EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.1
This Executive Employment Agreement dated effective as of July 1, 2007, is between Strata
Directional Technology, Inc. (“Company”) and Xxxxx X. Xxxxx (“Executive”).
R E C I T A L S:
A. Executive is currently employed by the Company pursuant to an employment agreement dated
February 1, 2004 (the “2004 Employment Agreement”) which terminates on January 31, 2008;
B. The Company wishes to continue to employ Executive, and Executive desires to continue
employment with Company by entering into a written agreement to specify the terms and conditions of
Executive’s continued employment with the Company;
C. Executive is to be employed as President and Chief Executive Officer of the Company;
X. Xxxxx-Xxxxxxxx Energy Inc. (“Xxxxx-Xxxxxxxx”) considers the maintenance of a sound
management team for the Company, its wholly owned subsidiary, including Executive, essential to
protecting and enhancing its best interests and those of its stockholders;
X. Xxxxx-Xxxxxxxx recognizes that the possibility of a change in control of the Company may
result in the departure or distraction of management to the detriment of the Company and its
stockholders; and
X. Xxxxx-Xxxxxxxx has determined that appropriate steps should be taken to obtain and retain
the continued attention and dedication of selected members of the Company’s management team to
their assigned duties without the distraction arising from the possibility of a change in control
of Xxxxx-Xxxxxxxx.
NOW, THEREFORE, in consideration of Executive’s past and future employment with Company and
other good and valuable consideration, the parties agree as follows:
Section 1. Definitions. As used in this Agreement, the following terms will have the
following meanings:
(a) Agreement refers to the Executive Employment Agreement represented by this
document.
(b) Xxxxx-Xxxxxxxx means Xxxxx-Xxxxxxxx Energy Inc.
(c) Cause has the meaning ascribed to it in Section 7(a)(ii).
(d) Change In Control means:
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(i) The acquisition after the date hereof by any individual, entity or group,
or a Person (within the meaning of Section 13(d)(3) of the Exchange Act), in each
case, other than an Excluded Person, of ownership of a majority of either: (i) the
then outstanding shares of Common Stock (“Outstanding Common Stock”) of
Xxxxx-Xxxxxxxx; or (ii) the combined voting power of the then outstanding voting
securities of Xxxxx-Xxxxxxxx entitled to vote generally in the election of directors
(“Outstanding Voting Securities”);
(ii) Approval by the stockholders of Xxxxx-Xxxxxxxx of a reorganization, merger
or consolidation, in each case, unless, either (1) immediately following such
reorganization, merger or consolidation, a majority of the then outstanding shares
of common voting securities of the entity resulting from such reorganization, merger
or consolidation and a majority of the combined voting power of the then outstanding
voting securities of such entity entitled to vote generally in the election of
directors (or similar governing persons) are then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Common Stock and Outstanding Voting Securities,
respectively, immediately prior to such reorganization, merger or consolidation, or
(2) a majority of the members of the board of directors (or similar governing body)
of the entity resulting from such reorganization, merger or consolidation were
members of the board of directors of Xxxxx-Xxxxxxxx at the time of the execution of
the initial agreement providing for such reorganization, merger or consolidation; or
(iii) Approval by the stockholders of Xxxxx-Xxxxxxxx of a complete liquidation
or dissolution of Xxxxx-Xxxxxxxx;
(iv) The sale or other disposition of all or substantially all of the assets of
Xxxxx-Xxxxxxxx and its subsidiaries taken as a whole, other than by way of a merger
or consolidation and other than to a third party, with respect to which following
such sale or other disposition, a majority of the then outstanding shares of common
stock of such third party and a majority of the combined voting power of the then
outstanding voting securities of such third party entitled to vote generally in the
election for directors (or similar governing persons) are then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners of the Outstanding Common Stock and Outstanding
Voting Securities, respectively, immediately prior to such sale or other
disposition.
(e) Code means the Internal Revenue Code of 1986, as amended.
(f) Common Stock means the common stock, $.01 par value of Xxxxx-Xxxxxxxx.
(g) Company means Strata Directional Technology, Inc.
(h) Confidential Information has the meaning ascribed to it in Section 9(b).
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(i) Constructively Terminated with respect to an Executive’s employment with Company
will be deemed to have occurred if Executive terminates his employment within six months
following the date on which:
(i) the Company demotes Executive to a lesser position, either in title or
responsibility, than the highest position held by Executive with Company at any time
during Executive’s employment with Company after the date hereof;
(ii) the Company decreases Executive’s salary below the highest level in effect at
any time during Executive’s employment with Company or reduces Executive’s benefits and
perquisites below the highest levels in effect at any time during Executive’s
employment with Company (other than as a result of any amendment or termination of any
Executive or group or other executive benefit plan, which amendment or termination is
applicable to all executives of Company or any inadvertent reduction in benefits that
Company cures within 30 days after receiving written notice of such reduction);
(iii) the Company requires Executive to relocate to a principal place of business
more than 50 miles from the principal place of business occupied by Company on the
first day of an Applicable Period;
(iv) Xxxxx-Xxxxxxxx is subject to a Change In Control, unless Executive accepts
employment with a successor to the Company or Xxxxx-Xxxxxxxx; or
(v) the Company breaches any other material term of this Agreement which is not
cured by Company within 30 days after receiving notice of such breach.
(j) Determination has the meaning ascribed to such term in Section 1313(a) of the Code.
(k) Disability with respect to Executive shall be deemed to exist if he meets the
definition of disability under the terms of the Company’s current long-term disability
policy (or any replacement long-term disability policy). Any refusal by Executive to submit
to a reasonable medical examination to determine whether Executive is so disabled shall be
deemed conclusively to constitute evidence of Executive’s disability.
(l) Executive refers to Xxxxx X. Xxxxx.
(m) Excluded Person means any Person who beneficially owns more than 10% of the
outstanding shares of Xxxxx-Xxxxxxxx at any time prior to the date hereof.
(n) Incentive Plan means the Xxxxx-Xxxxxxxx Energy Inc. 2006 Incentive Stock Plan, as
amended from time to time.
(o) Inventions has the meaning ascribed to it in Section 8(a).
(p) Salary has the meaning ascribed to it in Section 5(a).
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(q) Separation Payment Period has the meaning ascribed to it in Section 7(b)(ii).
(r) Separation Payments has the meaning ascribed to it in Section 7(b)(ii).
Section 2. Employment. Company hereby employs Executive, and Executive hereby accepts
employment by Company, upon the terms and subject to the conditions hereinafter set forth. The
2004nt Agreement is hereby terminated and superseded by this Agreement, effective as of the date
hereof.
Section 3. Duties. Executive shall be employed as the President and Chief Executive Officer
and shall report directly to the Chief Executive Officer and Chief Operating Officer of
Xxxxx-Xxxxxxxx and Board of Directors of the Company. Executive agrees to devote such time as is
necessary to perform his duties attendant to his executive position with Company, in a manner
consistent with Executive’s employment prior to the date hereof. Executive shall be allowed to
engage in other activities as an investor as well as participate in activities of charitable
organizations of his choice so long as they do not materially interfere with his duties for
Company.
Section 4. Term. The term of employment of Executive hereunder shall commence on the date of
this Agreement and terminate July 1, 2010.
Section 5. Compensation and Benefits. In consideration for the services of Executive
hereunder, Company shall compensate Executive as follows (except as set forth herein, Executive
acknowledges payment in full of all amounts due to him for services rendered prior to the date
hereof):
(a) Salary. Company shall pay Executive, semi-monthly in arrears with its normal
payroll procedures, a salary which is equivalent to an annual rate of $250,000 per annum
less applicable statutory deductions and withholdings (the “Salary”) payable in accordance
with the Company’s regular payroll procedures currently in effect. Any increase in the
Salary shall be in the sole discretion of the Compensation Committee of the Board of
Directors of Xxxxx-Xxxxxxxx.
(b) Management Incentive Bonus; . Executive shall be entitled to receive a bonus equal
to a maximum of 100% of his salary if the Company achieves its budgeted EBITDA goals as
determined by the Chief Executive Officer of Xxxxx-Xxxxxxxx and the Compensation Committee
of the Board of Directors. Such bonus shall be paid annually within 30 days following
Allis-Chalmer’s release of its audited financial statements for each fiscal year during the
term hereof. Executive shall also be eligible to receive from Company such other annual
management incentive bonuses as may be provided in management incentive bonus plans adopted
from time to time by Company.
(c) Vacation. Executive shall be entitled to four (4) weeks paid vacation per year.
Unless otherwise approved by the Chief Executive Officer or Chief Operating Officer of
Xxxxx-Xxxxxxxx, a maximum of ten days accrued vacation not taken in any calendar year shall
be carried forward and may be used in the next subsequent calendar year. Executive shall
schedule his paid vacation to be taken at times which are reasonably and mutually convenient
to both Company and Executive.
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(d) Insurance Benefits. Company shall provide accident, health, dental, disability and
life insurance for Executive under the group accident, health, dental, disability and life
insurance plans as may be maintained by Company for its full-time, salaried Executives.
(e) Car Allowance. The Executive will be paid a $1,000.00 per month car allowance
during the term of this Agreement.
Section 6. Expenses. The parties anticipate that in connection with the services to be
performed by Executive pursuant to the terms of this Agreement, Executive will be required to make
payments for travel, entertainment of business associates and similar expenses. Company shall
reimburse Executive for all reasonable expenses of types authorized by Company and incurred by
Executive in the performance of his duties hereunder, consistent with past practices. Executive
shall comply with such reporting requirements with respect to expenses as Company may establish
from time to time.
Section 7. Termination.
(a) General. Executive’s employment hereunder shall commence on the Commencement Date
and continue until the end of the term specified in Section 4, except that the employment of
Executive hereunder shall terminate prior to such time in accordance with the following:
(i) Death or Disability. Upon the death of Executive during the term of his
employment hereunder or, at the option of Company, in the event of Executive’s
Disability, upon 30 days’ notice to Executive.
(ii) For Cause. For “Cause” immediately upon written notice by Company to
Executive. A termination for Cause shall mean: (i) the commission of any act of
dishonesty, fraud, misrepresentation, misappropriation, or embezzlement by Executive
involving the Company; (ii) Executive’s unauthorized use or disclosure of any
confidential information or trade secrets of the Company; (iii) any violation by
Executive of a law or regulation applicable to the Company’s business, which violation,
in the sole discretion of the Board of the Company or Xxxxx-Xxxxxxxx, does or is
reasonably like to cause material injury to the Company; (iv) Executive’s conviction
of, or plea of nolo contendere or guilty to (a) a felony or (b) any other crime which
involves moral turpitude; (v) Executive’s continued failure, in the sole discretion of
the Board, to perform the principal duties, functions and responsibilities of his
position (other than any such failure resulting from Executive’s Disability (as defined
below)) or to follow the directives of the Board after written notice from the Company
identifying the deficiencies in performance and a reasonable cure period of not less
than thirty (30) days of any breach capable of cure; gross negligence or willful
misconduct in the performance of Executive’s duties; or (vi) a material and willful
breach of Executive’s fiduciary duties to the Company.
(iii) Without Cause. Without Cause upon notice by the Board of Directors to
Executive or upon notice by Executive to the Board of Xxxxx-Xxxxxxxx if Executive has
been Constructively Terminated.
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(b) Separation Pay.
(i) Termination Upon Death or Disability or For Cause. Executive shall not be
entitled to any separation pay or other compensation upon termination of his employment
pursuant to Section 7(a)(i) or (ii) except for his Salary earned but unpaid as of the
date of termination, unpaid expense reimbursements under Section 6 for expenses
incurred in accordance with the terms hereof prior to termination, and compensation for
accrued, unused vacation as of the date of termination.
(ii) Termination Without Cause. In the event Executive’s employment hereunder is
terminated pursuant to Section 7(a)(iii), Company shall pay Executive Separation
Payments as Executive’s sole remedy in connection with such termination. “Separation
Payments” are payments made at the semi-monthly rate of Executive’s then current Salary
in effect immediately preceding the date of termination. Separation Payments shall be
made for the remaining term of this Agreement (the “Separation Payment Period”) and
shall be paid by Company in equal semi-monthly payments in arrears or in accordance
with its then-current normal payroll procedure. Company shall also pay Executive his
Salary earned but unpaid as of the date of termination, unpaid expense reimbursements
under Section 6 for expenses incurred in accordance with the terms hereof prior to
termination, and compensation for accrued, unused vacation as of the date of
termination.
Section 8. Inventions; Assignment.
(a) Inventions Defined. All rights to discoveries, inventions, improvements, designs
and innovations (including all data and records pertaining thereto) that relate to the
business of Company, whether or not patentable, copyrightable or reduced to writing, that
Executive may discover, invent or originate during the term of his employment hereunder, and
for a period of six months thereafter, either alone or with others and whether or not during
working hours or by the use of the facilities of Company (“Inventions”), shall be the
exclusive property of Company. Executive shall promptly disclose all Inventions to Company,
shall execute at the request of Company any assignments or other documents Company may deem
necessary to protect or perfect its rights therein, and shall assist Company, at Company’s
expense, in obtaining, defending and enforcing Company’s rights therein. Executive hereby
appoints Company as his attorney-in-fact to execute on his behalf any assignments or other
documents deemed necessary by Company to protect or perfect its rights to any Inventions.
(b) Covenant to Assign and Cooperate. Without limiting the generality of the
foregoing, Executive hereby assigns and transfers to Company the world-wide right, title
and interest of Executive in the Inventions. Executive agrees that Company may apply for
and receive patent rights (including Letters
Patent in the United States) for the Inventions in Company’s name in such countries as
may be determined solely by Company. Executive shall communicate to Company all facts known
to Executive relating to the Inventions and shall cooperate with Company’s reasonable
requests in connection with vesting title to the Inventions and related patents exclusively
in Company and in connection with obtaining, maintaining and protecting Company’s exclusive
patent rights in the Inventions.
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(c) Successors and Assigns. Executive’s obligations under this Section 8 shall inure
to the benefit of Company and its successors and assigns and shall survive the expiration of
the term of this Agreement for such time as may be necessary to protect the proprietary
rights of Company in the Inventions.
Section 9. Confidential Information.
(a) Acknowledgment of Proprietary Interest. Executive acknowledges the proprietary
interest of Company in all Confidential Information. Executive agrees that all Confidential
Information learned by Executive during his employment with Company or otherwise, whether
developed by Executive alone or in conjunction with others or otherwise, is and shall remain
the exclusive property of Company. Executive further acknowledges and agrees that his
disclosure of any Confidential Information will result in irreparable injury and damage to
Company.
(b) Confidential Information Defined. “Confidential Information” means all
confidential and proprietary information of Company, including without limitation (i)
information derived from reports, investigations, experiments, research and work in
progress, (ii) methods of operation, (iii) market data, (iv) proprietary computer programs
and codes, (v) drawings, designs, plans and proposals, (vi) marketing and sales programs,
(vii) client lists, (viii) historical financial information and financial projections, (ix)
pricing formulae and policies, (x) all other concepts, ideas, materials and information
prepared or performed for or by Company and (xi) all information related to the business,
products, purchases or sales of Company or any of its suppliers and customers, other than
information that is publicly available.
(c) Covenant Not To Divulge Confidential Information. Company is entitled to prevent
the disclosure of Confidential Information. Company agrees to and has provided Confidential
Information to Executive since Executive’s employment with the Company and Executive
acknowledges and agrees that, during the course of his employment, Executive will be exposed
to, have access to, and gain knowledge of Confidential Information. As a portion of the
consideration for the employment of Executive and for the compensation being paid to
Executive by Company, Executive agrees at all times during the term of his employment
hereunder and thereafter to hold in strict confidence and not to disclose or allow to be
disclosed to any person, firm or corporation, other than to his professional advisors (who
have the obligation to maintain the confidentiality of such information) and to persons
engaged by Company to further the business of Company, and not to use except in the pursuit
of the business of Company, the Confidential Information, without the prior written consent
of Company.
(d) Return of Materials . In the event of any termination or cessation of his
employment with Company for any reason, or request by the Company at anytime, Executive
shall promptly deliver to Company all documents, data and other information derived from or
otherwise pertaining to Confidential Information. Executive shall not take or retain any
documents or other information, or any reproduction or excerpt thereof, containing or
pertaining to any Confidential Information.
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Section 10. Noncompetition.
(a) Executive understands that the Confidential Information and Executive’s work and
experience with Company has and will continue to enhance Executive’s value not only to
Company, but also to its competitors, and that the nature of the Confidential Information
to which Executive shall and will have access will make it difficult, if not impossible,
for Executive to work for a competitor or for any other company which competes with the
Company’s business, and for whom Executive, while employed by Company, has performed
services within twenty four months prior to the date of Executive’s termination without
disclosing or utilizing the Confidential Information to which he has had access during
the course of Executive’s employment. Executive further acknowledges and agrees that
Company’s agreement to impart to and to provide Executive with access to its Confidential
Information is ancillary to and contingent upon Executive’s agreement and that he will
not during Executive’s employment and for a period of two years immediately following
Executive’s last day of employment with Company or two years from the date of any court
order enforcing all or part of this Agreement, whichever is later (the “Non-Compete
Period”):
(i) carry on, initiate or have any ownership interest (directly or indirectly) in
any business that services, or distributes services similar to those of Company or its
affiliates, successors or assigns or that otherwise competes with Company or its
affiliates, successors or assigns provided that this provision shall not apply to the
ownership by Executive of less than 5% of a class of publicly traded equity securities;
(ii) become employed by, derive benefit from or otherwise provide services for
compensation (whether as an owner, partner, consultant, employee or otherwise) or
divert Company’s business to any person or entity that is a Major Competitor (as
defined below) of Company or its affiliates, successors or assigns, or any other
business in which Company maintains customers or engages in business and for whom
Executive, while employed by Company, has performed services within twenty four months
prior to the date of Executive’s separation; or
(iii) contact, solicit, or divert (directly or indirectly), for the purpose of
attempting to enter into a business relationship related to the distribution or
services provided by Company or its subsidiaries, affiliates, successors or assigns any
customer with whom Company has had a contractual relationship during the two year
period prior to Executive’s last day of employment with Company.
(b) Company’s business includes, without limitation, horizontal, directional and
measurement while drilling services to the oil and gas industry. This description of
the business, both actual and intended, is not intended to be limiting. The business
will continue to grow and evolve and the range of services and the ways of providing
services will continue to be enhanced and supplemented.
(c) If any part of this provision is held unenforceable or invalid, the remaining
parts thereof shall continue to be enforceable.
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(d) Executive acknowledges and agrees that Executive’s signing of and compliance is
a condition of Executive’s employment. Executive acknowledges and agrees that the scope
of this Agreement and promises herein are reasonable as to time, area and scope of
activity restrained and are necessary to protect Company’s legitimate business interests.
Specifically, Executive has considered this Agreement and the promises Executive has
made in light of the benefits that Executive has and will continue to obtain and has
concluded that the promises and agreements leave Executive with a reasonable number and
variety of permitted avenues for engaging in employment in a number of locations and a
number of occupations during the period of restriction. If the provisions of this
Section 10 pertaining to time, geographic area, and scope are deemed unenforceable by a
court of competent jurisdiction, then such provision shall include the maximum time,
geographic area, and scope which a court of competent jurisdiction determines to be
reasonable, valid, and enforceable. To the extent that the court permits bluepenciling
of the non-competition agreement, the parties intend that the court will take all action
necessary to revise it and those provisions necessary to it so as to create a binding and
enforceable provision.
(e) Major Competitor shall include, without limitation, (i) all entities which are
in the same or a similar business to that of Company, its affiliates, successors or
assigns and/or which offer a service and/or product the same or similar to any service
and/or product offered or in the process of being developed or offered by Company, its
subsidiaries, affiliates, successors or assigns and (ii) all of the following entities
and their respective successors in interest:
Xxxxx Xxxxxx Inteq;
Schlumberger (Anadrill);
Pathfinder;
Scientific Drilling;
Xxxxxxxxxxx International
Schlumberger (Anadrill);
Pathfinder;
Scientific Drilling;
Xxxxxxxxxxx International
Section 11. General.
(a) Notices. All notices and other communications hereunder shall be in writing or by
written telecommunication, and shall be deemed to have been duly given upon delivery if
delivered personally or via written telecommunication, or five days after mailing if mailed
by certified mail, return receipt requested or by written telecommunication, to the relevant
address set forth below, or to such other address as the
recipient of such notice or communication shall have specified to the other party in
accordance with this Section 11(a):
If to Company, to:
c/o Xxxxx-Xxxxxxxx Energy Inc.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
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If to Executive, to the last address for Executive appearing on the Company’s records
(b) Withholding. All payments required to be made to Executive by Company under this
Agreement shall be subject to the withholding of such amounts, if any, relating to federal,
state and local taxes as may be required by law.
(c) Equitable Remedies. Each of the parties hereto acknowledges and agrees that upon
any breach by Executive or Company of his or its obligations hereunder, Company shall have
no adequate remedy at law and accordingly shall be entitled to specific performance and
other appropriate injunctive and equitable relief.
(d) Severability. If any provision of this Agreement is held to be illegal, invalid
or unenforceable, such provision shall be fully severable, and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision never
comprised a part hereof, and the remaining provisions hereof shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a provision as
similar in its terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable.
(e) Waivers. No delay or omission by either party in exercising any right, power or
privilege hereunder shall impair such right, power or privilege, nor shall any single or
partial exercise of any such right, power or privilege preclude any further exercise thereof
or the exercise of any other right, power or privilege.
(f) Counterparts. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all of which together shall constitute one and the
same instrument.
(g) Captions. The captions in this Agreement are for convenience of reference only
and shall not limit or otherwise affect any of the terms or provisions hereof.
(h) Reference to Agreement. Use of the words “herein,” “hereof,” “hereto,” “hereunder”
and the like in this Agreement refer to this Agreement only as a whole and not to any
particular section or subsection of this Agreement, unless otherwise noted.
(i) Binding Agreement. This Agreement shall be binding upon and inure to the benefit
of the parties and shall be enforceable by the personal representatives and heirs of
Executive and the successors and assigns of Company. This Agreement may be assigned by the
Company or any Company to any Company or, subject to Section 7(b)(iii), to any successor to
all or substantially all of the Company’s business as a result of a merger, consolidation,
sale of stock or assets, or similar transaction; provided that in the event of any such
assignment, the Company shall remain liable for all of its obligations hereunder and shall
be liable for all obligations of all such assignees hereunder. If Executive dies while any
amounts would still be payable to him hereunder, such amounts shall be paid to Executive’s
estate. This Agreement is not otherwise assignable by Executive.
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(j) Entire Agreement. This Agreement contains the entire understanding of the
parties, supersedes all prior agreements and understandings relating to the subject matter
hereof and may not be amended except by a written instrument hereafter signed by each of the
parties hereto.
(k) Governing Law. This Agreement and the performance hereof shall be construed and
governed in accordance with the laws of the State of Texas, without regard to its choice of
law principles.
(l) Gender and Number. The masculine gender shall be deemed to denote the feminine or
neuter genders, the singular to denote the plural, and the plural to denote the singular,
where the context so permits.
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EXECUTED
July 9, 2007 and effective as of the date and year first above written.
| STRATA DIRECTIONAL TECHNOLOGY, INC. |
||||
| By: | /s/Xxxxxxxx X. Pound III | |||
| Xxxxxxxx X. Pound III | ||||
| Vice President & Secretary | ||||
| By: | /s/ Xxxxx X. Xxxxx | |||
| Xxxxx X. Xxxxx | ||||
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