.1 Bcf in the first nine months of 1995 to 18.6 Bcf in the
first nine months of 1996 resulting in an increase in gas sales of approximately
$17.0 million. These volume increases were primarily due to production from
properties acquired and wells drilled in 1995 and 1996.
9
<PAGE> 12
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS (CONTINUED)
-------------------------------------
The average price paid for the Company's oil increased from $16.83 per
barrel in the first nine months of 1995 to $19.44 per barrel in the first nine
months of 1996 which increased oil sales by approximately $1.4 million. The
average price paid for the Company's natural gas increased $.25 per Mcf to $2.51
per Mcf in the first nine months of 1996 compared to the first nine months of
1995 which increased gas sales in the first nine months of 1996 by approximately
$4.7 million.
GAS MARKETING AND GATHERING REVENUE. Gas marketing and gathering
revenue increased $4.7 million (17%) from $26.9 million in the first nine months
of 1995 to $31.6 million in the first nine months of 1996 due to an increase in
the volume of gas marketed, an increase in the average selling price of gas and
an increase in gas gathering revenues.
OILFIELD SALES AND SERVICE REVENUE. Oilfield sales and service revenue
increased $6.1 million (49%) from $12.5 million in the first nine months of 1995
to $18.6 million in the first nine months of 1996. This increase was primarily
due to the sales generated by the three oilfield sales and service companies
acquired by the Company in 1995 and increased third party oilfield service
revenue.
INTEREST AND OTHER REVENUE. Interest and other revenue increased
$466,000 (22%) from $2.1 million in the first nine months of 1995 to $2.6
million in the first nine months of 1996 primarily due to the recognition of
income in 1996 from incentive production payments associated with certain
properties operated by Ward Lake partially offset by the recognition in the
third quarter of 1995 of anticipated proceeds from contract rejection claims
that were filed in the bankruptcy proceedings of Columbia Gas Transmission
Corporation.
PRODUCTION EXPENSE. Production expense increased $4.9 million (60%)
from $8.3 million in the first nine months of 1995 to $13.2 million in the first
nine months of 1996. This increase was largely due to the increased production
discussed above. The average production cost in the first nine months of 1996
was $.60 per Mcfe compared to $.61 per Mcfe in the first nine months of 1995.
PRODUCTION TAXES. Production taxes increased $827,000 (58%) from $1.4
million in the first nine months of 1995 to $2.3 million in the first nine
months of 1996. This increase was primarily due to the increased production
volumes discussed above.
COST OF GAS AND GATHERING EXPENSE. Cost of gas and gathering expense
increased $3.5 million (16%) from $22.8 million in the first nine months of 1995
to $26.3 million the first nine months of 1996 due to an increase in volumes of
gas purchased and an increase in the cost of gas.
OILFIELD SALES AND SERVICE EXPENSE. Oilfield sales and service expense
increased $5.3 million (46%) from $11.7 million in the first nine months of 1995
to $17.0 million in the first nine months of 1996 primarily as a result of the
increased cost of goods sold associated with increased sales resulting from the
acquisitions described above.
EXPLORATION EXPENSE. Exploration expense increased $1.0 million (30%)
from $3.4 million in the first nine months of 1995 to $4.4 million in the first
nine months of 1996 primarily due to higher levels of geological, geophysical
and leasing activity and increases in the size of the technical staff in
conjunction with increased drilling activity.
10
<PAGE> 13
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
------------------------------------------------------------
AND RESULTS OF OPERATIONS (CONTINUED)
-------------------------------------
GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
increased $740,000 (24%) from $3.1 million in the first nine months of 1995 to
$3.8 million in the first nine months of 1996 primarily due to an increase in
franchise taxes and an increase in estimated profit sharing and bonuses for
1996.
INTEREST EXPENSE. Interest expense increased $1.6 million (39%) from
$4.0 million in the first nine months of 1995 to $5.6 million in the first nine
months of 1996. This increase was primarily due to higher average debt balances
incurred to finance the 1995 acquisitions.
DEPRECIATION, DEPLETION AND AMORTIZATION. Depreciation, depletion and
amortization increased by $9.1 million (71%) from $12.8 million in the first
nine months of 1995 to $21.9 million in the first nine months of 1996. Depletion
expense increased $7.3 million (75%) from $9.6 million in the first nine months
of 1995 to $16.9 million in the first nine months of 1996. This increase was
primarily due to the increased production volumes described above. Depletion per
Mcfe increased from $.71 per Mcfe in the first nine months of 1995 to $.77 per
Mcfe in the first nine months of 1996. This increase was primarily the result of
proved reserves added through acquisitions and drilling at a higher cost per
Mcfe.
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES. Income from
continuing operations before income taxes increased $9.5 million (160%) from
$6.0 million in the first nine months of 1995 to $15.5 million in the first nine
months of 1996. The operating income from the oil and gas operations segment
increased $8.7 million (95%) from $9.1 million in the first nine months of 1995
to $17.8 million in the first nine months of 1996. The increase was attributable
to the items discussed above. The operating income from the oilfield sales and
service segment increased $613,000 (515%) from $119,000 in the first nine months
of 1995 to $732,000 in the first nine months of 1996.
INCOME FROM CONTINUING OPERATIONS. Income from continuing operations
increased $6.7 million (178%) from $3.8 million in the first nine months of 1995
to $10.5 million in the first nine months of 1996. This increase in income from
continuing operations was primarily the result of the items discussed above.
Provision for income taxes from continuing operations increased $2.8 million
(129%) from $2.2 million in the first nine months of 1995 to $5.0 million in the
first nine months of 1996. This increase was attributable to an increase in
income from continuing operations before income taxes partially offset by a
decrease in the effective tax rate. Income from continuing operations on a per
share basis increased from $.45 per share in the first nine months of 1995 to
$.92 per share in the first nine months of 1996. This increase was primarily the
result of the factors discussed above.
LOSS FROM DISCONTINUED OPERATIONS. Loss from discontinued operations
was $1.5 million ($954,000 net of tax benefit or $.12 per share) in the first
nine months of 1995 compared to $675,000 ($439,000 net of tax benefit or $.04
per share) in the first nine months of 1996. In September 1996, the Company
revised its estimate of the loss on discontinuance of EPS and recognized an
additional charge to write-down various assets and inventories to estimated
realizable value and to establish a provision for estimated costs of asset
disposals and future losses related to EPS.
11
<PAGE> 14
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
----------------------------------------------------------------
AND RESULTS OF OPERATIONS (CONTINUED)
-----------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital is closely related to and dependent on
the current prices paid for its oil and gas.
The Company's current ratio at September 30, 1996 was 1.62 to 1.00.
During the first nine months of 1996, working capital increased $3.0 million
from $17.4 million to $20.4 million. The increase was primarily due to a
reduction in accounts payable and accrued expenses ($6.2 million) partially
offset by an increase in the current portion of long-term liabilities ($2.4
million) attributable to the first principal payment on the senior notes due on
September 30, 1997. The Company's operating activities provided cash flow of
$35.0 million during the first nine months of 1996.
On May 25, 1995, the Company's revolving bank facility was amended. The
facility was increased to $200 million, the maturity date was extended to March
31, 1999, and the borrowing base was increased to $81 million. The borrowing
base is calculated by the bank group and is based on the cash flows generated by
the Company's proved developed reserves, gas gathering systems and other
corporate assets. Generally, the Company can expect to have the borrowing base
increased by at least 50% of the present value before income taxes (discounted
at 10% per annum) of any proved developed reserves added through acquisition or
drilling.
On February 16, 1996, the Company's revolving bank facility was further
amended. The maturity date was extended to March 31, 2001 and the LIBOR interest
rate option was modified to decrease from LIBOR + 2% to a range of LIBOR +
1-1/4% to LIBOR + 3/4% as outstanding balances decrease in relation to the
borrowing base.
Outstanding balances under the facility incur interest at the Company's
choice of either: (1) the one, two or three-month LIBOR + 1.25% (6.91% for the
three-month LIBOR interest rate option at September 30, 1996) or (2) the bank's
prime rate (8.25% at September 30, 1996). At September 30, 1996, the Company had
$60 million outstanding under this facility.
The amended facility will continue to restrict the sale of assets to no
more than 15% of shareholders' equity in any one year and will require the
Company to maintain certain levels of net worth, working capital and debt
service coverage.
When market conditions are favorable, the Company may enter into
interest rate swap arrangements, whereby a portion of the Company's floating
rate exposure is exchanged for a fixed interest rate. The Company had no such
derivative financial instruments at September 30, 1996.
During 1993, the Company placed $35 million of 7% fixed-rate senior
notes with five insurance companies in a private placement. These notes, which
are interest-only for four years, mature on September 30, 2005. Equal annual
principal payments of $3,888,888 will be required on each September 30
commencing in 1997.
The senior note agreement limits the Company's senior debt to 50% of
the Company's discounted present value (at 10%) of its oil and gas reserves plus
the net book value of its gas gathering systems.
12
<PAGE> 15
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
----------------------------------------------------------------
RESULTS OF OPERATIONS (CONTINUED)
---------------------------------
Other terms and covenants are substantially the same as those contained in the
$200 million revolving credit facility.
The Company seeks to replace its production and expand its reserve base
through the acquisition of producing oil and gas properties, development
drilling in the shallow blanket formations and exploratory and development
drilling in the less developed and deeper formations in the Appalachian,
Michigan and Illinois Basins. The Company's acquisition activities in 1996 are
discussed in Note (2) to the Consolidated Financial Statements. The Company
plans to drill approximately 200 gross wells in 1996. The following table
summarizes the Company's drilling activities for the nine months ended September
30, 1996.
<TABLE>
<CAPTION>
1996 DRILLING RESULTS
NINE MONTHS ENDED
SEPTEMBER 30, 1996
-------------------------------------------
GROSS NET
------------------- -------------------
<S> <C> <C>
Development wells
Shallow blanket formations
Productive 79 64.5
Dry -- --
Less developed and deeper formations
Productive 26 18.5
Dry 12 7.1
Exploratory wells
Productive -- --
Dry 3 1.4
</TABLE>
The shallow blanket formation wells were drilled in Michigan to the
Antrim Shale formation; in New York and Pennsylvania to the Medina Sandstone
formation; in New York to the Bass Island Sandstone formation; and in West
Virginia to the Devonian Shale formation. The wells drilled to the less
developed and deeper formations were drilled to the Dundee Carbonate and
Niagaran Carbonate formations in Michigan; to the Beekmantown Dolomite, Rose Run
Sandstone and Trempealeau Sandstone formations in Ohio; and to the Onondaga
Limestone and Oriskany Sandstone formations in Pennsylvania.
The Company currently expects to spend approximately $28 million during
1996 on its direct drilling activities and approximately $9 million for other
capital expenditures. Through September 30, 1996, the Company had expended
approximately $18.0 million on its direct drilling activities to drill 120 gross
(91.5 net) wells. Reserves discovered totaled an estimated 21.4 Bcf equivalent.
The Company's acquisition program is expected to be financed with any
available cash flow over $37 million and with its available bank credit line.
The Company believes that its existing sources of working capital are sufficient
to satisfy all currently anticipated working capital requirements.
13
<PAGE> 16
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
----------------------------------------------------------------
AND RESULTS OF OPERATIONS (CONTINUED)
-----------------------------------------
The level of the Company's cash flow in the future will depend on a
number of factors including the demand and price levels for oil and gas, its
ability to acquire additional producing properties and the scope and success of
its drilling activities. The Company intends to finance such activities
principally through its available cash flow, through additional borrowings and,
to the extent necessary, the issuance of additional common or preferred stock.
FORWARD-LOOKING INFORMATION
The forward-looking statements regarding future operating and financial
performance contained in this report involve risks and uncertainties that
include, but are not limited to, the Company's future production and costs of
operation, the market demand for, and prices of, oil and natural gas, results of
the Company's future drilling and gas marketing activity, the uncertainties of
reserve estimates, environmental risks, and other factors detailed in the
Company's filings with the Securities and Exchange Commission. Actual results
may differ materially from forward-looking statements made in this report.
14
<PAGE> 17
- -------------------------------------------------------------------------------
PART II Other information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index
(b) Reports on Form 8-K
None
15
<PAGE> 18
- -------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
BELDEN & BLAKE CORPORATION
Date: November 5, 1996 By: /S/ Max L. Mardick
-------------------------- ----------------------------------
Max L. Mardick,
Director, President, and
Chief Operating Officer
Date: November 5, 1996 By: /S/ Ronald E. Huff
--------------------------- ---------------------------------
Ronald E. Huff,
Director, Senior Vice President and
Chief Financial Officer
16
<PAGE> 19
EXHIBIT INDEX
NO. DESCRIPTION
- --- -----------
10.1 Amended and Restated Employment Agreement between the
Company and Henry S. Belden IV
10.2 Severance Agreement between the Company and Max L.
Mardick
10.3 Form of Severance Agreement between the Company and
the following officers: Ronald E. Huff, Ronald L.
Clements and Joseph M. Vitale
10.4 Form of Severance Agreement between the Company and
the following officers and managerial personnel:
Dennis D. Belden, James C. Ewing, Charles P. Faber,
Tommy L. Knowles, Donald A. Rutishauser,
L. H. Sawatsky, Leo A. Schrider and Dean A. Swift
10.5 Severance Pay Plan for Key Employees of Belden &
Blake Corporation
11. Computation of Earnings Per Common and Common
Equivalent Shares
27. Financial Data Schedule
<PAGE> 1
EXHIBIT 10.1
October 25, 1996
Mr. Henry S. Belden, IV
5200 Stoneham Road
North Canton, OH 44720
Dear Mr. Belden:
This letter (the "Agreement") will amend and restate the
agreement between you and Belden & Blake Corporation (the "Company"), originally
effective October 1, 1991. The effective date of this amendment and restatement
is October 1, 1996.
1. EMPLOYMENT. The Company will employ you and you agree to serve as
its Chairman and Chief Executive Officer on a continuing basis but in no event
for a period shorter than five years nor longer than the period ending on the
sixty-fifth (65th) anniversary of your birth. On each October 1, commencing
October 1, 1997, this agreement will be automatically extended for an additional
one year so that it will continue to be in effect for five years from the date
of such extension unless either you or the Company give to the other written
notice of termination at least six (6) months prior to the anniversary of your
employment in which event this Agreement will terminate at the expiration of the
five year term then in effect. You will receive an annual salary of not less
than $322,500.00, payable in equal bi-weekly installments. Your base salary will
be reviewed annually by the Company's compensation committee. You will
participate in all incentive compensation and benefit plans hereafter offered by
the Company to its senior executives.
2. DUTIES DURING EMPLOYMENT. During your employment by the Company, you
will devote your best efforts and substantially all of your business time and
attention to the Company's affairs, including those of subsidiary and affiliated
companies, except that you may be a director of other non-competitive companies
as you and the Company may agree. You shall have such duties and
responsibilities as are customary for the chief executive officer of companies
similar in size and character to the Company and as shall be determined and
assigned to you by the Board of Directors of the Company.
3. BONUSES DURING EMPLOYMENT. In addition to your annual base salary,
the Company shall pay you such bonuses as the Board of Directors of the Company
may, in its discretion, deem appropriate and commensurate with your performance
and that of the Company.
<PAGE> 2
Mr. Henry S. Belden, IV
October 25, 1996
Page 2
4. HEALTH AND OTHER FRINGE BENEFITS DURING EMPLOYMENT. During the term
of your employment, in addition to the payments provided herein, you may
participate in such other fringe benefit plans or programs as the Company may
from time to time sponsor, provided that you meet the participation and
eligibility requirements thereof.
5. LIABILITY INSURANCE DURING EMPLOYMENT. During the term of your
employment hereunder, the Company shall provide to you director and officer
liability insurance coverage with coverage limits not less than that provided to
directors and officers of companies similar in size and character to the
Company. In addition, the Company shall provide you indemnification from
liability and costs of defense relating to your service as a director and
officer to the maximum extent permitted under the General Corporation Law of the
State of Ohio.
6. TERMINATION OF EMPLOYMENT UPON DEATH, DISABILITY OR FOR CAUSE.
Notwithstanding any other provision of this Agreement, your employment with the
Company will terminate in the event of your death or in the event of your total
and permanent disability which shall be defined as a disability which shall
qualify you for long term total and permanent disability benefits under the
Company's disability insurance policy. The Company shall provide and keep in
force a policy of insurance to provide disability benefits to you equivalent to
that provided to senior executives of companies similar in size and character to
the Company. Your employment may be terminated by the Company immediately and
without any liability to you whatever if such termination shall occur for
"cause". For purposes of this Agreement, termination shall be deemed to have
been for "cause" only if based on the fact that you have committed any of the
following acts and such has been materially harmful to the Company:
(a) An act of fraud, embezzlement or theft constituting a
felony and resulting or intended to result directly or
indirectly in substantial personal gain to you at the
expense of the Company; or
(b) You have failed to devote a substantial portion of your
business time (that is time after giving effect to illness,
vacations and other customary absences) during normal business
hours to the business and affairs of the Company.
<PAGE> 3
Mr. Henry S. Belden, IV
October 25, 1996
Page 3
7. RIGHT TO TERMINATE EMPLOYMENT AND SEVERANCE BENEFITS.
Notwithstanding any other provisions of this Agreement, you shall have the right
to terminate your employment with the Company and receive the severance benefits
identified in this Section without further obligation on your part to the
Company in the event of the occurrence of any of the following:
(a) The Board of Directors of the Company fails to re-elect you to
the offices of Chairman and Chief Executive Officer of the
Company at any time during the term hereof in which case you
may treat such failure as a termination of your employment by
the Company other than for "cause".
(b) A change of more than fifty (50) miles has occurred in the
location of the Company's principal office without your
consent requiring you to move.
(c) A good faith determination by you that there has occurred a
substantial and adverse change in the conditions of your
employment or a significant reduction in your compensation or
other employee benefits in excess of any such reductions made
effective for key executives of the Company generally.
In the event of the occurrence of any one or more of the
foregoing events and your election to terminate your employment with the Company
as a result thereof, the Company shall pay you in a lump sum an amount equal to
five (5) times the compensation paid to you by the Company during the calendar
year preceding your termination of employment. For purposes hereof, your
compensation shall include all compensation includable in gross income for
federal income tax purposes as required to be reported by the Company on
Internal Revenue Service Form W-2. You shall not be required to mitigate damages
or the amount of such payment or to seek employment elsewhere.
8. TERMINATION OF EMPLOYMENT AND SEVERANCE COMPENSATION FOLLOWING A
CHANGE IN CONTROL.
(a) If, following the occurrence of a Change in Control (defined
below), the Company terminates your employment during the
Severance Period (defined below) other than for "cause" as
described in Section 6, (i) the Company shall pay you in a
lump sum an amount equal to five (5) times the compensation
paid to you by the Company during the calendar year preceding
your termination of
<PAGE> 4
Mr. Henry S. Belden, IV
October 25, 1996
Page 4
employment, as such amount is determined under Section 7, (ii)
for a period of three (3) years following your termination of
employment, the Company will arrange to provide you with
health care coverage substantially similar to the coverage
provided to you immediately prior to your termination of
employment, and (iii) all outstanding stock options granted
under the Company's Stock Option Plan shall immediately vest.
If the continued health coverage under clause (ii) of this
Subsection is provided through participation in the Company's
group health plan, then following such period of continued
health care coverage, you will be eligible to elect to
continue, for yourself and your eligible dependents, health
benefits in accordance with the provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended.
(b) For the purposes of this Section, the term "Change in Control"
means the occurrence during the term of this Agreement of any
of the following events:
(i) The Company is merged, consolidated or reorganized
into or with another corporation or other legal
person, and as a result of such merger,
consolidation or reorganization less than a
majority of the combined voting power of the
then-outstanding voting stock of the corporation
or person surviving such merger, consolidation or
reorganization, immediately after such
transaction, are beneficially held, directly or
indirectly, in the aggregate by the beneficial
holders of voting stock of the Company immediately
prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to another
corporation or other legal person, and as a result
of such sale or transfer less than a majority of the
combined voting power of the then-outstanding voting
stock of such corporation or person immediately
after such sale or transfer is held in the aggregate
by the holders of voting stock of the Company
immediately prior to such sale or transfer;
<PAGE> 5
Mr. Henry S. Belden, IV
October 25, 1996
Page 5
(iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act) has become the beneficial owner (as the term
"beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange
Act) of securities representing 25% or more of the combined
voting power of the then-outstanding voting stock of the
Company;
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) that a
change in control of the Company has occurred or will occur in
the future pursuant to any then-existing contract or
transaction; or
(v) If, during any period of two consecutive years, individuals
who at the beginning of any such period constitute the
directors of the Company cease for any reason to constitute at
least a majority thereof; PROVIDED, HOWEVER, that for purposes
of this clause each director who is first elected, or first
nominated for election by the Company's stockholders, by a
vote of at least two-thirds of the directors of the Company
(or a committee thereof) then still in office who were
directors of the Company at the beginning of any such period
will be deemed to have been a director of the Company at the
beginning of such period.
Notwithstanding the foregoing provisions of clause (iii) or clause (iv)
of this Section, unless otherwise determined in a specific case by
majority vote of the board of directors of the Company, a "Change in
Control" shall not be deemed to have occurred for purposes of clause
(iii) or clause (iv) of this Section solely because (A) the Company,
(B) a subsidiary, (C) any Company-sponsored employee stock ownership
plan or any other employee benefit plan of the Company or any
subsidiary, (D) any person or group of which employees of the Company
or a subsidiary control a greater
<PAGE> 6
Mr. Henry S. Belden, IV
October 25, 1996
Page 6
than 25% interest unless the board of directors of the Company
determines that such person or group is making a "hostile acquisition",
or (E) any person or group of which you are an affiliate either files
or becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or
any successor schedule, form or report or item therein) under the
Exchange Act disclosing beneficial ownership by it of shares of voting
stock, whether in excess of 25% or otherwise, or because the Company
reports that a change in control of the Company has occurred or will
occur in the future by reason of such beneficial ownership.
(c) For purposes of this Section, the term "Severance
Period" means the period of time commencing on the date
of the first occurrence of a Change in Control and
continuing until the earliest of (i) the third
anniversary of the occurrence of the Change in Control
(ii) your death, or (iii) your attainment of age 65;
PROVIDED, HOWEVER, that commencing on each anniversary
of the Change in Control, the Severance Period will
automatically be extended for an additional year
unless, not later than 90 calendar days prior to such
anniversary date, either you or the Company has given
written notice to the other that the Severance Period
is not to be so extended.
(d) Notwithstanding anything contained in this Agreement to the
contrary, in the event of a Change in Control during the term
of your employment pursuant to Section 1, you may terminate
employment with the Company and any subsidiary for any reason,
or without reason, with the right to severance compensation as
provided in Subsection (a) of this Section.
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. Notwithstanding any
other provision hereof, unless such action would be expressly prohibited by
applicable law, if any payment of distribution by the Company or any of its
affiliates to or for your benefit, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise pursuant to
or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or the vesting
or exercisability of any of the foregoing (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the
<PAGE> 7
Mr. Henry S. Belden, IV
October 25, 1996
Page 7
Internal Revenue Code of 1986, as amended (the "Code") by reason of being
considered "contingent on a change in ownership or control" of the Company,
within the meaning of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter collectively referred to as the "Excise
Tax"), then you shall be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"); PROVIDED, HOWEVER, that no Gross-Up
Payment shall be made with respect to the Excise Tax, if any, attributable to
(a) any incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to the execution of this Agreement, or (b) any stock appreciation
or similar right, whether or not limited, granted in tandem with any ISO
described in clause (a). The Gross-Up Payment shall be in an amount such that,
after you pay all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax imposed upon the Gross-Up
Payment, you retain an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment.
10. OTHER BENEFITS. If your employment is terminated pursuant to
Section 8, the Company, at its sole expense for a period of up to three (3)
years following the date of your termination of employment, shall provide you
with up to 1,200 square feet of usable office space at a location you select,
including rent, utilities and escalation, but not in the Company's home office
building. The office space shall be furnished with your current office furniture
and shall be equipped with other reasonable furnishings, including computer,
telephone and photocopy equipment and shall be staffed by a full-time salaried
qualified executive secretary with appropriate fringe benefits. Ownership of the
furnishings and equipment or leasehold interests therein owned or leased and
furnished by the Company shall be retained by the Company and at the end of the
three (3) year period possession thereof shall be delivered to the Company. The
Company shall pay all other operating expenses of the office including, without
limitation, the cost of telephone service. You may at any time deliver
possession of this office space and the furnishings to the Company, at which
time the Company's obligations under this Section shall cease.
11. LEGAL FEES AND EXPENSES. It is the intent of the Company that you
not be required to incur the expenses associated with the enforcement of your
rights under this Agreement by litigation or other legal action because the cost
and expense
<PAGE> 8
Mr. Henry S. Belden, IV
October 25, 1996
Page 8
thereof would substantially detract from the benefits intended to be extended to
you hereunder. Accordingly, if it should appear to you that the Company has
failed to comply with any of its obligations under this Agreement or in the
event that the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation designed to deny,
or to recover from, you the benefits intended to be provided to you hereunder,
the Company irrevocably authorizes you from time to time to retain counsel of
your choice, at the expense of the Company as hereafter provided, to represent
you in connection with the initiation or defense of any litigation or other
legal action, whether by or against the Company or any director, officer,
stockholder or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to your entering into
an attorney-client relationship with such counsel, and in that connection the
Company agrees with you that a confidential relationship shall exist between you
and such counsel. The Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' and related fees and expenses you incur
as a result of the Company's failure to perform this Agreement or any provision
hereof or as a result of the Company or any person contesting the validity or
enforceability of this Agreement or any provision hereof as aforesaid.
12. SECURITY FOR PAYMENT. To ensure that you can enforce the provisions
of this Agreement, two agreements ("Trust Agreement" and "Trust Agreement No.
2"; collectively, the "Trusts") will be established between the Company and a
trustee appointed by the Company (the "Trustee"). The Trust Agreement sets forth
the terms and conditions relating to payment from the Trust Agreement of the
amounts and the other benefits provided pursuant to this Agreement and owed by
the Company and Trust Agreement No. 2 sets forth the terms and conditions
relating to payment from Trust Agreement No. 2 of attorneys' and related fees
and expenses pursuant to Section 11 owed by the Company. You shall make demand
on the Company for any payments due you pursuant to Section 11 prior to making
demand therefor on the Trustee under Trust Agreement No. 2. Payments by such
Trustee shall discharge the Company's liability under Section 11 only to the
extent that trust assets are used to satisfy such liability.
<PAGE> 9
Mr. Henry S. Belden, IV
October 25, 1996
Page 9
13. OBLIGATION OF THE COMPANY TO FUND TRUSTS. Upon the earlier to occur
of (a) a Change in Control that involves a transaction that was not approved by
the board of directors of the Company (the "Board"), and was not recommended to
the Company's shareholders by the Board, (b) a declaration by the Board that the
Trusts should be funded in connection with a Change in Control that involves a
transaction that was approved by the Board, or was recommended to shareholders
by the Board, or (c) a declaration by the Board that a Change in Control is
imminent, the Company shall promptly to the extent it has not previously done
so, and in any event within five (5) business days:
(i) transfer to the Trustee to be added to the principal of the
trust under the Trust Agreement a sum equal to the aggregate
value on the date of the Change in Control of the payment
provided for under Section 7 or Section 8 and other benefits
provided hereunder which could become payable to you;
PROVIDED, HOWEVER, that the Company shall not be required to
transfer, in the aggregate, to the trust under the Trust
Agreement a sum in excess of $12,000,000. Any payment by the
Trustee pursuant to the Trust Agreement shall, to the extent
thereof, discharge the Company's obligation to pay the payment
provided for under Section 7 or Section 8 and other benefits
provided hereunder which become payable to you, it being the
intent of the Company that assets in such Trust be held as
security for the Company's obligation to pay the payment
provided for under Section 7 or Section 8 and other benefits
provided hereunder; and
(ii) transfer to the Trustee to be added to the principal of the
trust under Trust Agreement No. 2 the sum of $250,000. Any
payments of attorneys' and related fees and expenses, which
are the obligation of the Company under Section 11, by the
Trustee pursuant to Trust Agreement No. 2 shall, to the extent
thereof, discharge the Company's obligation hereunder, it
being the intent of the Company that such assets in such Trust
be held as security for the Company's obligation under Section
11.
14. SUCCESSOR AND BINDING AGREEMENT. Your rights under this agreement
shall inure to the benefit of your executors, administrators, personal
representatives and assigns in the event of your death. This agreement shall be
binding upon and inure to
<PAGE> 10
Mr. Henry S. Belden, IV
October 25, 1996
Page 10
the benefit of the Company and any successor of the Company, including, without
limitation, any person, firm or corporation acquiring directly or indirectly all
or substantially all the assets or capital stock of the Company (and such
successor shall thereafter be deemed the "Company" for the purpose of this
agreement).
15. AUTOMOBILE. During the term of your employment, the Company shall
provide to you biennially, a new passenger automobile suitable to the
performance of your duties and appropriate to your office.
16. NON-COMPETITION. During the term of your employment with the
Company and for a period of two years thereafter, you will refrain from engaging
in a competing business without having first obtained the written consent of the
Company. For the purpose of this Agreement, you will be considered to be
"engaging in a competing business" if you participate in the management of any
business enterprise if such enterprise engages in substantial and direct
competition with the Company and such enterprise's sales of any product or
service competitive with any product or service of the Company amounted to 10%
of such enterprise's net sales for its most recently completed fiscal year and
if the Company's net sales of said product or service amount to 10% of the
Company's net sales for its most recently completed fiscal year. Notwithstanding
the foregoing, for the purposes of this Agreement, "engaging in a competing
business" will not include (a) the mere ownership of securities in any such
enterprise and the exercise of rights appurtenant thereto, (b) participation in
the management of any such enterprise other than in connection with the
competitive operations of such enterprise or (c) exploration of or the
production from properties or interests you own.
17. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by you and the Company. No waiver by either party hereto at
any time of any breach by the other party hereto or compliance with any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied with respect to the subject matter hereof
have been made by any of the parties that are not set forth expressly in this
Agreement and every one of them (if, in
<PAGE> 11
Mr. Henry S. Belden, IV
October 25, 1996
Page 11
fact, there have been any) is hereby terminated without liability or any other
legal effect whatsoever.
18. ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
shall supersede all prior verbal or written agreements, covenants,
communications, understandings, commitments, representations or warranties,
whether oral or written, by any party hereto or any of its representatives
pertaining to such subject matter.
19. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the substantive laws of the
State of Ohio, without giving effect to the principles of conflict of laws of
such State.
20. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall nevertheless remain in full force and
effect.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.
22. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings
used herein are for convenience and are not part of this Agreement and shall not
be used in construing it.
23. FURTHER ASSURANCES. Each party hereto shall execute such additional
documents, and do such additional things, as may reasonably be requested by the
other party to effectuate the purposes and provisions of this Agreement.
<PAGE> 12
Mr. Henry S. Belden, IV
October 25, 1996
Page 12
In order to formalize this amendment and restatement of the
agreement between you and the Company expressed in this letter, please sign and
return the enclosed copy of this letter.
Very truly yours,
BELDEN & BLAKE CORPORATION
By: /s/ M. L. Mardick
----------------------------
Agreed:
/s/ Henry S. Belden
----------------------------
Henry S. Belden, IV
<PAGE> 1
Exhibit 10.2
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of October 25, 1996,
is made and entered into by and between Belden & Blake Corporation, an Ohio
corporation (the "Corporation"), and Max L. Mardick (the "Executive").
WITNESSETH:
WHEREAS, the Executive is a senior executive or a key employee of the
Company (as defined herein) and has made and is expected to continue to make
major contributions to the short- and long-term profitability, growth and
financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most publicly held
companies, the possibility of a Change in Control (as defined below) exists;
WHEREAS, the Company desires to assure itself of both present and future
continuity of management and desires to establish certain minimum severance
benefits for certain of its senior executives, including the Executive,
applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior executives are not
practically disabled from discharging their duties in respect of a proposed or
actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional inducement for the
Executive to continue to remain in the ongoing employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as follows:
1. CERTAIN DEFINED TERMS. In addition to terms defined elsewhere herein,
the following terms have the following meanings when used in this Agreement with
initial capital letters:
(a) "Base Pay" means the Executive's annual base salary at a rate not
less than the Executive's annual fixed or base compensation as in effect
for Executive immediately prior to the occurrence of a Change in Control or
such higher rate as may be determined from time to time by the Board or a
committee thereof. "Base Pay" shall include any portion of the Executive's
annual base salary the receipt of which the Executive has elected to defer.
(b) "Board" means the Board of Directors of the Corporation.
<PAGE> 2
(c) "Cause" means that, prior to any termination pursuant to Section
3(b), the Executive shall have committed:
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment with the
Company or any Subsidiary;
(ii) intentional wrongful damage to property of the Company or
any Subsidiary;
(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any Subsidiary; or
(iv) intentional wrongful engagement in any Competitive Activity;
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act or failure to act on the part of the
Executive shall be deemed "intentional" if it was due primarily to an error
in judgment or negligence, but shall be deemed "intentional" only if done
or omitted to be done by the Executive not in good faith and without
reasonable belief that his action or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for "Cause" hereunder unless and until there
shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than three quarters of the
Board then in office at a meeting of the Board called and held for such
purpose, after reasonable notice to the Executive and an opportunity for
the Executive, together with his counsel (if the Executive chooses to have
counsel present at such meeting), to be heard before the Board, finding
that, in the good faith opinion of the Board, the Executive had committed
an act constituting "Cause" as herein defined and specifying the
particulars thereof in detail. Nothing herein will limit the right of the
Executive or his beneficiaries to contest the validity or propriety of any
such determination.
(d) "Change in Control" means the occurrence during the Term of any of
the following events:
(i) The Corporation is merged, consolidated or reorganized into
or with another corporation or other legal person, and as a result of
such merger, consolidation or reorganization less than a majority of
the combined voting power of the then-outstanding Voting Stock of the
corporation or person surviving such merger, consolidation or
reorganization, immediately after such transaction, are beneficially
held, directly or indirectly, in the aggregate by the
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beneficial holders of Voting Stock of the Corporation immediately
prior to such transaction;
(ii) The Corporation sells or otherwise transfers all or
substantially all of its assets to another corporation or other legal
person, and as a result of such sale or transfer less than a majority
of the combined voting power of the then-outstanding Voting Stock of
such corporation or person immediately after such sale or transfer is
held in the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report), each as promulgated
pursuant to the Exchange Act, disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing 25% or
more of the combined voting power of the then-outstanding Voting Stock
of the Corporation;
(iv) The Corporation files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in control of
the Corporation has occurred or will occur in the future pursuant to
any then-existing contract or transaction; or
(v) If, during any period of two consecutive years, individuals
who at the beginning of any such period constitute the Directors of
the Corporation cease for any reason to constitute at least a majority
thereof; PROVIDED, HOWEVER, that for purposes of this clause (v) each
Director who is first elected, or first nominated for election by the
Company's stockholders, by a vote of at least two-thirds of the
Directors of the Corporation (or a committee thereof) then still in
office who were Directors of the Corporation at the beginning of any
such period will be deemed to have been a Director of the Corporation
at the beginning of such period.
Notwithstanding the foregoing provisions of Paragraph (iii) or (iv) of this
Subsection, unless otherwise determined in a specific case by majority vote
of the Board, a "Change in Control" shall not be deemed to have occurred
for purposes of Paragraph (iii) or (iv) of this Subsection solely because
(A) the Corporation, (B) a Subsidiary, (C) any Company-
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<PAGE> 4
sponsored employee stock ownership plan or any other employee benefit plan
of the Company or any Subsidiary, (D) any person or group of which
employees of the Company or a Subsidiary control a greater than 25%
interest unless the Board determines that such person or group is making a
"hostile acquisition", or (E) any person or group of which the Executive is
an affiliate either files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or
Schedule 14A (or any successor schedule, form or report or item therein)
under the Exchange Act disclosing beneficial ownership by it of shares of
Voting Stock, whether in excess of 25% or otherwise, or because the
Corporation reports that a change in control of the Corporation has
occurred or will occur in the future by reason of such beneficial
ownership.
(e) "Company" means the Corporation and its Subsidiaries.
(f) "Competitive Activity" means the Executive's participation,
without the written consent of an officer of the Company, in the management
of any business enterprise if such enterprise engages in substantial and
direct competition with the Company and such enterprise's sales of any
product or service competitive with any product or service of the Company
amounted to 10% of such enterprise's net sales for its most recently
completed fiscal year and if the Company's net sales of said product or
service amounted to 10% of the Company's net sales for its most recently
completed fiscal year. "Competitive Activity" will not include (i) the mere
ownership of securities in any such enterprise and the exercise of rights
appurtenant thereto or (ii) participation in the management of any such
enterprise other than in connection with the competitive operations of such
enterprise.
(g) "Employee Benefits" means the perquisites, benefits and service
credit for benefits as provided under any and all employee retirement
income and welfare benefit policies, plans, programs or arrangements in
which Executive is entitled to participate, including without limitation
any stock option, stock purchase, stock appreciation, savings, pension,
supplemental executive retirement, or other retirement income or welfare
benefit, deferred compensation, incentive compensation, group or other
life, health, medical/hospital or other insurance (whether funded by actual
insurance or self-insured by the Company), disability, salary continuation,
expense reimbursement and other employee benefit policies, plans, programs
or arrangements that may now exist or any equivalent successor policies,
plans, programs or arrangements that may be adopted hereafter by the
Company, providing perquisites, benefits and service credit for benefits at
least as great
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<PAGE> 5
in the aggregate as are payable thereunder prior to a Change in Control.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Incentive Pay" means an annual amount equal to not less than the
highest aggregate annual bonus (whether paid in cash or stock and
regardless of any election to defer actual payment of all or any portion of
such bonus), incentive or other payments of compensation (including the
stock portion of the profit-sharing payment contributed by the Company to
the Belden & Blake Corporation 401(k) Profit Sharing Plan, but not cash or
stock payments in lieu of distributions of restricted stock which vested in
any year or stock options), in addition to Base Pay, made or to be made in
regard to services rendered in any calendar year during the three calendar
years immediately preceding the year in which the Change in Control
occurred pursuant to any bonus, incentive, profit-sharing, performance,
discretionary pay or similar agreement, policy, plan, program or
arrangement (whether or not funded) of the Company, or any successor
thereto providing benefits at least as great as the benefits payable
thereunder prior to a Change in Control.
(j) "Severance Period" means the period of time commencing on the date
of the first occurrence of a Change in Control and continuing until the
earliest of (i) the third anniversary of the occurrence of the Change in
Control, (ii) the Executive's death, or (iii) the Executive's attainment of
age 65.
(k) "Subsidiary" means an entity in which the Corporation directly or
indirectly beneficially owns 50% or more of the outstanding Voting Stock.
(l) "Term" means the period commencing as of the date hereof and
expiring as of the later of (i) the close of business on December 31, 1998,
or (ii) the expiration of the Severance Period; PROVIDED, HOWEVER, that (A)
commencing on January 1, 1998 and each January 1 thereafter, the term of
this Agreement will automatically be extended for an additional year
unless, not later than September 30 of the immediately preceding year, the
Company or the Executive shall have given notice that it or the Executive,
as the case may be, does not wish to have the Term extended and (B) subject
to the last sentence of Section 9, if, prior to a Change in Control, the
Executive ceases for any reason to be an employee of the Company and any
Subsidiary, thereupon without further action the Term shall be deemed to
have expired and this Agreement will immediately terminate and be of no
further effect. For purposes of this Subsection, the Executive shall not be
deemed to have ceased to be an employee of the
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<PAGE> 6
Company and any Subsidiary by reason of the transfer of Executive's
employment between the Corporation and any Subsidiary, or among any
Subsidiaries.
(m) "Termination Date" means the date on which the Executive's
employment with the Company is terminated (the effective date of which
shall be the date of termination, or such other date that may be
specified by the Executive if the termination is pursuant to Section 3(b)
or (c)).
(n) "Voting Stock" means securities entitled to vote generally in the
election of directors.
2. OPERATION OF AGREEMENT. This Agreement will be effective and
binding immediately upon its execution, but, anything in this Agreement to the
contrary notwithstanding, this Agreement will not be operative unless and until
a Change in Control occurs. Upon the occurrence of a Change in Control at any
time during the Term, without further action, this Agreement shall become
immediately operative.
3. TERMINATION FOLLOWING A CHANGE IN CONTROL. (a) In the event of the
occurrence of a Change in Control, the Executive's employment may be
terminated by the Company during the Severance Period and the Executive
shall be entitled to the benefits provided by Section 4 unless such
termination is the result of the occurrence of one or more of the
following events:
(i) The Executive's death;
(ii) If the Executive becomes permanently disabled within the
meaning of, and begins actually to receive disability benefits
pursuant to, the long-term disability plan in effect for, or
applicable to, Executive immediately prior to the Change in Control;
or
(iii) Cause.
If, during the Severance Period, the Executive's employment is terminated
by the Company or any Subsidiary other than pursuant to Paragraph (i), (ii)
or (iii) of this Subsection, the Executive will be entitled to the benefits
provided by Section 4.
(b) In the event of the occurrence of a Change in Control, the
Executive may terminate employment with the Company and any Subsidiary
during the Severance Period with the right to the benefits as provided in
Section 4 upon the occurrence of one or more of the following events
(regardless of whether any other reason, other than Cause as hereinabove
provided, for such termination exists or has occurred, including without
limitation other employment):
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<PAGE> 7
(i) Failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or a substantially equivalent
office or position, of or with the Company and/or a Subsidiary, as the
case may be, which the Executive held immediately prior to a Change in
Control, or the removal of the Executive as a Director of the
Corporation (or any successor thereto) if the Executive shall have
been a Director of the Corporation immediately prior to the Change
in Control;
(ii) (A) A significant adverse change in the nature or scope of
the authorities, powers, functions, responsibilities or duties
attached to the position with the Company and any Subsidiary which the
Executive held immediately prior to the Change in Control, (B) a
reduction in the aggregate of the Executive's Base Pay and Incentive
Pay received from the Company and any Subsidiary, or (C) the
termination or denial of the Executive's rights to Employee Benefits
or a reduction in the scope or value thereof, any of which is not
remedied by the Company within 10 calendar days after receipt by
the Corporation of written notice from the Executive of such change,
reduction or termination, as the case may be;
(iii) The liquidation, dissolution, merger, consolidation
or reorganization of the Corporation or transfer of all or
substantially all of its business and/or assets, unless the successor
or successors (by liquidation, merger, consolidation, reorganization,
transfer or otherwise) to which all or substantially all of its
business and/or assets have been transferred (directly or by
operation of law) assumed all duties and obligations of the Company
under this Agreement pursuant to Section 11(a);
(iv) The Company relocates its principal executive offices, or
requires the Executive to have his principal location of work changed,
to any location that is in excess of 25 miles from the location
thereof immediately prior to the Change in Control, or requires the
Executive to travel away from his office in the course of discharging
his responsibilities or duties hereunder at least 20% more (in terms
of aggregate days in any calendar year or in any calendar quarter when
annualized for purposes of comparison to any prior year) than was
required of Executive in any of the three full years immediately prior
to the Change in Control without, in either case, his prior written
consent; or
(v) Without limiting the generality or effect of the foregoing,
any material breach of this Agreement by the Company or any successor
thereto.
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<PAGE> 8
(c) Notwithstanding anything contained in this Agreement to the
contrary, in the event of the occurrence of a Change in Control, commencing
six months after the Change in Control, the Executive may terminate
employment with the Company and any Subsidiary for any reason, or without
reason, with the right to severance compensation as provided in Section
4(a).
(d) A termination by the Company pursuant to Subsection (a) of this
Section or by the Executive pursuant to Subsection (b) or (c) of this
Section will not affect any rights that the Executive may have pursuant to
any agreement, policy, plan, program or arrangement of the Company
providing Employee Benefits, which rights shall be governed by the terms
thereof.
4. SEVERANCE COMPENSATION. (a) If, following the occurrence of a Change in
Control, the Company terminates the Executive's employment during the Severance
Period other than pursuant to Section 3(a), or if the Executive terminates his
employment pursuant to Section 3(b) or (c), the Company will pay to the
Executive the following amounts within five business days after the Termination
Date and continue to provide to the Executive the following benefits:
(i) A lump sum payment in an amount equal to three times the sum
of (A) Base Pay (at the highest rate in effect for any period prior to
the Termination Date), plus (B) Incentive Pay (determined in
accordance with the standards set forth in Section 1(i)).
(ii) (A) For a period of 36 months following the Termination Date
(the "Continuation Period"), the Company will arrange to provide the
Executive with Employee Benefits that are welfare benefits (but not
stock option, stock purchase, stock appreciation or similar
compensatory benefits) substantially similar to those that the
Executive was receiving or entitled to receive immediately prior to
the Termination Date (or, if greater, immediately prior to the
reduction, termination, or denial described in Section 3(b)(ii)),
except that the level of any such Employee Benefits to be provided to
the Executive may be reduced in the event of a corresponding reduction
generally applicable to all recipients of or participants in such
Employee Benefits, and (B) such Continuation Period will be considered
service with the Company for the purpose of determining service
credits and benefits due and payable to the Executive under the
Company's retirement income, supplemental executive retirement and
other benefit plans of the Company applicable to the Executive, his
dependents or his beneficiaries immediately prior to the Termination
Date. In addition, the Company shall provide the Executive, at the
Executive's election, with either outplacement
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services by a firm selected by the Executive, at the expense of the
Company in an amount up to 20% of the Executive's Base Pay, or
reimbursement of reasonable outplacement expenses actually incurred by
the Executive, in an amount up to 15% of the Executive's Base Pay. If
and to the extent that any benefit described in Subparagraph (A) or
(B) of this Paragraph is not or cannot be paid or provided under any
policy, plan, program or arrangement of the Company or any Subsidiary,
as the case may be, then the Company will itself pay or provide for
the payment to the Executive, his dependents and beneficiaries, of
such Employee Benefits. Without otherwise limiting the purposes or
effect of Section 5, Employee Benefits otherwise receivable by the
Executive pursuant to Subparagraph (A) of this Paragraph will be
reduced to the extent comparable welfare benefits are actually
received by the Executive from another employer during the
Continuation Period following the Executive's Termination Date, and
any such benefits actually received by the Executive shall be reported
by the Executive to the Corporation. If the continued health coverage
under Subparagraph (A) of this Paragraph is provided through
participation in the Company's group health plan, then following such
period of continued health care coverage, the Executive will be
eligible to elect to continue, for himself and his eligible
dependents, health benefits in accordance with the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(b) Upon the occurrence of any of the events described in the third
paragraph of Section 8 of the Company's Stock Option Plan, each stock
option granted to the Executive under such Plan then outstanding but not
exercisable shall immediately become and be exercisable in full in
accordance with the terms of such Plan and the applicable option agreement
between the Corporation and the Executive.
(c) Without limiting the rights of the Executive at law or in equity,
if the Company fails to make any payment or provide any benefit required to
be made or provided hereunder on a timely basis, the Company will pay
interest on the amount or value thereof at an annualized rate of interest
equal to the "prime rate" as quoted from time to time during the relevant
period in the Northeast Edition of THE WALL STREET JOURNAL. Such interest
will be payable as it accrues on demand. Any change in such prime rate will
be effective on and as of the date of such change.
(d) Notwithstanding any provision of this Agreement to the contrary,
the parties' respective rights and obligations under this Section and under
Sections 5 and 7 will survive any termination or expiration of this
Agreement or the
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termination of the Executive's employment following a Change in Control for
any reason whatsoever.
5. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this
Agreement to the contrary notwithstanding, in the event that this Agreement
shall become operative and it shall be determined (as hereafter provided) that
any payment or distribution by the Company or any of its affiliates to or for
the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise pursuant to
or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or the vesting
or exercisability of any of the foregoing (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any successor provision thereto) by reason of being
considered "contingent on a change in ownership or control" of the Corporation,
within the meaning of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment or
payments (collectively, a "Gross-Up Payment"); PROVIDED, HOWEVER, that no
Gross-up Payment shall be made with respect to the Excise Tax, if any,
attributable to (i) any incentive stock option, as defined by Section 422 of the
Code ("ISO") granted prior to the execution of this Agreement, or (ii) any stock
appreciation or similar right, whether or not limited, granted in tandem with
any ISO described in clause (i). The Gross-Up Payment shall be in an amount such
that, after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Subsection (f) of this Section, all
determinations required to be made under this Section, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax
and whether a Gross-Up Payment is required to be paid by the Company to the
Executive and the amount of such Gross-Up Payment, if any, shall be made by
a nationally recognized accounting firm (the "Accounting Firm") selected by
the Executive in his sole discretion. The Executive shall direct the
Accounting Firm to submit its determination and detailed supporting
calculations to both the Company and the Executive within 30 calendar days
after the Termination
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Date, if applicable, and any such other time or times as may be requested
by the Company or the Executive. If the Accounting Firm determines that any
Excise Tax is payable by the Executive, the Company shall pay the required
Gross-Up Payment to the Executive within five business days after receipt
of such determination and calculations with respect to any Payment to the
Executive. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall, at the same time as it makes such
determination, furnish the Company and the Executive an opinion that the
Executive has substantial authority not to report any Excise Tax on his
federal, state or local income or other tax return. As a result of the
uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made (an "Underpayment"), consistent with the calculations required to
be made hereunder. In the event that the Company exhausts or fails to
pursue its remedies pursuant to Subsection (f) of this Section and the
Executive thereafter is required to make a payment of any Excise Tax, the
Executive shall direct the Accounting Firm to determine the amount of the
Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both the Company and the Executive as promptly
as possible. Any such Underpayment shall be promptly paid by the Company
to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determinations and calculations contemplated by Subsection (b) of this
Section. Any determination by the Accounting Firm as to the amount of the
Gross-Up Payment shall be binding upon the Company and the Executive.
(d) The federal, state and local income or other tax returns filed by
the Executive shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable
by the Executive. The Executive shall make proper payment of the amount of
any Excise Payment, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his federal income
tax return as filed with the Internal Revenue Service and corresponding
state and local tax returns, if relevant, as filed with the
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applicable taxing authority, and such other documents reasonably requested
by the Company, evidencing such payment. If prior to the filing of the
Executive's federal income tax return, or corresponding state or local tax
return, if relevant, the Accounting Firm determines that the amount of the
Gross-Up Payment should be reduced, the Executive shall within five
business days pay to the Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by
Subsection (b) of this Section shall be borne by the Company. If such fees
and expenses are initially paid by the Executive, the Company shall
reimburse the Executive the full amount of such fees and expenses within
five business days after receipt from the Executive of a statement therefor
and reasonable evidence of his payment thereof.
(f) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up Payment.
Such notification shall be given as promptly as practicable but no later
than 10 business days after the Executive actually receives notice of such
claim and the Executive shall further apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid (in
each case, to the extent known by the Executive). The Executive shall not
pay such claim prior to the earlier of (i) the expiration of the
30-calendar-day period following the date on which he gives such notice to
the Company and (ii) the date that any payment of amount with respect to
such claim is due. If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest such claim, the
Executive shall:
(i) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the
Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
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(iv) permit the Company to participate in any proceedings
relating to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs
and expenses (including interest and penalties) incurred in connection with
such contest and shall indemnify and hold harmless the Executive, on an
after-tax basis, for and against any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limiting the
foregoing provisions of this Subsection, the Company shall control all
proceedings taken in connection with the contest of any claim contemplated
by this Subsection and, at its sole option, may pursue or forego any and
all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim (provided, however, that the
Executive may participate therein at his own cost and expense) and may, at
its option, either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; PROVIDED, HOWEVER,
that if the Company directs the Executive to pay the tax claimed and sue
for a refund, the Company shall advance the amount of such payment to the
Executive on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income or
other tax, including interest or penalties with respect thereto, imposed
with respect to such advance; and PROVIDED FURTHER, HOWEVER, that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which the contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Subsection (f) of this Section, the Executive
receives any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Subsection (f)
of this Section) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Subsection (f) of this Section, a
determination is made that the Executive shall not be entitled to any
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<PAGE> 14
refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial or refund prior
to the expiration of 30 calendar days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the
amount of any such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid by the Company to the Executive
pursuant to this Section.
6. NO MITIGATION OBLIGATION. The Company hereby acknowledges that
it will be difficult and may be impossible for the Executive to find reasonably
comparable employment following the Termination Date and that the
non-competition covenant contained in Section 8 will further limit the
employment opportunities for the Executive. In addition, the Company
acknowledges that its severance pay plans applicable in general to its salaried
employees do not provide for mitigation, offset or reduction of any severance
payment received thereunder. Accordingly, the payment of the severance
compensation by the Company to the Executive in accordance with the terms of
this Agreement is hereby acknowledged by the Company to be reasonable, and the
Executive will not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever create
any mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise, except as expressly provided in the last
sentence of Section 4(a)(ii).
7. LEGAL FEES AND EXPENSES. (a) It is the intent of the
Company that the Executive not be required to incur legal fees and the
related expenses associated with the interpretation, enforcement or
defense of Executive's rights under this Agreement by litigation or
otherwise because the cost and expense thereof would substantially detract
from the benefits intended to be extended to the Executive hereunder.
Accordingly, if it should appear to the Executive that the Company has
failed to comply with any of its obligations under this Agreement or in
the event that the Company or any other person takes or threatens to take
any action to declare this Agreement void or unenforceable, or institutes
any litigation or other action or proceeding designed to deny, or to
recover from, the Executive the benefits provided or intended to be
provided to the Executive hereunder, the Company irrevocably authorizes
the Executive from time to time to retain counsel of Executive's choice,
at the expense of the Company as hereafter provided, to advise and
represent the Executive in connection with any such interpretation,
enforcement or defense, including without limitation the initiation or
defense of any litigation or other legal action, whether by or against the
Company or any Director, officer, stockholder or other person affiliated
with the Company, in any jurisdiction. Notwithstanding any existing or
prior attorney-client relationship between the Company and such counsel,
the Company irrevocably consents to the Executive's entering into an
attorney-client
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<PAGE> 15
relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel. Without respect to whether the Executive prevails,
in whole or in part, in connection with any of the foregoing, the Company will
pay and be solely financially responsible for any and all attorneys' and related
fees and expenses incurred by the Executive in connection with any of the
foregoing.
(b) Without limiting the obligations of the Company pursuant to
Subsection (a) of this Section, in the event a Change in Control occurs,
the performance of the Company's obligations under this Section shall be
secured by amounts deposited or to be deposited in trust pursuant to
certain trust agreements to which the Corporation shall be a party, which
amounts deposited shall in the aggregate be not less than $250,000,
providing that the fees and expenses of counsel selected from time to time
by the Executive pursuant to Subsection (a) of this Section shall be paid,
or reimbursed to the Executive if paid by the Executive, either in
accordance with the terms of such trust agreements, or, if not so provided,
on a regular, periodic basis upon presentation by the Executive to the
trustee of a statement or statements prepared by such counsel in accordance
with its customary practices. Any failure by the Company to satisfy any of
its obligations under this Subsection shall not limit the rights of the
Executive hereunder. Subject to the foregoing, the Executive shall have the
status of a general unsecured creditor of the Company and shall have no
right to, or security interest in, any assets of the Company or any
Subsidiary.
8. COMPETITIVE ACTIVITY; CONFIDENTIAL INFORMATION. (a) During a period
ending one year following the Termination Date, if the Executive shall have
received or shall be receiving benefits under Section 4, and, if applicable,
Section 5, the Executive shall not, without the prior written consent of the
Company, which consent shall not be unreasonably withheld, engage in any
Competitive Activity.
(b)(i) The Executive acknowledges and agrees that in the performance
of his duties as an officer and employee of the Company, he was and may be
brought into frequent contact with, had or may have had access to, and/or
became or may become informed of confidential and proprietary information
of the Company and/or information which is a trade secret of the Company
(collectively, "Confidential Information"), as more fully described in
Paragraph (ii) of this Subsection. The Executive acknowledges and agrees
that the
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Confidential Information of the Company gained by the Executive during his
association with the Company was or will be developed by and/or for the
Company through substantial expenditure of time, effort and money and
constitutes valuable and unique property of the Company.
(ii) The Executive will keep in strict confidence, and will not,
directly or indirectly, at any time, disclose, furnish, disseminate, make
available, use or suffer to be used in any manner any Confidential
Information of the Company without limitation as to when or how the
Executive may have acquired such Confidential Information. The Executive
specifically acknowledges that Confidential Information includes any and
all information, whether reduced to writing (or in a form from which
information can be obtained, translated, or derived into reasonably usable
form), or maintained in the mind or memory of the Executive and whether
compiled or created by the Company, which derives independent economic
value from not being readily known to or ascertainable by proper means by
others who can obtain economic value from the disclosure or use of such
information, that reasonable efforts have been put forth by the Company to
maintain the secrecy of Confidential Information, that such Confidential
Information is and will remain the sole property of the Company, and that
any retention or use by the Executive of Confidential Information after the
termination of the Executive's employment with and services for the Company
shall constitute a misappropriation of the Company's Confidential
Information.
(iii) The Executive further agrees that he shall return, within ten
(10) days of the effective date of his termination as an employee of the
Company, in good condition, all property of the Company then in his
possession, including, without limitation, (A) property, documents and/or
all other materials (including copies, reproductions, summaries and/or
analyses) which constitute, refer or relate to Confidential Information of
the Company, (B) keys to Company property, (C) files and (D) blueprints or
other drawings.
(iv) The Executive further acknowledges and agrees that his obligation
of confidentiality shall survive, regardless of any other breach of this
Agreement or any other agreement, by any party hereto, until and unless
such Confidential Information of the Company shall have become, through no
fault of the Executive, generally known to the public or the Executive is
required by law (after providing the Company with notice and
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<PAGE> 17
opportunity to contest such requirement) to make disclosure. The
Executive's obligations under this Subsection are in addition to, and not
in limitation or preemption of, all other obligations of confidentiality
which the Executive may have to the Company under general legal or
equitable principles or statutes.
9. EMPLOYMENT RIGHTS. Nothing expressed or implied in this Agreement
will create any right or duty on the part of the Company or the Executive to
have the Executive remain in the employment of the Company or any Subsidiary
prior to or following any Change in Control. Any termination of employment of
the Executive or the removal of the Executive from the office or position in
the Company or any Subsidiary prior to a Change in Control but following the
commencement of any discussion with any third person that ultimately results in
a Change in Control shall be deemed to be a termination or removal of the
Executive after a Change in Control for purposes of this Agreement.
10. WITHHOLDING OF TAXES. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as the
Company is required to withhold pursuant to any law or government regulation or
ruling.
11. SUCCESSORS AND BINDING AGREEMENT. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business
or assets of the Company, by agreement in form and substance satisfactory
to the Executive, expressly to assume and agree to perform this Agreement
in the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement will be
binding upon and inure to the benefit of the Company and any successor to
the Company, including without limitation any persons acquiring directly
or indirectly all or substantially all of the business or assets of the
Company whether by purchase, merger, consolidation, reorganization or
otherwise (and such successor shall thereafter be deemed the "Company" for
the purposes of this Agreement), but will not otherwise be assignable,
transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Subsections (a) and (b) of this Section. Without
limiting the generality or effect of the foregoing, the
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Executive's right to receive payments hereunder will not be assignable,
transferable or delegable, whether by pledge, creation of a security
interest, or otherwise, other than by a transfer by Executive's will or by
the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Subsection, the Company shall have
no liability to pay any amount so attempted to be assigned, transferred or
delegated.
12. NOTICES. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been
sent by a nationally recognized overnight courier service such as Federal
Express or UPS, addressed to the Corporation (to the attention of the Secretary
of the Corporation) at its principal executive office and to the Executive at
his principal residence, or to such other address as any party may have
furnished to the other in writing and in accordance herewith, except that
notices of changes of address shall be effective only upon receipt.
13. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Ohio, without giving effect to the
principles of conflict of laws of such State.
14. VALIDITY. If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid, unenforceable
or otherwise illegal, the remainder of this Agreement and the application of
such provision to any other person or circumstances will not be affected, and
the provision so held to be invalid, unenforceable or otherwise illegal will be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid or legal.
15. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Corporation. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. This Agreement supersedes and
completely replaces any prior severance or employment agreement previously
applicable to the Executive. No agreements or representations, oral or
otherwise, expressed or implied with respect to the subject matter hereof have
been made by either party which are
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not set forth expressly in this Agreement. References to Sections are to
references to Sections of this Agreement.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
BELDEN & BLAKE CORPORATION
By: /s/ H. S. Belden
------------------------------
Title: Chief Executive Officer
---------------------------
/s/ M. L. Mardick
---------------------------------
Max L. Mardick
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Exhibit 10.3
SEVERANCE AGREEMENT
-------------------
THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of
October 25, 1996, is made and entered into by and between Belden & Blake
Corporation, an Ohio corporation (the "Corporation"), and ________________ (the
"Executive").
WITNESSETH:
-----------
WHEREAS, the Executive is a senior executive or a key employee
of the Company (as defined herein) and has made and is expected to continue to
make major contributions to the short- and long-term profitability, growth and
financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most
publicly held companies, the possibility of a Change in Control (as defined
below) exists;
WHEREAS, the Company desires to assure itself of both present
and future continuity of management and desires to establish certain minimum
severance benefits for certain of its senior executives, including the
Executive, applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior
executives are not practically disabled from discharging their duties in respect
of a proposed or actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional inducement
for the Executive to continue to remain in the ongoing employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as
follows:
1. CERTAIN DEFINED TERMS. In addition to terms defined
elsewhere herein, the following terms have the following meanings when used in
this Agreement with initial capital letters:
(a) "Base Pay" means the Executive's annual base salary at a
rate not less than the Executive's annual fixed or base compensation as
in effect for Executive immediately prior to the occurrence of a Change
in Control or such higher rate as may be determined from time to time
by the Board or a committee thereof. "Base Pay" shall include any
portion of the Executive's annual base salary the receipt of which the
Executive has elected to defer.
(b) "Board" means the Board of Directors of the Corporation.
<PAGE> 2
(c) "Cause" means that, prior to any termination pursuant to
Section 3(b), the Executive shall have committed:
(i) an intentional act of fraud, embezzlement or theft
in connection with his duties or in the course of his
employment with the Company or any Subsidiary;
(ii) intentional wrongful damage to property of the
Company or any Subsidiary;
(iii) intentional wrongful disclosure of secret processes
or confidential information of the Company or any Subsidiary;
or
(iv) intentional wrongful engagement in any Competitive
Activity;
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act or failure to act on the part of the
Executive shall be deemed "intentional" if it was due primarily to an
error in judgment or negligence, but shall be deemed "intentional" only
if done or omitted to be done by the Executive not in good faith and
without reasonable belief that his action or omission was in the best
interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for "Cause" hereunder
unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less
than three quarters of the Board then in office at a meeting of the
Board called and held for such purpose, after reasonable notice to the
Executive and an opportunity for the Executive, together with his
counsel (if the Executive chooses to have counsel present at such
meeting), to be heard before the Board, finding that, in the good faith
opinion of the Board, the Executive had committed an act constituting
"Cause" as herein defined and specifying the particulars thereof in
detail. Nothing herein will limit the right of the Executive or his
beneficiaries to contest the validity or propriety of any such
determination.
(d) "Change in Control" means the occurrence during the Term
of any of the following events:
(i) The Corporation is merged, consolidated or
reorganized into or with another corporation or other legal
person, and as a result of such merger, consolidation or
reorganization less than a majority of the combined voting
power of the then-outstanding Voting Stock of the corporation
or person surviving such merger, consolidation or
reorganization, immediately after such transaction, are
beneficially held, directly or indirectly, in the aggregate
by the
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beneficial holders of Voting Stock of the Corporation
immediately prior to such transaction;
(ii) The Corporation sells or otherwise transfers all or
substantially all of its assets to another corporation or
other legal person, and as a result of such sale or transfer
less than a majority of the combined voting power of the
then-outstanding Voting Stock of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Company
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as
promulgated pursuant to the Exchange Act, disclosing that any
person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing
25% or more of the combined voting power of the
then-outstanding Voting Stock of the Corporation;
(iv) The Corporation files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or Schedule
14A (or any successor schedule, form or report or item
therein) that a change in control of the Company has occurred
or will occur in the future pursuant to any then-existing
contract or transaction; or
(v) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute
the Directors of the Corporation cease for any reason to
constitute at least a majority thereof; PROVIDED, HOWEVER,
that for purposes of this clause (v) each Director who is
first elected, or first nominated for election by the
Company's stockholders, by a vote of at least two-thirds of
the Directors of the Corporation (or a committee thereof) then
still in office who were Directors of the Corporation at the
beginning of any such period will be deemed to have been a
Director of the Corporation at the beginning of such period.
Notwithstanding the foregoing provisions of Paragraph (iii) or (iv) of
this Subsection, unless otherwise determined in a specific case by
majority vote of the Board, a "Change in Control" shall not be deemed
to have occurred for purposes of Paragraph (iii) or (iv) of this
Subsection solely because (A) the Corporation, (B) a Subsidiary,
(C) any Company-
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sponsored employee stock ownership plan or any other employee benefit
plan of the Company or any Subsidiary, (D) any person or group of which
employees of the Company or a Subsidiary control a greater than 25%
interest unless the Board determines that such person or group is
making a "hostile acquisition", or (E) any person or group of which the
Executive is an affiliate either files or becomes obligated to file a
report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule,
form or report or item therein) under the Exchange Act disclosing
beneficial ownership by it of shares of Voting Stock, whether in excess
of 25% or otherwise, or because the Corporation reports that a change
in control of the Corporation has occurred or will occur in the
future by reason of such beneficial ownership.
(e) "Company" means the Corporation and its Subsidiaries.
(f) "Competitive Activity" means the Executive's
participation, without the written consent of an officer of the
Corporation, in the management of any business enterprise if such
enterprise engages in substantial and direct competition with the
Company and such enterprise's sales of any product or service
competitive with any product or service of the Company amounted to 10%
of such enterprise's net sales for its most recently completed fiscal
year and if the Company's net sales of said product or service amounted
to 10% of the Company's net sales for its most recently completed
fiscal year. "Competitive Activity" will not include (i) the mere
ownership of securities in any such enterprise and the exercise of
rights appurtenant thereto or (ii) participation in the management of
any such enterprise other than in connection with the competitive
operations of such enterprise.
(g) "Employee Benefits" means the perquisites, benefits and
service credit for benefits as provided under any and all employee
retirement income and welfare benefit policies, plans, programs or
arrangements in which Executive is entitled to participate, including
without limitation any stock option, stock purchase, stock
appreciation, savings, pension, supplemental executive retirement, or
other retirement income or welfare benefit, deferred compensation,
incentive compensation, group or other life, health, medical/hospital
or other insurance (whether funded by actual insurance or self-insured
by the Company), disability, salary continuation, expense reimbursement
and other employee benefit policies, plans, programs or arrangements
that may now exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company,
providing perquisites, benefits and service credit for benefits at
least as great
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<PAGE> 5
in the aggregate as are payable thereunder prior to a Change
in Control.
(h) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(i) "Incentive Pay" means an annual amount equal to not less
than the highest aggregate annual bonus (whether paid in cash or stock
and regardless of any election to defer actual payment of all or any
portion of such bonus), incentive or other payments of compensation
(including the stock portion of the profit-sharing payment contributed
by the Company to the Belden & Blake Corporation 401(k) Profit Sharing
Plan, but not cash or stock payments in lieu of distributions of
restricted stock which vested in any year or stock options), in
addition to Base Pay, made or to be made in regard to services rendered
in any calendar year during the three calendar years immediately
preceding the year in which the Change in Control occurred pursuant to
any bonus, incentive, profit-sharing, performance, discretionary pay or
similar agreement, policy, plan, program or arrangement (whether or not
funded) of the Company, or any successor thereto providing benefits at
least as great as the benefits payable thereunder prior to a Change in
Control.
(j) "Severance Period" means the period of time commencing on
the date of the first occurrence of a Change in Control and continuing
until the earliest of (i) the third anniversary of the occurrence of
the Change in Control, (ii) the Executive's death, or (iii) the
Executive's attainment of age 65.
(k) "Subsidiary" means an entity in which the Corporation
directly or indirectly beneficially owns 50% or more of the
outstanding Voting Stock.
(l) "Term" means the period commencing as of the date hereof
and expiring as of the later of (i) the close of business on December
31, 1998, or (ii) the expiration of the Severance Period; PROVIDED,
HOWEVER, that (A) commencing on January 1, 1998 and each January 1
thereafter, the term of this Agreement will automatically be extended
for an additional year unless, not later than September 30 of the
immediately preceding year, the Company or the Executive shall have
given notice that it or the Executive, as the case may be, does not
wish to have the Term extended and (B) subject to the last sentence of
Section 10, if, prior to a Change in Control, the Executive ceases for
any reason to be an employee of the Company and any Subsidiary,
thereupon without further action the Term shall be deemed to have
expired and this Agreement will immediately terminate and be of no
further effect. For purposes of this Subsection, the Executive shall
not be deemed to have ceased to be an employee of the
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<PAGE> 6
Company by reason of the transfer of Executive's employment between
the Corporation and any Subsidiary, or among any Subsidiaries.
(m) "Termination Date" means the date on which the Executive's
employment with the Company is terminated (the effective date of which
shall be the date of termination, or such other date that may be
specified by the Executive if the termination is pursuant to Section
3(b)).
(n) "Voting Stock" means securities entitled to vote generally
in the election of directors.
2. OPERATION OF AGREEMENT. This Agreement will be effective
and binding immediately upon its execution, but, anything in this Agreement to
the contrary notwithstanding, this Agreement will not be operative unless and
until a Change in Control occurs. Upon the occurrence of a Change in Control at
any time during the Term, without further action, this Agreement shall become
immediately operative.
3. TERMINATION FOLLOWING A CHANGE IN CONTROL. (a) In the event
of the occurrence of a Change in Control, the Executive's employment
may be terminated by the Company during the Severance Period and the
Executive shall be entitled to the benefits provided by Section 4
unless such termination is the result of the occurrence of one or more
of the following events:
(i) The Executive's death;
(ii) If the Executive becomes permanently disabled within
the meaning of, and begins actually to receive disability
benefits pursuant to, the long-term disability plan in effect
for, or applicable to, Executive immediately prior to the
Change in Control; or
(iii) Cause.
If, during the Severance Period, the Executive's employment is
terminated by the Company or any Subsidiary other than pursuant to
Paragraph (i), (ii) or (iii) of this Subsection, the Executive will be
entitled to the benefits provided by Section 4.
(b) In the event of the occurrence of a Change in Control, the
Executive may terminate employment with the Company and any Subsidiary
during the Severance Period with the right to the benefits provided in
Section 4 upon the occurrence of one or more of the following events
(regardless of whether any other reason, other than Cause as
hereinabove provided, for such termination exists or has occurred,
including without limitation other employment):
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<PAGE> 7
(i) Failure to elect or reelect or otherwise to maintain
the Executive in the office or the position, or a
substantially equivalent office or position, of or with the
Company and/or a Subsidiary, as the case may be, which the
Executive held immediately prior to a Change in Control, or
the removal of the Executive as a Director of the Corporation
(or any successor thereto) if the Executive shall have been a
Director of the Corporation immediately prior to the Change in
Control;
(ii) (A) A significant adverse change in the nature or
scope of the authorities, powers, functions, responsibilities
or duties attached to the position with the Company and any
Subsidiary which the Executive held immediately prior to the
Change in Control, (B) a reduction in the aggregate of the
Executive's Base Pay and Incentive Pay received from the
Company and any Subsidiary, or (C) the termination or denial
of the Executive's rights to Employee Benefits or a reduction
in the scope or value thereof, any of which is not remedied by
the Company within 10 calendar days after receipt by the
Corporation of written notice from the Executive of such
change, reduction or termination, as the case may be;
(iii) The liquidation, dissolution, merger, consolidation
or reorganization of the Corporation or transfer of all or
substantially all of its business and/or assets, unless the
successor or successors (by liquidation, merger,
consolidation, reorganization, transfer or otherwise) to which
all or substantially all of its business and/or assets have
been transferred (directly or by operation of law) assumed all
duties and obligations of the Company under this Agreement
pursuant to Section 12(a);
(iv) The Company relocates its principal executive
offices, or requires the Executive to have his principal
location of work changed, to any location that is in excess of
25 miles from the location thereof immediately prior to the
Change in Control, or requires the Executive to travel away
from his office in the course of discharging his
responsibilities or duties hereunder at least 20% more (in
terms of aggregate days in any calendar year or in any
calendar quarter when annualized for purposes of comparison to
any prior year) than was required of Executive in any of the
three full years immediately prior to the Change in Control
without, in either case, his prior written consent; or
(v) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the
Company or any successor thereto.
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<PAGE> 8
(c) A termination by the Company pursuant to Subsection (a) of
this Section or by the Executive pursuant to Subsection (b) of this
Section will not affect any rights that the Executive may have pursuant
to any agreement, policy, plan, program or arrangement of the Company
providing Employee Benefits, which rights shall be governed by the
terms thereof.
4. SEVERANCE COMPENSATION. (a) If, following the occurrence of
a Change in Control, the Company terminates the Executive's employment
during the Severance Period other than pursuant to Section 3(a), or if
the Executive terminates his employment pursuant to Section 3(b), the
Company will pay to the Executive the following amounts within five
business days after the Termination Date and continue to provide to the
Executive the following benefits:
(i) A lump sum payment in an amount equal to three times
the sum of (A) Base Pay (at the highest rate in effect for any
period prior to the Termination Date), plus (B) Incentive Pay
(determined in accordance with the standards set forth in
Section 1(i)).
(ii)(A) For a period of 36 months following the
Termination Date (the "Continuation Period"), the Company will
arrange to provide the Executive with Employee Benefits that
are welfare benefits (but not stock option, stock purchase,
stock appreciation or similar compensatory benefits)
substantially similar to those that the Executive was
receiving or entitled to receive immediately prior to the
Termination Date (or, if greater, immediately prior to the
reduction, termination, or denial described in Section
3(b)(ii)), except that the level of any such Employee Benefits
to be provided to the Executive may be reduced in the event of
a corresponding reduction generally applicable to all
recipients of or participants in such Employee Benefits, and
(B) such Continuation Period will be considered service with
the Company for the purpose of determining service credits and
benefits due and payable to the Executive under the Company's
retirement income, supplemental executive retirement and other
benefit plans of the Company applicable to the Executive, his
dependents or his beneficiaries immediately prior to the
Termination Date. In addition, the Company shall provide the
Executive, at the Executive's election, with either
outplacement services by a firm selected by the Executive, at
the expense of the Company in an amount up to 20% of the
Executive's Base Pay, or reimbursement of reasonable
outplacement expenses actually incurred by the Executive, in
an amount up to 15% of the Executive's Base Pay. If and to the
extent that any benefit described in Subparagraph (A) or (B)
of this Paragraph
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<PAGE> 9
is not or cannot be paid or provided under any policy, plan,
program or arrangement of the Company or any Subsidiary, as
the case may be, then the Corporation will itself pay or
provide for the payment to the Executive, his dependents and
beneficiaries, of such Employee Benefits. Without otherwise
limiting the purposes or effect of Section 5, Employee
Benefits otherwise receivable by the Executive pursuant to
Subparagraph (A) of this Paragraph will be reduced to the
extent comparable welfare benefits are actually received by
the Executive from another employer during the Continuation
Period following the Executive's Termination Date, and any
such benefits actually received by the Executive shall be
reported by the Executive to the Corporation. If the continued
health coverage under Subparagraph (A) of this Paragraph is
provided through participation in the Company's group health
plan, then following such period of continued health care
coverage, the Executive will be eligible to elect to
continue, for himself and his eligible dependents, health
benefits in accordance with the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.
(b) Upon the occurrence of any of the events described in the
third paragraph of Section 8 of the Company's Stock Option Plan, each
stock option granted to the Executive under such Plan then outstanding
but not exercisable shall immediately become and be exercisable in full
in accordance with the terms of such Plan and the applicable option
agreement between the Corporation and the Executive.
(c) Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment or provide any benefit
required to be made or provided hereunder on a timely basis, the
Company will pay interest on the amount or value thereof at an
annualized rate of interest equal to the "prime rate" as quoted from
time to time during the relevant period in the Northeast Edition of THE
WALL STREET JOURNAL. Such interest will be payable as it accrues on
demand. Any change in such prime rate will be effective on and as of
the date of such change.
(d) Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under this
Section and under Sections 6 and 8 will survive any termination or
expiration of this Agreement or the termination of the Executive's
employment following a Change in Control for any reason whatsoever.
5. QUALIFIED PLAN BENEFITS. Upon the occurrence of a Change in
Control, the Executive's account in the Belden & Blake Corporation 401(k) Profit
Sharing Plan shall be come 100% vested and nonforfeitable.
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<PAGE> 10
6. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in
this Agreement to the contrary notwithstanding, in the event that this
Agreement shall become operative and it shall be determined (as
hereafter provided) that any payment or distribution by the Company or
any of its affiliates to or for the benefit of the Executive, whether
paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar right,
or the lapse or termination of any restriction on or the vesting or
exercisability of any of the foregoing (a "Payment"), would be subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code") (or any successor provision thereto)
by reason of being considered "contingent on a change in ownership or
control" of the Corporation, within the meaning of Section 280G of the
Code (or any successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment or payments (collectively, a "Gross-Up Payment");
PROVIDED, HOWEVER, that no Gross-up Payment shall be made with respect
to the Excise Tax, if any, attributable to (i) any incentive stock
option, as defined by Section 422 of the Code ("ISO") granted prior to
the execution of this Agreement, or (ii) any stock appreciation or
similar right, whether or not limited, granted in tandem with any ISO
described in clause (i). The Gross-Up Payment shall be in an amount
such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including
any Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment.
(b) Subject to the provisions of Subsection (f) of this
Section, all determinations required to be made under this Section,
including whether an Excise Tax is payable by the Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is required to
be paid by the Company to the Executive and the amount of such Gross-Up
Payment, if any, shall be made by a nationally recognized accounting
firm (the "Accounting Firm") selected by the Executive in his sole
discretion. The Executive shall direct the Accounting Firm to submit
its determination and detailed supporting calculations to both the
Company and the Executive within 30 calendar days after the Termination
Date, if applicable, and any such other time or times as may be
requested by the Company or the Executive. If the Accounting Firm
determines that any Excise Tax is payable by
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<PAGE> 11
the Executive, the Company shall pay the required Gross-Up Payment to
the Executive within five business days after receipt of such
determination and calculations with respect to any Payment to the
Executive. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Company and the Executive an opinion that
the Executive has substantial authority not to report any Excise Tax on
his federal, state or local income or other tax return. As a result of
the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should
have been made (an "Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts
or fails to pursue its remedies pursuant to Subsection (f) of this
Section and the Executive thereafter is required to make a payment of
any Excise Tax, the Executive shall direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and to
submit its determination and detailed supporting calculations to both
the Company and the Executive as promptly as possible. Any such
Underpayment shall be promptly paid by the Company to, or for the
benefit of, the Executive within five business days after receipt of
such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the
case may be, reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the preparation
and issuance of the determinations and calculations contemplated by
Subsection (b) of this Section. Any determination by the Accounting
Firm as to the amount of the Gross-Up Payment shall be binding upon the
Company and the Executive.
(d) The federal, state and local income or other tax returns
filed by the Executive shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the
Excise Tax payable by the Executive. The Executive shall make proper
payment of the amount of any Excise Payment, and at the request of the
Company, provide to the Company true and correct copies (with any
amendments) of his federal income tax return as filed with the Internal
Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment.
If prior to the filing of the Executive's federal
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<PAGE> 12
income tax return, or corresponding state or local tax return, if
relevant, the Accounting Firm determines that the amount of the
Gross-Up Payment should be reduced, the Executive shall within five
business days pay to the Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by Subsection (b) of this Section shall be borne by the
Company. If such fees and expenses are initially paid by the Executive,
the Company shall reimburse the Executive the full amount of such fees
and expenses within five business days after receipt from the Executive
of a statement therefor and reasonable evidence of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service or any other taxing authority
that, if successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as promptly as
practicable but no later than 10 business days after the Executive
actually receives notice of such claim and the Executive shall further
apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid (in each case, to the extent known
by the Executive). The Executive shall not pay such claim prior to the
earlier of (i) the expiration of the 30-calendar-day period following
the date on which he gives such notice to the Company and (ii) the date
that any payment of amount with respect to such claim is due. If the
Company notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the Executive shall:
(i) provide the Company with any written records or
documents in his possession relating to such claim reasonably
requested by the Company;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including without limitation accepting legal
representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably
selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
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<PAGE> 13
PROVIDED, HOWEVER, that the Company shall bear and pay directly all
costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Subsection,
the Company shall control all proceedings taken in connection with the
contest of any claim contemplated by this Subsection and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided, however, that the Executive may
participate therein at his own cost and expense) and may, at its
option, either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine; PROVIDED,
HOWEVER, that if the Company directs the Executive to pay the tax
claimed and sue for a refund, the Company shall advance the amount of
such payment to the Executive on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income or other tax, including interest or penalties
with respect thereto, imposed with respect to such advance; and
PROVIDED FURTHER, HOWEVER, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which the contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the
Company's control of any such contested claim shall be limited to
issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service
or any other taxing authority.
(g) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Subsection (f) of this Section, the
Executive receives any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of
Subsection (f) of this Section) promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon
after any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Subsection
(f) of this Section, a determination is made that the Executive shall
not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to
contest such denial or refund prior to the expiration of 30 calendar
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<PAGE> 14
days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of any such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Company to the Executive pursuant to this
Section.
7. NO MITIGATION OBLIGATION. The Company hereby acknowledges
that it will be difficult and may be impossible for the Executive to find
reasonably comparable employment following the Termination Date and that the
non-competition covenant contained in Section 9 will further limit the
employment opportunities for the Executive. In addition, the Company
acknowledges that its severance pay plans applicable in general to its salaried
employees do not provide for mitigation, offset or reduction of any severance
payment received thereunder. Accordingly, the payment of the severance
compensation by the Company to the Executive in accordance with the terms of
this Agreement is hereby acknowledged by the Company to be reasonable, and the
Executive will not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever create
any mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise, except as expressly provided in the last
sentence of Section 4(a)(ii).
8. LEGAL FEES AND EXPENSES. (a) It is the intent of the
Company that the Executive not be required to incur legal fees and the
related expenses associated with the interpretation, enforcement or
defense of Executive's rights under this Agreement by litigation or
otherwise because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Executive
hereunder. Accordingly, if it should appear to the Executive that the
Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or
unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, the Executive the
benefits provided or intended to be provided to the Executive
hereunder, the Company irrevocably authorizes the Executive from time
to time to retain counsel of Executive's choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense,
including without limitation the initiation or defense of any
litigation or other legal action, whether by or against the Company or
any Director, officer, stockholder or other person affiliated with the
Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to the Executive's entering into an
attorney-client relationship with such counsel, and
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<PAGE> 15
in that connection the Company and the Executive agree that a
confidential relationship shall exist between the Executive and such
counsel. Without respect to whether the Executive prevails, in whole or
in part, in connection with any of the foregoing, the Company will pay
and be solely financially responsible for any and all attorneys' and
related fees and expenses incurred by the Executive in connection with
any of the foregoing.
(b) Without limiting the obligations of the Company pursuant
to Subsection (a) of this Section, in the event a Change in Control
occurs, the performance of the Company's obligations under this Section
shall be secured by amounts deposited or to be deposited in trust
pursuant to certain trust agreements to which the Corporation shall be
a party, which amounts deposited shall in the aggregate be not less
than $250,000, providing that the fees and expenses of counsel
selected from time to time by the Executive pursuant to Subsection (a)
of this Section shall be paid, or reimbursed to the Executive if paid
by the Executive, either in accordance with the terms of such trust
agreements, or, if not so provided, on a regular, periodic basis upon
presentation by the Executive to the trustee of a statement or
statements prepared by such counsel in accordance with its customary
practices. Any failure by the Company to satisfy any of its
obligations under this Subsection shall not limit the rights of the
Executive hereunder. Subject to the foregoing, the Executive shall
have the status of a general unsecured creditor of the Company and
shall have no right to, or security interest in, any assets of the
Company or any Subsidiary.
9. COMPETITIVE ACTIVITY; CONFIDENTIAL INFORMATION. (a) During
a period ending one year following the Termination Date, if the
Executive shall have received or shall be receiving benefits under
Section 4, and, if applicable, Section 6, the Executive shall not,
without the prior written consent of the Company, which consent shall
not be unreasonably withheld, engage in any Competitive Activity.
(b)(i) The Executive acknowledges and agrees that in
the performance of his duties as an officer and employee of
the Company, he was and may be brought into frequent contact
with, had or may have had access to, and/or became or may
become informed of confidential and proprietary information of
the Company and/or information which is a trade secret of the
Company (collectively, "Confidential Information"), as more
fully described in Paragraph (ii) of this Subsection. The
Executive acknowledges and agrees that the Confidential
Information of the Company gained by the Executive during his
association with the Company was or will be developed by
and/or for the Company through
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<PAGE> 16
substantial expenditure of time, effort and money and
constitutes valuable and unique property of the Company.
(ii) The Executive will keep in strict confidence, and
will not, directly or indirectly, at any time, disclose,
furnish, disseminate, make available, use or suffer to be used
in any manner any Confidential Information of the Company
without limitation as to when or how the Executive may have
acquired such Confidential Information. The Executive
specifically acknowledges that Confidential Information
includes any and all information, whether reduced to writing
(or in a form from which information can be obtained,
translated, or derived into reasonably usable form), or
maintained in the mind or memory of the Executive and whether
compiled or created by the Company, which derives independent
economic value from not being readily known to or
ascertainable by proper means by others who can obtain
economic value from the disclosure or use of such information,
that reasonable efforts have been put forth by the Company to
maintain the secrecy of Confidential Information, that such
Confidential Information is and will remain the sole property
of the Company, and that any retention or use by the Executive
of Confidential Information after the termination of the
Executive's employment with and services for the Company shall
constitute a misappropriation of the Company's Confidential
Information.
(iii) The Executive further agrees that he shall return,
within ten (10) days of the effective date of his termination
as an employee of the Company, in good condition, all property
of the Company then in his possession, including, without
limitation, (A) property, documents and/or all other materials
(including copies, reproductions, summaries and/or analyses)
which constitute, refer or relate to Confidential Information
of the Company, (B) keys to Company property, (C) files and
(D) blueprints or other drawings.
(iv) The Executive further acknowledges and agrees that
his obligation of confidentiality shall survive, regardless of
any other breach of this Agreement or any other agreement, by
any party hereto, until and unless such Confidential
Information of the Company shall have become, through no fault
of the Executive, generally known to the public or the
Executive is required by law (after providing the Company with
notice and opportunity to contest such requirement) to make
disclosure. The Executive's obligations under this Subsection
are in addition to, and not in limitation or
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<PAGE> 17
preemption of, all other obligations of confidentiality which
the Executive may have to the Company under general legal or
equitable principles or statutes.
10. EMPLOYMENT RIGHTS. Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company or the
Executive to have the Executive remain in the employment of the Company or any
Subsidiary prior to or following any Change in Control. Any termination of
employment of the Executive or the removal of the Executive from the office or
position in the Company or any Subsidiary prior to a Change in Control but
following the commencement of any discussion with any third person that
ultimately results in a Change in Control shall be deemed to be a termination or
removal of the Executive after a Change in Control for purposes of this
Agreement.
11. WITHHOLDING OF TAXES. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
the Company is required to withhold pursuant to any law or government regulation
or ruling.
12. SUCCESSORS AND BINDING AGREEMENT. (a) The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all
of the business or assets of the Company, by agreement in form and
substance satisfactory to the Executive, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent the
Company would be required to perform if no such succession had taken
place. This Agreement will be binding upon and inure to the benefit of
the Company and any successor to the Company, including without
limitation any persons acquiring directly or indirectly all or
substantially all of the business or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but will not otherwise be assignable, transferable or
delegable by the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Subsections (a) and (b) of
this Section. Without limiting the generality or effect of the
foregoing, the Executive's right to receive payments hereunder will not
be assignable, transferable or delegable, whether by pledge, creation
of a security interest, or otherwise, other than by
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<PAGE> 18
a transfer by Executive's will or by the laws of descent and
distribution and, in the event of any attempted assignment or transfer
contrary to this Subsection, the Company shall have no liability to pay
any amount so attempted to be assigned, transferred or delegated.
13. NOTICES. For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof orally confirmed), or
five business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight courier service
such as Federal Express or UPS, addressed to the Corporation (to the attention
of the Secretary of the Corporation) at its principal executive office and to
the Executive at his principal residence, or to such other address as any party
may have furnished to the other in writing and in accordance herewith, except
that notices of changes of address shall be effective only upon receipt.
14. GOVERNING LAW. The validity, interpretation, construction
and performance of this Agreement will be governed by and construed in
accordance with the substantive laws of the State of Ohio, without giving effect
to the principles of conflict of laws of such State.
15. VALIDITY. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances will not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
16. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Corporation. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. This Agreement
supersedes and completely replaces any prior severance or employment agreement
previously applicable to the Executive. No agreements or representations, oral
or otherwise, expressed or implied with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. References to Sections are to references to Sections of this
Agreement.
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17. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the date first above written.
BELDEN & BLAKE CORPORATION
By: ________________________
Title:______________________
____________________________
[Executive]
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<PAGE> 1
Exhibit 10.4
SEVERANCE AGREEMENT
-------------------
THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of
October 25, 1996, is made and entered into by and between Belden & Blake
Corporation, an Ohio corporation (the "Corporation"), and _____________ (the
"Executive").
WITNESSETH:
-----------
WHEREAS, the Executive is a senior executive or a key employee
of the Company (as defined herein) and has made and is expected to continue to
make major contributions to the short- and long-term profitability, growth and
financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most
publicly held companies, the possibility of a Change in Control (as defined
below) exists;
WHEREAS, the Company desires to assure itself of both present
and future continuity of management and desires to establish certain minimum
severance benefits for certain of its senior executives, including the
Executive, applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior
executives are not practically disabled from discharging their duties in respect
of a proposed or actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional inducement
for the Executive to continue to remain in the ongoing employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as
follows:
1. CERTAIN DEFINED TERMS. In addition to terms
defined elsewhere herein, the following terms have the following meanings
when used in this Agreement with initial capital letters:
(a) "Base Pay" means the Executive's annual base salary at a
rate not less than the Executive's annual fixed or base compensation as
in effect for Executive immediately prior to the occurrence of a Change
in Control or such higher rate as may be determined from time to time
by the Board or a committee thereof. "Base Pay" shall include any
portion of the Executive's annual base salary the receipt of which the
Executive has elected to defer.
(b) "Board" means the Board of Directors of the
Corporation.
<PAGE> 2
(c) "Cause" means that, prior to any termination
pursuant to Section 3(b), the Executive shall have
committed:
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment
with the Company;
(ii) intentional wrongful damage to property of
the Company; or
(iii) intentional wrongful disclosure of secret
processes or confidential information of the Company;
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act or failure to act on the part of the
Executive shall be deemed "intentional" if it was due primarily to an
error in judgment or negligence, but shall be deemed "intentional" only
if done or omitted to be done by the Executive not in good faith and
without reasonable belief that his action or omission was in the best
interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for "Cause" hereunder
unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less
than three quarters of the Board then in office at a meeting of the
Board called and held for such purpose, after reasonable notice to the
Executive and an opportunity for the Executive, together with his
counsel (if the Executive chooses to have counsel present at such
meeting), to be heard before the Board, finding that, in the good faith
opinion of the Board, the Executive had committed an act constituting
"Cause" as herein defined and specifying the particulars thereof in
detail. Nothing herein will limit the right of the Executive or his
beneficiaries to contest the validity or propriety of any such
determination.
(d) "Change in Control" means the occurrence during
the Term of any of the following events:
(i) The Company is merged, consolidated or reorganized
into or with another corporation or other legal person, and as
a result of such merger, consolidation or reorganization less
than a majority of the combined voting power of the
then-outstanding Voting Stock of the corporation or person
surviving such merger, consolidation or reorganization,
immediately after such transaction, are beneficially held,
directly or indirectly, in the aggregate by the beneficial
holders of Voting Stock of the Corporation immediately prior
to such transaction;
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(ii) The Corporation sells or otherwise transfers all or
substantially all of its assets to another corporation or
other legal person, and as a result of such sale or transfer
less than a majority of the combined voting power of the
then-outstanding Voting Stock of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Corporation
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as
promulgated pursuant to the Exchange Act, disclosing that any
person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing
25% or more of the combined voting power of the
then-outstanding Voting Stock of the Corporation;
(iv) The Corporation files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or Schedule
14A (or any successor schedule, form or report or item
therein) that a change in control of the Company has occurred
or will occur in the future pursuant to any then-existing
contract or transaction; or
(v) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute
the Directors of the Corporation cease for any reason to
constitute at least a majority thereof; PROVIDED, HOWEVER,
that for purposes of this clause (v) each Director who is
first elected, or first nominated for election by the
Corporation's stockholders, by a vote of at least two-thirds
of the Directors of the Corporation (or a committee thereof)
then still in office who were Directors of the Corporation
at the beginning of any such period will be deemed to have
been a Director of the Corporation at the beginning of such
period.
Notwithstanding the foregoing provisions of Paragraph (iii) or (iv) of
this Subsection, unless otherwise determined in a specific case by
majority vote of the Board, a "Change in Control" shall not be deemed
to have occurred for purposes of Paragraph (iii) or (iv) of this
Subsection solely because (A) the Corporation, (B) a Subsidiary,
(C) any Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company, (D) any person or group of which
employees of the Company or a Subsidiary control a greater
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than 25% interest unless the Board determines that such person or
group is making a "hostile acquisition", or (E) any person or group of
which the Executive is an affiliate either files or becomes obligated
to file a report or a proxy statement under or in response to Schedule
13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act
disclosing beneficial ownership by it of shares of Voting Stock,
whether in excess of 25% or otherwise, or because the Corporation
reports that a change in control of the Corporation has occurred or
will occur in the future by reason of such beneficial ownership.
(e) "Company" means the Corporation and its Subsidiaries.
(f) "Employee Benefits" means the perquisites, benefits and
service credit for benefits as provided under any and all employee
retirement income and welfare benefit policies, plans, programs or
arrangements in which Executive is entitled to participate, including
without limitation any stock option, stock purchase, stock
appreciation, savings, pension, supplemental executive retirement, or
other retirement income or welfare benefit, deferred compensation,
incentive compensation, group or other life, health, medical/hospital
or other insurance (whether funded by actual insurance or self-insured
by the Company), disability, salary continuation, expense reimbursement
and other employee benefit policies, plans, programs or arrangements
that may now exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company,
providing perquisites, benefits and service credit for benefits at
least as great in the aggregate as are payable thereunder prior to a
Change in Control.
(g) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(h) "Incentive Pay" means an annual amount equal to not less
than the highest aggregate annual bonus (whether paid in cash or stock
and regardless of any election to defer actual payment of all or any
portion of such bonus), incentive or other payments of compensation
(including the stock portion of the profit-sharing payment contributed
by the Company to the Belden & Blake Corporation 401(k) Profit Sharing
Plan, but not cash or stock payments in lieu of distributions of
restricted stock which vested in any year or stock options), in
addition to Base Pay, made or to be made in regard to services rendered
in any calendar year during the three calendar years immediately
preceding the year in which the Change in Control occurred pursuant to
any bonus, incentive, profit-sharing, performance, discretionary pay or
similar agreement, policy, plan, program or
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arrangement (whether or not funded) of the Company, or any successor
thereto providing benefits at least as great as the benefits payable
thereunder prior to a Change in Control.
(i) "Severance Period" means the period of time commencing on
the date of the first occurrence of a Change in Control and continuing
until the earliest of (i) the second anniversary of the occurrence of
the Change in Control, (ii) the Executive's death, or (iii) the
Executive's attainment of age 65.
(j) "Subsidiary" means an entity in which the Company directly
or indirectly beneficially owns 50% or more of the outstanding Voting
Stock.
(k) "Term" means the period commencing as of the date hereof
and expiring as of the later of (i) the close of business on December
31, 1998, or (ii) the expiration of the Severance Period; PROVIDED,
HOWEVER, that (A) commencing on January 1, 1998 and each January 1
thereafter, the term of this Agreement will automatically be extended
for an additional year unless, not later than September 30 of the
immediately preceding year, the Corporation or the Executive shall have
given notice that it or the Executive, as the case may be, does not
wish to have the Term extended and (B) subject to the last sentence of
Section 10, if, prior to a Change in Control, the Executive ceases for
any reason to be an employee of the Company and any Subsidiary,
thereupon without further action the Term shall be deemed to have
expired and this Agreement will immediately terminate and be of no
further effect. For purposes of this Subsection, the Executive shall
not be deemed to have ceased to be an employee of the Company and any
Subsidiary by reason of the transfer of Executive's employment between
the Corporation and any Subsidiary, or among any Subsidiaries.
(l) "Termination Date" means the date on which the Executive's
employment with the Company is terminated (the effective date of which
shall be the date of termination, or such other date that may be
specified by the Executive if the termination is pursuant to Section
3(b)).
(m) "Voting Stock" means securities entitled to vote generally
in the election of directors.
2. OPERATION OF AGREEMENT. This Agreement will be effective
and binding immediately upon its execution, but, anything in this Agreement to
the contrary notwithstanding, this Agreement will not be operative unless and
until a Change in Control occurs. Upon the occurrence of a Change in Control at
any time during the Term, without further action, this Agreement shall become
immediately operative.
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3. TERMINATION FOLLOWING A CHANGE IN CONTROL. (a) In the event
of the occurrence of a Change in Control, the Executive's employment may be
terminated by the Company during the Severance Period and the Executive shall be
entitled to the benefits provided by Section 4 unless such termination is the
result of the occurrence of one or more of the following events:
(i) The Executive's death;
(ii) If the Executive becomes permanently disabled within
the meaning of, and begins actually to receive disability
benefits pursuant to, the long-term disability plan in effect
for, or applicable to, Executive immediately prior to the
Change in Control; or
(iii) Cause.
If, during the Severance Period, the Executive's employment is
terminated by the Company or any Subsidiary other than pursuant to
Paragraph (i), (ii) or (iii) of this Subsection, the Executive will be
entitled to the benefits provided by Section 4.
(b) In the event of the occurrence of a Change in Control, the
Executive may terminate employment with the Company and any Subsidiary
during the Severance Period with the right to the benefits provided in
Section 4 upon the occurrence of one or more of the following events
(regardless of whether any other reason, other than Cause as
hereinabove provided, for such termination exists or has occurred,
including without limitation other employment):
(i) Failure to elect or reelect or otherwise to
maintain the Executive in the office or the position, or a
substantially equivalent office or position, of or with the
Company and/or a Subsidiary, as the case may be, which the
Executive held immediately prior to a Change in Control, or
the removal of the Executive as a Director of the Corporation
(or any successor thereto) if the Executive shall have been a
Director of the Corporation immediately prior to the Change in
Control;
(ii) (A) A significant adverse change in the nature or
scope of the authorities, powers, functions, responsibilities
or duties attached to the position with the Company and any
Subsidiary which the Executive held immediately prior to the
Change in Control, (B) a reduction in the aggregate of the
Executive's Base Pay and Incentive Pay received from the
Company and any Subsidiary, or (C) the termination or denial
of the Executive's rights to Employee Benefits or a reduction
in the scope or value thereof, any of which is not remedied by
the Company within 10 calendar days after receipt by the
Corporation of written notice
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from the Executive of such change, reduction or termination,
as the case may be;
(iii) The liquidation, dissolution, merger, consolidation
or reorganization of the Corporation or transfer of all or
substantially all of its business and/or assets, unless the
successor or successors (by liquidation, merger,
consolidation, reorganization, transfer or otherwise) to which
all or substantially all of its business and/or assets have
been transferred (directly or by operation of law) assumed all
duties and obligations of the Company under this Agreement
pursuant to Section 12(a);
(iv) The Company relocates its principal executive
offices, or requires the Executive to have his principal
location of work changed, to any location that is in excess of
25 miles from the location thereof immediately prior to the
Change in Control, or requires the Executive to travel away
from his office in the course of discharging his
responsibilities or duties hereunder at least 20% more (in
terms of aggregate days in any calendar year or in any
calendar quarter when annualized for purposes of comparison to
any prior year) than was required of Executive in any of the
three full years immediately prior to the Change in Control
without, in either case, his prior written consent; or
(v) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the
Company or any successor thereto.
(c) A termination by the Company pursuant to Subsection (a) of
this Section or by the Executive pursuant to Subsection (b) of this
Section will not affect any rights that the Executive may have pursuant
to any agreement, policy, plan, program or arrangement of the Company
providing Employee Benefits, which rights shall be governed by the
terms thereof.
4. SEVERANCE COMPENSATION. (a) If, following the occurrence of
a Change in Control, the Company terminates the Executive's employment
during the Severance Period other than pursuant to Section 3(a), or if
the Executive terminates his employment pursuant to Section 3(b), the
Company will pay to the Executive the following amounts within five
business days after the Termination Date and continue to provide to the
Executive the following benefits:
(i) A lump sum payment in an amount equal to two
times the sum of (A) Base Pay (at the highest rate in effect
for any period prior to the Termination Date),
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plus (B) Incentive Pay (determined in accordance with
the standards set forth in Section 1(h)).
(ii) (A) For a period of 36 months following the
Termination Date (the "Continuation Period"), the Company will
arrange to provide the Executive with Employee Benefits that
are welfare benefits (but not stock option, stock purchase,
stock appreciation or similar compensatory benefits)
substantially similar to those that the Executive was
receiving or entitled to receive immediately prior to the
Termination Date (or, if greater, immediately prior to the
reduction, termination, or denial described in Section
3(b)(ii)), except that the level of any such Employee Benefits
to be provided to the Executive may be reduced in the event of
a corresponding reduction generally applicable to all
recipients of or participants in such Employee Benefits, and
(B) such Continuation Period will be considered service with
the Company for the purpose of determining service credits and
benefits due and payable to the Executive under the Company's
retirement income, supplemental executive retirement and other
benefit plans of the Company applicable to the Executive, his
dependents or his beneficiaries immediately prior to the
Termination Date. In addition, the Company shall provide the
Executive, at the Executive's election, with either
outplacement services by a firm selected by the Executive, at
the expense of the Company in an amount up to 20% of the
Executive's Base Pay, or reimbursement of reasonable
outplacement expenses actually incurred by the Executive, in
an amount up to 15% of the Executive's Base Pay. If and to the
extent that any benefit described in Subparagraph (A) or (B)
of this Paragraph is not or cannot be paid or provided under
any policy, plan, program or arrangement of the Company or any
Subsidiary, as the case may be, then the Company will itself
pay or provide for the payment to the Executive, his
dependents and beneficiaries, of such Employee Benefits.
Without otherwise limiting the purposes or effect of Section
6, Employee Benefits otherwise receivable by the Executive
pursuant to Subparagraph (A) of this Paragraph will be reduced
to the extent comparable welfare benefits are actually
received by the Executive from another employer during the
Continuation Period following the Executive's Termination
Date, and any such benefits actually received by the Executive
shall be reported by the Executive to the Corporation. If the
continued health coverage under Subparagraph (A) of this
Paragraph is provided through participation in the Company's
group health plan, then following such period of continued
health care coverage, the Executive will be eligible to elect
to continue, for himself and his eligible dependents, health
benefits in accordance with the
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provisions of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended.
(b) Upon the occurrence of any of the events described in the
third paragraph of Section 8 of the Company's Stock Option Plan, each
stock option granted to the Executive under such Plan then outstanding
but not exercisable shall immediately become and be exercisable in full
in accordance with the terms of such Plan and the applicable option
agreement between the Corporation and the Executive.
(c) Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment or provide any benefit
required to be made or provided hereunder on a timely basis, the
Company will pay interest on the amount or value thereof at an
annualized rate of interest equal to the "prime rate" as quoted from
time to time during the relevant period in the Northeast Edition of THE
WALL STREET JOURNAL. Such interest will be payable as it accrues on
demand. Any change in such prime rate will be effective on and as of
the date of such change.
(d) Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under this
Section and under Sections 6 and 8 will survive any termination or
expiration of this Agreement or the termination of the Executive's
employment following a Change in Control for any reason whatsoever.
5. QUALIFIED PLAN BENEFITS. Upon the occurrence of a Change in
Control, the Executive's account in the Belden & Blake Corporation
401(k) Profit Sharing Plan shall become 100% vested and nonforfeitable.
6. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in
this Agreement to the contrary notwithstanding, in the event that this
Agreement shall become operative and it shall be determined (as
hereafter provided) that any payment or distribution by the
Corporation or any of its affiliates to or for the benefit of the
Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise pursuant to or by
reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock appreciation
right or similar right, or the lapse or termination of any restriction
on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision thereto) by reason of being considered "contingent
on a change in ownership or control" of the Corporation, within the
meaning of Section 280G of the Code (or any successor provision
thereto) or to any
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similar tax imposed by state or local law, or any interest or penalties
with respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an
additional payment or payments (collectively, a "Gross-Up Payment");
PROVIDED, HOWEVER, that no Gross-up Payment shall be made with respect
to the Excise Tax, if any, attributable to (i) any incentive stock
option, as defined by Section 422 of the Code ("ISO") granted prior to
the execution of this Agreement, or (ii) any stock appreciation or
similar right, whether or not limited, granted in tandem with any ISO
described in clause (i). The Gross-Up Payment shall be in an amount
such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including
any Excise Tax imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payment.
(b) Subject to the provisions of Subsection (f) of this
Section, all determinations required to be made under this Section,
including whether an Excise Tax is payable by the Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is required to
be paid by the Company to the Executive and the amount of such Gross-Up
Payment, if any, shall be made by a nationally recognized accounting
firm (the "Accounting Firm") selected by the Executive in his sole
discretion. The Executive shall direct the Accounting Firm to submit
its determination and detailed supporting calculations to both the
Company and the Executive within 30 calendar days after the Termination
Date, if applicable, and any such other time or times as may be
requested by the Company or the Executive. If the Accounting Firm
determines that any Excise Tax is payable by the Executive, the Company
shall pay the required Gross-Up Payment to the Executive within five
business days after receipt of such determination and calculations with
respect to any Payment to the Executive. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall, at
the same time as it makes such determination, furnish the Company and
the Executive an opinion that the Executive has substantial authority
not to report any Excise Tax on his federal, state or local income or
other tax return. As a result of the uncertainty in the application of
Section 4999 of the Code (or any successor provision thereto) and the
possibility of similar uncertainty regarding applicable state or local
tax law at the time of any determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the
event that the Company exhausts or fails to pursue its remedies
pursuant to
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Subsection (f) of this Section and the Executive thereafter is required
to make a payment of any Excise Tax, the Executive shall direct the
Accounting Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting
calculations to both the Company and the Executive as promptly as
possible. Any such Underpayment shall be promptly paid by the Company
to, or for the benefit of, the Executive within five business days
after receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the
case may be, reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the preparation
and issuance of the determinations and calculations contemplated by
Subsection (b) of this Section. Any determination by the Accounting
Firm as to the amount of the Gross-Up Payment shall be binding upon the
Company and the Executive.
(d) The federal, state and local income or other tax returns
filed by the Executive shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the
Excise Tax payable by the Executive. The Executive shall make proper
payment of the amount of any Excise Payment, and at the request of the
Company, provide to the Company true and correct copies (with any
amendments) of his federal income tax return as filed with the Internal
Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment.
If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting
Firm determines that the amount of the Gross-Up Payment should be
reduced, the Executive shall within five business days pay to the
Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by Subsection (b) of this Section shall be borne by the
Company. If such fees and expenses are initially paid by the Executive,
the Company shall reimburse the Executive the full amount of such fees
and expenses within five business days after receipt from the Executive
of a statement therefor and reasonable evidence of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service or any other taxing authority
that, if successful, would require the
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payment by the Company of a Gross-Up Payment. Such notification shall
be given as promptly as practicable but no later than 10 business days
after the Executive actually receives notice of such claim and the
Executive shall further apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid (in each case,
to the extent known by the Executive). The Executive shall not pay such
claim prior to the earlier of (i) the expiration of the 30-calendar-day
period following the date on which he gives such notice to the Company
and (ii) the date that any payment of amount with respect to such claim
is due. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive shall:
(i) provide the Company with any written records or
documents in his possession relating to such claim reasonably
requested by the Company;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including without limitation accepting legal
representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably
selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly all
costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Subsection,
the Company shall control all proceedings taken in connection with the
contest of any claim contemplated by this Subsection and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided, however, that the Executive may
participate therein at his own cost and expense) and may, at its
option, either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts,
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as the Company shall determine; PROVIDED, HOWEVER, that if the Company
directs the Executive to pay the tax claimed and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income or other
tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and PROVIDED FURTHER, HOWEVER, that any
extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which the
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such
contested claim shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Subsection (f) of this Section, the
Executive receives any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of
Subsection (f) of this Section) promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon
after any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Subsection
(f) of this Section, a determination is made that the Executive shall
not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to
contest such denial or refund prior to the expiration of 30 calendar
days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of any such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Company to the Executive pursuant to this
Section.
7. NO MITIGATION OBLIGATION. The Company hereby acknowledges
that it will be difficult and may be impossible for the Executive to find
reasonably comparable employment following the Termination Date. In addition,
the Company acknowledges that its severance pay plans applicable in general to
its salaried employees do not provide for mitigation, offset or reduction of any
severance payment received thereunder. Accordingly, the payment of the severance
compensation by the Company to the Executive in accordance with the terms of
this Agreement is hereby acknowledged by the Company to be reasonable, and the
Executive will not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever create
any mitigation, offset, reduction or any other obligation on the part
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of the Executive hereunder or otherwise, except as expressly provided in the
last sentence of Section 4(a)(ii).
8. LEGAL FEES AND EXPENSES. (a) It is the intent of the
Company that the Executive not be required to incur legal fees and the
related expenses associated with the interpretation, enforcement or
defense of Executive's rights under this Agreement by litigation or
otherwise because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Executive
hereunder. Accordingly, if it should appear to the Executive that the
Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or
unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, the Executive the
benefits provided or intended to be provided to the Executive
hereunder, the Company irrevocably authorizes the Executive from time
to time to retain counsel of Executive's choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense,
including without limitation the initiation or defense of any
litigation or other legal action, whether by or against the Company or
any Director, officer, stockholder or other person affiliated with the
Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to the Executive's entering into an
attorney-client relationship with such counsel, and in that connection
the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. Without respect to
whether the Executive prevails, in whole or in part, in connection with
any of the foregoing, the Company will pay and be solely financially
responsible for any and all attorneys' and related fees and expenses
incurred by the Executive in connection with any of the foregoing.
(b) Without limiting the obligations of the Company pursuant
to Subsection (a) of this Section, in the event a Change in Control
occurs, the performance of the Company's obligations under this Section
shall be secured by amounts deposited or to be deposited in trust
pursuant to certain trust agreements to which the Corporation shall
be a party, which amounts deposited shall in the aggregate be not less
than $250,000, providing that the fees and expenses of counsel
selected from time to time by the Executive pursuant to Subsection (a)
of this Section shall be paid, or reimbursed to the Executive if paid
by the Executive, either in accordance with the terms of such trust
agreements, or, if not so provided, on a regular, periodic basis upon
presentation by the Executive to the trustee of a statement
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or statements prepared by such counsel in accordance with its customary
practices. Any failure by the Company to satisfy any of its obligations
under this Subsection shall not limit the rights of the Executive
hereunder. Subject to the foregoing, the Executive shall have the
status of a general unsecured creditor of the Company and shall have no
right to, or security interest in, any assets of the Company or any
Subsidiary.
9. CONFIDENTIAL INFORMATION. (a) The Executive acknowledges
and agrees that in the performance of his duties as an officer and/or
employee of the Company, he was and may be brought into frequent
contact with, had or may have had access to, and/or became or may
become informed of confidential and proprietary information of the
Company and/or information which is a trade secret of the Company
(collectively, "Confidential Information"), as more fully described in
Subsection (b) of this Section. The Executive acknowledges and agrees
that the Confidential Information of the Company gained by the
Executive during his association with the Company was or will be
developed by and/or for the Company through substantial expenditure of
time, effort and money and constitutes valuable and unique property of
the Company.
(b) The Executive will keep in strict confidence, and will
not, directly or indirectly, at any time, disclose, furnish,
disseminate, make available, use or suffer to be used in any manner any
Confidential Information of the Company without limitation as to when
or how the Executive may have acquired such Confidential Information.
The Executive specifically acknowledges that Confidential Information
includes any and all information, whether reduced to writing (or in a
form from which information can be obtained, translated, or derived
into reasonably usable form), or maintained in the mind or memory of
the Executive and whether compiled or created by the Company, which
derives independent economic value from not being readily known to or
ascertainable by proper means by others who can obtain economic value
from the disclosure or use of such information, that reasonable efforts
have been put forth by the Company to maintain the secrecy of
Confidential Information, that such Confidential Information is and
will remain the sole property of the Company, and that any retention or
use by the Executive of Confidential Information after the termination
of the Executive's employment with and services for the Company shall
constitute a misappropriation of the Company's Confidential
Information.
(c) The Executive further agrees that he shall return, within
ten (10) days of the effective date of his termination as an employee
of the Company, in good condition, all property of the Company then in
his
15
<PAGE> 16
possession, including, without limitation, (i) property, documents
and/or all other materials (including copies, reproductions, summaries
and/or analyses) which constitute, refer or relate to Confidential
Information of the Company, (ii) keys to Company property, (iii) files
and (iv) blueprints or other drawings.
(d) The Executive further acknowledges and agrees that his
obligation of confidentiality shall survive, regardless of any other
breach of this Agreement or any other agreement, by any party hereto,
until and unless such Confidential Information of the Company shall
have become, through no fault of the Executive, generally known to the
public or the Executive is required by law (after providing the Company
with notice and opportunity to contest such requirement) to make
disclosure. The Executive's obligations under this Section are in
addition to, and not in limitation or preemption of, all other
obligations of confidentiality which the Executive may have to the
Company under general legal or equitable principles or statutes.
10. EMPLOYMENT RIGHTS. Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company or the
Executive to have the Executive remain in the employment of the Company or any
Subsidiary prior to or following any Change in Control. Any termination of
employment of the Executive or the removal of the Executive from the office or
position in the Company or any Subsidiary prior to a Change in Control but
following the commencement of any discussion with any third person that
ultimately results in a Change in Control shall be deemed to be a termination or
removal of the Executive after a Change in Control for purposes of this
Agreement.
11. WITHHOLDING OF TAXES. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
the Company is required to withhold pursuant to any law or government regulation
or ruling.
12. SUCCESSORS AND BINDING AGREEMENT. (a) The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all
of the business or assets of the Company, by agreement in form and
substance satisfactory to the Executive, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent the
Company would be required to perform if no such succession had taken
place. This Agreement will be binding upon and inure to the benefit of
the Company and any successor to the Company, including without
limitation any persons acquiring directly or indirectly all or
substantially all of the business or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but will
16
<PAGE> 17
not otherwise be assignable, transferable or delegable by
the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Subsections (a) and (b) of
this Section. Without limiting the generality or effect of the
foregoing, the Executive's right to receive payments hereunder will not
be assignable, transferable or delegable, whether by pledge, creation
of a security interest, or otherwise, other than by a transfer by
Executive's will or by the laws of descent and distribution and, in the
event of any attempted assignment or transfer contrary to this
Subsection, the Company shall have no liability to pay any amount so
attempted to be assigned, transferred or delegated.
13. NOTICES. For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof orally confirmed), or
five business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight courier service
such as Federal Express or UPS, addressed to the Corporation (to the attention
of the Secretary of the Corporation) at its principal executive office and to
the Executive at his principal residence, or to such other address as any party
may have furnished to the other in writing and in accordance herewith, except
that notices of changes of address shall be effective only upon receipt.
14. GOVERNING LAW. The validity, interpretation, construction
and performance of this Agreement will be governed by and construed in
accordance with the substantive laws of the State of Ohio, without giving effect
to the principles of conflict of laws of such State.
15. VALIDITY. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances will not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
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<PAGE> 18
16. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Corporation. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. This Agreement
supersedes and completely replaces any prior severance or employment agreement
previously applicable to the Executive. No agreements or representations, oral
or otherwise, expressed or implied with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. References to Sections are to references to Sections of this
Agreement.
17. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the date first above written.
BELDEN & BLAKE CORPORATION
By:_______________________
Title:____________________
___________________________
[Executive]
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<PAGE> 1
Exhibit 10.5
SEVERANCE PAY PLAN FOR KEY EMPLOYEES
OF
BELDEN & BLAKE CORPORATION
1. GENERAL STATEMENT OF PURPOSE. With the high level of
corporate acquisition and restructuring activity over the past several years,
employees are understandably concerned about their careers and their personal
financial security. As a result, even rumors of acquisitions and restructuring
cause employees to consider major career changes in an effort to assure
financial security for themselves and their families.
This Severance Pay Plan for Key Employee of Belden & Blake
Corporation (the "Plan") is designed to assure fair treatment of Key Employees
(as defined below) in the event of a Change in Control (as defined below). In
such circumstances, it would permit Key Employees to make critical career
decisions in an atmosphere free of time pressure and financial uncertainty,
increasing their willingness to remain with Belden & Blake Corporation (the
"Corporation") notwithstanding the outcome of a possible Change in Control.
2. EFFECTIVE AND TERMINATION DATES. The Plan shall
be effective as of October 1, 1996 (the "Effective Date"). The
Plan will automatically terminate on December 31, 1998 (the
"Termination Date"), if there has been no Change in Control prior
to such date.
3. DEFINITIONS. Where the following words and
phrases appear in the Plan, they shall have the respective
meanings set forth below, unless their context clearly indicates
otherwise:
a. AVERAGE INCENTIVE PAY. The term "Average Incentive Pay"
shall mean an amount which is the greater of (i) the average amount of
Incentive Pay awarded to the Key Employee for the three calendar years
immediately prior to the Key Employee's termination of employment
(whether or not paid in such calendar years) or (ii) the amount of the
most recent award of Incentive Pay.
b. BASE SALARY. The term "Base Salary" shall mean, with
respect to each Key Employee, the annual base compensation of such Key
Employee at the rate in effect immediately prior to the Change in
Control or at such higher rate as may be in effect immediately prior to
the Key Employee's termination of employment. "Base Salary" shall
include any portion of the Key Employee's annual base compensation the
receipt of which the Key Employee has elected to defer.
<PAGE> 2
2
c. BOARD. The term "Board" shall mean the board of directors
of the Corporation.
d. CAUSE. The term "Cause" shall mean that, prior to any
termination of employment pursuant to Section 4.b., the Key Employee
shall have committed:
i) an intentional act of fraud, embezzlement or
theft in connection with his duties or in the course of
his employment with the Company;
(ii) intentional wrongful damage to property of
the Company; or
(iii) intentional wrongful disclosure of secret
processes or confidential information of the Company;
and any such act shall have been materially harmful to the Company or
any Subsidiary. For purposes of the Plan, no act or failure to act on
the part of the Key Employee shall be deemed "intentional" if it was
due primarily to an error in judgment or negligence, but shall be
deemed "intentional" only if done or omitted to be done by the Key
Employee not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Key Employee shall not be deemed to
have been terminated for "Cause" hereunder unless and until there shall
have been delivered to the Key Employee a copy of a resolution duly
adopted by the affirmative vote of not less than three quarters of the
Board then in office at a meeting of the Board called and held for such
purpose, after reasonable notice to the Key Employee and an opportunity
for the Key Employee, together with his counsel (if the Key Employee
chooses to have counsel present at such meeting), to be heard before
the Board, finding that, in the good faith opinion of the Board, the
Key Employee had committed an act constituting "Cause" as herein
defined and specifying the particulars thereof in detail. Nothing
herein will limit the right of the Key Employee or his beneficiaries to
contest the validity or propriety of any such determination.
e. CHANGE IN CONTROL. The term "Change in Control" shall mean
the occurrence of any of the following events:
(i) The Corporation is merged, consolidated or
reorganized into or with another corporation or other legal
person, and as a result of such merger, consolidation or
reorganization less than a majority of the combined voting
power of the then-outstanding Voting Stock of the corporation
or person surviving such merger, consolidation or
reorganization,
<PAGE> 3
3
immediately after such transaction, are beneficially held,
directly or indirectly, in the aggregate by the beneficial
holders of Voting Stock of the Corporation immediately prior
to such transaction;
(ii) The Corporation sells or otherwise transfers all or
substantially all of its assets to another corporation or
other legal person, and as a result of such sale or transfer
less than a majority of the combined voting power of the
then-outstanding Voting Stock of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Corporation
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as
promulgated pursuant to the Exchange Act, disclosing that any
person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing
25% or more of the combined voting power of the
then-outstanding Voting Stock of the Corporation;
(iv) The Corporation files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or Schedule
14A (or any successor schedule, form or report or item
therein) that a change in control of the Corporation has
occurred or will occur in the future pursuant to any
then-existing contract or transaction; or
(v) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute
the directors of the Corporation cease for any reason to
constitute at least a majority thereof; provided, however,
that for purposes of this clause each director who is first
elected, or first nominated for election by the Corporation's
stockholders, by a vote of at least two-thirds of the
directors of the Corporation (or a committee thereof) then
still in office who were directors of the Corporation at the
beginning of any such period will be deemed to have been a
director of the Corporation at the beginning of such period.
<PAGE> 4
4
Notwithstanding the foregoing provisions of Paragraph (iii) or (iv) of
this Subsection, unless otherwise determined in a specific case by
majority vote of the Board, a "Change in Control" shall not be deemed
to have occurred for purposes of Paragraph (iii) or (iv) of this
Subsection solely because (A) the Corporation, (B) a Subsidiary, (C)
any Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company, (D) any person or group of which
employees of the Company control a greater than 25% interest unless the
Board determines that such person or group is making a "hostile
acquisition", or (E) any person or group of which the Executive is an
affiliate either files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule, form or report or item
therein) under the Exchange Act disclosing beneficial ownership by it
of shares of Voting Stock, whether in excess of 25% or otherwise, or
because the Corporation reports that a change in control of the
Corporation has occurred or will occur in the future by reason of such
beneficial ownership.
f. CODE. The term "Code" shall mean the Internal Revenue Code
of 1986, as amended.
g. COMMITTEE. The term "Committee" shall mean the Compensation
Committee of the Board.
h. COMPANY. The term "Company" shall mean the Corporation and
its Subsidiaries.
i. EXCHANGE ACT. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
j. INCENTIVE PAY. The term "Incentive Pay" shall mean the
annual compensation and award (whether paid in cash or stock and
regardless or any election to defer actual payment of all or any
portion of such award, but not including stock options) allocated to a
Key Employee pursuant to any incentive compensation plans and
arrangements of the Company. "Incentive Pay" shall include the stock
portion of the profit-sharing payment contributed by the Company to the
Belden & Blake Corporation 401(k) Profit Sharing Plan.
k. KEY EMPLOYEE. The term "Key Employee" shall mean any
employee of the Company who is identified on Exhibit A hereto.
Notwithstanding the foregoing, employees who would otherwise be Key
Employees shall not be Key Employees for purposes of the Plan if they
have entered into an employment agreement, severance agreement or
similar arrangement with the Company providing for the payment of
severance
<PAGE> 5
5
compensation in specified circumstances following a Change in Control.
In addition, the term "Key Employee" shall include such other employees
of the Company as shall be designated in writing by, or in minutes of
the actions of, the Committee.
l. SEVERANCE PAY. The term "Severance Pay" shall mean the
amount payable as set forth in Section 5.a. of the Plan.
m. SUBSIDIARY. The term "Subsidiary" shall mean an entity in
which the Corporation directly or indirectly beneficially owns 50% or
more of the outstanding Voting Stock.
n. VOTING STOCK. The term "Voting Stock" shall mean securities
entitled to vote generally in the election of directors.
4. ELIGIBILITY UNDER THE PLAN.
a. Subject to the limitations described below, the Plan
applies to Key Employees who are employed on the date that a Change in
Control occurs. The Corporation reserves the right, at any time prior
to the occurrence of a Change in Control, to amend, modify, change or
terminate the Plan with or without notice or any liability to Key
Employees. The Plan shall not be amended, modified, changed or
terminated after the occurrence of a Change in Control without the
written consent of each Key Employee.
b. A Key Employee will be eligible for Severance Compensation
and other benefits under the Plan if, within two (2) years after the
occurrence of a Change in Control:
(i) The Key Employee's employment with the
Company is terminated by the Company other than for
Cause.
(ii) The Key Employee voluntarily terminates his
employment with the Company following the occurrence of any of
the following events:
(A) The failure to elect, reelect or
otherwise maintain the Key Employee in the office or
position in the Company which the Key Employee held
immediately prior to the Change in Control;
(B) A reduction in the Key Employee's Base
Salary in effect immediately prior to the Change in
Control, or a reduction in the Key Employee's
opportunity for Incentive Pay or a reduction or
<PAGE> 6
6
termination of any benefits described in
Section 5.b. to which the Key Employee was
entitled immediately prior to the Change in
Control;
(C) The liquidation, dissolution, merger,
consolidation or reorganization of the Corporation or
the transfer of all or a significant portion of its
business and/or assets, unless the successor or
successors (by liquidation, merger, consolidation,
reorganization or otherwise) to which all or a
significant portion of its business and/or assets
have been transferred (directly or by operation of
law) shall have assumed all duties and obligations of
the Company under the Plan pursuant to Section 15; or
(D) The Company relocates its principal
executive offices, requires the Key Employee to
change his principal location of work to any location
which is in excess of 25 miles from the location
thereof immediately prior to the Change in Control,
or requires the Key Employee to travel away from his
office in the course of discharging his
responsibilities or duties hereunder significantly
more (in terms of either consecutive days or
aggregate days in any calendar year) than was
required of him prior to the Change in Control,
without, in any case, his prior written consent.
5. SEVERANCE COMPENSATION.
a. SEVERANCE PAY. Each Key Employee who is terminated in
accordance with Section 4.b. shall, within five (5) business days after
such termination, receive Severance Pay from the Company in a lump sum
payment (the "Severance Payment") in an amount equal to one times the
Key Employee's Base Salary plus his Average Incentive Pay.
b. HEALTH AND LIFE BENEFITS. Each Key Employee who is
terminated in accordance with Section 4.b., may continue, for himself
and his eligible dependents, health and life insurance benefits for the
one year period immediately following his termination of employment.
During any period of continued coverage pursuant to this Section, the
Key Employee will be required to pay the same cost of coverage,
co-pays, deductibles and other similar payments paid by active
employees of the Company having elected the same type of coverage. The
Key Employee shall cease to be eligible for continued health and life
insurance benefits provided by the Company if he (i) waives such
coverage, (ii) fails to
<PAGE> 7
7
pay any amount required for such coverage or (iii) becomes eligible for
other group health coverage. Following such one year period, the Key
Employee shall be eligible to elect to continue, for himself and his
eligible dependents, health benefits in accordance with the provisions
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.
c. STOCK OPTIONS. Upon the occurrence of any of the events
described in the third paragraph of Section 8 of the Corporation's
Stock Option Plan, each stock option granted to the Key Employee under
such Plan then outstanding but not exercisable shall immediately become
and be exercisable in full in accordance with the terms of such Plan
and the applicable option agreement between the Corporation and the Key
Employee.
d. OUTPLACEMENT COUNSELING. Each Key Employee who is
terminated in accordance with Section 4.b. shall be reimbursed by the
Company for reasonable expenses incurred for outplacement counseling
(i) which are pre-approved by the Company's Manager of Human Resources,
(ii) which do not exceed 15% of the Key Employee's Base Salary and
(iii) which are incurred by the Key Employee within six (6) months
following such termination.
e. CALCULATION. The calculation of all payments of
compensation and other benefits to be provided to each affected Key
Employee under the Plan shall be made by the Company.
6. QUALIFIED PLAN BENEFITS. Upon the occurrence of a
Change in Control a Key Employee's account in the Belden & Blake
Corporation 401(k) Profit Sharing Plan shall become 100% vested
and nonforfeitable.
7. LIMITATION AND INDEMNIFICATION.
a. Notwithstanding anything in the Plan to the contrary, the
Company shall not be obligated to pay to any Key Employee any amount of
money, or provide the Key Employee with any benefits, which are in
excess of the then maximum amount which the Company can deduct for
federal income tax purposes.
b. Without limiting the generality of paragraph a. of this
Section, if any Key Employee is a "disqualified individual", as defined
in Section 280G(c) of the Code, the present value of payments under the
Plan made to the Key Employee shall not in the aggregate be greater
than the excess, if any, of (i) 299% of the Key Employee's "base
amount", as determined under Section 280G of the Code, over
<PAGE> 8
8
(ii) the aggregate present value of all payments in the nature of
compensation (other than the payments under the Plan) to or for the
Key Employee's benefit that are considered "contingent on a change" in
ownership or control of the Corporation as determined under Section
280G(b)(2) of the Code. If the application of the preceding sentence
should require a reduction in benefits, such reduction shall be
implemented first, by reducing any non-cash benefits to the extent
necessary, and second, by reducing any cash benefits to the extent
necessary. In each case, the reductions shall be made starting with
the latest payment or benefit. In no event, however, will any benefit
be reduced to the extent such benefit is specifically excluded by
Section 280G(b) of the Code as a "parachute payment" or as an "excess
parachute payment". Any decisions regarding the requirement or
implementation of such reductions shall be made by Jones, Day, Reavis
& Pogue or such other tax counsel selected by the Corporation's
independent accountants and acceptable to the Key Employee.
c. Unless otherwise prohibited by applicable law, if,
notwithstanding the application of paragraph b. of this Section, an
amount paid to the Key Employee under the Plan is subject to the excise
tax imposed by Section 4999 of the Code, the Company shall pay to the
Key Employee an additional amount in cash (the "Additional Payment")
equal to the amount necessary to cause the aggregate remuneration
received by the Key Employee under the Plan, including such additional
cash payment (net of all federal, state and local income taxes and all
taxes payable as the result of the application of Sections 280G and
4999 of the Code to be equal to the aggregate remuneration the Key
Employee would have received, excluding such Additional Payment (net of
all federal, state and local income taxes), as if Sections 280G and
4999 of the Code had not been enacted into law.
8. MITIGATION. A Key Employee shall not be required
to mitigate the amount of any payment or benefit provided for in
the Plan by seeking other employment or otherwise.
9. TIMING OF SEVERANCE PAY, ETC. Severance Pay and the
Additional Payment are not included as earnings for the purpose of calculating
contributions or benefits under any employee benefit plan of the Company.
Severance Pay and the Additional Payment shall not be made from any benefit plan
funds, and shall constitute an unfunded unsecured obligation of the Company.
Severance Pay shall be paid in a lump sum on the date of termination or promptly
thereafter. The Additional Payment shall be paid in a lump sum as soon as
practicable after the amount of such Payment has been calculated. Severance Pay
and the Additional Payment shall be net of any income, excise or
<PAGE> 9
9
employment taxes which are required to be withheld from such
payment.
10. CONFIDENTIALITY; CONFIDENTIAL INFORMATION. Payment
of Severance Pay and benefits set forth in Section 5 to a
Key Employee is conditioned upon the Key Employee agreeing
in writing with the Company that:
a. The Key Employee acknowledges and agrees that in the
performance of his duties as an employee of the Company, he was brought
into frequent contact with, had access to, and became informed of
confidential and proprietary information of the Company and/or
information which is a trade secret of the Company (collectively,
"Confidential Information"), as more fully described in Subsection b.
of this Section. The Key Employee acknowledges and agrees that the
Confidential Information of the Company gained by the Key Employee
during his association with the Company was developed by and/or for the
Company through substantial expenditure of time, effort and money and
constitutes valuable and unique property of the Company.
b. The Key Employee will keep in strict confidence, and will
not, directly or indirectly, at any time, disclose, furnish,
disseminate, make available, use or suffer to be used in any manner any
Confidential Information of the Company without limitation as to when
or how the Key Employee may have acquired such Confidential
Information. The Key Employee specifically acknowledges that
Confidential Information includes any and all information, whether
reduced to writing (or in a form from which information can be
obtained, translated, or derived into reasonably usable form), or
maintained in the mind or memory of the Key Employee and whether
compiled or created by the Company, which derives independent economic
value from not being readily known to or ascertainable by proper means
by others who can obtain economic value from the disclosure or use of
such information, that reasonable efforts have been put forth by the
Company to maintain the secrecy of Confidential Information, that such
Confidential Information is and will remain the sole property of the
Company, and that any retention or use by the Key Employee of
Confidential Information after the termination of the Executive's
employment with and services for the Company shall constitute a
misappropriation of the Company's Confidential Information.
c. The Key Employee further agrees that he shall return,
within ten (10) days of the effective date of his termination as an
employee of the Company, in good condition, all property of the Company
then in his possession, including, without limitation, (i) property,
<PAGE> 10
10
documents and/or all other materials (including copies, reproductions,
summaries and/or analyses) which constitute, refer or relate to
Confidential Information of the Company, (ii) keys to Company property,
(iii) files and (iv) blueprints or other drawings.
d. The Key Employee further acknowledges and agrees that his
obligation of confidentiality shall survive until and unless such
Confidential Information of the Company shall have become, through no
fault of the Key Employee, generally known to the public or the Key
Employee is required by law (after providing the Company with notice
and opportunity to contest such requirement) to make disclosure. The
Key Employee's obligations under this Subsection are in addition to,
and not in limitation or preemption of, all other obligations of
confidentiality which the Key Employee may have to the Company under
general legal or equitable principles or statutes.
11. RELEASE. Payment of the Severance Pay and benefits set
forth in Section 5 to a Key Employee is conditioned upon the Key Employee
executing and delivering a release satisfactory to the Corporation releasing the
Company from any and all claims, demands, damages, actions and/or causes of
action whatsoever, which he may have had on account of the termination of his
employment, including, but not limited to claims of discrimination, including on
the basis of sex, race, age, national origin, religion, or handicapped status
(with all applicable periods during which the Key Employee may revoke the
release or any provision thereof having expired), and any and all claims,
demands and causes of action for retirement (other than under the Belden & Blake
Corporation Employees 401(k) Profit Sharing Plan or under any "welfare benefit
plan" of the Company (as the term "welfare benefit plan" is defined in Section
3(1) of the Employee Retirement Income Security Act of 1974, as amended)),
severance or other termination pay, and because, pursuant to Section 5.a., the
Key Employee is entitled to lump sum payments of Incentive Pay under the
incentive compensation plans and arrangements of the Company described in
Section 3.d. Such release shall not, however, apply to the ongoing obligations
of the Company arising under the Plan, or rights of indemnification the Key
Employee may have under the Company's policies or by contract or by statute.
12. LEGAL FEES AND EXPENSES.
a. It is the intent of the Company that the Key Employee not
be required to incur legal fees and the related expenses associated
with the interpretation, enforcement or defense of his rights under the
Plan by litigation or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be
<PAGE> 11
11
extended to the Key Employee hereunder. Accordingly, if it should
appear to the Key Employee that the Company has failed to comply with
any of its obligations under the Plan or in the event that the Company
or any other person takes or threatens to take any action to declare
the Plan void or unenforceable, or institutes any litigation or other
action or proceeding designed to deny, or to recover from, the Key
Employee the benefits provided or intended to be provided to the Key
Employee hereunder, the Company irrevocably authorizes the Key Employee
from time to time to retain counsel of his choice, at the expense of
the Company as hereafter provided, to advise and represent the Key
Employee in connection with any such interpretation, enforcement or
defense, including without limitation the initiation or defense of any
litigation or other legal action, whether by or against the Company or
any director, officer, stockholder or other person affiliated with the
Company in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to the Key Employee's entering into an
attorney-client relationship with such counsel, and in that connection
the Company and the Key Employee agree that a confidential relationship
shall exist between the Key Employee and such counsel. Without respect
to whether the Key Employee prevails, in whole or in part, in
connection with any of the foregoing, the Company will pay and be
solely financially responsible for any and all attorneys' and related
fees and expenses incurred by the Key Employee in connection with any
of the foregoing.
b. Without limiting the obligations of the Company pursuant to
Subsection a. of this Section, in the event a Change in Control occurs,
the performance of the Company's obligations under this Section shall
be secured by amounts deposited or to be deposited in trust pursuant to
certain trust agreements to which the Corporation shall be a party,
which amounts deposited shall in the aggregate be not less than
$250,000, providing that the fees and expenses of counsel selected from
time to time by the Key Employee pursuant to Subsection a. of this
Section shall be paid, or reimbursed to the Key Employee if paid by the
Key Employee, either in accordance with the terms of such trust
agreements, or, if not so provided, on a regular, periodic basis upon
presentation by the Key Employee to the trustee of a statement or
statements prepared by such counsel in accordance with its customary
practices. Any failure by the Company to satisfy any of its obligations
under this Subsection shall not limit the rights of the Key Employee
hereunder. Subject to the foregoing, the Key Employee shall have the
status of a general unsecured creditor of the
<PAGE> 12
12
Company and shall have no right to, or security interest in, any assets
of the Company or any Subsidiary.
13. EMPLOYMENT RIGHTS. Nothing expressed or implied in the
Plan shall create any right or duty on the part of the Company or the Key
Employee to have the Key Employee remain in the employment of the Company at any
time prior to a Change in Control. Any termination of employment of the Key
Employee or the removal of the Key Employee from the office or position in the
Company prior to a Change in Control but following the commencement of any
discussion with any third person that ultimately results in a Change in Control
shall be deemed to be a termination or removal of the Key Employee after a
Change in Control for purposes of the Plan.
14. WITHHOLDING OF TAXES. The Company may withhold
from any amounts payable under the Plan all federal, state, city
or other taxes as shall be required pursuant to any law or
government regulation or ruling.
15. SUCCESSORS AND BINDING EFFECT.
a. The Company shall require any successor, (including without
limitation any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of the Company whether
by purchase, merger, consolidation, reorganization or otherwise, and
such successor shall thereafter be deemed the Company for the purposes
of the Plan), to assume and agree to perform the obligations under the
Plan in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. The Plan
shall be binding upon and inure to the benefit of the Company and any
successor to the Company, but shall not otherwise be assignable,
transferable or delegable by the Company.
b. The rights under the Plan shall inure to the benefit of and
be enforceable by the Key Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
c. The rights under the Plan are personal in nature and
neither the Company nor any Key Employee shall, without the consent of
the other, assign, transfer or delegate the Plan or any rights or
obligations hereunder except as expressly provided in this Section.
Without limiting the generality of the foregoing, a Key Employee's
right to receive payments hereunder shall not be assignable,
transferable or delegable, whether by pledge, creation of a security
interest or otherwise, other than by a transfer by his or her will or
by the laws of descent and distribution and, in the event of any
attempted assignment or transfer
<PAGE> 13
13
contrary to this Section, the Company shall have no liability to pay
any amount so attempted to be assigned, transferred or delegated.
d. The obligation of the Company to make payments
and/or provide benefits hereunder shall represent an
unsecured obligation of the Company.
e. The Corporation and each Key Employee recognize that each
party will have no adequate remedy at law for breach by the other of
any of the agreements contained herein and, in the event of any such
breach, the Corporation and each Key Employee hereby agree and consent
that the other shall be entitled to a decree of specific performance,
mandamus or other appropriate remedy to enforce performance of
obligations under the Plan.
16. GOVERNING LAW. The validity, interpretation,
construction and performance of the Plan shall be governed by the
laws of the State of Ohio, without giving effect to the
principals of conflict of laws of such State.
17. VALIDITY. If any provisions of the Plan or the application
of any provision hereof to any person or circumstance is held invalid,
unenforceable or otherwise illegal, the remainder of the Plan and the
application of such provision to any other person or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
18. CAPTIONS. The captions in the Plan are for
convenience of reference only and do not define, limit or
describe the scope or intent of the Plan or any part hereof and
shall not be considered in any construction hereof.
19. CONSTRUCTION. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine
gender and the singular shall be deemed to include the plural,
unless the context clearly indicates to the contrary.
20. ADMINISTRATION OF THE PLAN.
a. IN GENERAL. The Plan shall be administered by the
Corporation, which shall be named fiduciary under the Plan. The
Corporation shall have the sole and absolute discretion to interpret
where necessary all provisions of the Plan (including, without
limitation, by supplying omissions from, correcting deficiencies in, or
resolving inconsistencies or ambiguities, in the language of the Plan),
to determine the rights and status under the Plan of Key Employees or
other persons, to resolve questions or disputes arising under the
<PAGE> 14
14
Plan and to make any determinations with respect to the benefits
payable hereunder and the persons entitled thereto as may be necessary
for the purposes of the Plan. Without limiting the generality of the
forgoing, the Corporation is hereby granted the authority (i) to
determine whether a particular employee is a "Key Employee" under the
Plan and (ii) to determine whether a particular Key Employee is
eligible for Severance Compensation and other benefits under the Plan.
b. DELEGATION OF DUTIES. The Corporation may
delegate any of its administrative duties, including,
without limitation, duties with respect to the processing,
review, investigation, approval and payment of Severance
Compensation and Additional Payments, to named administrator
or administrators.
c. REGULATIONS. The Corporation shall promulgate any
rules and regulations it deems necessary in order to carry
out the purposes of the Plan or to interpret the terms and
conditions of the Plan; provided, however, that no rule,
regulation or interpretation shall be contrary to the
provisions of the Plan.
d. CLAIMS PROCEDURE. The Corporation shall determine the
rights of any employee of the Company to any Severance Compensation or
an Additional Payment hereunder. Any employee or former employee of the
Company who believes that he is entitled to receive Severance
Compensation or an Additional Payment under the Plan, including other
than that initially determined by the Corporation, may file a claim in
writing with the Manager of Human Resources of the Corporation. The
Corporation shall, no later than ninety (90) days after the receipt of
a claim, either allow or deny the claim by written notice to the
claimant. If a claimant does not receive written notice of the
Corporation's decision on his claim within such 90-day period, the
claim shall be deemed to have been denied in full.
A denial of a claim by the Company, wholly or partially, shall be
written in a manner calculated to be understood by the claimant and
shall include:
(i) the specific reason or reasons for the
denial;
(ii) specific reference to pertinent Plan
provisions on which the denial is based;
<PAGE> 15
15
(iii) a description of any additional material or
information necessary for the claimant to perfect the claim
and an explanation of why such material or information is
necessary; and
(iv) an explanation of the claim review procedure.
A claimant whose claim is denied (or his duly authorized
representative) may, within thirty (30) days after receipt of denial of
his claim, request a review of such denial by the Corporation by filing
with the Secretary of the Corporation a written request for review of
his claim. If the claimant does not file a request for review with the
Corporation within such 30-day period, the claimant shall be deemed to
have acquiesced in the original decision of the Corporation on his
claim. If a written request for review is so filed within such 30-day
period, the Corporation shall conduct a full and fair review of such
claim. During such full review, the claimant shall be given the
opportunity to review documents that are pertinent to his claim and to
submit issues and comments in writing. The Corporation shall notify the
claimant of its decision on review with sixty (60) days after receipt
of a request for review. Notice of the decision on review shall be in
writing. If the decision on review is not furnished to the claimant
within such 60-day period, the claim shall be deemed to have been
denied on review.
e. REVOCABILITY OF ACTION. Any action taken by the Corporation
with respect to the rights or benefits under the Plan of any employee
shall be revocable by the Corporation as to payments or distributions
not yet made to such person, and acceptance of Severance Compensation
or an Additional Payment under the Plan constitutes acceptance of and
agreement to the Corporation making any appropriate adjustments in
future payments or distributions to such person to offset any excess or
underpayment previously made to him.
f. EXCEPTION OF RECEIPT. Upon receipt of any
Severance Compensation or an Additional Payment hereunder,
the Corporation reserves the right to require any Key
Employee to execute a receipt evidencing the amount and
payment of such Severance Compensation and/or Additional
Payment.
<PAGE> 16
16
IN WITNESS WHEREOF, Belden & Blake Corporation has caused the
Plan to be executed this 25 day of October, 1996.
ATTEST: BELDEN & BLAKE CORPORATION
/s/ Joseph M. Vitale By: /s/ M. L. Mardick
- -------------------- -----------------------------
Title: President
--------------------------
<PAGE> 1
EXHIBIT 11.1
- -------------------------------------------------------------------------------
BELDEN & BLAKE CORPORATION
COMPUTATION OF EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARES
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
--------------------------------- ----------------------------
1996 1995 1996 1995
---------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Average shares outstanding ............................. 11,171 9,741 11,168 7,993
Net effect of conversion of stock options and
warrants ................................................ -- -- -- --
Total primary shares .................................... 11,171 9,741 11,168 7,993
Net effect of convertible securities..................... -- -- -- --
Total fully diluted shares .............................. 11,171 9,741 11,168 7,993
Net income .............................................. $ 3,186 $ 1,155 $ 10,013 $ 2,810
Less preferred stock dividends .......................... 45 45 135 135
Net income applicable to common shares
primary ............................................... 3,141 1,110 9,878 2,675
Plus 7.5% preferred stock dividends ..................... -- -- -- --
Net income applicable to common shares ................. 3,141 1,110 9,878 2,675
fully diluted
Earnings per common share primary ....................... .28 .11 .88 .33
Earnings per common share fully diluted ................. .28 .11 .88 .33
</TABLE>
The effects of common stock options, warrants and convertible
securities have not been included in the computation as their effect is either
not dilutive or antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000880114
<NAME> BELDEN & BLAKE CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 11,293
<SECURITIES> 0
<RECEIVABLES> 28,534
<ALLOWANCES> 0
<INVENTORY> 9,575
<CURRENT-ASSETS> 53,343
<PP&E> 311,766
<DEPRECIATION> 79,526
<TOTAL-ASSETS> 296,400
<CURRENT-LIABILITIES> 32,929
<BONDS> 99,566
<COMMON> 1,117
0
2,400
<OTHER-SE> 149,346
<TOTAL-LIABILITY-AND-EQUITY> 296,400
<SALES> 107,472
<TOTAL-REVENUES> 110,026
<CGS> 58,788
<TOTAL-COSTS> 58,788
<OTHER-EXPENSES> 30,168
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,587
<INCOME-PRETAX> 15,483
<INCOME-TAX> 5,031
<INCOME-CONTINUING> 10,452
<DISCONTINUED> (439)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,013
<EPS-PRIMARY> 0.88
<EPS-DILUTED> 0.88
</TABLE>
