LETTERHEAD OF ATLAS AMERICA, INC. April 5, 2006
LETTERHEAD
OF
ATLAS
AMERICA, INC.
April
5,
2006
Mr.
Xxxxxxx Xxxxx
00000
Xxxxxxxx Xxxx
Pepper
Pike, OH 44124
Dear
Rich:
We
at
Atlas America, Inc. (“AAI”) are delighted that you have agreed to join us and be
employed as President, Chief Operating Officer and a manager of a new management
company which will be a Delaware limited liability company (the “Company”)
formed by AAI. The Company will manage the entity established by AAI to conduct
its exploration and production and direct placement businesses (“Atlas Energy
LLC”). The terms and conditions under which you will be performing those
services, intending to be legally bound, are as follows (the
“Agreement”):
1. Title
and Position.
You will
serve as the President and Chief Operating Officer of the Company and will
be on
its board of managers (the “Office”).
2. Services.
You
will
serve the Company diligently, competently, and to the best of your ability
during the period of employment. You will devote substantially all of your
working time and attention to the business of the Company and its affiliates,
and you will not undertake any other duties which conflict with your
responsibilities to the Company. The Company and AAI shall provide you with
sufficient support, capital and quality personnel to assist you in performing
and discharging your duties. Initially, you will perform your duties from an
office in the Cleveland, Ohio metropolitan area and the Company will hire a
person to assist you. If you later determine that an office in another locality
would be more appropriate for the performance of your duties, the Company will
consider your possible relocation.
Your
Office shall report (as the highest level officer of the Company and Atlas
Energy LLC other than its Chief Executive Officer) only to the Chief Executive
Officer and the Company’s board of managers (“Board”). You shall have all of the
traditional functions, powers and authority as are customary for the President
and Chief Operating Officer managing a group the size of the Company and Atlas
Energy LLC. You will render such services as may reasonably be required of
you
to accomplish the business purposes of the Company, which shall include, but
may
not be limited to day to day oversight of the Company’s business and those of
any subsidiaries, and such duties, which are appropriate to the office, as
the
Chief Executive Officer or the Board may assign to you from time to
time.
3. Term.
The term
of your employment shall commence on April 17, 2006 (the “Employment Effective
Date”) and, unless sooner terminated pursuant to Section 5, shall continue for a
period of two (2) years thereafter. The two (2) year period is hereafter
referred to as the “Contract Period.” After the first year of the Contract
Period, the term shall automatically renew daily so that on any day that this
Agreement is in effect, the Contract Period shall have a remaining term of
not
less than one (1) year; provided, however, that such automatic extension shall
cease upon the Company’s notice of its election to terminate this Agreement at
the end of the one (1) year period then in effect, which such notice may not
be
given prior to the first anniversary of the date of this Agreement. Termination
of your employment hereunder for any reason shall be referred to as a
“Termination.”
4. Compensation. Your
compensation and participation in equity compensation and benefits during the
Contract Period shall be as follows:
(a) Base
Salary.
During
the Contract Period, you shall receive an annual base salary ("Annual Base
Salary") of not less than Three Hundred Thousand Dollars ($300,000). The Annual
Base Salary shall be payable in accordance with the Company's regular payroll
practice for its senior executives, as in effect from time to time. During
the
Contract Period, the Annual Base Salary may be reviewed by the Board for
possible increase; however, your Annual Base Salary shall not
decrease.
(b) Bonus.
During
the first year of the Contract Period, your bonus shall be at least Seven
Hundred Thousand Dollars ($700,000) of which One Hundred Thousand Dollars
($100,000) shall be paid ratably over the year, with the remaining Six Hundred
Thousand Dollars ($600,000) payable at the normal time for the payment of
bonuses by the Company, but not later than March 31st
of the
subsequent year.
(c) Equity
Compensation.
The
Atlas Energy LLC Units, Atlas Energy LLC Options and AAI Options referenced
herein are sometimes referred to individually as a “Security” or collectively as
the “Securities.” All Securities, including units or shares issuable on exercise
of options, shall be non-assessable and subject to the same rights, privileges,
preferences and distributions as the same class of Securities held by other
holders. The term “Issuer” shall mean Atlas Energy LLC in the case of Atlas
Energy LLC Units and Atlas Energy LLC Options, and shall mean AAI in the case
of
the AAI Options and shares of common stock issuable on exercise
thereof.
(i) Atlas
Energy LLC Units. At
the
time of the initial public offering (“IPO”) of Atlas Energy LLC, you will
receive a grant of units of Atlas Energy LLC with a value of One Million Dollars
($1,000,000) (based on the IPO price), which units will be subject to forfeiture
(the “Restriction”) in the event that you are no longer employed by the Company
(“Atlas Energy LLC Units”). The Restriction on 25% of the units will terminate,
and your interest in the units shall vest, on each of the first four anniversary
dates of the Employment Effective Date. It is intended that you will have voting
rights and distribution rights with respect to the Atlas Energy LLC Units
immediately upon their issuance.
(ii) Atlas
Energy LLC Options. Also
at
the time of the IPO, you will receive options to acquire one percent of the
number of units of Atlas Energy LLC outstanding immediately following the IPO
(excluding your Atlas Energy LLC Units) (“Atlas Energy LLC Options”), with a
strike price equal to the IPO price and an exercise term of ten (10) years.
Such
options will vest 25% per year on each of the first four anniversary dates
of
the Employment Effective Date.
(iii) AAI
Options. You
will
also immediately upon execution of this Agreement be granted options to purchase
50,000 shares of stock of AAI pursuant to the Atlas America, Inc. Stock
Incentive Plan at the current fair market value of such shares and an exercise
term of ten (10) years. For each year in which you remain employed by the
Company, these options will vest 25% per year on each of the first four
anniversary dates of the Employment Effective Date.
(iv) Atlas
Energy LLC IPO. If,
on
the first anniversary date of the Effective Date of your employment under this
Agreement, the IPO of Atlas Energy LLC has not been effected and is not
reasonably anticipated to be capable of timely completion, the intended
restricted units and options with respect to Atlas Energy LLC units will be
replaced by One Million Dollars ($1,000,000) (based on the then current price)
of stock (with the Restriction) of AAI and AAI options to acquire an amount,
not
to exceed 0.5%, of the then outstanding number of AAI shares (excluding AAI
shares granted to you). The amount referred to in the preceding sentence
shall be determined by dividing the value of AAI’s exploration and production
business by the value of all of its businesses and multiplying the result by
1%,
with a cap of 0.5%. The AAI options issued pursuant to this paragraph shall
have
a strike price equal to the then fair market value of such shares with the
same
vesting schedule as would have existed for Atlas Energy LLC options had the
IPO
occurred on the date that AAI options are granted.
(v) Change
of Control.
All
Securities shall vest 100% and the Restriction shall terminate automatically
upon a Change of Control of Atlas Energy LLC. “Change of Control” shall mean for
purposes of this Agreement, the occurrence of any of the following: (1) the
acquisition of the beneficial ownership under the Securities Exchange Act of
1934, of 50% percent or more of AAI or Atlas Energy LLC’s voting securities or
all or substantially all of the assets of either AAI or Atlas Energy LLC by
a
single person or entity or a group of affiliated persons or entities, other
than
an entity of which either Xxxxxx Xxxxx or Xxxxxxxx Xxxxx is an officer, manager,
or director or participant; or (2) AAI or Atlas Energy LLC consummates a merger,
consolidation, share exchange, division, split or other transaction (the
“Transaction”) with an unaffiliated entity, at anytime after which the Company
is not the manager of Atlas Energy LLC; (3) the shareholders of AAI or Atlas
Energy LLC approve a plan of complete liquidation or winding up or enter an
agreement for the sale or disposition in one transaction or a series of
transactions, of all or substantially all of the assets, other than to an entity
of which Xxxxxx Xxxxx or Xxxxxxxx Xxxxx is an officer, manager, director or
participant; or (4) the bankruptcy of AAI, the Company or Atlas Energy
LLC.
(vi) Accelerated
Vesting.
The
Restriction shall terminate in advance of the vesting described above upon
whichever is the first to occur of (a) a Change in Control; or (b)
Termination by you for Good Reason or by the Company other than for Cause.
All
Securities as to which the Restriction has terminated are fully (100%) vested
Securities. Vested Securities shall not be subject to forfeiture under any
circumstance, including but not limited to whether your term of employment
is
terminated by the Company or you, whether for Cause, Good Reason, without Cause,
or on any other basis.
(vii) Registration
of Securities. AAI
and
Atlas Energy LLC (each an “Issurer”) each agrees to file with the U.S.
Securities and Exchange Commission as soon as reasonably practicable, a
Registration Statement on Form S-8 providing for, with respect to Atlas Energy,
the resale of the Atlas Energy LLC Units, and the units of Atlas Energy LLC
issuable upon exercise of the Atlas Energy LLC Options and, with respect to
RAI,
the shares of common stock issuable upon exercise of the AAI Options
(collectively, the "Registrable Securities"). Each such Issuer shall cause
its
respective Registration Statement to remain effective until the earlier of
(i)
the date on which all of the Registrable Securities included in such
Registration Statement have been sold pursuant to such Registration Statement
or
pursuant to Rule 144 and (ii) the expiration of the exercise period for all
Securities included in such Registration Statement. The Issuer shall pay all
registration expenses in connection with the registration of the Registrable
Securities pursuant to this Agreement. Further, each Issuer agrees to register,
list and qualify the Registrable Securities issued or issuable by it on a U.S.
national securities exchange registered with the U.S. Securities and Exchange
Commission and maintain in good standing at all times the registration, listing
and qualification thereof, including the timely filing of all periodic and
other
reports. In the event that you seek to sell, assign, transfer or otherwise
dispose of Securities on the basis of an exemption from registration under
the
Securities Act of 1933, as amended, and under the provisions of applicable
state
law, you shall provide to the Issuer of such Securities an opinion of your
counsel reasonably acceptable to the effect that the transaction is exempt
from
registration, and such Issuer shall issue appropriate instructions to its
transfer agent at no cost to you necessary to effectuate the sale.
(viii) Section
16 Compliance.
Each
Issuer shall take all actions necessary so that the grant of all Securities
issued or issuable by it shall comply with the requirements of Exchange Act
Rule
16b-3(d) necessary for each grant to qualify for the exemption available
thereunder from potential liability under Section 16(b) of the Securities
Exchange Act of 1934, to the extent applicable to you.
(ix)
Adjustments
Upon Changes in Capitalization. In
the
event of changes in the outstanding securities of the Issuer by reason of
distributions, dividends, splits, reverse splits, recapitalizations, mergers,
consolidations, combinations or exchanges of units or shares, separations,
reorganizations, liquidations, or changes in the number (other than in
connection with the issuance of securities for fair market value or services)
and classes of securities issued and outstanding, the number of Securities
to be
issued pursuant to the Atlas Energy LLC Units, the Atlas Energy LLC Options
and
the AAI Options shall be correspondingly adjusted, so that your proportionate
interest in the Issuer, any successor thereto, or in the cash, assets or other
securities into which the Securities are converted or exchanged, shall be
maintained to the same extent, as near as may be practicable, as immediately
before the occurrence of any such event.
(x)
Exercise
of Options and Cashless Conversion. Any
vested Atlas Energy LLC Options and the AAI Options may be exercised, in whole
or in part, at any time or from time to time, by delivery to the Issuer of
written notice of exercise, together with payment of a purchase price payable
in
cash or instructions to effectuate a cashless exercise. You shall have the
right, but not the obligation, to elect to exercise the Atlas Energy LLC Options
and the AAI Options by subtracting the exercise price from the closing bid
price
of the Issuer’s units or common stock as of the date of the Issuer’s receipt of
your written notice of exercise, multiplying that amount by the number of option
units or shares exercised and dividing by the closing bid price of the same
date
(the “Conversion Price”). That number of option units or shares equal to the
difference between the number of option units or shares exercised and the
Conversion Price shall be deemed surrendered by you upon conversion as the
consideration therefor.
(xi)
Nature
of AAI Options. The
AAI
Options are intended to qualify under Section 422 of the Internal Revenue Code
of 1986, as amended, as incentive stock options, to the extent of the $100,000
annual exercise limitation or any greater successor limitation specified in
the
Code and regulations thereto.
(xii) Non-Transferability
of the Options. The
Atlas
Energy LLC Options and the AAI Options shall not be transferable except, in
the
case of your death, by will or the laws of descent and distribution or, during
your lifetime, to your "family member" (as defined in Form S-8) through gift
or
domestic relations order as permitted by Form S-8 (as currently in effect or
as
it may be amended), nor shall such Securities be subject to attachment,
execution or other similar process.
(xiii) Award
Agreements. The
Atlas
Energy LLC Options and the AAI Options shall be evidenced by an award agreement
whose terms shall be consistent with this Agreement.
(d) Benefits.
During
the Contract Period, you shall be entitled to receive the following additional
benefits:
(i) Participation
in Benefit Plans.
During
the Contract Period and, to the extent specifically provided for herein,
thereafter: (1) you shall be entitled to participate in all applicable
incentive, savings, and retirement plans, practices, policies, and programs
of
the Company to the extent they are generally available to other senior officers,
directors or executives of the Company, and (2) you and/or your family, as
the case may be, shall be eligible for participation in, and shall receive
all
benefits under, all applicable welfare benefit plans, practices, policies,
and
programs provided by the Company, including, without limitation, medical,
prescription, dental, disability, sickness benefits, employee life insurance,
accidental death, and travel insurance plans and programs, to the same extent
as
other senior officers, directors or executives of the Company. Notwithstanding
anything in this Agreement to the contrary, all benefit plans shall be subject
to continuation beyond expiration or Termination, regardless of the grounds,
in
accordance with the terms of such plans and applicable law.
(ii) Expenses.
The
Company shall reimburse you for all reasonable and necessary expenses incurred
by you in carrying out your duties under this Agreement. You shall present
to
the Company, from time to time, an itemized account of such expenses in such
form as may be required by the Company.
5. Termination.
Anything herein contained to the contrary notwithstanding, your employment
hereunder shall terminate as a result of any of the following
events:
(a) Your
death;
(b) Termination
by the Company for Cause. "Cause" shall encompass any of the following: (i)
you
have committed any act of fraud in connection with your employment; (ii) you
have been convicted of a crime other than a traffic offense; (iii) your failure
to materially perform your duties under this Agreement (other than as a result
of physical or mental illness or injury), after the Board delivers to you a
written demand for substantial performance, with reasonable opportunity to
cure,
that specifically identifies the manner in which the Board believes that you
have not substantially performed your duties; or (iv) your breach of
Section 14 of this Agreement if such breach impacts your ability to fully
perform your expected duties hereunder;
(c) Termination
by the Company without Cause, upon forty-five (45) days prior written notice
to
you;
(d) You
become disabled by reason of physical or mental disability for more than one
hundred eighty (180) days in the aggregate or a period of ninety (90)
consecutive days during any 365-day period and the Board determines, in good
faith based upon medical evidence, that you, by reason of such physical or
mental disability, are rendered unable to perform your duties and services
hereunder (a "Disability"). You agree to provide your medical records and to
submit to a medical examination so that the Board may make its determination.
A
termination of your employment by the Company for Disability shall be
communicated to you by written notice and shall be effective on the
30th
day
after your receipt of such notice (the “Disability Effective Date”) unless you
return to full time performance of your duties before the Disability Effective
Date.
(e) A
Termination for Cause shall be effected in accordance with the following
procedures. The Company shall give you written notice ("Notice of Termination
for Cause") of its intention to terminate your employment for Cause, setting
forth in reasonable detail the specific conduct constituting Cause and the
specific provision(s) of this Agreement on which it relies;
(f) Termination
for "Good Reason" upon thirty (30) days' prior written notice to the Company.
"Good Reason" shall mean: any
material breach of this Agreement by the Company that is not remedied by the
Company promptly after receipt of written notice from you, a reduction of your
Base Salary, a demotion from President and Chief Operating Officer of the
Company, a material reduction in your duties, or your failure to be elected
to
the Board of the Company;
provided, however, that Termination by you for Good Reason shall be effective
only if such failure has not been cured within thirty (30) days after notice
of
such failure has been given to the Company. A
termination of your employment for Good Reason shall be effectuated by giving
the Company written notice ("Notice of Termination for Good Reason") of the
termination within three (3) months of the event constituting Good Reason,
setting forth in reasonable detail the specific conduct of the Company that
constitutes Good Reason and the specific provision(s) of this Agreement on
which
you rely;
(g) Your
Termination for any reason other than those set forth in Section 5(f) (other
than by your death or Disability) upon thirty (30) day's prior written notice
to
the Company.
(h) Termination
at the end of the Contract Period by reason of non-renewal.
The
giving of notice not to continue the automatic extension, as provided in Section
3, shall constitute a termination without Cause, provided, however, that if
the
Company waives the covenant not to compete contained in Section 8 hereof,
termination following giving of notice not to continue the automatic renewal
received shall constitute a termination for Cause.
(i) The
"Date
of Termination" means the date of your death, the Disability Effective Date,
the
date on which the termination of your employment by the Company for Cause or
without Cause or by you for Good Reason is effective, or the date on which
you
give the Company notice of a Termination without Good Reason, as the case may
be.
6. Consideration
Payable to You Upon Termination or in the Event of Death.
(a) Death.
If your
employment is terminated by reason of your death during the Contract Period,
the
Company shall pay to your designated beneficiaries (or, if there is no such
beneficiary, to your estate or legal representative), in one cash payment within
sixty (60) days after the Date of Termination, the sum of the following amounts
(the "Accrued Obligations"): (i) any portion of your Annual Base Salary through
the Date of Termination that has been earned but not yet been paid; (ii) an
amount representing the Bonus for the period that includes the Date of
Termination, computed by assuming that the amount of all such Bonus would be
equal to the maximum amount of such Bonus that the you earned the prior fiscal
year, and multiplying that amount by a fraction, the numerator of which is
the
number of days worked in the current fiscal year through the Date of
Termination, and the denominator of which is the total number of work days
in
the relevant current fiscal year; (iii) any accrued but unpaid Bonus and
vacation pay; and (iv) notwithstanding herein anything to the contrary, your
family (spouse and issue) shall have health insurance paid for by AAI or the
Company for a one year period after the date of your death. Any
compensation previously deferred by you (together with any accrued interest
or
earnings thereon) that has not yet been paid will be paid in accordance with
the
terms and conditions under which such amounts were initially deferred. In the
event of termination under this paragraph, all other benefits, payments or
compensation to be provided to you hereunder shall terminate and your rights
in
any unvested AAI stock options or Atlas Energy unit options shall be terminated,
any units with Restrictions shall be forfeited and incentive plans shall be
governed solely by the terms of the applicable plan.
(b) By
the Company for Cause; By You Other than for Good Reason.
If your
employment is terminated by the Company for Cause during the Contract Period,
the Company shall pay you the Annual Base Salary and vacation pay through the
Date of Termination to the extent earned but not yet paid. If you voluntarily
terminate employment during the Contract Period, other than for Good Reason,
the
Company shall pay you the Annual Base Salary through the Date of Termination
to
the extent earned but not yet paid. The amount of any compensation you
previously deferred (together with any accrued interest or earnings thereon)
will be paid under the terms and conditions under which such amounts were
initially deferred. In the event of termination under this paragraph, all other
benefits, payments or compensation to be provided to you hereunder shall
terminate and your rights in incentive plans shall be governed solely by the
terms of the applicable plan, except that all Securities that have vested as
of
the Date of Termination shall not be subject to forfeiture but then the exercise
of any option shall be governed by the terms of the applicable
plan.
(c) By
the Company Other than for Cause or Death; by you for Good
Reason.
If,
during the Contract Period, the Company terminates your employment, other than
for Cause or Death, or you terminate employment for Good Reason, the Company
shall pay to you, amounts equal to compensation and benefits set forth in
Sections 4 and 6 as if you had remained employed by the Company pursuant to
this
Agreement, all such sums to be payable at the time when the same would have
become due and payable if Termination had not occurred; provided, that the
Bonus
portion shall be equal to the prorated Bonus paid to you in the fiscal year
ending prior to Termination; provided, further, that you shall continue to
receive for the period described above benefits described in Section 4(d) and,
to the extent any benefits described in Section 4(d) cannot be provided pursuant
to a plan or program maintained by the Company for its executives, the Company
shall provide such benefits outside such plan or program at no additional cost
(including without limitation tax cost) to you and your family; and provided,
finally, that during any period when the you are eligible to receive benefits
of
the type described in clause (i) of Section 4(d) under another employer-provided
plan, the benefits provided by the Company under this Section 6(c) may be made
secondary to those provided under such other plan. In addition to the foregoing,
the Restrictions on any Atlas Energy units or AAI stock outstanding on the
Date
of Termination shall terminate as of the Date of Termination and all options
to
acquire Atlas Energy units or AAI stock outstanding on the Date of Termination
shall be fully vested and exercisable and shall remain in effect and exercisable
through the end of their respective terms, without regard to the Termination
of
your employment. The payments and benefits provided pursuant to this Section
6(c) are intended to compensate you for a Termination by the Company other
than
for Cause or for the actions of the Company leading to a Termination by you
for
Good Reason, and shall be the sole and exclusive remedy therefore. If you are
terminated by reason of Disability, you shall assign to Company any benefits
received on account of Company provided disability insurance for the period
on
which this severance payment is based. You
shall
not be required to mitigate the amount of any payment provided for in this
Section 6(c) by seeking other employment or otherwise, nor shall the amount
of
any payment or benefit provided for herein be reduced by any compensation or
any
retirement benefit heretofore or hereafter earned by you as the result of
employment by any other person, firm or corporation.
7. Confidential
Information; No Solicitation
(a) All
confidential information or trade secrets which you may obtain during the
Contract Period relating to the business of the Company and its affiliates shall
not be published, disclosed, or made accessible by you to any other person,
firm, or corporation except in connection with the business, and for the
benefit, of the Company, and its affiliates. For purposes of this Agreement,
"Confidential Information" shall include, but not be limited to, (i) the
identity of the Company's lessors, suppliers and customers, and (ii) the
Company's hedging, geological and billing practices. The provisions of this
Section 7(a) shall survive the termination of this Agreement, but shall not
apply to any information which is or becomes publicly available otherwise than
by any breach of this Section 7(a). Notwithstanding anything in this Section
7(a) to the contrary, you may publish, disclose, or make accessible Confidential
Information to the extent required by law, judicial or administrative
proceedings or the like.
(b) You
shall
not, during the Contract Period and for two years thereafter for yourself or
on
behalf of any other person, firm, partnership, corporation, or other entity,
directly or indirectly solicit or hire, or attempt to solicit or hire, any
employee of the Company or its affiliates away from the Company or its
affiliates.
8. Covenant-Not-to-Compete.
You shall not, during the Contract Period and during the Post Termination
Restricted Period if applicable and as defined herein, for yourself, or on
behalf of any other person, firm, partnership, corporation, or other entity,
directly or indirectly engage in any aspect of any business involved in (i)
oil
or natural gas exploration, drilling or production or in (ii) the offering
of
ownership interests in any entity engaged in oil or natural gas exploration,
drilling or production. For purposes of this Section 8, the Post Termination
Restricted Period shall not apply in the event your employment is terminated
under Section 5(c) or 5(f) and shall mean the greater of (a) twenty-four months
or (b) a period equal to the balance of the Contract Period immediately
following Termination. For purposes of clause (i) of this Section 8, "to engage"
shall include your acting as an owner (of more than 5%), employee, director
or
officer of an entity so engaged.
9. Remedies
in Case of Breach of Certain Covenants or Termination.
The Company and you agree that the damages that may result to the Company from
misappropriation of Confidential Information or competition as prohibited by
Sections 7 and 8 could be estimated only by conjecture and not by any accurate
standard, and, therefore, any breach by you of the provisions of such sections,
in addition to giving rise to monetary damages, will be subject to injunctive
relief.
10. Director
and Officer Insurance.
You
shall
be covered during the Contract Period and thereafter by Officer and Director
liability insurance in amounts and on terms similar to other senior executives,
directors and managers of AAI and the Company and in an amount appropriate
for
companies the size and in the business of AAI and the Company but in no event
shall the required policy limit be in excess of twenty million dollars
($20,000,000), the amount of the current AAI policy. AAI or the Company shall
pay for such Officer and Director liability insurance.
11. Mitigation.
You
shall not be required to mitigate the amount of any payment provided for in
this
Agreement by seeking other employment or otherwise, nor shall the amount of
any
payment or benefit provided for herein be reduced by any compensation or any
retirement benefit heretofore or hereafter earned by you as the result of
employment by any other person, firm or corporation.
12. Gross-Up
Payment.
(a) Notwithstanding
any provision in the Agreement to the contrary, in the event that it shall
be
determined that any payment or distribution by the Company to or for the benefit
of you, whether paid or payable or distributed or distributable pursuant to
the
terms of this Agreement or otherwise (a “Payment”), would constitute an “excess
parachute payment” within the meaning of Section 280G of the Code, the Company
shall pay you an additional amount (the “Gross-Up Payment”) such that the net
amount retained by you after deduction of any excise tax imposed under Section
4999 of the Code, and any federal, state and local income tax, FICA and Medicare
withholding taxes and excise tax imposed upon the Gross-Up Payment, but before
any federal, state or local income tax FICA and Medicare withholding taxes
on
the Payment itself, shall be equal to the Payment. For purposes of determining
the amount of the Gross-Up Payment, unless you specify that other rates apply,
you shall be deemed to pay federal income tax and employment taxes at the
highest marginal rate of federal income and employment taxation in the calendar
year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rate of taxation in the state and locality of
your
residence on your Date of Termination, net of the reduction in federal income
taxes that may be obtained from the deduction of such state and local taxes
(calculated by assuming that any reduction under Section 68 of the Code in
the
amount of itemized deductions allocable to you applies first to reduce that
amount of such state and local income taxes that would otherwise be deductible
by you).
(b) In
the
event that the excise tax imposed by Section 4999 of the Code is subsequently
determined to be less than the amount taken into account hereunder at the time
of your Termination, you shall repay to the Company, at the time that the amount
of such reduction in excise tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the excise tax, federal, state and local income
taxes and FICA and Medicare withholding taxes imposed on the Gross-Up Payment
being repaid by you to the extent that such repayment results in a reduction
in
excise tax, FICA and Medicare withholding taxes and/or a federal, state or
local
income tax deduction) plus interest on the amount of such repayment at the
rate
provided in Section 1274(b)(2)(B) of the Code. In the event that the excise
tax
is determined to exceed the amount taken into account hereunder at the time
of
your Termination (including by reason of any payment the existence or amount
of
which cannot be determined at the time of the Gross-Up Payment), the Company
shall make an additional Gross-Up Payment to you in respect to such excess
(plus
any interest, penalties or additions payable by you with respect to such excess)
at the time that the amount of such excess is finally determined.
(c) Notwithstanding
the foregoing, in the event you suffer any adverse tax consequences resulting
from the previous inclusion of the payment received pursuant to Section 11(a)
as
ordinary income, and your inability to claim as a deduction the repayment of
all
or a portion of the Gross-Up Payment, you will be able to retain such amount
of
the Gross-Up Payment, as reasonably determined by the Accountants
(as hereinafter defined) to compensate you for such adverse tax
consequences.
(d) Subject
to any determination made by the Internal Revenue Service (the “IRS”), all
determinations as to whether a Gross-Up Payment is required and the amount
of
Gross-Up Payment and the assumptions to be used in arriving at the determination
shall be made by the Company’s independent certified public accountants,
appointed prior to any change in ownership (as defined under Code §280G(b)(2)),
and/or tax counsel selected by such accountants (the “Accountants”) in
accordance with the principles of §280G of the Code. All fees and expenses of
the Accountants will be borne by the Company. Subject to any determination
made
by the IRS, determinations of the Accountants under this Agreement with respect
to (1) the initial amount of any Gross-Up Payment and (2) any subsequent
adjustment of such payment shall be binding on the Company and you.
13. Survival.
Any
provisions of this Agreement that impose continuing obligations on the parties,
including, but not limited to, the provisions of Sections 6, 7, 8, 9, 10, 11
and
12, shall survive any expiration or Termination for any reason, whether or
not
expressly stated as surviving such expiration or Termination in this Section
or
in any other Section of this Agreement. Further, all obligations that are
accrued but unpaid or unperformed as of the expiration or Termination, including
but not limited to the payment per Section 4(d) of reimbursable expenses
incurred as of such date, shall survive any expiration or Termination for any
reason.
14. Representations
and Warranties.
You represent and warrant to the Company that you are under no contractual
or
other restriction or obligation which would prevent you from performing your
duties hereunder or which would interfere with the rights of the Company to
engage in its businesses.
15. Severability.
In case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal, or unenforceable in any respect such
validity, illegality or unenforceability shall not affect any other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision(s) had never been contained herein, provided
that such invalid, illegal or unenforceable provision(s) shall first be
curtailed, limited or eliminated only to the extent necessary to remove such
invalidity, illegality or unenforceability with respect to the applicable law
as
it shall then be applied.
16. Modification
of Agreement.
This Agreement shall not be modified by any oral agreement, either
expressed or implied, and all modifications hereof shall be in writing and
signed by the parties hereto.
17. Waiver.
The waiver of any right under this Agreement by any of the parties hereto shall
not be construed as a waiver of the same right at a future time or as a waiver
of any other rights under this Agreement.
18. Governing
Law.
This Agreement shall be governed by and construed in accordance with the
internal laws of the Commonwealth of Pennsylvania, without giving affect to
the
principles of conflicts of laws.
19. Assignment.
(a) This
Agreement is personal to you and, without the prior written consent of the
Company, shall not be assignable by you. This Agreement shall inure to the
benefit of and be enforceable by your heirs, personal representatives, and
legal
representatives.
(b) This
Agreement shall inure to the benefit of and be binding upon the Company and
its
successors and assigns, and the Company may assign this Agreement to any
affiliate of AAI, including Atlas Energy LLC.
20. Notices.
Any notice to be given pursuant to this Agreement shall be sufficient if in
writing and mailed by certified or registered mail, postage-prepaid, to the
addresses listed below:
If
to Company:
Atlas
[
]
000
Xxxxxx Xxxx
Moon
Township, PA 15108
With
a Copy to:
Ledgewood,
a professional corporation
0000
Xxxxxx Xxxxxx, Xxxxx 000
Philadelphia,
PA 19103
Attn:
Xxxxxxx
X. Xxx, Esquire
If
to You:
Xxxxxxx
Xxxxx
00000
Xxxxxxxx Xxxx
Pepper
Pike, OH 44124
With
a Copy to:
Xxxx,
Xxxxxxx and Xxxxx, PLC
000
Xxxxxxxx Xxxxxx, Xxxxx 0000
Detroit,
MI 48226
Attn:
Xxxxxxx
X. Xxxxxx, Esquire
21. Entire
Agreement.
This
Agreement constitutes the entire agreement between AAI, the Company and Atlas
and you with respect to the subject matter hereof and supersedes any and all
other previous or contemporaneous communications, representations,
understandings, agreements, negotiations and discussions, either oral or
written, among such parties with respect to the subject matter hereof. There
are
no written or oral agreements, understandings, or representations, directly
or
indirectly related to the subject matter of this Agreement, that are not set
forth herein.
22. Counterparts/Facsimile
Signatures.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same Agreement.
For purposes of this Agreement, a facsimile or PDF signature shall be valid
and
enforceable as an original.
23. Atlas
America, Inc. Performance.
Atlas
America, Inc. hereby unconditionally guarantees to you the full and prompt
payment and performance of all obligations hereunder to be performed by the
Company and/or Atlas Energy LLC and agrees that you shall have recourse against
Atlas America, Inc. in the event that the Company or Atlas Energy LLC fails
to
pay any amounts or perform any obligations hereunder as they become due or
obligatory.
24. Payment
of Your Attorneys’ Fees.
The
Company agrees to pay your reasonable attorneys’ fees and related expenses
incurred in connection with the review, drafting and negotiation of this
Agreement.
Please
acknowledge your acceptance of and agreement to the terms of this letter
agreement by signing a copy of this letter where indicated and returning it
to
me.
|
Sincerely,
|
||
|
ATLAS
AMERICA, INC.
|
||
|
By:
|
|
|
|
Xxxxxx
X. Xxxxx
|
||
|
Chief
Executive Officer and President
|
||
ACCEPTED
AND AGREED:
|
Xxxxxxx
Xxxxx
|
