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EXHIBIT 10.31
XXXXXXX EXPLORATION COMPANY
EMPLOYEE STOCK OWNERSHIP AGREEMENT
THIS AGREEMENT, made by and between XXXXXXX EXPLORATION COMPANY, a
Delaware corporation (the "Company") and [See Schedule I attached]
("Employee"),
WITNESSETH:
WHEREAS, Employee is an employee of Xxxxxxx Oil & Gas, L.P., a
Delaware limited partnership (the "Partnership") of which the Company is both a
general partner and a limited partner and Xxxxxxx, Inc., a Texas corporation,
is a general partner;
WHEREAS, prior to the date hereof, Employee owned an interest as a
limited partner (the "Limited Partner Interest") in the Partnership;
WHEREAS, the Limited Partner Interest was acquired by Employee
pursuant to an Employment Equity Interests Plan Participation Agreement dated
October 14, 1994 which contained confidentiality, noncompetition and vesting
provisions (the "1994 Agreements"), among other terms;
WHEREAS, in connection with the formation of the Company, which was
consummated on the date hereof, Employee contributed the Limited Partner
Interest to the Company in exchange for 66,964 shares of common stock in the
Company, par value $.01 per share (the "Shares"); and
WHEREAS, Employee and the Company have agreed in connection with the
issuance of the Shares that the Shares should be subject to agreements similar
to the 1994 Agreements;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto do hereby agree as follows:
1. Vesting, Forfeiture and Repurchase. The Shares shall be subject
to vesting and forfeiture as follows:
(a) Except as otherwise provided in this Paragraph 1,
16.67% of the Shares (or 11,160 Shares) shall be deemed fully vested
on the date of this Agreement, 28.33% of the Shares (or 18,974 Shares)
shall be deemed fully vested on July 1, 1997, an additional 28.33% of
the Shares (or 18,973 Shares) shall be deemed fully vested on July 1,
1998, and the remaining 26.67% of the Shares (or 17,857 Shares) shall
be deemed fully vested on July 1, 1999.
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(b) If Employee's employment with the Company or any of
its subsidiaries (including the Partnership), or any of its or their
successors or affiliates (collectively, the "Employer") terminates at
any time prior to July 1, 1999, for any reason other than the death of
Employee, in which case subparagraph (c) of this Paragraph 1 shall
control, the then unvested portion of the Shares shall be deemed
automatically forfeited by Employee to the Company, effective on the
date of such termination.
(c) If Employee dies prior to July 1, 1999, in lieu of
the vesting schedule provided in subparagraph (a) of this Paragraph 1,
one sixtieth (1/60) of the Shares shall be deemed fully vested for
each month ended prior to the date of death, beginning with the month
ended July 31, 1994 and ending with the month ended immediately prior
to the date of death. Any remaining unvested portion of the Shares
shall be deemed automatically forfeited by Employee to the Company,
effective on the date of death.
(d) Upon Employee's termination of employment, by death
or otherwise, if the Company's common stock is not then listed on an
established securities exchange, the Company shall have the right,
exercisable at any time on or before the first anniversary of such
termination by written notice delivered to Employee or his personal
representative, to purchase all or any portion of the Shares which is
not forfeited in accordance with the provisions of subparagraphs (b)
or (c) of this Paragraph 1. The purchase price for such Shares shall
be the fair market value thereof on the date of termination. For this
purpose, fair market value shall be an amount equal to the value of
the Shares on the termination date as mutually agreed upon by the
Company and Employee or his personal representative. If they are
unable to reach agreement on such value, such value shall be computed
in the same manner as it would be if all Company assets were sold for
cash, all Company liabilities were paid and all remaining cash were
distributed to the shareholders of the Company in liquidation of the
Company. For purposes of this computation, the value of the Company
assets shall equal the excess of (i) the aggregate of (X) the present
value of the future net revenues attributable to the Company's proved
oil and gas reserves, as determined in accordance with the immediately
succeeding sentence, as reflected on the Company's most recent
engineering report, and (Y) the book value, as reflected on the
Company's most recent financial statements, of all cash, unevaluated
oil and gas properties and other assets of the Company, over (ii) an
amount equal to all debts, obligations and liabilities of the Company
of every kind whatsoever. The present value of the future net
revenues shall be discounted at a rate of ten percent (10%) per annum,
and the valuation shall assume that prices for future oil and gas
production shall remain fixed at the prices in effect as of the date
of termination of employment. Payment for such Shares shall be in
cash and shall be paid within ninety days after the purchase price has
been determined. If the Company elects not to purchase any portion of
the Shares of the terminated Employee, such
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portion shall be retained by Employee or pass to his successors by
operation of law, and this Agreement shall thereupon terminate.
(e) Unless and until any portion of the Shares is
forfeited or repurchased as provided in this Paragraph 1, Employee
shall have full rights of ownership with respect to such Shares from
and after the date of this Agreement.
(f) Upon the occurrence of a Change-in-Control, as defined in
this subparagraph (f), any unvested portion of Employee's Shares shall
be vested immediately. A Change-in-Control for this purpose will
occur if (i) as a result of any merger or acquisition transaction
involving the Company or any transaction involving the issuance or
redemption of equity interests in the Company, more than fifty percent
(50%) of such equity interests is owned by parties other than those
listed on Exhibit A attached hereto, and (ii) within twelve (12)
months after the occurrence described in clause (i) of this
subparagraph (f), either (A) Employee's job responsibilities are
substantially diminished or (B) Employee is required to relocate to a
principal place of business that is more than sixty (60) miles from
the principal place of business of Employee immediately prior to such
occurrence.
2. Confidentiality. Employee hereby acknowledges that the Employer's
trade secrets and other confidential or proprietary information, as they may
exist from time to time (the "Proprietary Information") are valuable, special
and unique assets of the Employer's business, access to and knowledge of which
are essential to the performance of Employee's duties as an employee of the
Employer. Employee agrees that Employee will hold in strict confidence and
will not directly or indirectly disclose or reveal to any person, or use for
Employee's own personal benefit or for the benefit of anyone else, any
Proprietary Information of any kind (including but not limited to compensation
data, partner lists, financial information, pending projects and proposals
information, proprietary processes, research and development strategy
information, scientific data, technological data and technological prototypes,
regardless of whether acquired, learned, obtained or developed by Employee
alone or in conjunction with others) belonging to or concerning the Employer or
any of its affiliates, participants, partners, customers or clients, except (i)
with the prior written consent of the President of the Company, (ii) in the
course of the proper performance of Employee's duties as an employee of the
Employer, or (iii) as required by applicable law or legal process. The
provisions of this Paragraph 2 shall continue in effect notwithstanding the
termination of Employee's employment with the Employer for any reason.
3. Noncompetition. During the period of Employee's employment with
the Employer and for a period of one year thereafter, Employee agrees that
Employee will not directly or indirectly engage or participate in, on
Employee's own behalf or for anyone else, whether as a director, officer,
shareholder, member, partner, employee, consultant, agent, representative,
proprietor, associate, investor or otherwise, any business or activity which is
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competitive with the business of the Employer or any of its affiliates in any
geographical area in the continental United States, or in the offshore area
within the portion of the Gulf of Mexico over which the United States or any
State thereof asserts jurisdiction, which is within one-half (1/2) mile of
lands (i) in which the Employer has a mineral property interest (including but
not limited to a mineral lease, overriding royalty interest, production
payment, net profits interest, or mineral fee interest) or right, license or
authority to conduct or direct exploratory activities (including but not
limited to seismic, geophysical and geochemical activities) as of the date of
Employee's termination of employment with the Employer, or (ii) which are part
of an area of mutual interest designated by the Employer as of the date of
Employee's termination of employment with the Employer. The term "area of
mutual interest" for this purpose shall not include geological areas of
interest ("Geological Areas") which are designated for preliminary geological
mapping (such as, for example, those areas covered by that certain MXC
Exploration Company Consulting Agreement dated as of February 28, 1994, between
MXC Exploration Company and the Partnership), but such term shall include all
areas designated by the Employer (including areas designated within the
Geological Areas) for three dimensional seismic acquisition ("3D Areas") over
the majority of the lands within each such 3D Area. The foregoing restrictions
shall not apply, however, to Employee's ownership of or dealings with respect
to any securities of any corporation or other entity whose equity securities
are actively traded on any recognized stock exchange or in the over-the-counter
market so long as Employee's holdings in such corporation or other entity do
not exceed five percent (5%) of the outstanding equity securities of any class
in such corporation or other entity. The provisions of this Paragraph 3 shall
continue in effect notwithstanding the termination of Employee's employment
with the Employer for any reason.
4. Enforceability. If, for any reason, any provision contained in
this Agreement should be held invalid by a court of competent jurisdiction,
then it is the intent of each of the parties hereto that the balance of this
Agreement be enforced to the fullest extent permitted by applicable law.
Accordingly, should a court of competent jurisdiction determine that the scope
of any covenant is too broad to be enforced as written, it is the intent of
each of the parties that the court should reform such covenant to such narrower
scope as it determines enforceable.
5. Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of Employee and his beneficiaries, devisees, heirs and
legal representatives, and the Company and its successors and assigns. This
Agreement shall also bind and be applicable to any interest received by
Employee, by virtue of the interests granted hereunder, in any entity which is
a successor to the Company except to the extent otherwise expressly provided
herein.
6. Employee Representations. Employee represents that he is
acquiring the Shares as an investment and not with a view to any sale or
distribution of all or any portion of the Shares. Employee will hold the
Shares subject to all applicable provisions of the Securities
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Act of 1933, as amended (the "Act"), and the rules and regulations promulgated
thereunder, and will not at any time make any sale, transfer or other
disposition of the Shares in contravention of the Act or such rules and
regulations. Further, Employee represents that he will not make any
disposition or transfer of any of the Shares unless and until (a) he has given
the Company notice in writing of the proposed disposition or transfer and the
circumstances surrounding it, and (b) either (i) the Shares to be so disposed
of or transferred shall have been registered under the Act or (ii) counsel for
the Company or other counsel satisfactory to the Company shall have given a
written opinion that registration under the Act is not required.
7. Employment at Will. The execution of this Agreement does not
enlarge or otherwise affect the terms of Employee's employment with the
Company, and the Company may terminate the employment of Employee at will and
as freely and with the same effect as if this Agreement had not been executed.
IN WITNESS WHEREOF, this Agreement has been executed this _____ day of
February, 1997.
XXXXXXX EXPLORATION COMPANY
By
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Xxx X. Xxxxxxx, President
EMPLOYEE:
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[See Schedule I attached]
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EXHIBIT A
XXXXXXX EXPLORATION COMPANY, A Delaware corporation
XXXXXXX OIL & GAS, L.P., A Delaware limited partnership
XXXXXXX, INC. (f/k/a Xxxxxxx Exploration Company), a Texas corporation
GENERAL ATLANTIC PARTNERS III, L.P., a Delaware limited partnership
GAP-XXXXXXX PARTNERS, L.P., a Delaware limited partnership
XXX X. XXXXXXX
XXXX X. XXXXXXX
XXXXXX X. XXXXXX
RIMCO PARTNERS, X.X. XX
RIMCO PARTNERS, L.P. III
RIMCO PARTNERS, X.X. XX
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Schedule I
Xxx X. Xxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
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