EXHIBIT 10.10
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") by and between Xxxxxx Petroleum
Company, a Delaware corporation ("Company"), and Xxxx X. Xxxxxx ("Consultant")
is made this 19th day of June, 1996 and is effective as of the day Xxxx X.
Xxxxxx ceases to be Chief Executive Officer of the Company ("Effective Date").
RECITALS
WHEREAS, Consultant desires to retire as the Chief Executive Officer of
the Company; and
WHEREAS, the Company desires to retain Consultant, upon the terms and
conditions provided herein, so that the Company may continue to benefit from the
expertise and contacts in the oil and gas industry developed by Consultant over
the past 46 years; and
WHEREAS, Consultant desires to be so retained.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the above recitals, and for and in
consideration of the mutual promises set forth below, the parties agree as
follows:
1. SCOPE OF SERVICES
Consultant shall, at the Company's election and request, provide
consultation to the Company from time to time on any matters pertaining to
corporate or financial strategy, investor relations, including relations with
institutional investors, and public/private financing opportunities; provided,
however, that Consultant shall not be obligated to perform such services for
more than 20 hours per month, 10 months per year. The Company shall give
reasonable advance notice of any request to provide consultant services
hereunder.
Subject to Section 6, during the term of this Agreement, Consultant may
engage in other activities which require similar services provided that
Consultant shall not engage in activities which require such substantial
services on the part of Consultant that he is unable to perform the duties
assigned to him by the Company hereunder. Consultant may maintain or make
investments or engage in other business or enterprises, provided such
investments, businesses or enterprises do not require services on the part of
Consultant which would materially impair the performance of his duties under
this Agreement.
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2. TERM OF AGREEMENT
This Agreement shall commence on the Effective Date and shall continue
in full force and effect through December 31, 2001 ("Expiration Date");
provided, however, that unless Consultant has delivered notice of termination to
the Company prior to the Expiration Date, the Expiration Date shall
automatically be extended to the end of succeeding five year periods subject to
cancellation by Consultant upon not less than thirty (30) days written notice to
the Company prior to December 31 of any fifth year.
3. COMPENSATION OF CONSULTANT
As compensation for the services provided hereunder, commencing on the
Effective Date Consultant shall be paid a fee ("Consultation Fee") of not less
than one hundred ninety thousand dollars ($190,000.00) per year increased
annually (pro rated for partial years) based upon the change in the Consumer
Price Index published by the Department of Labor, Bureau of Labor Statistics
(provided, however, if the Consumer Price Index for any year exceeds 4%, the
increase shall be 4% plus one-half of the excess of the Consumer Price Index
over 4%, which amount is herein referred to as the "Inflation Factor"), for each
year of this Agreement, payable in substantially equal semi-monthly installments
during the term hereof. It is understood that the Company will review annually
and may, in the discretion of its Board, increase the Consultation Fee, in which
case the amount of such increased compensation shall thereafter be deemed to be
the amount of the Consultation Fee.
All compensation paid hereunder shall be subject to such payroll and
withholding deductions as are required by the laws of any federal, state or
local jurisdiction with taxing authority with respect to such compensation.
4. OTHER BENEFITS
(a) The Company shall maintain in full force and effect, and
Consultant and his spouse shall be entitled to participate in,
the Company's major medical benefit plan. In addition,
Consultant shall be entitled to receive, as disability insurance
protection, the disability coverage provided to full-time
executives of the Company. In the event the participation of
Consultant or Consultant's spouse in any such plan or program is
barred, the Company shall arrange to provide Consultant and
Consultant's spouse with benefits substantially similar to those
which they would otherwise have been entitled to receive under
such plans and programs from which their continued participation
is barred.
(b) The Company shall reimburse Consultant for reasonable expenses
incurred in connection with the performance of services
hereunder. The Company shall reimburse Consultant for expenses
incurred for travel, lodging, food, tolls and parking in
connection with the performance of Consultant's duties
hereunder. If
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Consultant travels by private plane, the Company shall reimburse
Consultant an amount equal to the coach or equivalent class
ticket applicable to such travel. Consultant shall provide to
the Company receipts or other appropriate documentation
substantiating the expenses to be reimbursed under this
provision. Reimbursement shall be made within fifteen (l5) days
of the Company's receipt of the required information.
Notwithstanding the foregoing, in the event that Consultant is
required to travel outside the state of Mississippi (so long as
Consultant resides in Mississippi) in the course of his duties
hereunder, the Company shall advance a reasonable travel
allowance to Consultant.
(d) As an inducement to Consultant's agreement to provide the
services set forth hereunder, the Company shall issue to
Consultant 25,000 shares of common stock of the Company, $0.01
par value per share, 20% of which shall vest on each of the
first five anniversaries of the Effective Date of this
Agreement, as contemplated by the Restricted Stock Agreement
attached as Exhibit A.
(e) The benefits and covenants described in subsections (a) and (c)
are referred to herein as the Benefits.
5. AUTHORITY AND CAPACITY
Consultant shall at all times be an independent contractor, and nothing
in this Agreement shall be construed to constitute Consultant as an employee,
agent, joint venturer or partner of the Company.
6. INFORMATION, MATERIALS AND INVENTIONS
Consultant shall hold in strict confidence and not disclose to others or
use, either before or after termination of this Agreement, confidential
information, whether technical, scientific or business, concerning the Company's
business activities and interests with which Consultant becomes familiar in
contacts with the Company. Similarly, Consultant shall not disclose to others
without the Company's prior written consent the results or specific nature of
Consultant's work with the Company.
7. OTHER OBLIGATIONS AND AGREEMENTS
This Agreement shall not affect any of the following agreements between
the Consultant and the Company: the Stockholders Agreement, dated September 16,
1994 among the Company, the Consultant, other members of the Consultant's
family, and NOCO Enterprises, L.P.; the Contingent Share Agreement, dated
September 16, 1994 among the Company, Consultant, other members of Consultant's
family; the Registration Rights Agreement, dated September 16, 1996 between the
Company and Consultant and certain other owners of common stock of the Company;
any stock option or other award granted to Consultant under the Company's stock
incentive plans;
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any amounts contributed by or for the account of Consultant in the Company's
401(k) Plan.. This Agreement replaces any other agreements between Consultant
and the Company made before the execution of this Agreement.
8. COMPLIANCE WITH LAWS
Consultant agrees that, in the performance of services hereunder, he
shall comply with all laws, rules and regulations of any governmental authority
applicable in connection therewith.
9. TERMINATION
(a) All obligations of the Company and Consultant hereunder, except
for the Company's obligations pursuant to Paragraph 9(b) below,
shall terminate (i) upon the earlier to occur of (a) the death
or disability of Consultant or (b) a Change in Control of the
Company, unless otherwise agreed to by the Company and
Consultant; or (ii) on or after the fifth anniversary of the
Effective Date, at the option of the Company acting through its
Board of Directors. A "Change in Control" shall have occurred
only if: (i) any person or group of persons acting in concert
(within the meaning of Section 13(d) of the Securities Exchange
Act of 1934) shall have become the beneficial owner of a
majority of the outstanding common stock of the Company; (ii)
the stockholders of the Company shall cause a change in a
majority of the members of the Board within a twelve-month
period, provided, however, that the election of a newly-elected
director shall not be deemed to be a change in the membership of
the Board if the nomination for election by the Company's
stockholders of such new director was approved by either the
vote of two-thirds of the directors then still in office who
were directors at the beginning of such twelve-month period or
by "NOCO" or the "Callon Family" under the terms of, and as
defined in, the Stockholders' Agreement, dated September 16,
1994, between the Company, NOCO and the Callon Family; (iii) the
Company or its stockholders shall enter into an agreement to
dispose of all or substantially all of the assets or outstanding
capital stock of the Company in any manner (including, but not
limited to, by means of sale, merger, reorganization or
liquidation); or (iv) Xxxx X. Xxxxxx shall no longer serve as a
Director of the Company.
(b) In the event this Agreement is terminated pursuant to Paragraph
9(a) or upon breach by the Company, Consultant and, if
Consultant predeceases his wife, Consultant's wife, shall be
entitled to receive a Termination Payment which shall be payable
during the Termination Period. The Termination Payment shall
equal the Consultation Fee in effect on the date of termination,
increased annually by the Inflation Factor, which shall be paid
annually, in substantially equal semi-monthly installments;
provided, however, that in lieu of semi-monthly payment of the
Termination Payment, Consultant or Consultant's wife, as the
case may be, may elect to receive, and, subject to approval of
the Board of Directors, the Company shall pay, $1.5 million,
increased annually from the date hereof by the Inflation
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Factor, in one lump sum payment; provided further, that in the
event this Agreement is terminated at the option of the Company
after the fifth anniversary of the Effective Date, the Company
may elect to pay $1.5 million, increased annually from the date
hereof by the Inflation Factor, in one lump sum payment in lieu
of semi-monthly payment of the Termination Payment. In addition
to the Termination Payment, the Company shall maintain in full
force and effect, and Consultant and Consultant's spouse shall
be entitled to the Benefits. "Termination Period" means the
period of time from the date of termination of this Agreement to
the later of the death of Consultant and the death of
Consultant's spouse.
(c) If this Agreement shall terminate because of the Company's
breach, then, in addition to the Termination Payment and
Benefits to which Consultant and his spouse are entitled, the
Company shall pay as liquidated damages and not as a penalty,
the sum of $1.5 million, increased annually from the date hereof
by the Inflation Factor, which is intended to compensate
Consultant for all other damages to which Consultant or
Consultant's spouse, as applicable, may suffer as a result of
such breach, including damages for any and all loss of benefits
to Consultant and his spouse under the Benefits, which
Consultant would have received if the Company had not breached
this Agreement. The parties hereto agree that the actual amounts
of such damages are impossible of calculation and that the
liquidated damages provided for herein is a reasonable measure
of such damages.
(d) Consultant shall not be required to mitigate the amount of any
payment provided for in this Paragraph 9 by seeking and
accepting employment or otherwise. Termination of this Agreement
shall not affect the Company's obligation under the indemnity
provisions set forth in Paragraph 10. Upon termination pursuant
to Paragraph 9(a), all stock previously granted to Consultant
under Paragraphs 4(d) and 4(e) and any other incentive
compensation program or plan in which Consultant has been
granted awards or in which Consultant participates, shall
immediately vest.
(e) If the aggregate of the Termination Payment and other benefits
to Consultant or Consultant's spouse pursuant to this Paragraph
9 (the "Aggregate Amount") or payment pursuant to Paragraph 9(c)
("Liquidated Damages") would constitute a "parachute payment"
(as defined in Section 280G of the Internal Revenue Code of
1986, as amended or supplemented (the "Code")), the Termination
Payment or Liquidated Damages, as the case may be, shall be
reduced to the largest amount as will result in no portion of
the Aggregate Amount or Liquidated Damages being subject to the
excise tax imposed by Section 4999 of the Code. The
determination of any reduction in the Termination Payment or
Liquidated Damages pursuant to this Paragraph shall be made by
Consultant or Consultant's spouse and the Company in good faith,
and in the event of disagreement, such determination shall be
made by means of arbitration to be conducted at the Company's
expense. Any such arbitration shall be conducted in Natchez or
Jackson, Mississippi, by one arbitrator, who shall be a member
of a nationally recognized accounting firm that is
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not then engaged by the Company or any of its major
stockholders, and who shall be jointly designated by the
parties; provided, that if the parties cannot agree on the
selection of an arbitrator, the Company's then current
independent auditors shall select such arbitrator. The findings
of the arbitrator shall be conclusive and binding on the
parties. Notwithstanding the above, Consultant or Consultant's
spouse may elect to receive, in lieu of the reduced amount
described above, the full amount of the Termination Payment,
together with the other benefits that Consultant or Consultant's
spouse has the right to receive from the Company, or the full
amount of Liquidated Damages, as the case may be, provided the
Company is so notified in writing within 15 days of the date of
termination.
(f) The Company may terminate this Agreement "for cause". As used
herein, "for cause" shall mean the willful misconduct or
intentional and continual neglect of duties which has materially
and adversely affected the Company; provided, however, that
Consultant shall have first received written notice from the
Board advising of the acts or omissions that constitute the
misconduct or neglect of duties, and such misconduct or neglect
of duties continues after Consultant shall have had a reasonable
opportunity to correct the same.
10. COUNSEL FEES AND INDEMNIFICATION.
(a) In the event the Consultant is required to employ legal counsel
to enforce the performance of this Agreement or recover damages
because of any breach of this Agreement, the Consultant shall be
entitled to recover from the Company reasonable attorneys' fees
and the reimbursement of all necessary expenses and court costs
up to a maximum of $300,000.
(b) The Company shall indemnify and hold Consultant harmless to the
maximum extent permitted by law against judgments, fines,
amounts paid in settlement and reasonable expenses, including
attorneys' fees and costs incurred by Consultant in connection
with the defense of, or as a result of any action or proceeding
(or any appeal from any action or proceeding) in which
Consultant is made or is threatened to be made a party by reason
of the fact that Consultant is or was acting in furtherance of
his duties hereunder and in the best interests of the Company,
regardless of whether such action or proceeding is one brought
by or in the right of the Company or any of its subsidiaries or
affiliates, to procure a judgment in its favor.
The undertakings of subparagraph (a) above, are
independent of, and shall not be limited or prejudiced by the
undertakings of this subparagraph (b).
11. MISCELLANEOUS
(a) Notice may be sent by facsimile, overnight mail or first class
mail. Notice sent by
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facsimile shall be deemed to have been received upon the sending
party's receipt of its facsimile machine's confirmation of
successful transmission, if the day on which such facsimile is
received is not a business day or is after five p.m. on a
business day, then such facsimile shall be deemed to have been
received on the next following business day. Notice by overnight
mail or courier shall be deemed to have been received on the
next business day after it was sent or such earlier time as is
confirmed by the receiving party. Notice via first class mail
shall be considered delivered three business days after mailing.
For purposes hereof, "business day" shall mean any day except
Saturday, Sunday or Federal Reserve Bank holidays.
All invoices and other documents required by this Agreement
shall be sent to the Company at the following address:
Xxxxxx Petroleum Company
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
All invoices and other documents required by this Agreement
shall be sent to Consultant at the following address:
Xxxx X. Xxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
(b) This Agreement is not assignable or transferable by either
party, in whole or in part, except with the prior written
consent of the other party. Consultant shall not subcontract any
work under this Agreement to any subcontractor except with the
Company's prior written consent.
(c) Should any one or more of the provisions hereof be determined to
be illegal or unenforceable, all other provisions hereof shall
be given effect separately therefrom and shall not be affected
thereby.
(d) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware.
(e) This Agreement represents the entire agreement and understanding
between the Company and Consultant relative to the subject
matter hereof, and there are no understandings, agreements,
conditions or representations, oral or written, express or
implied, with reference to the subject matter hereof that are
not merged or superseded hereby. No amendment, modification or
release from any provision hereof shall be of any force or
affect unless it specifically refers to this Agreement, is in
writing and is signed by the party claimed to be bound thereby.
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(f) The Company shall pay all reasonable costs of legal counsel
retained by Consultant to represent Consultant for purposes of
Consultant's decision to enter into this Agreement and
negotiation of the terms hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date set forth above.
XXXXXX PETROLEUM COMPANY ("COMPANY")
BY:_________________________________
DATE:
XXXX X. XXXXXX ("CONSULTANT")
---------------------------------
DATE:
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Exhibit A
RESTRICTED STOCK AGREEMENT UNDER THE
XXXXXX PETROLEUM COMPANY
1994 STOCK INCENTIVE PLAN
THIS AGREEMENT is entered into this th day of , 1996, between Xxxxxx
Petroleum Company, a Delaware corporation (the "Company") and Xxxx X. Xxxxxx
("Grantee"), pursuant to the provisions of the Xxxxxx Petroleum Company 1994
Stock Incentive Plan (the "Plan") as adopted by the Board of Directors of the
Company and approved by the sole stockholder of the Company on July 14, 1994.
The Board of Directors of the Company has determined that Grantee is eligible to
participate as a Grantee under the Plan, and, to carry out its purposes, has
this day authorized the issue, pursuant to the Plan, of the shares of common
stock of the Company, par value $0.01 per share ("Common Stock"), set forth
below to Grantee.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties do hereby agree as follows:
1. GRANT. Subject to all of the terms, conditions and provisions of the
Plan and of this Agreement, the Company hereby grants to Grantee 25,000 shares
of Common Stock ("Shares") under the Plan, which Shares shall consist of
authorized but unissued shares or issued shares reacquired by the Company.
2. VESTING. The Shares shall vest pursuant to the vesting schedule set
forth below or as otherwise described in that certain Consulting Agreement dated
, between the Company and Grantee and to which a copy of this Agreement is
attached as Exhibit A.
VESTING DATE VESTED PERCENTAGE
------------ -----------------
, 1997 20%
, 1998 20%
, 1999 20%
, 2000 20%
, 2001 20%
3. GRANTEE'S AGREEMENT. Grantee expressly and specifically agrees that:
(a) With respect to the calendar year in which any portion of the
Shares vest, the Grantee shall include in his gross income for
federal income tax purposes the amount the fair market value (as
determined in Section 6.7 of the Plan) of the Shares issuable on
the date of vesting;
(b) The grant of the Shares is special incentive compensation which
shall not be taken into account as "wages" or "salary" in
determining the amount of payment or benefit
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to the Grantee under any pension, thrift, stock or deferred
compensation plan of the Company; and
(c) On behalf of the Grantee's beneficiary, such grant shall not
affect the amount of any life insurance coverage available to
such beneficiary under any life insurance plan of the Company.
4. OTHER TERMS, CONDITIONS AND PROVISIONS. As previously provided, the
Shares herein granted by the Company to Grantee are issued subject to all of the
terms, conditions and provisions of the Plan. Grantee hereby acknowledges
receipt of a copy of the Plan and the parties agree that the entire text of such
Plan be, and it is, hereby incorporated herein by reference as fully as if
copied herein in full. Reference to such Plan is therefore made for a full
description of the rights of Grantee, adjustments to be made in the event of
changes in the capital structure of the Company, and all of the other
provisions, terms and conditions of the Plan applicable to the Shares granted
herein. If any of the provisions of this Agreement shall vary from or be in
conflict with the Plan, the provisions of the Plan shall be controlling.
5. NON-TRANSFERABILITY. Unvested Shares granted hereunder are not
transferable or assignable by Grantee except by will or the laws of descent and
distribution.
IN WITNESS WHEREOF, this Agreement is executed and entered into
effective on the day and year first above expressed.
ATTEST: XXXXXX PETROLEUM COMPANY
--------------------------- --------------------------------
H. Xxxxxxx Xxxxx, Secretary Xxxx X. Xxxxxx, President
GRANTEE
--------------------------------
Xxxx X. Xxxxxx
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