1
EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is made the
1st day of June, 1998, by and between National Energy Group, Inc., a Delaware
corporation acting by and through its hereunto duly authorized officer (the
"Company"), and Xxxxxx X. Xxxxx (the "Executive").
WHEREAS, the Executive is presently in the employ of the Company in
the capacity of Vice President-Land and Assistant General Counsel and is willing
to provide certain employment assurances to the Executive in the event of a
Change of Control (as defined below) of the Company as incentive and inducement
for the Executive to continue in such employment in her present capacity after a
Change of Control; and
WHEREAS, in consideration of such employment assurances, the
Executive is willing to remain in the employ of the Company in the capacity of
Vice President-Land and Assistant General Counsel after a Change of Control of
the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
terms and conditions hereof, the Company and the Executive hereby agree as
follows:
1. Employment. In consideration of the benefits hereinafter
specified, the Executive hereby agrees to continue her employment with the
Company in the capacity of Vice President-Land and Assistant General Counsel
after a Change of Control of the Company and to discharge her duties in such
capacity during the term of this Agreement.
2. Exclusive Services. The Executive shall devote her full working
time, ability and attention to the business of the Company during the term of
this Agreement and shall not, directly or indirectly, render any services of a
business, commercial or professional nature to any other person, corporation or
organization, whether for compensation or otherwise, without the prior knowledge
and consent of the Board of Directors (the "Board") or President and Chief
Executive Officer of the Company; provided, however, that the provisions of this
Agreement shall not be construed as preventing the Executive from investing in
other non-competitive businesses or enterprises if such investments do not
require substantial services on the part of the Executive in the affairs or
operations of any such business or enterprise so as to significantly diminish
the performance by the Executive of her duties, functions and responsibilities
under this Agreement. During the term of this Agreement, the Executive shall
not, directly or indirectly, either through any kind of ownership (other than
ownership of securities of publicly held corporations of which the Executive
owns less than five percent (5%) of any class of outstanding securities) or as a
director, officer, agent, employee or consultant engage in any business that is
competitive with the Company.
3. Authority and Duties. During the term of this Agreement, the
Executive shall have such authority and shall perform such duties, functions and
responsibilities as are specified by the Bylaws of the Company, the Executive
Committee, the Board of Directors, or the President of the Company and/or as are
appropriate for the office of the Vice President-Land and Assistant General
Counsel and shall serve with the necessary power and authority commensurate with
such position. If the Company removes the Executive from the office of the Vice
President-Land and Assistant General Counsel of the Company after a Change of
Control or limits, restricts or reassigns her authority and responsibility after
a Change of Control so as to be less significant than, or not comparable to,
that to which she held immediately preceding such Change of Control in her
capacity as Vice President-Land and Assistant General Counsel without her prior
mutual consent, the Executive shall be entitled to resign for good reason and
receive the Severance Benefits set forth in this Agreement.
2
4. Compensation. In consideration for the services to be rendered by
the Executive to the Company and/or its subsidiaries, the Company shall pay to
the Executive at least the gross cash compensation and shall award to the
Executive at least the bonuses as set forth below:
==================================================================================================================================
ANNUAL ANNUAL BONUS
ANNUAL PERIOD BASE SALARY
----------------------------------------------------------------------------------------------------------------------------------
For the one year period 100% of the average of the Executive's annual base 100% of the average of the bonuses paid
following effective date of a salary in effect immediately prior to the Change in to the Executive for each of the three
Change of Control Control and of the Executive's annual base salary for fiscal years before the Change in Control
each of the immediately preceding two years
----------------------------------------------------------------------------------------------------------------------------------
For the second year following 100% of the average of the Executive's annual base 100% of the average of the bonuses paid
effective date of a Change of salary on the date that is one year after the Change to the Executive for the three immediately
Control in Control and of the Executive's annual base salary preceding fiscal years
for each of the immediately preceding two years
----------------------------------------------------------------------------------------------------------------------------------
For the third year following 100% of the average of the Executive's annual base 100% of the average of the bonuses paid to
effective date of a Change of salary on the date that is two years after the Change the Executive for the three immediately
Control in Control and of the Executive's annual base salary preceding fiscal years
for each of the immediately preceding two years
==================================================================================================================================
In the event that the Executive shall not have been employed for three years
prior to the effective date of this Agreement, the Executive's annual base
compensation rate or bonus rate shall be averaged over the actual period of
employment of the Executive by the Company.
Each of the annual base salary amounts set forth above shall be paid
to the Executive in equal monthly installments, or as otherwise agreed, during
each corresponding year of the term of this Agreement, provided that for any
period of less than one (1) year, the annual base salary shall be pro-rated
accordingly. The annual bonus amount indicated above or amounts in excess of
such indicated bonus shall be awarded no later than December 31 of the
corresponding annual period. The amount set forth above is compensation to the
Executive or gross amounts due hereunder, and the Company shall have the right
to deduct therefrom all taxes and other amounts which may be required to be
deducted or withheld by law (including, but not limited to, income tax,
withholding, social security and medicare payments) whether such law is now in
effect or becomes effective after the execution of this Agreement.
5. Benefits and Business Expenses. During the term hereof:
(a) The Executive shall be entitled to continue her participation
in programs maintained by the Company for the benefit of its
employees and officers and to participate in new or amended
programs, including, but not limited to, medical, health, life,
accident and disability insurance programs, pension plans, incentive
compensation plans, stock option plans, stock appreciation rights
plans, and limited stock appreciation rights plans. The Company
shall not terminate nor amend such plans to the detriment of the
Executive.
2
3
(b) To the extent that the Company has provided the Officer with
an automobile, club memberships, association and trade memberships
and other memberships prior to the Change of Control, the Company
shall continue to provide the Officer with such items, of a
comparable nature, following a Change of Control. The Company shall
pay the expenses of such automobile, memberships and subscriptions.
(c) The Executive shall be reimbursed for any business expenses
reasonably incurred in carrying out her duties, functions and
responsibilities upon presentation of expense reports to the
Company.
6. Term. This Agreement shall have a term of three (3) years
commencing on the effective date of a Change of Control and shall be
automatically extended on the 1st day of each and every calendar month during
the term of this Agreement for an additional calendar month so that at the
beginning of each and every month during the term of this Agreement there shall
be a remaining term of three (3) years (but in no event beyond the time the
Executive reaches age 65) unless and until the Company gives written notice to
the Executive that the term of this Agreement shall not be further so extended,
in which case the Executive shall be entitled to resign for good reason. The
provisions of this Section 6 shall apply to each Change of Control irrespective
of any Changes of Control which may have occurred previously.
7. Severance Benefits After Change Of Control. In addition to such
compensation and other benefits payable to or provided for the Executive as
authorized by the Board from time to time, Executive shall be entitled to
receive in lieu of the compensation described in paragraph 4 hereof, and the
Company shall pay or provide to the Executive the following severance benefits
(the "Severance Benefits") in the event that, during the term hereof, the
Company discharges the Executive without cause or the Executive resigns for good
reason after a Change of Control, to-wit:
(a) The Company shall pay to the Executive a lump sum cash
payment (multiplied by the applicable factor described below)
payable on such date of termination of employment equal to the
Executive's Abase compensation@ then in effect, which shall, and is
defined to, consist of the sum of (i) the Executive's annual base
salary then in effect, (ii) the average of the amounts of the last
three annual cash bonuses paid or granted to, or earned by, the
Executive, and (iii) the average of the total amounts of the
Company's contributions to its retirement plan allocable to the
Executive on a fully vested basis for the last three fiscal years of
the retirement plan. The amount of the Abase compensation@ payable
to the Executive pursuant to this Section 7(a) shall be multiplied
by the number three (3) for the purposes of determining the lump sum
cash severance payment due under this Section 7(a).
(b) All stock options granted by the Company to the Executive,
all contributions made by the Executive and by the Company for the
account of the Executive to any pension, retirement or any other
benefit plan, and all other benefits or bonuses, including but not
limited to net profits interests which contain vesting or
exercisability provisions conditioned upon or subject to the
continued employment of the Executive, shall become fully vested and
exercisable and shall remain fully exercisable for a period of the
later of three hundred sixty (360) days after (i) the date of such
termination of employment, or (ii) the termination of this
Agreement.
(c) The Company shall continue the participation of the Executive
in all life, accident, disability, medical, dental and all other
health and casualty insurance plans maintained by the Company for
its officers and employees for a period of one (1) year after the
date of such termination of employment or for such longer period as
may be required by applicable law.
3
4
(d) Notwithstanding any provision of this Agreement to the
contrary, if the Executive is a disqualified individual (as the term
"disqualified individual" is defined in Section 280G of the Code)
and if any portion of the Severance Benefits under this Section 7 of
this Agreement would be an excess parachute payment (as the term
"excess parachute payment" is defined in Section 280G of the Code)
but for the application of this sentence, then the amount of the
Severance Benefits otherwise payable to the Executive pursuant to
this Agreement will be reduced to the minimum extent necessary (but
in no event to less than zero) so that no portion of the Severance
Benefits, as so reduced, constitutes an excess parachute payment.
The determination of whether any reduction in the amount of the
Severance Benefits is required pursuant to this Section 7(d) will be
made by the Company's independent accountants. The fact that the
Executive has her Severance Benefits reduced as a result of the
limitations set forth in this Section 7(d) will not of itself limit
or otherwise affect any rights of the Executive arising other than
pursuant to this Agreement.
(e) The Company has determined that the amounts payable under
this Agreement constitute reasonable compensation for services
rendered. Accordingly, notwithstanding any other provision hereof,
unless such action would be expressly prohibited by applicable law,
if any amount is paid pursuant to this Agreement which is determined
to be subject to the excise tax imposed by Section 4999 of the Code,
the Company will pay to the Executive an additional amount in cash
equal to the amount necessary to cause the aggregate amount payable
under this Agreement, including such additional cash payment (net of
all federal, state and local income taxes and all taxes payable as
the result of the application of Sections 280G and 4999 of the
Code), to be equal to the aggregate amount payable under this
Agreement, excluding such additional payment (net of all federal,
state and local income taxes), as if Sections 280G and 4999 of the
Code (and any successor provisions thereto) had not been enacted
into law.
8. Place of Performance. During the term hereof:
(a) The principal office of the Executive and the principal place
for performance by her of her duties, functions and responsibilities
under this Agreement shall be in the City or suburbs of Dallas,
Texas.
(b) It is recognized that the performance of the Executive's
duties hereunder may occasionally require the Executive, on behalf
of the Company, to be away from her principal office for business
reasons. Unless consent of the President and Chief Executive Officer
is obtained by the Executive, such periods of being away from her
principal office on behalf of the Company shall not exceed thirty
(30) calendar days per year.
9. Definition of Change of Control. For purposes of this Agreement,
"Change of Control" shall mean the occurrence of one or more of the following
events: (i) a person or entity or group (as that term is used in Section
13(d)(3) of the Exchange Act) of persons or entities shall have become the
beneficial owner of a majority of the securities of the Company ordinarily
having the right to vote in the election of directors, (ii) during any
consecutive two-year period, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any directors
who are members of such Board of Directors of the Company on the date hereof and
any new directors whose election by such Board of Directors of the Company or
whose nomination for election by the stockholders of the Company was approved by
a vote of 66 2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office, (iii) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, the assets of the Company to
any person or entity or group (as so defined in Section 13(d)(3) of the Exchange
Act)
4
5
of persons or entities (other than any wholly owned subsidiary of the Company),
or (iv) the merger or consolidation of the Company into or with another
corporation or the merger of another corporation into the Company with the
effect that immediately after such transaction any person or entity or group (as
so defined in Section 13(d)(3) of the Exchange Act) of persons or entities, or
the stockholders of any other entity, shall have become the beneficial owner of
securities of the surviving corporation of such merger or consolidation
representing a majority of the voting power of the outstanding securities of the
surviving corporation ordinarily having the right to vote in the election of
directors. The Alexander Energy Corporation merger, however it might be
structured, shall not constitute a Change of Control under this Agreement.
10. Discharge with Cause. For the purposes of this Agreement, the
Company shall be deemed to have discharged the Executive for cause only if any
one of the following conditions existed:
(a) If the Executive shall have willfully breached or habitually
neglected her duties and responsibilities as the Vice President-Land
and Assistant General Counsel of the Company; or
(b) If the Executive shall have been convicted of any felony
offense during the term of this Agreement.
The discharge of the Executive by the Company when none of the foregoing
conditions exist shall be deemed to be a discharge without cause.
11. Resignation for Good Reason. For the purposes of this Agreement,
the Executive shall have resigned for good reason if any one of the following
conditions existed at the time of her resignation:
(a) If the Company shall have assigned to the Executive
authority and responsibilities less significant than, or not
comparable to, that which she had in her capacity as Vice
President-Land and Assistant General Counsel immediately preceding a
Change of Control or shall otherwise so limit or restrict her
authority and responsibilities after a Change of Control;
(b) The Company shall have reduced the Executive's annual base
salary below her annual base salary in effect on the effective date
of a Change of Control or the Company shall have reduced the
Executive's annual cash bonus below that of her last annual cash
bonus prior to the effective date of a Change of Control;
(c) The Company shall have taken any actions having the purpose
or intent and the effect of inducing the Executive to resign, such
as failing to provide the Executive with all personnel benefits
which are otherwise generally provided to executive officers of the
Company or reasonably necessary or appropriate for the performance
by the Executive of her duties as Vice President-Land and Assistant
General Counsel of the Company; or
(d) The Company shall have declined to extend the term of this
Agreement pursuant to Section 6 hereof.
12. Termination Upon Death. This Agreement shall terminate
immediately upon the date of the death of the Executive.
13. Remedies. Subject to the provisions of Section 14(i) below, if
the Executive shall file any judicial action for enforcement of this Agreement
and successfully recover compensation or
5
6
damages, the Executive shall be entitled to recover from the Company an
additional amount equal to interest at ten percent (10%) per annum on the amount
recovered from the date such amount was due and payable together with all
expenses and reasonable attorneys' fees incurred in obtaining legal advice and
counseling respecting her rights under this Agreement and in prosecuting and
disposing of such action.
14. General Provisions.
(a) Notices. Any notices to be given hereunder by either party
to the other may be given either by personal delivery in writing or
by fax, or by mail, registered or certified, postage prepaid, return
receipt requested, addressed to the parties at their respective
addresses set forth below their signatures to this Agreement, or at
such other addresses as they may specify to the other in writing.
(b) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
(c) Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future
laws effective during the term hereof, such provision shall be fully
severable and this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised
a part hereof, and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible and still be legal,
valid or enforceable.
(d) Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements or
understandings, whether written or oral, with respect to the subject
matter hereof. No terms, conditions or warranties, other than those
contained herein, and no amendments or modifications hereto shall be
binding unless made in writing and signed by the parties hereto.
(e) Binding Effect. This Agreement shall extend to and be
binding upon and inure to the benefit of the parties hereto, their
respective heirs, representatives, successors and assigns. All of
the provisions of this Agreement shall be fully applicable to any
successor to the Company resulting from a Change of Control. The
Company agrees that in the event of a tender or exchange offer,
merger, consolidation or liquidation or any such similar event
involving the Company, its securities or assets, it shall reveal the
existence of this Agreement to the acquiring person or entity. The
Company further agrees that if such action is not inconsistent with
the best interests of the Company, it shall condition approval of
any transactions proposed by the acquiror upon obtaining the
consent, in writing, of the potential successor to the Company to be
bound by this Agreement. In the event the Executive dies prior to
the termination of this Agreement, any compensation or other payment
due and owing to the Executive on or before the date of the
Executive's death shall be paid to her estate, executors,
administrators, heirs or legal representatives. Since the duties and
services of the Executive hereunder are special, personal and unique
in nature, the Executive may not transfer, sell or otherwise assign
her rights, obligations or benefits under this Agreement.
(f) Waiver. The waiver by either party hereto of a breach of
any term or provision of this Agreement shall not operate or be
construed as a waiver of a subsequent breach of the same provisions
by either party or of the breach of any other term or provision of
this Agreement.
6
7
(g) Titles. Titles of the paragraphs herein are used solely for
convenience and shall not be used for interpretation or construing
any word, clause, paragraph or provision of this Agreement.
(h) Certain Conflicts. The parties hereto acknowledge and agree
that Executive has entered into that certain letter agreement
pertaining to the Executive's employment with the Company dated
March 26, 1998 (the "Letter Agreement"). Where a conflict may arise
between the provisions of this Agreement and the Letter Agreement,
the provisions of the Letter Agreement shall apply.
(i) Mediation/Arbitration. Notwithstanding anything to the
contrary contained herein, in the event of a dispute between the
parties to this agreement, the parties agree to participate in good
faith in a minimum of four (4) hours of mediation in Dallas, Texas
with an attorney-mediator trained and certified by the American
Arbitration Association, the United States Arbitration and Mediation
Service, or any comparable organization, and to abide by the
mediation procedures and decision of such organization. The parties
agree to equally bear the costs of the mediation. In the event the
parties cannot resolve their dispute through mediation as described
herein, the parties agree to participate in binding arbitration
pursuant to the rules of the American Arbitration Association or
mutually agreeable similar organization. Such arbitration shall be
held in Dallas, Texas, shall be binding and nonappealable and a
judgment on the award to the prevailing party (inclusive of
reasonable attorney's fees and costs) may be entered in any court
having competent jurisdiction.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Executive Employment Agreement as of the day and year first written above,
effective as of the date specified above.
COMPANY:
NATIONAL ENERGY GROUP, INC.
By: /s/ XXXXX X. XXXXX
---------------------------------
Xxxxx X. Xxxxx
Executive Vice President and
Chief Operating Officer
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
(000) 000-0000
(000) 000-0000 (Fax)
EXECUTIVE:
/s/ XXXXXX X. XXXXX
---------------------------------------
XXXXXX X. XXXXX
0000 Xxxxxxxx
Xxxxxxxxxx, XX 00000
7