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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of the 1st day of September, 1998
(the "Effective Date"), by and among TransCoastal Acquisition, Inc. (to be
renamed Xxxxxxx GMP International, Inc.), a Louisiana corporation (the
"Company"); and Xxxx X. Xxxxxxxxx, Xx., an individual residing in Louisiana
("Employee").
W I T N E S S E T H :
WHEREAS, the Company and TransCoastal Marine Services, Inc.
("TransCoastal" or "Parent" or "Parent Company") have entered into a Stock
Purchase and Merger Agreement with Xxxxxxx GMP International, Inc. ("Dickson
GMP"), Xxxxxxx Marine, Inc., Dickson Nigeria, Ltd, Servicios y Construcciones
Petroleas Xxxxxxx, C.A., Ventura Resources, Inc. (collectively, the "Xxxxxxx
Group") and the Shareholders (the "Purchase/Merger Agreement") to acquire all of
the outstanding shares of common stock of the Xxxxxxx Group (the "Transaction").
Words used herein that are capitalized but not defined shall have the meaning
set forth in the Purchase/Merger Agreement;
WHEREAS, Employee is presently employed by Xxxxxxx GMP;
WHEREAS, the Company desires to retain Employee as an employee of the
Company after the Effective Date;
WHEREAS, Employee desires to be employed by the Company in the position
and on the further terms and conditions provided herein;
WHEREAS, TransCoastal's and the Company's business includes (i)
pipeline construction, repair, maintenance, trenching, testing, commissioning
and other related pipeline services, (ii) fabrication of offshore platforms and
other related oil and gas facilities and (iii) refurbishment and fabrication of
offshore drilling rigs and barge drilling rigs (the "Company Business"); and
WHEREAS, the parties hereto desire to enter into an employment
agreement effective as of the Effective Date;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and intending to be legally bound thereby, the
parties agree as follows:
1. EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1 On and as of the Effective Date, the Company hereby agrees
to employ Employee for the Term (as defined in Section 2 hereof) to render
services to the Company or its affiliates within Orleans Parish, Louisiana, as
Chief Executive Officer, and, in connection therewith, to perform such duties on
a temporary and limited basis in such other locations as the Company and its
affiliates are conducting business, commensurate with such office under the
general supervision of the Board of Directors, the Chief Executive Officer or
the President of the Parent Company. The general scope of responsibilities,
authority, reporting relationship and management authority is outlined on
Exhibit 1 annexed hereto and made a part hereof.
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1.2 (a) On and as of the Effective Date, Employee hereby
agrees to accept such employment and to perform his duties in a diligent manner
and to use his best efforts to advance the business and goodwill of the Company,
its Parent and affiliates.
(b) Employee further agrees to devote such of his time,
skill, energy and attention to the Company as shall be reasonably necessary to
carry out his duties as Chief Executive Officer. During the Term, Employee will
not engage in any other business for Employee's own account or accept any
employment from any other entity, or render any services, give any advice or
serve in an advisory or consulting capacity, whether gratuitously or otherwise,
to or for any person, firm, corporation or entity other than the Company, its
Parent or affiliates without the prior written approval of the President or the
Chief Operating Officer and/or the Board of Directors of the Parent Company,
except as provided in Section 1.2(d) hereof.
(c) In addition to the restrictions set forth in Section
1.2(b) hereof, Employee shall not pursue for his own account (or for any other
person or entity) any business, ownership or investment opportunity that in any
way relates to the Company Business, except as provided in Section 1.2(d)
hereof.
(d) Notwithstanding any provision hereof to the contrary,
Employee shall be entitled to serve on corporate, educational, civic, religious
or charitable boards or committees; to deliver lectures, fulfil speaking
engagements or teach at educational institutions and to otherwise manage passive
personal investments, so long as such activities do not interfere with the
performance of Employee's responsibilities as an Employee of the Company in
accordance with this Agreement. Further, Employee shall not be prohibited from
(i) having passive investments of up to 5% in any publicly held business
enterprise or (ii) having passive investments in any privately held business so
long as such business does not compete with Company Business and does not
materially interfere with the performance of his duties under this Agreement.
Additionally, Employee may continue to engage in the activities set forth on the
attached Exhibit 1.2(d) as long as such activities do not interfere with or
detract from Employee performing his duties for the Company, its Parent or
affiliates.
2. TERMS OF EMPLOYMENT.
The term of this Agreement (the "Term") shall commence as of
the Effective Date and shall continue until (i) three (3) years from the
Effective Date of this Agreement or (ii) the date of termination of Employee's
employment where such termination is pursuant to Section 4.1, 4.2, 4.3 or 4.5
hereof. This Agreement shall automatically be renewed for successive one-year
periods annually thereafter, unless terminated as of the end of the Term or any
one (1) year extended term by written notice by either the Company to the
Employee or the Employee to the Company 120 days in advance of the expiration of
the initial term or any extension thereof, as the case may be. For all purposes
of this Agreement, the "Term" shall be deemed to include any such extended
period.
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3. COMPENSATION.
3.1 During the Term, as base compensation, exclusive of
bonuses and benefits set forth below, for his services to be rendered to or at
the request of the Company or its Parent in accordance with this Agreement, the
Company agrees to pay Employee an initial annual salary of $175,000, payable in
semi-monthly, equal installments in accordance with the Company's regular
payroll practices in effect from time to time. The Board of Directors of the
Parent Company may provide such increases in salary as it may from time to time
deem appropriate; provided, however, any Company-wide or Parent-wide cost of
living or similar increase shall be applicable to Employee. Such salary for each
succeeding year shall not be less than that for the immediately preceding year.
3.2 During the Earn-Out Period, Employee shall be entitled to
a cash incentive bonus up to a maximum of 50% of Employee's annual salary in
accordance with a plan to be determined by the Board of Directors of the Parent
Company. The Employee shall not be entitled to participate in any of the
Company's and TransCoastal's other cash bonus or incentive plans (as may be
amended from time to time) during the Earn-Out Period. After the Earn-Out Period
expires, Employee shall participate in the Company's and TransCoastal's various
bonus or incentive plans and stock option plans commensurate with Employee's
position; provided, however, that for the period from the expiration of the
Earn-Out Period to December 31, 1999, the bonus and other incentive plans will
be limited to the Employee's pro rata participation for the remainder of 1999 of
the bonus program in place for other Company and TransCoastal employees.
3.3 The Company shall promptly pay or reimburse Employee for
all ordinary and necessary business expenses, including reasonable business
entertainment, actually incurred or paid by him during the Term in connection
with the performance of his duties under this Agreement upon presentation of
reasonable and practical expense statements or vouchers or such other supporting
information as the Company may reasonably require, provided such expenses are
consistent with the Company's and TransCoastal's normal practice.
3.4 Employee shall be entitled to all rights and benefits for
which he shall be eligible under any pension, group health, life, and disability
insurance plans or other benefits which the Company and TransCoastal may provide
for its employees commensurate with Employee's position. Employee shall also be
entitled to five (5) weeks vacation per year commencing on the Effective Date of
this Agreement. However, if Employee resigns or voluntarily terminates
Employee's employment within six months from the Effective Date of this
Agreement, Employee shall not be entitled to any unused and/or accrued vacation
pay upon termination or resignation of Employee's employment. The Company or
TransCoastal may amend from time to time and/or terminate any benefits
contemplated by this Section 3, provided that such amendments will be of general
application. Other provisions of this Agreement may be amended or modified only
pursuant to a written agreement between the Company and Employee and
TransCoastal as guarantor.
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4. TERMINATION.
4.1 Subject to the further provisions hereof, the Company
shall have the right to terminate Employee's employment for any reason with 14
days notice to Employee. If Employee's employment is terminated by the Company
for any reason other than those described in Section 4.2, 4.3 or 4.4 below,
Employee shall be entitled to continue to receive his base salary for the lesser
of (i) two years or (ii) the remaining Term, in periodic payments in accordance
with the Company's established payroll practice in effect from time to time and
Employee shall be entitled to the benefits provided for herein for such period
and any other vested or earned benefits pursuant to Employee benefit plans to
the extent permitted by applicable Law and the provisions of the applicable
benefit plan; provided, however, that if Employee shall die during this payment
period, any unpaid compensation shall terminate upon death. In the event that
the Company shall exercise the rights provided in this Section 4.1, the Employee
shall continue to be subject to the Obligations set forth in Sections 5 and 6 of
this Agreement so long as Employee continues to receive the salary and benefits
from the Company as set forth in this Section 4.1. Further, except for Cause,
the Company shall not have the right to terminate Employee's employment pursuant
to this Section 4.1 during the Earn-Out Period. The Company, at its sole option,
may require Employee to execute a release by Employee to the Company
simultaneously with the payment of any monies due Employee which release shall
not cover a breach of the obligations of this Agreement. In the event that the
Employee's continued participation in the Company's Group Life and/or medical
insurance is prohibited by law or the applicable plan, the Company shall
reimburse Employee for the equivalent premium for such benefit, but only to the
extent the Company would have paid the premium for the Employee under the
applicable plan if the Employee had continued to be employed by the Company.
4.2 In the event of Employee's death during the Term, this
Agreement shall terminate and Employee's estate shall be entitled to receive a
lump sum payment equal to the aggregate of: (i) the salary to the end of the
month in which the employee dies; (ii) any unpaid business expenses described in
Section 3.3 above incurred prior to Employee's death and (iii) any other vested
or earned benefits pursuant to employee benefit plans. The Company shall have no
further obligations or liabilities hereunder after the date of death, whether to
Employee's estate, legal representatives or otherwise, except with respect to
amounts which may have been due and owing to Employee with respect to periods
prior to the date of death.
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4.3 If, during the Term, Employee shall become physically or
mentally disabled, whether totally or partially, so that he is unable to perform
his usual duties for a period of six (6) consecutive months, or for shorter
periods aggregating six (6) months during any twenty-four (24) month period, the
Company may, upon sixty (60) days' written notice to Employee and upon the
expiration of such notice (but before Employee has recovered from such
disability), terminate Employee's employment. Unless and until the Company
terminates Employee's employment, the Company shall continue to pay to Employee
his full salary less any benefits paid to Employee under the terms of any
disability insurance plan of the Company which includes the Employee. Upon
termination pursuant to this Section 4.3, Employee shall have no right to
compensation or other benefits for any period after such date of termination,
except for any benefit which may be payable to Employee under the terms of any
disability insurance plan of the Company, if any, and any other vested or earned
benefits pursuant to employee benefit plans.
4.4 The Company may terminate Employee's employment for Cause
(as hereinafter defined), at any time by written notice to Employee. Such notice
shall set forth, in appropriate detail, the Cause for such termination. For
purposes of this Agreement, termination for "Cause" shall mean termination in
connection with any act or omission by Employee which constitutes (i) willful
neglect by Employee to perform his duties hereunder; (ii) any intentional act or
omission by Employee outside the good faith performance of his duties hereunder
which has subjected or is likely to subject the Company or TransCoastal or
affiliates to material loss; (iii) breach by Employee of the terms of this
Agreement; (iv) willful misconduct or willful violation of any material law,
governmental rule or regulation applicable to the operation of the business of
the Company unless such misconduct or violation results from a directive by the
Board of Directors of the Company or its Parent; (v) breach of fiduciary duty
involving personal profit or usurpation of an opportunity available to the
Company, its Parent or affiliates by Employee (other than in compliance with
Section 1.2(b) hereof) to the material detriment of the Company, its Parent or
affiliates; or (vi) the conviction of Employee for a felony. "Cause" shall not
include failure of Employee to relocate in the event of a move of the location
of the performance of Employee's services. Following receipt of such
notification by Employee, the Employee shall have the opportunity for a period
of thirty (30) days to remedy any such violation, unless such violation is of a
nature and type that cannot be remedied or the Company has given the Employee
prior notice of repeat violations. Following such notice, if applicable, the
Cause for termination shall be deemed "remedied" if, in the reasonable judgment
of the Board of Directors of the Parent Company, Employee's actions in remedying
such Cause have resulted in no material adverse effect being incurred by the
Company, its Parent or affiliates in connection with such Cause for termination.
Upon termination for Cause, Employee shall be entitled to a lump sum payment,
payable immediately upon such termination equal to the sum of the following: (i)
any salary accrued prior to the termination date; (ii) accrued vacation pay;
(iii) reimbursement of Employee expenses incurred or accrued prior to
termination, and (iv) any other vested or earned benefits pursuant to employee
benefits plans. The Company at the direction of the Parent may, at its option,
elect to continue such salary and other benefits for a maximum additional period
of two (2) years from the date of termination, which election shall be made by
the Company and notice thereof delivered to Employee at the time of termination.
If the Company elects to continue such payments, Employee shall continue to be
subject to the provisions of Sections 5 and 6 hereof for such period; otherwise
Employee shall be released therefrom, except for the provisions of Section 5.
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4.5 Notwithstanding any provision of this Section 4 or other
provision of this Agreement to the contrary, Employee may resign at any time
upon 14 days written notice to Employer. In the event of such resignation,
Employee shall be entitled to a lump sum payment payable immediately upon such
termination equal to the sum of the following: (i) salary accrued prior to
termination date, (ii) accrued vacation pay, (iii) reimbursement of reasonable
business expenses incurred or accrued prior to the date of termination, and (iv)
any other vested or earned benefits pursuant to employee benefits plans.
5. PROTECTION OF CONFIDENTIAL INFORMATION.
In view of the fact that Employee's work as an Employee of the
Company will bring him into close contact with many confidential affairs of the
Company, TransCoastal and its affiliates, including information about costs,
profits, markets, sales, technical information and data, and plans for future
developments:
(a) Employee acknowledges that the Company has invested and
will continue to invest considerable resources in the development of
its business and agrees (i) that all trade secrets and proprietary
information of the Company, TransCoastal and its affiliates (including,
without limitation, lists of customers and terms of agreements or
contracts are and shall continue to be the sole and exclusive property
of the Company, TransCoastal and its affiliates, and that Employee
neither has nor shall have the right, title or interest therein; (ii)
that such trade secrets and proprietary information are not readily
accessible to competitors of the Company, TransCoastal or its
affiliates; (iii) that such trade secrets and proprietary information
must continue to be confidential; and (iv) to not disclose any trade
secrets and proprietary information of the Company, TransCoastal or its
affiliates to anyone outside of management of the Company, at any time
during or after his employment with the Company, except with the prior
written consent of the Parent Company.
(b) Employee further agrees to deliver promptly to the Company
on termination of his employment with the Company, or at any time the
Company or TransCoastal may so reasonably request, all memoranda,
notes, records, reports and other documents (and all copies thereof)
relating to the business of the Company, TransCoastal and its
affiliates which he may then possess or have under his control.
(c) The obligations of Employee under this Section 5 shall
survive the termination of this Agreement and Employee's employment
hereunder for three years.
(d) Notwithstanding any provision of this Section 5 to the
contrary, confidential information, however, shall not include
information (a) which is, at the time in question in the public domain
through no wrongful act of Employee, (b) which is disclosed to Employee
by a third party not under any obligations of confidentiality to the
Company, TransCoastal or its affiliates, (c) which is required by
appropriate court or governmental order, law, or regulation to be
disclosed or (d) which the Company or TransCoastal has expressly given
Employee the right to disclose pursuant to his employment.
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6. NONCOMPETITION.
6.1 The parties hereto agree that the Company, TransCoastal
and its affiliates are and will be engaging in the Company Business in, and in
the waters offshore, of the following parishes of Louisiana attached as Exhibit
6.1 and in the counties of the State of Texas along the Gulf of Mexico and in
Xxxxxx County and the counties contiguous thereto as well as other locations
throughout the world, such other locations being determined immediately prior to
termination (the "Subject Areas").
6.2 Employee agrees that, except as otherwise provided herein,
for the period subsequent to the termination hereof that the Company shall
continue to pay Employee his salary and other benefits provided hereunder, but
not to exceed two years following the termination of this Agreement, he will
not, directly, or indirectly, for himself or others, own, manage, operate,
control, be employed by, consult on behalf of or otherwise engage or participate
in the ownership, management, operation or control of, any company or other
business enterprise engaged in the Company Business within any of the Subject
Areas; provided, however, that nothing contained herein shall prohibit Employee
from (i) having passive investments in any publicly held business enterprise or
(ii) having passive investments in any privately held business enterprise so
long as he does not own more than 5% of the equity interests of any privately
held business enterprise that engages in the Company Business in any of the
Subject Areas.
6.3 Employee acknowledges and agrees that imminent harm and
irreparable injury will result to Company or to TransCoastal and their property
in the event of a breach of the noncompetition covenant contained in Section 6.2
by Employee, and that Company shall be entitled, in addition to any other
remedies and damages available to Company, to an injunction to restrain such
breach or threatened breach by Employee.
6.4 The Company and the Employee recognize and acknowledge
that the Company has acquired the business of Xxxxxxx GMP from Employee and
other Shareholders and that this Section 6 is partial consideration for the sale
of such business. Employee recognizes that the noncompetition agreement is
necessary to protect the legitimate business interests of Company, TransCoastal
and its affiliates, including their goodwill and confidential information.
7. NOTICES.
All notices, requests, consents and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally or sent by prepaid
telegram or mailed first-class, postage prepaid, by registered or certified
mail, as follows (or to such other address as any party shall designate by
notice in writing to the other in accordance herewith):
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If to the Company, then to:
TransCoastal Acquisition, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx "Bo" Xxxxx
If to Employee, then to:
Xxxx X. Xxxxxxxxx, Xx.
0 Xxxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
8. GENERAL.
8.1 This Agreement shall be governed by and construed and
enforced in accordance with the Laws of the State of Texas, regardless of any
conflicts of law rule, principle, or law to the contrary. Any legal action or
proceeding against the Company or Employee with respect to this Agreement may be
brought in the United States District Court, Southern District of Texas in
Houston, Texas or in courts of Xxxxxx County, Texas, and, by execution of this
Agreement, the Company and Employee hereby accept, unconditionally and
irrevocably, the exclusive jurisdiction and venue of such courts and hereby
agree to be bound by any final and nonappealable judgment rendered in any such
action or proceeding.
8.2 The section headings contained herein are for reference
purposes only and shall not in any way affect the meanings or interpretation of
this Agreement.
8.3 This Agreement sets forth the entire agreement and
undertaking of the parties relating to the subject matter hereof, and supersedes
all prior agreements, arrangements and understandings, written or oral, relating
to the subject matter hereof.
8.4 No representation, promise or inducement has been made by
any party that is not embodied in this Agreement, and no party shall be bound by
or liable for any alleged representation, promise or inducement not so set
forth.
8.5 This Agreement, and Employee's rights and obligations
hereunder, may not be assigned by Employee. Subject to the other provisions of
this Agreement, the Company may assign its rights, together with obligations
hereunder, to any of its respective affiliates or subsidiaries, or in connection
with any sale, merger, transfer or other disposition of all or substantially all
of its business or assets; however, any such transaction shall require that this
Agreement be expressly assumed and shall not expand the scope of Employee's
obligations hereunder or otherwise amend the provisions of this Agreement
without Employee's express written consent.
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8.6 If any of the provisions of this Agreement are hereafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of the provisions of this Agreement, which shall be given full effect
without regard to the invalid portions.
8.7 This Agreement may be amended, modified, superseded,
canceled, renewed or extended, and the terms or covenants hereof may be waived
only by a written instrument executed by all of the parties hereto. The failure
of any party at any time or times to require performance of any provision hereof
shall in no manner affect the right at a later time to enforce the same. No
waiver by any party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or construed as, a further or continuing waiver of any such
breach, or a waiver of the breach of any other term or covenant contained in
this Agreement.
8.8 This Agreement may be executed in any number of
counterparts and shall become binding when one or more counterparts bear the
signature of all of the parties reflected hereon as signatories.
9. CHANGE OF CONTROL
Notwithstanding any provisions of this Agreement to the
contrary, in the event of a sale of all or substantially all of the assets of
the Company or TransCoastal, a merger, consolidation, liquidation, or
reorganization of the Company or TransCoastal, in which the Company or
TransCoastal is not the surviving entity, or any other event which results in a
change in control of the Company or TransCoastal, the Company or the surviving
entity as the case may be, shall either expressly adopt the provisions of this
Agreement, including maintaining Employee in the position provided for herein or
shall pay to Employee at such time an amount equal to twenty-four (24) months
compensation of Employee's then current annual salary and shall continue to
provide the other benefits provided for herein for the period set forth above.
Such Employee shall continue to be bound by Sections 5 and 6 herein; otherwise,
the Employee shall be released from this Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Employment
Agreement on the dates set forth below each signature.
EMPLOYEE
Name: Xxxx X. Xxxxxxxxx, Xx.
TRANSCOASTAL ACQUISITION, INC.
By:
Name: B. E. Xxxxxxxxxx
Title: President
GUARANTY
Notwithstanding any provision hereof to the contrary, TransCoastal
agrees that it is bound by the terms and conditions hereof to the same extent as
the Company and does hereby by its execution hereof for the purpose of this
guaranty only does unconditionally guarantee each and every obligation
undertaken herein by the Company.
TRANSCOASTAL MARINE SERVICES, INC.
By:
Name: Xxxx Xxxxx, III
Title: President
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EXHIBIT 1.2(d)
XXXX X. XXXXXXXXX, XX.
APPROVED OUTSIDE BUSINESS AND INVESTMENTS ACTIVITIES PURSUANT TO SECTION 1.2(d):
NONE
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EXHIBIT 1
POSITION DESCRIPTION
XXXX X. XXXXXXXXX, XX.
POSITION:
Chief Executive Officer
RESPONSIBILITIES:
Chief Executive Officer responsible for the overall direction and operations of
the Company and affiliates
AUTHORITY:
Approved Capital Budget - $1,000,000
Approved Facilities Expense - $1,000,000
REPORTS TO:
President and Chief Operating Officer, Transcoastal Marine Services, Inc.
FACILITIES AND SUPPORT COMPANY WILL PROVIDE:
An office in the New Orleans, Louisiana metropolitan area
Provide reasonable and necessary office furnishing, up-to-date office equipment,
including any special office equipment, as well as dedicated secretarial,
clerical and other support personnel commensurate with position.
BENEFITS:
In addition, to all standard Company benefits, incentives, and items embodied in
the Employment Agreement, the following items are provided:
o Car allowance of $750 per month
o All business related mobile telephone expenses (including local and
long distance charges)
o Membership costs and expenses in business organizations and clubs
(limit one club)
o Business Class Air Fare for flights less than 2 hours in duration and
First-class or Business Class Air travel in flights in excess of 2
hours in duration
o Reasonable and documented business expenses
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o All home and office expenses, including special fax telephone lines
and equipment as needed and required
o E-mail and on-line connection fees and subscriber service
o Annual physical examination
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EXHIBIT 6.1
