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EXHIBIT 10.2
EXHIBIT A
SECOND RESTATED
EMPLOYMENT AGREEMENT
This Agreement is entered into as of the ___ day of ________, 199_, by
and between Continental Natural Gas, Inc., an Oklahoma corporation
("Employer"), and Xxxxx X. Xxxxxxx ("Employee").
RECITALS
A. As of March 27, 1989, Employer and Employee entered into an
Employment Agreement pursuant to which Employee agreed to employment with
Employer;
B. The Employment Agreement (the "Employment Agreement") was
subsequently amended August 8, 1990, November 15, 1992, January 1, 1995 and
February 28, 1996;
C. Employer desires to continue to employ Employee and Employee
desires to continue to be employed by Employer to serve and perform such duties
at such times and places and upon such terms and conditions as hereinafter
provided;
D. Employer desires to receive from Employee a covenant not to
disclose certain information relating to Employer's business and a covenant not
to compete with Employer;
E. Employer and Employee desire to set forth in writing the terms
and conditions of their agreement and understandings.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration this day
paid by each party to the other, the receipt and sufficiency of which are
hereby acknowledged, Employer and Employee agree as follows:
1. Employment. Employer hereby agrees to continue the employment
of Employee and Employee hereby agrees to continue to provide Employee's
services to Employer upon the terms and conditions herein stated.
2. Term. Subject to the provisions for termination as
hereinafter provided, the term of this Agreement shall begin as of the date
hereof, and shall terminate on December 31, 1999.
3. Compensation.
(a) Salary. For services rendered by Employee under this
Agreement, Employer shall pay Employee a salary of One Hundred Fifty
Thousand Dollars ($150,000.00) per annum, payable in twenty-six (26)
equal bi-weekly installments. On
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January 1 of each calendar year during the term hereof, the annual
salary payable to Employee pursuant to this paragraph 3(a) shall be
increased by a percentage equal to the percentage increase as of such
date, if any, in the Official Consumers Price Index published by the
Bureau of Labor Statistics of the U. S. Department of Labor,
applicable to the smallest geographic region which includes Tulsa,
Oklahoma, with reference to the Official Consumers Price Index for
January 1 of the previous year.
(b) Bonus. For the calendar year 1997 and for all
subsequent calendar years during the term of this Agreement, Employer
shall pay Employee a yearly bonus equal as follows:
(i) If the Adjusted Income for such calendar year is
equal to or greater than the Initial Threshold, but less than
the Second Threshold, the yearly bonus payable to Employee
shall equal the product obtained by multipying (A) $50,000 by
(B) a fraction (I) the numerator of which is the amount by
which the Adjusted Income for such calendar year exceeds the
Initial Threshold and (II) the denominator of which is the
difference between the Second Threshold and the Initial
Threshold;
(ii) If the Adjusted Income is equal to or greater
than the Second Threshold, but less than the Third Threshold,
the yearly bonus payable to Employee shall equal $50,000;
(iii) If the Adjusted Income is equal to or greater
than the Third Threshold, but less than the Fourth Threshold,
the yearly bonus payable to Employee shall equal $100,000; or
(iv) If the Adjusted Income is equal to or greater
than the Fourth Threshold, the yearly bonus payable to
Employee shall equal $150,000.
The Thresholds for the 1997 calendar year shall be as follows:
Initial Threshold = $4,400,000
Second Threshold = $5,500,000
Third Threshold = $6,600,000
Fourth Threshold = $7,700,000
For any calendar year subsequent to 1997, the Initial Threshold shall
be an amount equal to 20% of Average Daily Adjusted Equity for the
previous calendar year, the Second Threshold will be 25% of such
Average Daily Adjusted Equity, the Third Threshold will be 30% of such
Average Daily Adjusted Equity and the Fourth Threshold will be 35% of
such Average
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Daily Adjusted Equity . As used herein, the term "Adjusted Income"
shall mean, for the calendar year in question, the income of Employer
before income taxes plus depreciation, depletion and amortization and
any other noncash items. As used herein, the term "Average Daily
Adjusted Equity" shall mean, for the calendar year in question, the
average of the Adjusted Equity for the year in question; such Adjusted
Equity being an amount, determined each day, equal to (A) the
stockholders' equity of Employer as of the last day of the previous
calendar year less (B) the then Unutilized IPO Proceeds. As of any
day, the then Unutilized IPO Proceeds shall be an amount equal to (I)
the net proceeds, after all expenses, to Employer raised pursuant to
the initial public offering ("IPO") consummated by Employer as of the
effective date of this Agreement less (II) the amount of Employer's
long-term debt as of such day which has been incurred by Employer
since the date of the IPO (plus any long-term debt incurred by
Employer prior to the IPO if incurred in contemplation of the IPO, as
determined by Employer, in Employer's sole discretion, exercised in
good faith).
Within thirty (30) days after the end of each calendar month,
Employer shall make a good faith estimate of the Adjusted Income for
such calendar month and pay Employee the estimated bonus attributable
thereto). Within ninety (90) days after the end of each calendar year
during the term hereof, an accounting of the actual amounts owed to
Employee pursuant to this paragraph 3(b) shall be conducted by
Employer and, to the extent of the difference between the aggregate of
the estimated monthly payments to Employee and the actual amounts owed
by Employer to Employee, the party owing such amounts shall make
payment to the other. Such payment shall be made within five (5) days
after delivery of the accounting to Employee. Any payment not paid on
or before the due date therefor shall bear interest at a varying rate
of interest per annum equal to the prime lending rate of Bank of
Oklahoma, N.A., plus one and one-half percent (1-1/2%).
If this Agreement becomes effective on any day other than
January 1, the bonus payable to Employee for the first calendar year
during which this Agreement is effective shall be prorated. The bonus
payable to Employee for the portion of such calendar year from January
1 through the day prior to the effective date of this Agreement shall
be paid based upon the terms of the Employment Agreement prior to its
amendment and restatement hereunder. The bonus which would have been
paid under such Employment Agreement prior to its amendment and
restatement hereunder shall be computed for the entire calendar year
and then multiplied by a fraction, the numerator of which is the
number of days of such calendar year prior to the effective date of
this Agreement and the denominator of which is the number of days in
such entire calendar year. The
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bonus payable to Employee for the remaining portion of such calendar
year shall be paid based upon the terms described in this paragraph
3(b), prorated in the same manner as described in the preceding
sentence (using the number of remaining days in such calendar year as
the numerator).
(c) Determination of Adjusted Income and Average Daily
Adjusted Equity. The Adjusted Income and Average Daily Adjusted
Equity shall be determined by the certified public accountant or
accounting firm (the "CPA") which normally audits the books of
Employer. Such determinations shall be made using generally accepted
accounting principles, consistently applied and consistent with past
practices of Employer. Such determinations shall be binding on all
parties and conclusive in all respects; provided, however, Employee
shall have the right to audit the determinations. If Employee's audit
reveals inconsistencies in the determination by the CPA resulting in
an error in the amount payable hereunder for any twelve-month period
in excess of five percent (5%), Employer shall bear the cost of
Employee's audit. Otherwise, Employee's audit shall be Employee's
expense. After any such audit, once the correct amount owed is
determined, the party owing the other shall pay the amount owed upon
demand.
(d) Automobile Allowance. Employer shall also pay
Employee at the same times Employee is paid salary pursuant to
paragraph 3(a) above, Four Hundred Dollars ($400.00) per month during
the term of this Agreement as an automobile allowance. In
consideration thereof and as a result of the nature of the services to
be performed by Employee, Employee shall keep an automobile available
and in working condition so that Employee can adequately perform the
services required to be performed by Employee hereunder.
(e) Additional Compensation. The compensation agreed to
be paid to Employee by Employer in this paragraph 3 shall not operate
in any manner as a limitation of any type upon or as a direction,
express or implied, against the exercise by the Board (the "Board") of
Directors of Employer of its power, authority and discretion to grant
additional bonuses and/or fees or other additional direct or indirect
benefits or compensation to or on behalf of Employee if, in the
business judgment of the Board, such action is merited and in the best
interest of Employer.
(f) Withholding. The salary and any other compensation
paid to Employee shall be subject to any and all such payroll and
withholding deductions as are required by the laws of any
jurisdiction, federal, state or local, with taxing authority with
respect to such salary and other compensation.
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(g) Payments after Termination. Notwithstanding any
other provision of this Agreement to the contrary, except as provided
in paragraph 13 hereof, any payment required pursuant to this
paragraph 3 attributable to any period of time occurring during the
term of this Agreement shall be made when due despite the fact that
such payment is due after termination of this Agreement.
4. Duties. To the best of Employee's ability, using reasonable
and prudent judgment and care, Employee shall render such services and perform
such duties as are customary for a Vice-President of Operations in the industry
and as may be requested by Employer from time to time.
5. Extent of Services. Employee shall devote such time and
energy to the furtherance of Employer's business as shall be determined by the
Board. During the term of this Agreement, Employee shall not, directly or
indirectly, alone or as a member of any business entity, or as an officer,
director or stockholder of any corporation, be engaged in or concerned with any
other commercial or business duties or pursuits which would require such
substantial services on the part of Employee that Employee, in Employer's sole
opinion, would be unable to perform the services required to be performed by
Employee hereby.
6. Working Facilities and Staff. Employee shall be furnished
with such facilities, staff and services as are suitable to Employee's position
and adequate for the performance of Employee's duties.
7. Expenses. Employer will reimburse Employee for all such
expenses which Employer, in Employer's sole discretion, deems are reasonably
incurred for promoting the business of Employer, upon the presentation by
Employee, from time to time, of an itemized account of such expenditures.
8. Vacations. During the term of this Agreement, Employee shall
be entitled, during each year of employment with Employer, to a vacation in
accordance with the established company policy of Employer, during which time
Employee's compensation hereunder shall be paid in full.
9. Insurance. During the term of this Agreement, Employer shall
provide to Employee, and pay all premiums for, major medical insurance with
coverage for Employee and Employee's immediate family on terms no less
favorable than is currently provided.
10. Pension and Profit-sharing Plan. During the term of this
Agreement, to the extent it is financially reasonable as determined by the
Board, Employer shall maintain in effect any pension and profit-sharing plans
maintained by Employer as of the date hereof
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and Employee shall be entitled to participate in such plans on a
non-discriminatory basis.
11. Memberships. During the term of this Agreement, Employer
agrees to pay, on behalf of Employee, up to Three Thousand Dollars ($3,000.00)
per year for dues and/or fees for club memberships, dinner clubs and/or
professional organizations.
12. Disability and Death. If Employee is unable to perform
Employee's services by reason of illness or incapacity for a period of more
than ninety (90) consecutive days, the compensation otherwise payable to
Employee during the continued period of such illness or incapacity shall be
reduced by fifty percent (50%). Employee's full compensation shall be
reinstated upon Employee's return to employment and the discharge of Employee's
full duties hereunder. Notwithstanding anything herein to the contrary,
Employer may terminate this Agreement at any time after Employee shall be
absent from Employee's employment, for whatever cause, for a continuous period
of more than sixty (60) consecutive days, in which event, subject to paragraph
3(g) hereof, all obligations of the Employer hereunder, including Employer's
obligations to pay Employee the compensation provided in paragraph 3 hereof,
shall immediately cease upon any such termination. In no event, however, shall
any provision of this paragraph 12 be interpreted to limit or restrict
Employee's rights to participate in and receive benefits under the existing
Employer disability plan(s). Subject to paragraph 3(g) hereof, all of
Employer's obligations hereunder, including Employer's obligations to pay
Employee the compensation provided in paragraph 3 hereof, shall cease
immediately upon Employee's death. The determination of all periods of time
under this paragraph 12 shall be calculated by including (and counting)
weekends which occur within the applicable period but excluding days of sick
leave, vacation, holidays and other days off, if any, allowed pursuant to
established company policy of Employer.
13. Termination for Cause. Employer may terminate Employee's
employment under this Agreement upon (10) days' notice to Employee after the
occurrence of any of the following events ("Cause Events") unless such events
were caused at the direction of Employer:
(a) Any failure by Employee to faithfully perform the
covenants and agreements of Employee herein stated;
(b) Willful, gross misconduct by Employee in connection
with the performance of the covenants and agreements of Employee
herein stated;
(c) If Employee violates any law, rule or regulation
which violation materially adversely affects Employer or any of
Employer's subsidiaries or other affiliates (collectively hereinafter
referred to as the "Employer Companies");
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(d) If Employee violates any of the provisions of
paragraphs 16 or 17;
(e) If Employee converts any property of Employer
Companies;
(f) If Employee is convicted of any felony which
materially adversely affects Employer Companies or the ability of
Employee to perform Employee's duties hereunder; or
(g) If Employee is convicted of any lesser crime or
offense involving property or business of Employer Companies.
In the event of a dispute as to whether a Cause Event has occurred, upon the
request of Employer or Employee, such dispute shall be resolved pursuant to the
expedited procedures of the commercial arbitration rules of the American
Arbitration Association regardless of the amount in controversy, with each
party to bear its own arbitration costs and expenses. The parties stipulate
that the hearing locale for any such arbitration proceeding will be Tulsa,
Oklahoma. Judgment upon the award rendered as a result of such arbitration may
be entered in any court having jurisdiction thereof. The parties further
stipulate that the provisions hereof shall be a complete defense to any suit,
action or proceeding instituted in any federal, state or local court or before
any administrative tribunal with respect to any controversy or dispute arising
out of or relating to whether a Cause Event has occurred. Upon termination of
Employee's employment under this Agreement as a result of a Cause Event, all of
Employer's obligations hereunder, including Employer's obligations to pay
Employee the compensation provided in paragraph 3 hereof (whether or not then
accrued), shall immediately cease. Nothing contained herein shall be construed
as limiting in any manner any of the rights or remedies available to Employer
pursuant to this agreement or otherwise with respect to such Cause Event.
14. Expiration of Term. In the event this Agreement is terminated
due to expiration of the term of this Agreement as set forth in paragraph 2
hereof, subject to paragraph 3(g) hereof, all of Employer's obligations
hereunder, including Employer's obligations to pay Employee the compensation
provided in paragraph 3 hereof, shall immediately cease.
15. Other Termination by Employer. In the event Employer
terminates Employee's employment hereunder for any reason other than as
provided in paragraphs 12, 13 or 14, (a) all of Employer's obligations
hereunder, including Employer's obligations to pay Employee the compensation
provided in paragraph 3 hereof, shall continue until terminated under paragraph
14 above, and (b) notwithstanding anything to the contrary contained herein,
the provisions of paragraph 17 hereof shall not apply.
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16. Disclosure of Information. Employee acknowledges that, in and
as a result of Employee's employment with Employer, Employee has and will be
making use of, acquiring, developing and/or adding to confidential information
of special and unique value relating to such matters as Employer Companies'
products, trade secrets, systems, procedures, manuals, confidential reports,
customer and supplier lists, and other information, data and displays, whether
or not patented or copyrighted, as well as the nature and type of product sold
by Employer Companies, the identity of Employer Companies' suppliers and
customers, the products and methods used and preferred by Employer Companies'
customers, and the prices paid by such customers (collectively hereinafter
referred to as the "Confidential Information"). As a material inducement to
Employer to enter into this Agreement and to pay to Employee the compensation
referred to in paragraph 3 hereof (as well as any additional benefits referred
to herein), Employee covenants and agrees that Employee and Employee's
partners, agents, representatives, servants, employers, employees and any and
all other persons acting, directly or indirectly, for or with Employee shall
not, at any time during or following the term of Employee's employment
hereunder, directly or indirectly, for any purpose whatsoever, divulge or
disclose any of the Confidential Information which has been obtained by or
disclosed to Employee and shall not at any time during or following the term of
Employee's employment hereunder, directly or indirectly, use, for any purpose
whatsoever, any of the Confidential Information for Employee's benefit or for
any purpose, whether or not beneficial to Employee, except for the purpose of
permitting Employee to perform the services for Employer contemplated by this
Agreement. Employee further covenants and agrees that all such Confidential
Information shall be the exclusive property of Employer and, upon the
expiration of this Agreement, Employee shall deliver to Employer all
Confidential Information then in the possession, custody or control of Employee
and without regard to the form in which such Confidential Information is stored
or the media for storage for such Confidential Information.
17. Covenants Against Competition. Employee acknowledges that
Employee's services to be rendered hereunder are of a special and unusual
character which have a unique value to Employer, the loss of which cannot
adequately be compensated by damages in an action at law. In view of the
unique value to Employer of the services of Employee for which Employer has
contracted hereunder, and because of the Confidential Information to be
obtained by or disclosed to Employee, as hereinabove set forth, and as a
material inducement to Employer to enter into this Agreement, and to pay to
Employee the compensation referred to in paragraph 3 hereof, (as well as any
additional benefits referred to herein), Employee covenants and agrees that
Employee and Employee's partners, agents, representatives, servants, employers,
employees and any and all other persons acting, directly or indirectly, for or
with Employee
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shall not, during the term of this Agreement and for a period of two (2) years
thereafter, within the continental United States:
(a) Solicit in any manner the termination of any of the
Agreements (the "CNG Agreements") between any of the Employer
Companies and any end-user customer ("CNG End-User") or supplier ("CNG
Supplier");
(b) Prior to or immediately upon termination of any CNG
Agreement, compete with or bid competitively against any of the
Employer Companies in order to sell product to any CNG End-User or
obtain supply or product from the same source of supply provided by
any CNG Supplier to any of the Employer Companies; or
(c) Solicit for employment or employ any person who is
then or was at any time during the term of this Agreement an employee
of Employer Companies.
18. Reasonableness of Restrictions. Employee has carefully read
and considered the provisions of paragraphs 16 and 17 hereof and having done
so, agrees that the restrictions set forth in such paragraphs (including, but
not limited to, the time period restriction and the geographical areas of
restriction set forth in paragraphs 16 and 17) are fair and reasonable and are
reasonably required for the protection of the interests of Employer, its
officers, directors and other employees. Notwithstanding the foregoing, in the
event that any of the provisions of paragraphs 16 or 17 shall be held to be
invalid or unenforceable, the remaining provisions thereof shall nevertheless
continue to be valid and enforceable as though the invalid or unenforceable
parts had not been included therein. In the event that any provision of
paragraph 16 or 17 relating to time period and/or areas of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum time period
or areas such court deems reasonable and enforceable, such time period and/or
areas of restriction shall be deemed to become and thereafter be the maximum
time period and/or areas which such court deems reasonable and enforceable.
19. Equitable Relief; Accounting for Profits. In the event of a
breach or threatened breach of any of the provisions of paragraphs 16 or 17,
Employer, in addition to and not in limitation of any other rights or remedies
available to Employer at law or in equity, shall be entitled to a permanent
injunction in order to prevent or to restrain any such breach by Employee or by
Employee's partners, agents, representatives, servants, employers, employees
and/or any and all persons, directly or indirectly, acting for or with
Employee. Employee further covenants and agrees that if Employee shall violate
any of Employee's covenants and agreements pursuant to paragraphs 16 and 17
above, Employer shall be entitled to an accounting and repayment of all
profits, compensations, commissions, remunerations and/or other benefits which
Employee,
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directly or indirectly, may realize as a result of, growing out of or in
connection with, any such violation. Such remedy shall be in addition to and
not in limitation of any injunctive relief or other rights or remedies which
Employer is or may be entitled to at law or in equity or under this Agreement.
In any action brought by Employer against Employee for the breach of paragraph
16 or 17, Employer shall be entitled to recover Employer's costs and expenses,
including reasonable attorneys' fees.
20. Notices. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing, and shall be deemed to have
been given if personally delivered or if deposited in the United States mail,
by certified mail, with proper postage prepaid thereon, addressed as follows:
If to Employer: Continental Natural Gas, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Att'n: Xx. Xxxx X. Xxxxx
If to Employee: Xx. Xxxxx X. Xxxxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
or to such other address as either party may hereafter advise the other by
notice given in accordance with the provisions hereof.
21. Waiver of Breach. The waiver by Employer of a breach of any
provision of this Agreement by Employee shall not operate or be construed as a
waiver of any subsequent breach by Employee.
22. Assignment. Employer may assign this Agreement to any
successor in interest of Employer's business. The rights and obligations of
the parties under this Agreement shall inure to the benefit of and shall be
binding upon the successors and assigns of Employer and Employee; provided,
however, that Employee may not assign this Agreement without the prior written
consent of Employer.
23. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same Agreement.
24. Governing Law. This Agreement shall be construed in
accordance with, and the rights and duties of the parties hereto shall be
governed by, the internal laws of the State of Oklahoma. The parties hereto
irrevocably and unconditionally consent to and submit themselves to the
exclusive jurisdiction of the courts of the State of Oklahoma located in Tulsa
County, Oklahoma and the courts of the United States of America located in the
Northern District of Oklahoma (collectively, the "Agreed Courts") with respect
to any actions, suits or proceedings arising out of or in
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connection with this Agreement and the transactions contemplated hereby and the
parties hereto agree not to commence any action, suit or proceeding relating
thereto except in such Agreed Courts. The parties hereto further agree that
service of any process, summons, notice, or documents in accordance with
paragraph 20 hereof shall be effective service of process for any action, suit
or proceeding brought. The parties hereto irrevocably and unconditionally
waive any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in the
Agreed Courts and hereby further irrevocably and unconditionally waive and
agree not to plead or claim that any such action, suit or proceeding brought in
any of the Agreed Courts has been brought in an inconvenient forum.
25. Entire Agreement. This instrument contains the entire
Agreement of the parties pertaining to Employee's employment by Employer,
superseding all other agreements (including, without limitation, the March 27,
1989 Employment Agreement between Employer and Employee, and all amendments,
modifications and supplements thereto) (collectively hereinafter referred to as
the "Prior Employment Agreements") whether oral or written, express or implied.
It may not be changed orally but only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification, extension
or discharge is sought. Further, except as specifically set forth herein,
Employer and Employee do hereby release each other from any and all claims,
known or unknown, fixed or contingent, that either may have against the other
pursuant to the Prior Employment Agreements or otherwise.
26. Severability. The provisions of this Agreement shall be
deemed severable, and the invalidity or unenforceability of any one or more of
the provisions hereof shall not affect the validity and enforceability of the
other provisions hereof.
27. Construction. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any party.
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IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above set forth.
Continental Natural Gas, Inc.
By /s/ XXXX X. XXXXX
-------------------------------------
Xxxx X. Xxxxx, Chairman
"Employer"
/s/ XXXXX X. XXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxx
"Employee"
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