EMPLOYMENT AGREEMENT
AGREEMENT, made December 31, 1996, by and between
Domain Energy Corporation, a Delaware corporation (the "Company")
and Xxxxxxx X. Xxxxx ("Executive").
RECITALS
In order to induce Executive to serve as the President and Chief
Executive Officer of the Company, the Company desires to provide Executive with
compensation and other benefits on the terms and conditions set forth in this
Agreement.
Executive is willing to accept such employment and perform
services for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as
follows:
1. EMPLOYMENT.
1.1 Subject to the terms and conditions of this Agreement, the
Company hereby employs Executive during the term hereof as its President and
Chief Executive Officer. In his capacity as the President and Chief Executive
Officer of the Company, Executive shall report to the Board of Directors of the
Company (the "Board") and shall have the customary powers, responsibilities and
authorities of chief executive officers of corporations of the size, type and
nature of the Company, as it exists from time to time, as are assigned by the
Board.
1.2 Subject to the terms and conditions of this
Agreement, Executive hereby accepts employment as the President
and Chief Executive Officer of the Company and agrees to devote his full working
time and efforts, to the best of his ability, experience and talent, to the
performance of services, duties and responsibilities in connection therewith.
Executive shall perform such duties and exercise such powers, commensurate with
his position, as the President and Chief Executive Officer of the Company, as
the Board shall from time to time delegate to him on such terms and conditions
and subject to such restrictions as such Board may reasonably from time to time
impose. Executive also agrees to serve, if elected, as a member of the Board.
1.3 Nothing in this Agreement shall preclude Executive from
engaging, so long as, in the reasonable determination of such Board, such
activities do not interfere with his duties and responsibilities hereunder, in
charitable and community affairs, from managing any passive investment made by
him in equity securities or other assets (provided that no such investment may
exceed 5% of the equity of any entity, without the prior approval of such Board
of Directors and Executive shall give the Board of Directors prior written
notice of any investment in an entity that is not publicly traded) or from
serving, subject to the prior approval of such Board of Directors, as a member
of boards of directors or as a trustee of any other corporation, association or
entity. For purposes of the preceding sentence, any approval of the Board
required therein shall not be unreasonably withheld.
2. TERM OF EMPLOYMENT. Executive's term of employment
under this Agreement shall commence as of the date hereof and,
subject to the terms hereof, shall terminate on the earlier of (i) December 31,
1999 (the "Termination Date") or (ii) termination of Executive's employment
pursuant to this Agreement; PROVIDED, HOWEVER, that any termination of
employment by Executive (other than for death, Permanent Disability or Good
Reason) may only be made upon 60 days prior written notice to the Company and
any termination of employment by Executive for Good Reason may only be made upon
30 days prior written notice to the Company.
3. COMPENSATION.
3.1 SALARY. The Company shall pay Executive a base salary ("Base
Salary") at the rate of $180,000 per annum for the period commencing on the
beginning of Executive's term of employment hereunder and ending on the
Termination Date. Base Salary shall be payable in accordance with the ordinary
payroll practices of the Company. Any increase in Base Salary shall be in the
discretion of the Board and, as so increased, shall constitute "Base Salary"
hereunder.
3.2 ANNUAL BONUS. In addition to his Base Salary, Executive shall
be paid an annual cash bonus (the "Bonus") during the term of his employment
hereunder with a target amount equal to 50% of Base Salary (the "Target Bonus")
and a maximum amount equal to 90% of Base Salary based on performance criteria
determined by the Company's Board of Directors in its sole discretion.
3.3 COMPENSATION PLANS AND PROGRAMS. Executive shall
be entitled to participate in any compensation plan or program
maintained by the Company in which other senior executives of the Company
participate on terms comparable to those applicable to such other senior
executives.
4. EMPLOYEE BENEFITS.
4.1 EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES. The
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Company shall provide Executive during the term of his employment
hereunder with coverage under all employee pension and welfare
benefit programs, plans and practices (commensurate with his
positions in the Company and to the extent permitted under any
employee benefit plan) in accordance with the terms thereof, which
the Company makes available to its senior executives (including,
without limitation, participation in health, dental, group life,
disability, retirement and all other plans and fringe benefits to
the extent generally provided to such senior executives).
4.2 VACATION AND FRINGE BENEFITS. Executive shall be entitled to
no less than twenty-five (25) business days paid vacation in each calendar year,
which shall be taken at such times as are consistent with Executive's
responsibilities hereunder. Such vacation time shall accrue at a rate of 2.08
vacation days for each calendar month worked. Unless otherwise approved by the
Board, any vacation days not taken in any calendar year shall be forfeited
without payment therefor. In addition, Executive shall be entitled to the
perquisites and other fringe benefits commensurate with his position with the
Company, which the parties agree shall be $20,000 annually (excluding such paid
vacation). Such annual amount shall be paid to the Executive on
the same periodic basis as his Base Salary, and Executive shall have the right
to determine the utilization and apportionment thereof among such perquisites
and other fringe benefits. The Company shall furnish Executive with a private
office and a private secretary and all other reasonable assistance and
accommodations.
5. EXPENSES. Executive is authorized to incur reasonable expenses
in carrying out his duties and responsibilities under this Agreement and
promoting the business of the Company, including, without limitation, expenses
for travel, lodgings, entertainment and similar items related to such duties and
responsibilities. The Company will reimburse Executive for all such expenses
upon presentation by Executive from time to time of appropriately itemized and
approved (consistent with the Company's policy) accounts of such expenditures.
6. TERMINATION OF EMPLOYMENT.
6.1 TERMINATION NOT FOR CAUSE OR TERMINATION FOR GOOD REASON. (a)
Subject to the terms and conditions of this Agreement, the Company may terminate
Executive's employment at any time for any reason. If Executive's employment is
terminated by the Company other than for Cause (as defined in Section 6.4(b)
hereof) or other than as a result of Executive's death, Retirement (as defined
below in this Section 6.1(a)) or Permanent Disability (as defined in Section 6.2
hereof) or if Executive terminates his employment for Good Reason (as defined in
Section 6.1 (c) hereof) prior to the Termination Date, Executive shall
receive all such payments, if any, under applicable compensation and employee
benefit plans or programs, including but not limited to those referred to in
Section 3.3 hereof, to which he is entitled pursuant to the terms of such plans
or programs. In addition, Executive shall receive a lump sum cash payment (the
"Termination Amount") in lieu of any Bonus in respect of all or any portion of
the fiscal year in which such termination occurs and any other cash compensation
(other than the Vacation Payment and the Compensation Payment referred to
below). The Termination Amount shall consist of the greater of (i) an amount
equal to the Executive's Base Salary at its then current annual rate plus the
amount of Executive's Target Bonus for the entire year in which his termination
occurs (irrespective of whether the performance criteria have been met) or (ii)
the aggregate amount of Base Salary which Executive would have received for the
remaining term of this Agreement. In addition, Executive shall receive a cash
lump sum payment in respect of accrued but unused vacation days (the "Vacation
Payment") and all compensation earned but not yet paid (including any deferred
Bonus payments) (the "Compensation Payment"). "Retirement" means the termination
of Executive's employment with the Company and all of its affiliates as a result
of his reaching a retirement age (not less than 62 years of age) established by
the Board for his retirement.
(b) The Termination Amount, the Vacation Payment and the
Compensation Payment shall be paid by the Company to Executive within 30 days
after the termination of Executive's employment by check payable to the order of
Executive or by wire
transfer to an account specified by Executive. Payments or amounts to which
Executive is entitled under applicable compensation and employee benefit plans
or programs will be paid to Executive pursuant to the terms of such plans or
programs.
(c) For purposes of this Agreement, "Good Reason" shall mean any
of the following (without Executive's express prior written consent):
(i) any removal of Executive as the President and Chief Executive
Officer of the Company or any material reduction by the Company of
Executive's authority, duties or responsibilities (except in connection
with the termination of Executive's employment for Cause, as a result of
Permanent Disability, or as a result of Executive's death or
Retirement);
(ii) any reduction by the Company in Executive's Base Salary, other
than a reduction which is part of a uniformly applied general salary
reduction program affecting senior executives of the Company;
(iii) the Company's moving Executive's place of
employment outside the Houston, Texas metropolitan area; or
(iv) Executive's election to terminate his employment for any
reason within 30 calendar days following a Change of Control (as defined
in the Non-Qualified Stock Option Agreement attached hereto as Exhibit A
(the "Option Agreement")).
6.2 PERMANENT DISABILITY. If the Executive becomes totally and
permanently disabled (as defined in the Company's Long-Term Disability Benefit
Plan applicable to senior executive officers as in effect on the date hereof)
("Permanent Disability"), the Company or Executive may terminate Executive's
employment on written notice thereof, and in any such case Executive shall
receive or commence receiving:
(i) as soon as possible under the terms thereof, all amounts
payable pursuant to the terms of any disability insurance policy or
similar arrangement which the Company maintains during the term hereof;
(ii) within 30 days after the giving or receipt of such notice by
the Company, as the case may be, the Target Bonus in respect of the
fiscal year in which his termination occurs (irrespective of whether the
performance criteria have been met), prorated by a fraction, the
numerator of which is the number of days of the fiscal year until
termination and the denominator of which is 365;
(iii) within 30 days after the giving or receipt of such notice by
the Company, as the case may be, the Vacation Payment and the
Compensation Payment; and
(iv) as soon as possible under the terms thereof, all such payments
under applicable plans or programs, including but not limited to those
referred to in Sections 3.3 and 4.1 hereof, to which he is entitled
pursuant to the terms of such plans or programs, in accordance with
their terms.
6.3 DEATH. In the event of Executive's death during the term of
his employment hereunder, Executive's estate or designated beneficiaries shall
receive or commence receiving:
(i) within 30 days after the Company knows of Executive's death,
the Target Bonus in respect of the fiscal year in which his death occurs
(irrespective of whether the performance criteria have been met),
prorated by a fraction, the numerator of which is the number of days of
the fiscal year until his death and the denominator of which is 365;
(ii) within 30 days after the Company knows of
Executive's death, the Vacation Payment and the
Compensation Payment; and
(iii) as soon as possible under the terms thereof, all such payments
under applicable plans or programs, including but not limited to those
referred to in Sections 3.3 and 4.1 hereof, to which Executive's estate
or designated beneficiaries are entitled pursuant to the terms of such
plans or programs, in accordance with their terms.
6.4 VOLUNTARY TERMINATION BY EXECUTIVE; DISCHARGE FOR
CAUSE. (a) The Company shall have the right to terminate the
employment of Executive for Cause. In the event that Executive's
employment is terminated by the Company for Cause, as hereinafter
defined, or by Executive other than for Good Reason or other than
as a result of the Executive's Permanent Disability, Retirement or death,
Executive shall only be entitled to receive, within 30 days after such
termination, the Compensation Payment and the Vacation Payment and any other
then-vested benefits under any compensation or employee benefit plans or
programs to which he is entitled pursuant to the terms of such plans or
programs. Executive shall not be entitled, among other things, to the payment of
any Bonus in respect of all or any portion of the fiscal year in which such
termination occurs. After the termination of Executive's employment under this
Section 6.4, the obligations of the Company under this Agreement to make any
further payments, or provide any benefits other than those specified herein, to
Executive shall thereupon cease and terminate.
(b) As used herein, the term "Cause" shall be limited to (i)
Executive's commission of any act of fraud or embezzlement against the Company
or any of its affiliates, irregardless of whether such act results in material
financial loss to the Company or any of its affiliates, or other willful
malfeasance or willful misconduct by Executive in connection with his employment
that results in material financial loss to the Company or any of its affiliates,
(ii) continuing refusal by Executive to perform his duties hereunder or any
lawful direction of the Board as required under Section 1.2, after written
notice of any such refusal to perform such duties or direction was given to
Executive by the Board and Executive has been given a 30-day cure period after
receipt of such notice to take reasonable corrective
action, (iii) any material breach of the provisions of Section 13 of this
Agreement by Executive or any other material breach of this Agreement by
Executive after written notice of any such breach was given to Executive by the
Board and Executive has been given a 30-day cure period after receipt of such
notice to take reasonable corrective action or (iv) the conviction of Executive
for any felony. Termination of Executive pursuant to Section 6.4 shall be made
by delivery to Executive of a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire Board at a meeting of
the Board called and held for such purpose (after 30 days prior written notice
(which may include the 30 day period referred to in (ii) above) to Executive and
reasonable opportunity for Executive to be heard before the Board prior to such
vote), finding that in the reasonable judgment of such Board, Executive was
guilty of conduct set forth in any of clauses (i) through (iv) above and
specifying the particulars thereof.
7. STOCK ARRANGEMENTS. Executive and the Company shall enter into
the Common Stock Management Investor Subscription Agreement attached hereto as
Exhibit B (the "Subscription Agreement"). In addition, on the date of the
purchase of common stock under the Subscription Agreement, the Company shall
issue to the Executive an option to purchase up to 450 shares of the Company's
Common Stock, par value $.01 per share, pursuant to the Option Agreement.
8. MITIGATION OF DAMAGES. Executive shall not be
required to mitigate any damages or the amount of any payment
provided for under this Agreement by seeking other employment or otherwise after
the termination of his employment hereunder, and any amounts earned by
Executive, whether from self-employment, as a common-law employee or otherwise,
shall not reduce the amount of any Termination Amount or other payments or
amounts otherwise payable to him.
9. NOTICES. All notices or communications hereunder
shall be in writing, addressed as follows:
To the Company:
Domain Energy Corporation
0000 Xxxxxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
with copies to:
Xxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx X. Xxxx III, Esq.
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
To Executive:
Xxxxxxx X. Xxxxx
00000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual
date of mailing (or, if earlier, the actual date of receipt) shall constitute
the time at which notice was given.
10. SEPARABILITY; LEGAL FEES. If any provision of this Agreement
shall be declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the remaining provisions hereof
which shall remain in full force and effect. In any dispute between the
Executive and the Company pertaining to this Agreement, the non-prevailing party
shall pay the costs of any legal fees and other fees and expenses which may be
incurred by the prevailing party in such dispute. For these purposes, the
plaintiff shall be deemed to be the prevailing party if the plaintiff is awarded
in excess of 50% of the amount claimed in the complaint and the defendant shall
be deemed to be the prevailing party if the plaintiff is awarded 50% or less of
the amount claimed in the complaint.
11. ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the heirs and legal representatives of Executive and the
permitted assigns and successors of the Company, but neither this Agreement nor
any rights or obligations hereunder shall be assignable or otherwise subject to
hypothecation by Executive (except by will or by operation of the laws of
intestate succession) or by the Company, except that the Company may assign this
Agreement to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Company, if such
successor expressly agrees to assume the obligations of the Company hereunder.
12. AMENDMENT. This Agreement may only be amended by
written agreement of the parties hereto.
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION; NON- COMPETITION.
(a) Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Company or any of its affiliates, except (i) while employed by
the Company, in the business of and for the benefit of the Company, or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order Executive to divulge, disclose or make accessible such
information. For purposes of this Section 13(a), "Confidential Information"
shall mean non-public information concerning the financial data, strategic
business plans, product development (or other proprietary product data),
customer lists, marketing plans and other non-public, proprietary and
confidential information of the Company, First Reserve Corporation or their
respective affiliates (the "Restricted Group") or customers, that, in any case,
is not otherwise available to the public (other than by Executive's breach of
the terms hereof).
(b) During the period of his employment hereunder and for six (6)
months thereafter, Executive agrees that, without the prior written consent of
the Company, (A) he will not, directly
or indirectly, either as principal, manager, agent, consultant, officer,
stockholder, partner, investor, lender or employee or in any other capacity,
carry on, be engaged in or have any financial interest in, any business or
entity which is in competition with the business of any member of the Restricted
Group engaged in the oil and gas exploration and production business and (B) he
shall not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or offer employment to any person who has been
employed by any member of the Restricted Group engaged in the oil and gas
exploration and production business at any time during the 12 months immediately
preceding such solicitation.
(c) For purposes of this Section 13, a business shall be deemed
to be in competition with a member of the Restricted Group engaged in the oil
and gas exploration and production business if it is also principally engaged in
the oil and gas exploration and production business within the same geographic
area in which such member of the Restricted Group is so engaged. Nothing in this
Section 13 shall be construed so as to preclude Executive from investing in any
publicly or privately held company, provided Executive's beneficial ownership of
any class of such company's securities does not exceed 5% of the outstanding
securities of such class.
(d) Executive and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree that
if in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any
respect, such court shall have the right, power and authority to excise or
modify such provision or provisions of this covenant as to the court shall
appear not reasonable and to enforce the remainder of the covenant as so
amended. Executive agrees that any breach of the covenants contained in this
Section 13 would irreparably injure the Company. Accordingly, Executive agrees
that the Company may, in addition to pursuing any other remedies it may have in
law or in equity, cease making any payments otherwise required by this Agreement
(until any such breach is cured) and obtain an injunction against Executive from
any court having jurisdiction over the matter restraining any further violation
of this Agreement by Executive.
14. BENEFICIARIES; REFERENCES. Executive shall be entitled to
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following Executive's death, and may change such election, in either
case by giving the Company written notice thereof. In the event of Executive's
death or a judicial determination of his incompetence, reference in this
Agreement to Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative. Any reference to the
masculine gender in this Agreement shall include, where appropriate, the
feminine.
15. SURVIVORSHIP. The respective rights and
obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations. The
provisions of this Section 15 are in addition to the survivorship provisions of
any other section of this Agreement.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED,
INTERPRETED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF DELAWARE, WITHOUT REFERENCE TO RULES RELATING TO CONFLICTS OF
LAW.
17. EFFECT ON PRIOR AGREEMENTS. This Agreement contains the
entire understanding between the parties hereto with respect to the subject
matter hereof and supersedes in all respects any prior or other agreement or
understanding between the Company or any affiliate of the Company and Executive
with respect to such subject matter, other than the Option Agreement.
18. WITHHOLDING. The Company shall be entitled to
withhold from payment any amount of withholding required by law.
19. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which will be deemed an
original.
Domain Energy Corporation
By /s/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: Vice President and Chief
Financial Officer
/s/ XXXXXXX X. XXXXX
Xxxxxxx X. Xxxxx
