EXECUTION VERSION

 

(g)           “ Change of Control ” shall mean a “change of control event” within the meaning of Treas. Reg. 1.409A-3(i)(5); provided , that in no event shall the consummation of the Proposed Transaction constitute a Change in Control for purposes of this Agreement.

 

(h)           “ Change of Control Severance Term ” shall mean the twenty-four (24) month period following Employee’s termination pursuant to Section 8(h) below.

 

(i)            “ Code ” shall mean the Internal Revenue Code of 1986, as amended.

 

(j)            “ Common Shares ” shall have the meaning set forth in Section 4(c) below.

 

(k)           “ Company ” shall have the meaning set forth in the preamble hereto.

 

(l)            “ Company Group ” shall mean the Company together with any direct or indirect subsidiaries of the Company.

 

(m)          “ Compensation Committee ” shall mean the Board or the committee of the Board designated to make compensation decisions relating to senior executive officers of the Company Group.

 

(n)           “ Competitive Activities ” shall mean any business activities in which the Company or any other member of the Company Group engages during the Term of Employment.

 

(o)           “ Confidential Information ” shall mean confidential or proprietary trade secrets, client lists, client identities and information, information regarding service providers, investment methodologies, marketing data or plans, sales plans, management organization information, operating policies or manuals, business plans or operations or techniques, financial records or data, or other financial, commercial, business, or technical information (i) relating to the Company or any other member of the Company Group or (ii) that the Company or any other member of the Company Group may receive belonging to suppliers, customers, or others who do business with the Company or any other member of the Company Group, but shall exclude any information that is in the public domain or hereafter enters the public domain, in each case without the breach by Employee of Section 9(a) below.

 

(p)           “ Covered Compensation ” shall mean compensation paid or payable to Employee pursuant to this Agreement as Base Salary, STI Award, LTI Award, and any allowances paid.

 

(q)           “ Delay Period ” shall have the meaning set forth in Section 14 below.

 

(r)            “ Developments ” shall have the meaning set forth in Section 9(f) below.

 

(s)           “ Disability ” shall mean any physical or mental disability or infirmity of the Employee that has prevented the performance of Employee’s duties for a period of (i) ninety (90) consecutive days or (ii) one hundred twenty (120) non-consecutive days during any twelve (12) month period.  Any question as to the existence, extent, or potentiality of Employee’s Disability upon which Employee and the Company cannot agree shall be determined by a qualified, independent physician selected by the Company and approved by Employee (which approval shall not be unreasonably withheld).  The determination of any such physician shall be final and conclusive for all purposes of this Agreement.

 

(t)            “ Effective Date ” shall have the meaning set forth in the recitals above.

 

(u)           “ Employee ” shall have the meaning set forth in the preamble hereto.

 

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(v)           “ Good Reason ” shall mean, without Employee’s consent, (i) a diminution in Employee’s title, duties, or responsibilities, (ii) a reduction in the Covered Compensation, (iii) the failure of the Company to pay any compensation hereunder when due or to perform any other obligation of the Company hereunder, (iv) the relocation of Employee’s principal place of employment to a country other than France, or (v) failure of the Company to obtain a written agreement from any successor or assign of the Company to assume the obligations of the Company under this Agreement upon a Change of Control.

 

(w)          “ Interfering Activities ” shall mean (i) encouraging, soliciting, or inducing, or in any manner attempting to encourage, solicit, or induce, any individual employed by, or individual or entity providing consulting services to, the Company or any other member of the Company Group to terminate such employment or consulting services; provided , that the foregoing shall not be violated by general advertising not targeted at employees or consultants of the Company or any other member of the Company Group; (ii) hiring any individual who was employed by the Company or any other member of the Company Group within the six (6) month period prior to the date of such hiring; or (iii) encouraging, soliciting, or inducing, or in any manner attempting to encourage, solicit, or induce, any customer, supplier, licensee, or other business relation of the Company or any other member of the Company Group to cease doing business with or materially reduce the amount of business conducted with the Company or any other member of the Company Group, or in any way interfering with the relationship between any such customer, supplier, licensee, or business relation and the Company or any other member of the Company Group.

 

(x)            “ LTI Award ” shall have the meaning set forth in Section 4(c) below.

 

(y)           “ Person ” shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust (charitable or non-charitable), unincorporated organization, or other form of business entity.

 

(z)            “ Proposed Transaction ” shall mean the proposed transaction whereby the Company will become a wholly-owned subsidiary of Toreador Holding SAS, a wholly-owned subsidiary of the Company.

 

(aa)         “ Release Expiration Date ” shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers Employee the release contemplated in Section 8(h) below, or in the event that such termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date.

 

(bb)         “ Restricted Area ” shall mean France or any other jurisdiction in which the Company or any other member of the Company Group engages in business during the Term of Employment, or at the time of a termination of Employee’s employment was engaged in business.

 

(cc)         “ Restricted Period ” shall mean the period commencing on the Effective Date and extending to the twelve (12) month anniversary of Employee’s termination of employment for any reason.

 

(dd)         “ Severance Term ” shall mean the twenty-four (24) month period following Employee’s termination by the Company without Cause (other than by reason of death or Disability) or by Employee for Good Reason.

 

(ee)         “ STI Award ” shall have the meaning set forth in Section 4(a) below.

 

(ff)           “ Taxable Cost ” shall have the meaning set forth in Section 8(d)(vi) below.

 

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(gg)         “ Term of Employment ” shall mean the period specified in Section 2 below.

 

Section 2.              Acceptance and Term of Employment .

 

The Company agrees to employ Employee, and Employee agrees to serve the Company, on the terms and conditions set forth herein.  The “Term of Employment” shall mean the period commencing on the Effective Date and, unless terminated sooner as provided in Section 8 hereof, continuing for a period of two (2) years from the Effective Date; provided, however, that the Term of Employment shall be extended automatically at the end of the initial two (2) year term for a one (1) year term and thereafter for successive one (1) year terms if neither the Company nor Employee has advised the other in writing in accordance with Section 19 at least ninety (90) days prior to the end of the then current term that such term will not be extended for an additional one (1) year term.

 

Section 3.              Position, Duties, and Responsibilities; Place of Performance .

 

(a)           During the Term of Employment, Employee shall be employed and serve as the President and Chief Executive Officer of the Company and shall have such duties and responsibilities as are commensurate with such title.  The Employee shall report to the Board and shall carry out and perform all orders, directions and policies given to him by the Board consistent with his position and title.  Employee also agrees to serve as an officer and/or director of any member of the Company Group, in each case without additional compensation, except as provided herein or in a separate agreement between the parties.  In addition, at such time that Employee obtains all required work permits in France, the Company shall cause Employee to be appointed as Chairman of Toreador Holding SAS (the “ Appointment Date ”).  From and after the Appointment Date, the Company shall expressly be permitted to have all or part of the Base Salary and STI Award paid to Employee by Toreador Holding SAS.

 

(b)           Employee shall devote his full business time, attention, skill, and best efforts to the performance of his duties under this Agreement and shall not engage in any other business or occupation during the Term of Employment, including, without limitation, any activity that (x) conflicts with the interests of the Company or any other member of the Company Group, (y) interferes with the proper and efficient performance of Employee’s duties for the Company, or (z) interferes with Employee’s exercise of judgment in the Company’s best interests.  Notwithstanding the foregoing, nothing herein shall preclude Employee from (i) serving, with the prior written consent of the Board, as a member of the boards of directors or advisory boards (or their equivalents in the case of a non-corporate entity) of non-competing businesses, (ii) engaging in charitable activities and community affairs, and (iii) managing his personal investments and affairs; provided , however , that the activities set out in clauses (i), (ii), and (iii) shall be limited by Employee so as not to materially interfere, individually or in the aggregate, with the performance of his duties and responsibilities hereunder.

 

Section 4.              Compensation .  During the Term of Employment, Employee shall be entitled to the following compensation:

 

(a)           Base Salary .  Employee shall be paid an annualized Base Salary, payable in accordance with the regular payroll practices of the Company, of not less than $420,000, with increases, if any, as may be approved in writing by the Compensation Committee.

 

(b)           Short-Term Incentive Awards .

 

(i)            In his capacity as President and CEO of the Company, Employee shall be eligible for an annual cash short-term incentive award determined by the Compensation Committee in respect of each fiscal year (or partial fiscal year) during the Term of Employment

 

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(the “ STI Award ”) in accordance with this Section 4(b).  The target STI Award for each fiscal year shall be 100% of Base Salary (or such greater percentage of Base Salary as the Board or Compensation Committee shall determine, in its sole discretion) and, if earned, shall be paid by no later than March 31st of each year with respect to the preceding year.

 

(ii)           The criteria for achieving the STI Award shall be based upon the level of achievement of Company and individual performance objectives for such fiscal year, as determined by the Board or the Compensation Committee and agreed to by Employee, as evidenced by an Addendum to this Agreement executed by the Company and Employee by December 1 of each year with respect to the following year.

 

(iii)          The STI Award for any partial fiscal year occurring during the Term of Employment shall be pro rated as and to the extent provided in Section 8.

 

(c)           Long-Term Incentive Awards .

 

(i)            In his capacity as President and CEO of the Company, Employee shall be eligible for a long-term incentive award determined by the Compensation Committee in respect of each fiscal year (or partial fiscal year) during the Term of Employment in accordance with this Section 4(c) (the “ LTI Award ”).  The LTI Award for 2009, the performance criteria for which the Company agrees have been achieved, shall be the grant, as of the Effective Date, of the number of shares of common stock of the Company (“ Common Shares ”) equal to 200% of the Base Salary divided by the closing price of the Common Shares on the Effective Date.

 

(ii)           The target LTI Award for each subsequent fiscal year shall be a number of Common Shares equal to 200% of Base Salary divided by the January Representative Value (as defined in Exhibit A, annexed hereto) of the Company’s Common Shares and, if earned, shall be granted by no later than March 31st of the following year.  The actual LTI Award payable shall be based upon the level of achievement of the annual performance objectives for such fiscal year, as described in Exhibit A annexed hereto.

 

(iii)          The LTI Award for any year shall vest in three equal installments, with the first 1/3 vesting on the first anniversary of the grant of the LTI Award , the second 1/3 vesting on the second anniversary of the grant of the LTI Award, and the remaining 1/3 vesting on the third anniversary of the grant of the LTI Award, and shall be subject to such restriction on written transfer policies as the Company may adopt from time to time and which are applicable to all officers, directors and other management personnel of the Company.

 

Section 5.              Employee Benefits .

 

(a)           General .  During the Term of Employment, Employee shall be entitled to participate in health insurance, retirement, and other benefits provided to other senior executives of the Company.

 

(b)           Vacation and Time Off .  During each calendar year of the Term of Employment, Employee shall be eligible for thirty (30) days paid vacation, as well as sick pay and other paid and unpaid time off in accordance with the policies and practices of the Company.

 

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Section 6.              Key-Man Insurance .

 

At any time during the Term of Employment, the Company shall have the right to insure the life of Employee for the sole benefit of the Company, in such amounts, and with such terms, as it may determine.  All premiums payable thereon shall be the obligation of the Company.  Employee shall have no interest in any such policy, but agrees to cooperate with the Company in procuring such insurance by submitting to physical examinations, supplying all information required by the insurance company, and executing all necessary documents, provided that no financial obligation is imposed on Employee by any such documents.

 

Section 7.              Reimbursement of Business Expenses .

 

Employee is authorized to incur reasonable business expenses in carrying out his duties and responsibilities under this Agreement, and the Company shall promptly reimburse him for all such reasonable business expenses, subject to documentation in accordance with written Company policy, as in effect from time to time.

 

Section 8.              Termination of Employment .

 

(a)           General .  The Term of Employment shall terminate earlier than as provided in Section 2 hereof upon the earliest to occur of (i) Employee’s death, (ii) a termination by reason of a Disability, (iii) a termination by the Company with or without Cause, and (iv) a termination by Employee with or without Good Reason.  Upon any termination of Employee’s employment for any reason, except as may otherwise be requested by the Company in writing and agreed upon in writing by Employee, Employee shall resign from any and all directorships, committee memberships, and any other positions Employee holds with the Company or any other member of the Company Group.  Notwithstanding anything herein to the contrary, the payment (or commencement of a series of payments) hereunder of any nonqualified deferred compensation (within the meaning of Section 409A of the Code) upon a termination of employment shall be delayed until such time as Employee has also undergone a “separation from service” as defined in Treas. Reg. 1.409A-1(h), at which time such nonqualified deferred compensation (calculated as of the date of Employee’s termination of employment hereunder) shall be paid (or commence to be paid) to Employee on the schedule set forth in this Section 8 as if Employee had undergone such termination of employment (under the same circumstances) on the date of his ultimate “separation from service.”

 

(b)           Termination Due to Death or Disability .  Employee’s employment shall terminate automatically upon his death.  The Company may terminate Employee’s employment immediately upon the occurrence of a Disability, such termination to be effective upon Employee’s receipt of written notice of such termination.  In the event Employee’s employment is terminated due to his death or Disability, Employee or his estate or his beneficiaries, as the case may be, shall be entitled to:

 

(i)            The Accrued Obligations; and

 

(ii)           Any unpaid STI Award in respect of any completed fiscal year that has ended prior to the date of such termination, which amount shall be paid within sixty (60) days from the date of such; and

 

(iii)          Any STI Award that would have been payable with respect to the year of termination in the absence of the Employee’s death or Disability, pro-rated for the period the Employee worked prior to his death or Disability, which amount shall be paid at such time STI Awards are paid to other senior executives of the Company, but in no event later than one day

 

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prior to the date that is 2 1/2 months following the last day of the fiscal year in which such termination occurs; and

 

(iv)          Immediate pro-rata vesting of any Common Shares previously awarded to the Employee based on the number of months the Employee has worked for the Company from the date of grant as a percentage of the total number of months required for complete vesting in absence of a termination of employment, and cancellation of any remaining Common Shares not so vested; and

 

(v)           The rights to the same compensation and benefits as provided in Section 8(d) below, in lieu of clauses (i) through (iv), if the termination of Employee’s employment is by reason of death or Disability while the Employee is traveling on official Company business.

 

Following such termination of Employee’s employment by reason of death or Disability, except as set forth in this Section 8(b), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(c)           Termination by the Company for Cause .

 

(i)            The Company may terminate Employee’s employment at any time for Cause, effective upon Employee’s receipt of written notice of such termination; provided , however , that with respect to any Cause of termination relying on clause (ii) or (vi) of the definition of Cause set forth in Section 1(f) hereof, to the extent such act or acts are curable, Employee shall be given not less than twenty (20) days’ written notice by the Board of the Company’s intention to terminate him for Cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based, and such termination shall be effective at the expiration of such twenty (20) day notice period unless Employee has substantially cured such act or acts or failure or failures to act that give rise to Cause during such period.

 

(ii)           In the event the Company terminates Employee’s employment for Cause, he shall be entitled only to the Accrued Obligations, and any previously awarded Common Shares which are not vested as of the date of termination shall be cancelled.  Following such termination of Employee’s employment for Cause, except as set forth in this Section 8(c)(ii), Employee shall have no further rights to any compensation or any other benefits under this Agreement.

 

(d)           Termination by the Company without Cause .  The Company may terminate Employee’s employment at any time without Cause, effective upon Employee’s receipt of written notice of such termination.  In the event Employee’s employment is terminated by the Company without Cause (other than due to death or Disability), Employee shall be entitled to:

 

(i)            The Accrued Obligations;

 

(ii)           Any unpaid STI Award in respect of any completed fiscal year that has ended prior to the date of such termination, which amount shall be paid at such time STI Awards are paid to other senior executives of the Company, but in no event later than one day prior to the date that is 2½ months following the last day of the fiscal year in which such termination occurred; and

 

(iii)          The target STI Award for the year in which termination occurs, pro-rated for the period the Employee worked prior to such termination, which amount shall be paid at such

 

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time STI Awards are paid to other senior executives of the Company, but in no event later than one day prior to the date that is 2 1/2 months following the last day of the fiscal year in which such termination occurs; and

 

(iv)          Immediate vesting of any Common Shares, including LTI Awards, previously awarded to the Employee; and

 

(v)           Continuation of payment of Base Salary and Target STI Award during the Severance Term, payable in accordance with the Company’s regular payroll practices; and

 

(vi)          Continuation, during the Severance Term, of the health benefits provided to Employee and his covered dependants under the Company’s health plans, it being understood and agreed that the Company’s obligation to provide such continuation of benefits shall terminate prior to the expiration of the Severance Term in the event that Employee becomes eligible to receive any health benefits while employed by or providing service to, in any capacity, any other business or entity during the Severance Term; provided , however , that as a condition of the Company’s providing the continuation of health benefits described herein, the Company may require Employee to elect continuation coverage under COBRA.  Notwithstanding the forgoing, if such health benefits are provided to employees of the Company generally through a self-insured arrangement, and Employee qualifies as a “highly compensated individu