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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 15th day of December,
1997 (the "EFFECTIVE DATE") by and between Queen Sand Resources, Inc., a
Delaware corporation (the "COMPANY"), having a business address at 0000 Xxx
Xxxx, Xxxxx 000, X.X. #00, Xxxxxx, Xxxxx 00000-0000, and Xxxxxx X. Xxxxxxx (the
"EXECUTIVE"), having a mailing address at 000 Xxx Xxxxxxxxx, X.X. Xxx 000,
Xxxxxx, Xxxxx 00000.
RECITALS
The Executive possesses extensive knowledge of the business and
affairs of the Company, its policies, methods, personnel, and plans for the
future.
The Board has determined that it is in the best interests of the
Company to assure that the Company will have the continued dedication of the
Executive, notwithstanding the possibility, threat or occurrence of a Change of
Control (as defined in Section 5 hereof). The Board believes it is imperative
to retain the Executive's services, to diminish the inevitable distraction of
the Executive by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the Executive's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control.
The Company wishes to protect the Executive from loss of compensation
and benefits if his continued employment is no longer possible through no fault
of the Executive.
The Executive is desirous of committing himself to serve the Company
on the terms herein provided.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties agree as follows:
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. EMPLOYMENT. Upon the terms and subject to the conditions
contained in this Agreement, the Executive agrees to provide full-time services
for the Company during the Employment Period (as defined below). The Executive
agrees to devote his best efforts to the business of the Company, and shall
perform his duties in a diligent, trustworthy and business-like manner, all for
the purpose of advancing the business of the Company.
2. DUTIES. The Executive shall have the title of Chief Operating
Officer and shall have the duties that are customarily attendant to that office
and such other duties as are from time to time assigned by the Board of
Directors. During the Employment Period, the Executive's position (including
status, offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 90-day period immediately preceding the Effective Date. During the
Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees
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to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
3. EMPLOYMENT PERIOD. Subject to the terms and conditions
hereof, the Company agrees to employ the Executive for a term (the "EMPLOYMENT
PERIOD") commencing as of the Effective Date and terminating on June 30, 2002.
4. SALARY AND BENEFITS. The salary and benefits of the Executive
hereunder are as set forth on Exhibit A attached hereto.
5. TERMINATION OF EMPLOYMENT. The Board of Directors of the
Company may terminate the employment of the Executive at any time as it deems
appropriate.
(a) Termination Without Cause; Resignation for Good
Reason. If during the term of this Agreement, (i) the Executive's
employment is terminated by the Company without Cause (defined below)
or (ii) the Executive voluntarily terminates his employment during the
Employment Period for Good Reason, then the Company shall pay the
Executive (in a lump sum) an amount equal to the sum of (x) the Base
Salary for one year in effect immediately prior to the termination and
(y) the amount of the Bonus that would have been payable to the
Executive for such year, prorated to the Termination Date, and the
Company shall issue to the Executive a number of stock options that
the Executive would have been entitled to receive for that year,
prorated to the Termination Date.
For purposes of this Agreement, "GOOD REASON" shall mean:
(i) Without his express written consent, the
assignment to the Executive of any duties materially
inconsistent with his positions, duties, responsibilities and
status with the Company as of the Effective Date, or a
substantial reduction in his reporting responsibilities,
titles or offices as of the Effective Date, or any removal of
the Executive from or any failure to re-elect the Executive to
any of such positions, except in connection with the
termination of his employment for Cause, Disability (defined
below) or as a result of his death or by the Executive other
than for Good Reason;
(ii) A reduction by the Company in the Executive's
Base Salary (as defined in Exhibit A attached hereto) as in
effect immediately prior to the Effective Date or as the same
may be increased from time to time;
(iii) A reduction by the Company in the amounts
payable under the Company's annual incentive plan unless such
reduction affects all executive officers of the Company and
does not result in a proportionately greater
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reduction in the rights of or benefits to the Executive as
compared with any other executive officer of the Company;
(iv) The failure by the Company to continue in
effect any benefit or compensation plan (including but not
limited to any stock option plan, pension plan, life insurance
plan, health and accident plan or disability plan) in which
the Executive from time to time participates (or plans
providing substantially similar benefits, and whether by or
through the Company or another member of the Company Group),
the taking of any action by the Company which would adversely
affect the Executive's participation in or materially reduce
his benefits under any of such plans or deprive him of any
material fringe benefit enjoyed by him, or the failure by the
Company to provide the Executive with the number of paid
vacation days to which he is then entitled on the basis of
years of service with the Company in accordance with the
Company's normal vacation policy in effect immediately prior
to the Effective Date except for such changes in benefits that
affect all executive officers of the Company and do not result
in a proportionately greater reduction in the rights of or
benefits to the Executive as compared with any other executive
officer of the Company;
(v) Any failure of the Company to obtain the
assumption of, or the agreement to perform, this Agreement by
any successor as contemplated in Section 13(a) hereof; or
(vi) Any purported termination of the Executive's
employment which is not effected pursuant to a notice of
termination satisfying the requirements of Section 5(b) or
5(d) hereof; and for purposes of this Agreement, no such
purported termination shall be effective.
(b) Voluntary Resignation or Termination for Cause. If
the Executive shall voluntarily terminate his employment for other
than Good Reason or if the Company shall discharge the Executive for
Cause, this Agreement shall terminate immediately and the Company
shall have no further obligation to make any payment under this
Agreement except that the Company shall pay the Executive accrued but
unpaid salary, bonuses and benefits pursuant to Section 4 hereof
through the Date of Termination.
For the purposes of this Agreement, the Company shall have
"CAUSE" to terminate the Executive's employment hereunder upon (A) the
willful and continued failure by the Executive to substantially
perform his duties with the Company (other than any such failure
resulting from incapacity due to physical or mental illness), and such
failure is not remedied in a reasonable time after a written demand
for substantial performance is delivered to the Executive by the Board
which specifically identifies the manner in which the Board believes
that he has not substantially performed his duties, or (B) the final,
nonappealable conviction of a felony. For purposes of this paragraph,
no act, or failure to act, on the Executive's part shall be considered
"WILLFUL" unless done, or omitted to be done, by him not in good faith
and without reasonable belief that his action or omission was not in
the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause under
(A) above unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less
than two- thirds (2/3) of the entire authorized membership of the
Board at a meeting of the Board called and held for the purpose (after
reasonable notice and an opportunity for the Executive, together with
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board he was guilty of conduct set forth
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above in clause (A) of the first sentence of this paragraph and
specifying the particulars thereof in detail.
(c) Termination After Change of Control. If, within six
(6) months after a Change of Control (defined below), the Company
shall terminate the Executive's employment other than pursuant to
Section 3 or 5(b)hereof or if the Executive shall terminate his
employment for Good Reason, then the Company shall pay to the
Executive as severance pay in a lump sum not later than the tenth
(10th) day following the Date of Termination, the following amounts:
(i) The Executive's full Base Salary through the
Date of Termination at the rate in effect at the time of
notice of termination is given;
(ii) In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination,
an amount equal to the sum of (x) the Base Salary for one year
in effect immediately prior to the termination and (y) the
amount of the Bonus that would have been payable to the
Executive for such year, prorated to the Termination Date and
the Company shall issue to the Executive a number of stock
options that the Executive would have been entitled to receive
for that year, prorated to the Termination Date;
(iii) In lieu of shares of common stock of the
Company, par value $.0015 per share ("COMPANY SHARES")
issuable upon exercise of options ("OPTIONS"), if any, granted
to the Executive under any stock option plan of the Company
(which Options shall be canceled upon the making of the
payment referred to below), the Executive shall receive an
amount in cash equal to the aggregate spread between the
exercise prices of all Options held by the Executive whether
or not then fully exercisable, and the highest price per
Company Share of Common Stock actually paid (including the
fair market value of non- cash consideration per Company Share
received) in connection with any change in control of the
Company (such price being hereinafter referred to as
"TERMINATION PRICE"); and
(iv) The Company shall also pay all reasonable
legal fees and expenses incurred by the Executive as a result
of such termination (including all such reasonable fees and
expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement).
"CHANGE OF CONTROL" means any of the following:
(i) any consolidation or merger of the Company in
which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's
common stock would be converted into cash, securities or other
property, other than a merger of the Company in which the
holders of the Company's common stock immediately prior to the
merger have the same proportionate ownership of common stock
of the surviving corporation immediately after the merger;
(ii) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of
all or substantially all of the assets of the Company;
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(iii) any approval by the stockholders of the
Company of any plan or proposal for the liquidation or
dissolution of the Company;
(iv) the cessation of control (by virtue of their
not constituting a majority of directors) of the Company's
Board of Directors by the individuals (the "CONTINUING
DIRECTORS") who (x) at the date of this Agreement were
directors or (y) become directors after the date of this
Agreement and whose election or nomination for election by the
Company's stockholders, was approved by a vote of at least
two-thirds of the directors then in office who were directors
at the date of this Agreement or whose election or nomination
for election was previously so approved);
(v) (A) the acquisition of beneficial ownership
(within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended ("BENEFICIAL OWNERSHIP")) of
an aggregate of 15% of the voting power of the Company's
outstanding voting securities by any person or group (as such
term is used in Rule 13d-5 under such Act) who Beneficially
Owned less than 10% of the voting power of the Company's
outstanding voting securities on the date hereof, (B) the
acquisition of Beneficial Ownership of an additional 5% of the
voting power of the Company's outstanding voting securities by
any person or group who Beneficially Owned at least 10% of the
voting power of the Company's outstanding voting securities on
the date hereof, or (C) the execution by the Company and a
stockholder of a contract that by its terms grants such
stockholder (in its, hers or his capacity as a stockholder) or
such stockholder's Affiliate (as defined in Rule 405
promulgated under the Securities Act of 1933 (an "AFFILIATE"))
including, without limitation, such stockholder's nominee to
the Board of Directors (in its, hers or his capacity as an
Affiliate of such stockholder), the right to veto or block
decisions or actions of the Board of Directors; provided,
however, that notwithstanding the foregoing, the events
described in items (A), (B) or (C) above shall not constitute
a Change in Control hereunder if the securityholder is (aa) a
trustee or other fiduciary holding securities under an
employee benefit plan of the Company and acting in such
capacity, (bb) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of voting securities of the
Company or (cc) in the case of an acquisition described in
items (A) or (B) above (but not in the case of an acquisition
described in item (C) above), any other person whose
acquisition of shares of voting securities is approved in
advance by a majority of the Continuing Directors; provided
further, however that none of the following shall constitute a
Change in Control: (aa) the right of the holders of any voting
securities of the Company to vote as a class on any matter or
(bb) any vote required of disinterested or unaffiliated
directors or stockholders including, without limitation,
pursuant to Section 144 of the Delaware General Corporation
Law or Rule 16b-3 promulgated pursuant to the Securities
Exchange Act of 1934; or
(vi) subject to applicable law, in a Chapter 11
bankruptcy proceeding, the appointment of a trustee or the
conversion of a case involving the Company to a case under
Chapter 7.
(d) Disability. The Company may terminate this Agreement
for Disability. If the Company shall terminate the Executive's
employment for Disability, the Company's obligation to pay salary,
bonuses and benefits pursuant to Section 4 hereof shall terminate,
except that the Company shall pay the Executive (i) accrued but
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unpaid salary and benefits pursuant to Section 4 hereof through the
Date of Termination, and (ii) the benefits set forth in Section 5(e)
hereof. The Company also shall make any additional payments necessary
to provide the disability benefits set forth in Exhibit A attached
hereto. "DISABILITY" shall exist if because of ill health, physical
or mental disability, or any other reason beyond his control, and
notwithstanding reasonable accommodations made by the Company, the
Executive shall have been unable, unwilling or shall have failed to
perform his duties under this Agreement, as determined in good faith
by the Compensation Committee of the Company's Board of Directors, for
a period of 180 consecutive days, or if, in any 12-month period, the
Executive shall have been unable or unwilling or shall have failed to
perform his duties for a period of 270 days, irrespective of whether
or not such days are consecutive.
(e) Employee Benefits. Unless the Executive's employment
is terminated pursuant to Section 5(b) hereof, the Company shall
maintain in full force and effect (to the extent consistent with past
practice), for the continued benefit of the Executive and, if
applicable, the Executive's spouse and children, the employee benefits
set forth in [subsections (d) ("LIFE INSURANCE"), (e) ("DISABILITY
INSURANCE"), (f) ("MEDICAL EXPENSES") and (h) ("FRINGE BENEFITS AND
PERQUISITES")] of Exhibit A attached hereto that he was entitled to
receive immediately prior to the Date of Termination (subject to the
general terms and conditions of the plans and programs under which he
receives such benefits) for the balance of the Employment Period
notwithstanding the termination hereof or for the period provided for
under the terms and conditions of such plans and programs, whichever
is longer, provided that his continued participation or, if
applicable, the participation of the Executive's spouse and children,
is possible under the general terms and conditions of such plans and
programs.
(f) Notice of Termination. Any termination by the
Company or by the Executive shall be communicated by Notice of
Termination to the other party thereto given in accordance with
Section 13(c) hereof. For purposes of this Agreement, a "NOTICE OF
TERMINATION" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if
the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than fifteen (15) days after the giving of such
notice). The failure by the Executive or the Company to set forth in
the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason, Cause or Disability shall not waive any
right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(g) Date of Termination. "DATE OF TERMINATION" means (i)
if the Executive's employment is terminated by the Company for Cause
or Disability or by the Executive for Good Reason or within six (6)
months after a Change of Control, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be,
(ii) if the Executive's employment is terminated by the Company or
other than for Cause, the Date of Termination shall be the date on
which the Company notifies the Executive of such termination and (iii)
if the Executive's employment is terminated by reason of death, the
Date of Termination shall be the date of death of the Executive.
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(h) Mitigation of Amounts Payable Hereunder. The
Executive shall not be required to mitigate the amount of any payment
provided for in this Section 5 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this
Section 5 be reduced by any compensation earned by the Executive as
the result of employment by another employer after the Date of
Termination, or otherwise.
6. DEATH OF THE EXECUTIVE. If the Executive dies prior to the
end of Employment Period, the Executive's employment and other obligations
under this Agreement shall automatically terminate and all compensation, to
which the Executive is or would have been entitled hereunder (including without
limitation under subsections (a) ("BASE SALARY"), (b) ("BONUS") and (c) ("STOCK
OPTIONS") of Exhibit A attached hereto), shall terminate as of the end of the
month in which the Executive's death occurs; provided, however, that (i) the
Company shall pay to the Executive's estate, as soon as practicable, a prorated
Annual Incentive Payment, if earned in accordance with the Company's annual
incentive plan; (ii) for the balance of the Employment Period, the Executive's
spouse and children shall be entitled to receive their benefits under the
Company's group hospitalization, medical and dental plans (if any); and (iii)
the Executive's named beneficiary or beneficiaries shall receive the benefits
payable pursuant to subsection (d) ("LIFE INSURANCE") of Exhibit A attached
hereto and such reimbursement as may have been due to the Executive pursuant to
subsection (g) ("PAYMENT AND REIMBURSEMENT OF EXPENSES") of Exhibit A attached
hereto.
7. CONFIDENTIAL INFORMATION. The Executive recognizes and
acknowledges that he will have access to certain information of members of the
Company Group (as defined below) and that such information is confidential and
constitutes valuable, special and unique property of such members of the
Company Group. The Executive shall not at any time, either during or
subsequent to the term of this Agreement, disclose to others, use, copy or
permit to be copied, except in pursuance of his duties for and on behalf of the
Company, it successors, assigns or nominees, any Confidential Information of
any member of the Company Group (regardless of whether developed by the
Executive) without the prior written consent of the Company. As used herein,
"COMPANY GROUP" means the Company, and any entity that directly or indirectly
controls, is controlled by, or is under common control with, the Company. For
purposes hereof, "CONTROL" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
entity, whether through the ownership of voting securities, by contract or
otherwise. The term "CONFIDENTIAL INFORMATION" with respect to any person
means any secret or confidential information or know-how and shall include, but
shall not be limited to, the plans, customers, costs, prices, uses, and
applications of products and services, results of investigations, studies or
experiments owned or used by such person, and all apparatus, products,
processes, compositions, samples, formulas, computer programs, computer
hardware designs, computer firmware designs, and servicing, marketing or
manufacturing methods and techniques at any time used, developed, investigated,
made or sold by such person, before or during the term of this Agreement, that
are not readily available to the public or that are maintained as confidential
by such person. The Executive shall maintain in confidence any Confidential
Information of third parties received as a result of his employment with the
Company in accordance with the Company's obligations to such third parties and
the policies established by the Company.
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8. DELIVERY OF DOCUMENTS UPON TERMINATION. The Executive shall
deliver to the Company or its designee at the termination of his employment all
correspondence, memoranda, notes, records, drawings, sketches, plans, customer
lists, product compositions, and other documents and all copies thereof, made,
composed or received by the Executive, solely or jointly with others, that are
in the Executive's possession, custody, or control at termination and that are
related in any manner to the past, present, or anticipated business or any
member of the Company Group. In this regard, the Executive hereby grants and
conveys to the Company all right, title and interest in and to, including
without limitation, the right to possess, print, copy, and sell or otherwise
dispose of, any reports, records, papers, summaries, photographs, drawings or
other documents, and writings, and copies, abstracts or summaries thereof, that
may be prepared by the Executive or under his direction or that may come into
his possession in any way during the term of his employment with the Company
that relate in any manner to the past, present or anticipate business of any
member of the Company Group.
9. FURTHER ACTS. At the request of the Company (but without
additional compensation from the Company during his employment by the Company)
the Executive shall execute any and all papers and perform all lawful acts that
the Company may deem necessary or appropriate to further evidence or carry out
the transactions contemplated in this Agreement including, without limitation,
such acts as may be necessary for the preparation, filing, prosecution, and
maintenance of applications for United States letters patent and foreign
letters patent, or for United States and foreign copyright, on the
Developments.
10. NO COMPETITION. Throughout the term of the Agreement and,
unless the Agreement terminates pursuant to Section 3, 5(a) or 5(c), through
the first anniversary of the expiration thereof, the Executive shall not
directly or indirectly engage in the business of acquiring oil and natural gas
reserves and oil and natural gas production and exploitation; or any other
business in which any member of the Company Group directly or indirectly
engages during the term of the Agreement; provided, however, that the
restriction in this Section 10 shall apply only to the reasonable and limited
geographic area consisting of any state in which any member of the Company
Group directly or indirectly has offices, operations, or customers, or
otherwise conducts business; and provided further that if the Agreement
terminates pursuant to Section 5(b), the Executive shall be subject to the
provisions of this Section 10 only if the Company pays the Executive in a lump
sum an amount equal to the annual Base Salary in effect at the Date of
Termination. For purposes of this Section 10, the Executive shall be deemed to
engage in a business if he directly or indirectly, engages or invests in, owns,
manages, operates, controls or participates in the ownership, management,
operation or control of, is employed by, associated or in any manner connected
with, or renders services or advice to, any business engaged in acquiring oil
and natural gas reserves and oil and natural gas production and exploitation;
provided, however, that the Executive may invest in the securities of any
enterprise (but without otherwise participating in the activities of such
enterprise) if (x) such securities are listed on any national or regional
securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934 and (y) the Executive does not beneficially own
(as defined Rule 13d-3 promulgated under the Securities Exchange Act of 1934)
in excess of 5% of the outstanding capital stock of such enterprise;
The Executive agrees that if a court of competent jurisdiction
determines that the length of time or any other restriction, or portion
thereof, set forth in this Section 10 is overly restrictive and unenforceable,
the court may reduce or modify such restrictions to those which it deems
reasonable and enforceable under the circumstances, and as so reduced or
modified, the parties hereto agree that the restrictions of this Section 10
shall remain in full force and effect. The Executive further agrees that if a
court of competent jurisdiction determines that
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any provision of this Section 10 is invalid or against public policy, the
remaining provisions of this Section 10 and the remainder of this Agreement
shall not be affected thereby, and shall remain in full force and effect.
The Executive acknowledges that the business of the Company and the
other members of the Company Group is southwest United States in scope and that
the restrictions imposed by this Agreement are legitimate, reasonable and
necessary to protect the Company's and its affiliates' investment in their
businesses and the goodwill thereof. The Executive acknowledges that the scope
and duration of the restrictions contained herein are reasonable in light of
the time that the Executive has been engaged in the business of the Company and
the other members of the Company Group, the Executive's reputation in the
markets for the Company's and the businesses of the other members of the
Company Group and the Executive's relationship with the suppliers, customers
and clients of the Company and the other members of the Company Group. The
Executive further acknowledges that the restrictions contained herein are not
burdensome to the Executive in light of the consideration paid therefor and the
other opportunities that remain open to the Executive. Moreover, the Executive
acknowledges that he has other means available to him for the pursuit of his
livelihood.
11. REMEDIES. The Executive acknowledges that a remedy at law for
any breach or attempted breach of the Executive's obligations under Sections 7
through 10 hereof may be inadequate, agrees that the Company may be entitled to
specific performance and injunctive and other equitable remedies in case of any
such breach or attempted breach, and further agrees to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such injunctive or other equitable relief. The Company shall have the right to
offset against amounts to be paid to the Executive pursuant to the terms hereof
any amounts from time to time owing by the Executive to the Company. The
termination of the Agreement pursuant to Section 3, 5(b) or 5(d) hereof shall
not be deemed to be a waiver by the Company of any breach by the Executive of
this Agreement or any other obligation owed the Company, and notwithstanding
such a termination the Executive shall be liable for all damages attributable
to such a breach.
12. DISPUTE RESOLUTION. Subject to the Company's right to seek
injunctive relief in court as provided in Section 11 hereof, any dispute,
controversy or claim arising out of or in relation to or connection to this
Agreement, including without limitation any dispute as to the construction,
validity, interpretation, enforceability or breach of this Agreement, shall be
exclusively and finally settled by arbitration, and any party may submit such
dispute, controversy or claim, including a claim for indemnification under this
Section 12, to arbitration.
(a) Arbitrators. The arbitration shall be heard and
determined by one arbitrator, who shall be impartial and who shall be
selected by mutual agreement of the parties. If the parties cannot
agree on the sole arbitrator, then the appointing authority for the
implementation of such procedure shall be the Senior United States
District Judge for the Northern District of Texas, who shall appoint
an independent arbitrator who does not have any financial interest in
the dispute, controversy or claim. If the Senior United States
District Judge for the Northern District of Texas refuses or fails to
act as the appointing authority within ninety (90) days after being
requested to do so, then the appointing authority shall be the Chief
Executive Officer of the American Arbitration Association, who shall
appoint an independent arbitrator who does not have any financial
interest in the dispute, controversy or claim. All decisions and
awards by the arbitration tribunal shall be made by majority vote.
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(b) Proceedings. Unless otherwise expressly agreed in
writing by the parties to the arbitration proceedings:
(i) The arbitration proceedings shall be held in
Dallas, Texas, at a site chosen by mutual agreement of the
parties, or if the parties cannot reach agreement on a
location within thirty (30) days of the appointment of the
last arbitrator, then at a site chosen by the arbitrators;
(ii) The arbitrators shall be and remain at all
times wholly independent and impartial;
(iii) The arbitration proceedings shall be
conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, as amended from time
to time;
(iv) Any procedural issues not determined under
the arbitral rules selected pursuant to item (iii) above shall
be determined by the law of the place of arbitration, other
than those laws which would refer the matter to another
jurisdiction;
(v) The decision of the arbitrators shall be
reduced to writing; final and binding without the right of
appeal; the sole and exclusive remedy regarding any claims,
counterclaims, issues or accounting presented to the
arbitrators; made and promptly paid in United States dollars
free of any deduction or offset; and any costs or fees
incident to enforcing the award shall, to the maximum extent
permitted by law, be charged against the party resisting such
enforcement;
(vi) The award shall include interest from the
date of any breach or violation of this Agreement, as
determined by the arbitral award, and from the date of the
award until paid in full, at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Code; and
(vii) Judgment upon the award may be entered in any
court having jurisdiction over the person or the assets of the
party owing the judgment or application may be made to such
court for a judicial acceptance of the award and an order of
enforcement, as the case may be.
(c) Acknowledgment Of Parties. Each party acknowledges
that he or it has voluntarily and knowingly entered into an agreement
to arbitration under this Section by executing this Agreement.
13. MISCELLANEOUS PROVISIONS.
(a) Successors of the Company. The Company will require
any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and
substance satisfactory to the Executive, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to compensation from
the Company in the same amount and on the same terms as the Executive
would be entitled hereunder if the Executive terminated his employment
for Good Reason,
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except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date
of Termination. As used in this Agreement, "COMPANY" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the agreement
provided for in this Section 13(a) or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
(b) Executive's Heirs, etc. The Executive may not assign
his rights or delegate his duties or obligations hereunder without the
written consent of the Company. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die
while any amounts would still be payable to him hereunder as if he had
continued to live, all such amounts, unless other provided herein,
shall be paid in accordance with the terms of this Agreement to his
designee or, if there be no such designee, to his estate.
(c) Notice. For the purposes of this Agreement, notices
and all other communications provide for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered or
mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth on the first page of this Agreement, provided that all notices
to the Company shall be directed to the attention of the Chief
Executive Officer of the Company with a copy to the Secretary of the
Company, or to such other in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
(d) Amendment; Waiver. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing signed by the Executive and such
officer as may be specifically designated by the Board of Directors of
the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
(e) Invalid Provisions. Should any portion of this
Agreement be adjudged or held to be invalid, unenforceable or void,
such holding shall not have the effect of invalidating or voiding the
remainder of this Agreement and the parties hereby agree that the
portion so held invalid, unenforceable or void shall, if possible, be
deemed amended or reduced in scope, or otherwise be stricken from this
Agreement to the extent required for the purposes of validity and
enforcement thereof.
(f) Survival of the Executive's Obligations. The
Executive's obligations under this Agreement shall survive regardless
of whether the Executive's employment by the Company is terminated,
voluntarily or involuntarily, by the Company or the Executive, with or
without Cause.
(g) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same instrument.
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(h) Governing Law. This Agreement shall be governed by
and construed under the laws of the State of Texas.
(i) Captions and Gender. The use of captions and Section
headings herein is for purposes of convenience only and shall not
effect the interpretation or substance of any provisions contained
herein. Similarly, the use of the masculine gender with respect to
pronouns in this Agreement is for purposes of convenience and includes
either sex who may be a signatory.
(j) Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements, both
written and oral, between the parties with respect to the subject
matter hereof, including, without limitation, the Employment Agreement
dated July 1, 1997 between the Company and the Executive.
(k) Legal Costs; Payments During Dispute. The Company
shall pay promptly as incurred, to the full extent permitted by law,
all legal fees and expenses which the Executive may reasonably incur
as a result of any contest (regardless of the outcome thereof) by the
Company, the Executive or others of the validity or enforceability of,
or liability under, any provision of this Agreement or any guarantee
of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement),
plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code. If
there shall be any dispute between the Company and the Executive (i)
in the event of any termination of the Executive's employment by the
Company, whether such termination was for Cause or Disability, or (ii)
in the event of any termination of employment by the Executive,
whether Good Reason existed, then, unless and until there is a final,
nonappealable judgment by a court of competent jurisdiction or
decision of arbitration declaring that such termination was for Cause
or Disability or that the determination by the Executive of the
existence of Good Reason was not made in good faith, the Company shall
pay all amounts, and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be, that
the Company would be required to pay or provide pursuant to Section 5
hereof as though such termination were by the Company without Cause or
Disability or by the Executive with Good Reason; provided, however,
that the Company shall not be required to pay any disputed amounts
pursuant to this paragraph except upon receipt of an undertaking by or
on behalf of the Executive to repay all such amounts to which the
Executive is ultimately adjudged by such court not to be entitled.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the date first set forth above.
QUEEN SAND RESOURCES, INC.
By: /s/ AUTHORIZED SIGNATORY
--------------------------------
Name:
---------------------------
Title:
--------------------------
and
By: /s/ AUTHORIZED SIGNATORY
--------------------------------
Name:
---------------------------
Title:
--------------------------
(EXECUTIVE)
/s/ XXXXXX X. XXXXXXX
--------------------------------------
Xxxxxx X. Xxxxxxx
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EXHIBIT A
SALARY AND BENEFITS
(a) Base Salary. The Company shall pay the Executive as
compensation an aggregate salary of $130,000 per year during the
Employment Period (pro rated for periods less than twelve (12)
months), or such greater amount as shall be approved by the
Compensation Committee of the Company's Board of Directors ("BASE
SALARY"). The Compensation Committee shall review the Executive's
Base Salary at least annually and in conducting such review shall take
into consideration the most recent executive compensation assessment
prepared by an independent compensation consultant to the Company.
The Base Salary for each year shall be paid by the Company in
accordance with the regular payroll practices of the Company. The
Company may not reduce the Executive's Base Salary at any time during
the term hereof.
(b) Bonus. Subject to the provisions of this paragraph
(b), the Company shall pay the Executive an annual bonus for each
fiscal year during the Term of this Agreement (the amount of the Bonus
will be prorated for any period of less than twelve calendar months).
Such bonus shall be paid on the last business day of the third month
following the fiscal year end of the Company during the Term of this
Agreement. The Compensation Committee shall review the method of
determination of the Executive's Bonus at least annually and in
conducting such review shall take into consideration the most recent
executive compensation assessment prepared by an independent
compensation consultant to the Company.
(c) Stock Options. The Company shall grant the Executive
stock options pursuant to the Company's 1997 Incentive Equity Plan
(the "PLAN") on terms and conditions to be determined by the
Compensation Committee of the Company's Board of Directors, and in
making such determination shall take into consideration the most
recent executive compensation assessment prepared by an independent
compensation consultant to the Company
(d) Life Insurance. During the Employment Period and
subject to the Executive's qualification under normal life insurance
underwriting standards as of the date hereof and at any policy renewal
date, the Company shall provide, at the Company's expense, a term life
insurance policy on the life of the Executive for the benefit of such
beneficiary or beneficiaries as may be designated from time to time by
the Executive, such policy to be in a face amount as designated by the
Board of Directors for all executives generally.
(e) Disability Insurance. During the Employment Period
and subject to the Executive's qualification under normal disability
insurance underwriting standards as of the date hereof and at any
policy renewal date, the Company shall provide, at the Company's
expense, a disability insurance policy with such terms that are
designated by the Board of Directors for all executives generally.
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(f) Medical Expenses. During the Employment Period, the
Company shall pay, or reimburse the Executive for, all medical and
dental expenses incurred by the Executive or his spouse or Dependents
(as defined in Section 152 of the Internal Revenue Code ("Code")).
The Executive acknowledges that the Company may enter into insurance
agreements with respect to the payments and reimbursements described
in this subsection. The Executive will use reasonable efforts to
assist the Company in recovering payments and reimbursements from such
insurers.
(g) Payment and Reimbursement of Expenses. During the
Employment Period, the Company shall pay or reimburse the Executive
for all reasonable travel and other expenses incurred by the Executive
in performing his obligations under this Agreement in accordance with
the policies and procedures of the Company for its senior executive
officers, provided that the Executive properly accounts therefor in
accordance with the regular policies of the Company. In addition, the
Company shall pay or reimburse the Executive for reasonable costs of
accountants, lawyers, compensation specialists and other professionals
retained by the Executive in connection with the negotiation and
execution of this Agreement.
(h) Fringe Benefits and Perquisites. During the
Employment Period, the Executive shall be entitled to participate in
or receive benefits under any plan or arrangement made available by
the Company to its senior executive officers, subject to and on a
basis consistent with the terms, conditions and overall administration
of such plans and arrangements. Nothing paid to the Executive under
any plan or arrangement made available to the Executive shall be
deemed to be in lieu of compensation hereunder.
(i) Vacations. During the Employment Period and in
accordance with the regular policies of the Company, the Executive
shall be entitled to the number of paid vacation days in each calendar
year determined by the Company from time to time for its senior
executive officers, but not less than four (4) weeks in any calendar
year (prorated in any calendar year in which the Executive is employed
hereunder for less than the entire year in accordance with the number
of days in such calendar year during which the Executive is so
employed).
(j) Tax. The Company may withhold from any compensation,
benefits, or amounts payable under this Agreement all federal, state,
city, or other taxes as may be required pursuant to any law or
governmental regulation or ruling.
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