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EXHIBIT 10.9
EMPLOYMENT AGREEMENT
This Agreement, made this 1st day of October, 1998, by and between
Xxxxxx Oil & Gas Corporation, a Delaware corporation (the "Company"), and Xxxx
Xxxxxx ("Executive").
WITNESSETH:
WHEREAS, the Company desires to employ Executive as Senior Vice
President and Chief Financial Officer on the terms set forth below, and
Executive is willing to accept such employment on such terms.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the parties hereto do hereby agree:
1. DEFINITIONS
As used in this Agreement, defined words and phrases have the meaning
first ascribed to them herein whenever the first letter of each word is
capitalized. Words used in the masculine apply equally to the feminine,
and wherever the context dictates, the plural should be read as the
singular and the singular as the plural. References to Sections are to
Sections of this Agreement. The headings at the beginning of each
section are inserted for convenience only and are not intended to
describe, interpret, define, or limit the scope, extent, or intent of
this Agreement.
a. "Board" means the Company's board of directors.
b. "Cause" shall be deemed to exist if, and only if:
i. Executive is convicted in a court of law of any crime (i)
that constitutes a felony relating to the Company or any
other business endeavor or (ii) that constitutes a felony
which involves moral turpitude; or
ii. Executive engages in willful misconduct or any material
breach of or willful material failure to perform his duties
and responsibilities hereunder, which misconduct, breach, or
failure shall continue after the Company, by action of the
Board, shall have advised Executive thereof in writing and
shall have afforded Executive a reasonable opportunity
(which shall be at least 30 days from the date of such
written advice or knowledge thereof) to correct the acts or
omissions complained of, and which Executive shall have so
failed to take action to correct within such period.
c. "Disability" means Executive's inability to fully and competently
perform the duties hereunder for a period of at least three
consecutive months by reason of mental or physical illness or
other incapacity. The Company and Executive or his
attorney-in-fact shall, based on competent medical advice,
determine whether Executive is and continues to be disabled. If
the Company and Executive or his attorney-in-fact disagree with
the
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determination of disability, then each of them shall appoint a
doctor and the two doctors shall select a third independent doctor
whose decision as to whether Executive has been unable to perform
the duties of the nature contemplated hereunder for a
three-consecutive-month period shall be binding on the parties.
The doctor advising the Company with regard to the Company's
initial determination of whether Executive has been disabled
within the foregoing meaning and the independent doctor selected
by the two doctors designated by the Company and Executive or his
attorney-in-fact shall be given full access to Executive's medical
records and shall be afforded a reasonable opportunity to examine
Executive. The Company agrees to instruct such doctors to maintain
all information reflected in Executive's records in full
confidence and not to disclose such information to any person
(including the Company) except as may be necessary for the
determination described above. All references to doctor in this
paragraph 1.d shall mean a practicing doctor of medicine.
d. "Executive Officer" means Senior Vice President and Chief
Financial Officer.
e. "Notice of Termination" means a notice that sets forth the date of
termination and, in the event of termination for Cause, the facts
and circumstances claimed to provide a basis for termination of
Executive's employment.
f. "Change of Control" means if (i) the Company is merged or
consolidated with another corporation and as a result of such
merger or consolidation less than 50% of the outstanding voting
securities of the surviving or resulting corporation are owned in
the aggregate by the former shareholders of the Company; (ii) the
Company sells all or substantially all of its assets to another
corporation, which is not a wholly-owned subsidiary of the
Company; (iii) any person or group within the meaning of the
Securities Exchange Act of 1934, as amended, acquires (together
with voting securities of the Company held by such person or
group) 30% or more of the outstanding voting securities of the
Company (whether directly, indirectly, beneficially or of record)
pursuant to any transaction or combination of transactions; (iv)
there is a change of control of the Company of a nature that would
be required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended, whether or not the Company is then
subject to such reporting requirements; or (v) the individuals
who, at the beginning of any period of twelve consecutive months,
constituted the Board of Directors cease, for any reason, to
constitute at least a majority thereof, unless the nomination for
election or election by the Company's shareholders of each new
director of the Company was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or
nomination for election was previously so approved.
Notwithstanding the foregoing, however, a Change of Control shall
not be deemed to have occurred upon issuance of capital stock by
the Company approved by a vote of at least two-thirds of the
directors then in office.
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2. TERM
This Agreement commences effective as of October 1, 1998 (the
"Commencement Date"), shall continue for 12 months from the
Commencement Date, unless sooner terminated, and each year thereafter,
unless either of the parties upon thirty (30) days written notice that
the Agreement shall not be extended for the ensuing year, which notice
shall not be deemed to be a Notice of Termination under the provisions
of this Agreement.
3. DUTIES
During the term of his employment as provided in Section 2 above, the
Company will employ Executive in a senior executive capacity, with such
responsibilities as the Company may from time to time determine during
the term of this Agreement, including the duties of the Controller.
Executive will comply with all applicable laws, with all corporate
documents governing the conduct of the Company's business and affairs,
and with the Company's policies.
Executive agrees to devote substantially all of his business time to
the performance of his duties hereunder.
4. COMPENSATION
a. The Company shall pay Executive for all services to be performed
hereunder during the term of this Agreement. The Company agrees to
pay to Executive an annual salary of $175,000.00, payable in
semimonthly installments in arrears on the fifteenth and last day
of each calendar month, the first such installment to be payable
for the period ended October 15, 1998.
b. The Executive shall participate in the Company's 1997 Annual and
Long-Term Incentive-Performance Plan (the "Plan"), in accordance
with the terms and provisions of the Plan, (i) as to annual
performance awards, commencing in 1998 to the extent in 1998 his
participation award exceeds $50,000, and annually thereafter as
provided in the Plan, and (ii) as to stock options, commencing in
2000 and annually thereafter, so long as the Plan remains in
effect, and Executive is employed by the Company.
c. The Company shall provide Executive with an interest free loan of
$50,000.00, which Executive must repay to the Company on or before
the third anniversary of the Commence Date. In addition, in the
event Executive voluntarily terminates his employment with the
Company or his employment is terminated by the Company for Cause,
the loan must be repaid on demand by the Company.
d. The Company shall, effective the Commencement Date, grant
Executive a total of 381,000 options to purchase shares of the
Company's common stock for a purchase price of $1.00 per share
(the "Options"), which shall vest in cumulative annual
installments as follows: (i) 33 1/3% of such Options on the first
anniversary of the Commencement Date,
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or upon termination of employment by the Company if employment is
terminated by the Company before the first anniversary and not
terminated for Cause or a Change of Control, (ii) 66 2/3% of such
Options on the second anniversary of the Commencement Date, and
(iii) 100% of such Options on the third anniversary of the
Commencement Date.
e. The Company agrees to pay Executive in addition to payments and
award set forth in paragraphs a,b,c and d above, an initial bonus
of $50,000.00 payable within ten (10) business days of the
Commencement Date.
f. In addition to the payments and awards set forth in paragraphs
a,b,c,d, and e above:
i. During the term of this Agreement, upon submission of a
reasonable accounting, the Company shall reimburse Executive
for all reasonable travel, entertainment, and other business
expenses that are in compliance with company policy related
to his employment hereunder.
ii. During the term of this Agreement, Executive shall be
eligible for the Company's employee benefit programs on the
terms on which the same are extended to the Company's
executives generally, including but not limited to the
Company's Section 401(k) plan, a health care plan, four
weeks vacation and reimbursement for unreserved parking
expenses.
The Company shall have the right to deduct from all payments to be made
under this Agreement any federal, state, or local taxes required by law
to be withheld from such payments.
5. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Executive agrees that, during his employment by the Company and for 1
year thereafter, he will not use or disclose to others, directly or
indirectly, any confidential information relating to the business,
prospects, or plans of the Company or its subsidiaries. Notwithstanding
the previous sentence, Executive shall not be in violation of this
section in the event of a disclosure pursuant to a court action or
governmental rule, regulation, or proceeding (hereinafter referred to
as an "Ordered Disclosure") provided Executive has notified the Company
of such Ordered Disclosure within five business days of being
personally served with such Ordered Disclosure. Executive agrees to
cooperate in good faith with the Company in responding to such Ordered
Disclosure in order to prevent, limit or impose restrictions on such
Ordered Disclosure. In no event, however, shall this section require
Executive to take action or otherwise cause Executive to be in
violation of any law or result in contempt of such Ordered Disclosure.
Upon termination of his employment with the Company, Executive shall
surrender to the Company any and all work papers, reports, manuals,
documents, and the like (including all
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originals and copies thereof) in his possession which contain
confidential information relating to the business, prospects, or plans
of the Company or its affiliates.
Executive agrees that following any termination of his employment with
the Company, he will endorse strategies of the Company, and will not
disclose or cause to be disclosed any negative, adverse or derogatory
comments or information of a substantial nature about the Company or
its management, or about any product or service provided by the
Company, or about the Company's prospects for the future. The Company
may seek the assistance, cooperation or testimony of Executive
following any such termination in connection with any investigation,
litigation or proceeding arising out of matters within the knowledge of
Executive and related to his position as an officer or employee of the
Company, and in any instance, Executive shall provide such assistance,
cooperation or testimony and the Company shall pay Executive's
reasonable costs and expenses in connection therewith. In addition, if
such assistance, cooperation or testimony requires more than a nominal
commitment of Executive's time, the Company will compensate Executive
for such time at a per diem rate derived from Executive's salary from
the Company at the time of Executive's termination.
6. TERMINATION
a. This Agreement shall automatically terminate upon Executive's
death or Disability. In addition, this Agreement may be
terminated by the Company or Executive at any time for any reason
whatsoever. Any termination of Executive's employment by the
Company or by Executive (other than termination pursuant to the
first sentence of this subsection a.) shall be communicated by
written Notice of Termination to the other party hereto in
accordance with Section 16.
b. Upon termination of this Agreement for any reason, Executive
shall be entitled to receive, and the Company shall pay Executive
(or, if such termination is caused by Executive's death, his
estate or as may be directed by the legal representatives of such
estate) within 30 days of the termination date, any unpaid
amounts earned by or payable to Executive through the date of
termination under Sections 4.a., 4.b. (if any) and 4.f.(if any),
which amounts shall be reduced by any amounts owed to the Company
pursuant to the loan provided for in Section 4.c. (and the
principal amount of such loan shall be reduced by a corresponding
amount).
c. In addition to the amounts to which Executive is entitled under
Section 6.b., if this Agreement is terminated by the Company
other than for Cause or other than a Change of Control, the
Company shall pay Executive in a single lump-sum payment an
amount equal to the compensation that would have been payable
under Section 4.a. over the next twelve (12) months had this
Agreement not otherwise been terminated, which amount shall be
reduced by any amount owed to the Company pursuant to the loan
provided for in Section 4.c. (and the principal amount of such
loan shall be reduced by a corresponding amount). Such
compensation shall be the only compensation payable as a result
of such termination and, except as may otherwise be provided in
any other agreement or option
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plans, Executive shall not be entitled to any accrued bonuses,
acceleration of vesting with respect to any options or
acceleration of any other rights he may have under any employee
benefit plan or arrangement, it being understood and agreed that
the Company may terminate this Agreement at any time with or
without Cause by notice to the Executive as provided herein. The
amounts payable under this Section 6.c. shall be paid no later
than 30 days after the date of termination.
d. In addition to the amounts to which Executive is entitled under
Section 6.b., if this Agreement is terminated by the Company
because of a Change of Control, the Company shall pay Executive
in a single lump-sum payment an amount equal to (i) the
compensation that would have been payable under Section 4.a. over
the next eighteen (18) months had this Agreement not otherwise
been terminated, and (ii) the amount of Executive's annual
performance award for the last full-year prior to the Change of
Control, which amount shall be reduced by any amounts owed to the
Company pursuant to the loan provided for in Section 4.c. (and
the principal amount of such loan shall be reduced by a
corresponding amount). Such compensation shall be the only
compensation payable as a result of such termination because of a
Change of Control. Except as may otherwise be provided in any
other agreement or option plans, Executive shall not be entitled
to any accrued bonuses, acceleration of vesting with respect to
any options or acceleration of any other rights he may have under
any employee benefit plan or arrangement. The amounts payable
under this Section 6.d. shall be paid no later than 30 days after
the date of termination.
7. RESTRICTIVE COVENANT
During the term of Executive's employment with the Company, and (except
as provided in clause (c) below) for a period of one year following the
termination of Executive's employment with the Company for any reason,
including termination occasioned by the expiration of this Agreement,
Executive shall not:
a. interfere with the relationship of the Company or any of its
employees, agents or representatives;
b. directly or indirectly divert or attempt to divert from the
Company any property acquisition in which the Company has been
actively engaged during the term hereof; or
c. directly or indirectly render financial or other services of the
nature of those provided to the Company to any person, company or
entity other than the Company, provided, this clause (c) shall
terminate upon the termination of Executive's employment with the
Company.
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8. INDEMNIFICATION
Except to the extent attributable to Executive's willful misconduct or
actions leading to the Company's termination of this Agreement for
Cause, the Company shall indemnify Executive against expenses
(including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with
any action, suit, or proceeding to which Executive has been made a
party by reason of his capacity as Executive Officer of the Company if
Executive acted in good faith and in a manner Executive reasonably
believed to be in or not opposed to the best interest of the Company
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe Executive's conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that Executive
did not act in good faith and in a manner which Executive reasonably
believed to be in or not opposed to the best interest of the Company,
and with respect to any criminal action or proceeding, had reasonable
cause to believe that Executive's conduct was unlawful.
9. ADDITIONAL REMEDIES
In the event of a breach or a threatened breach of the terms of Section
5 or 7 of by Executive, the Company shall, in addition to all other
remedies, be entitled to a temporary or permanent injunction and/or a
decree for specific performance, in accordance with the provisions
hereof, without showing any actual damage or that monetary damages
would not provide an adequate remedy and without any bond or other
security being required.
10. NONASSIGNMENT
This Agreement is personal to Executive and shall not be assigned by
him. Executive shall not hypothecate, delegate, encumber, alienate,
transfer, or otherwise dispose of his rights and duties hereunder. The
Company may assign this Agreement without Executive's consent to any
other entity who, in connection with such assignment, acquires all or
substantially all of the Company's assets, or into or with which the
Company is merged or consolidated.
11. WAIVER
The waiver by the Company of a breach by Executive of any provision of
this Agreement shall not be construed as a waiver of any subsequent
breach by Executive.
12. SEVERABILITY
If any clause, phrase, provision, or portion of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable under any applicable law, such event shall not affect or
render invalid or unenforceable the remainder of this Agreement and
shall not affect the application of any clause, provision, or portion
hereof to other persons or circumstances.
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13. DISPUTES
Each of the parties hereto hereby irrevocably agrees that any legal
action or proceeding arising out of this Agreement shall be brought
only in the state or federal courts located in the state of Texas. Each
party hereto hereby irrevocably consents to the service or process
outside the territorial jurisdiction of such courts in any such action
or proceeding by the mailing of such documents by registered United
States mail, postage prepaid, if to the Company to the address of its
principal place of business and if to Executive to the address listed
in the Company's books and records.
14. RELEVANT LAW
This Agreement shall be construed by, subject to, and governed in
accordance with the internal laws of the State of Texas.
15. NOTICES
All notices, requests, demands, and other communications in connection
with this Agreement shall be made in writing and shall be deemed to
have been given when delivered by hand or 48 hours after mailing at any
general or branch United States post office by registered or certified
mail, postage prepaid, addressed as follows, or to such other address
as shall have been designated in writing by the addressee:
a. If to the Company:
Xxxxxx Oil & Gas Corporation
Suite 1100
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Corporate Secretary
b. If to Executive:
Xxxx Xxxxxx
Xxxxxx Oil & Gas Corporation
Suite 1100
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
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16. Entire Agreement
This Agreement sets forth the entire understanding of the parties and
supersedes all prior agreements, arrangements, and communications,
whether oral or written, and this Agreement shall not be modified or
amended except by written agreement of the Company and Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
COMPANY:
XXXXXX OIL & GAS CORPORATION
By
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Xxxx X. Xxxxxxx
President and Chief Executive
Officer
EXECUTIVE:
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Xxxx Xxxxxx
