EXHIBIT 10.3
FORM OF EMPLOYMENT AGREEMENT
THIS IS AN EMPLOYMENT AGREEMENT (the "Agreement") between XXXXXX
EXPLORATION COMPANY, a Delaware corporation, ("Company"), and ____________
______________ ("Employee"). The parties agree as follows:
1. Effective Date and Term. This Agreement will take effect as of
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__________, 199__. The initial term of this Agreement will be three (3) years
following its effective date. On each anniversary of the effective date, the
term of this Agreement will automatically be extended one year, to restore the
unexpired term to three years, unless either party gives notice to the other
party before such anniversary date, stating that the Agreement will not be so ex
tended, in which case the term of this Agreement will not be extended and will
expire on the third anniversary date following the notice. If the Employment
terminates at any time before expiration of this Agreement, then notwithstanding
such expiration the parties will remain obligated to comply with their
respective obligations under Paragraph 6. The Employee's obligations and the
Company's rights under Paragraphs 8, 9 and 10 shall survive expiration of this
Agreement, and shall continue in full force and effect.
2. Employment. The Employee will serve as _____________________________
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of the Company, or in other positions assigned by the Company (the
"Employment"). The Employee's duties will be those assigned by the Company's
Chief Executive Officer. The Employment will be full time, and the Employee's
entire business time and efforts will be devoted to the performance of
Employee's duties for the Company during the term of the Employment, provided
that nothing in this Paragraph shall prevent the Employee from engaging in
additional activities in connection with personal investments and community
affairs that are not inconsistent with the Employee's duties under this
Agreement. Employee will comply with the Company's employment policies.
3. Termination of Employment. During the term of this Agreement, the
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Employment may be terminated as provided in Paragraph 5. After expiration of
this Agreement, either party may terminate the Employment at will.
4. Compensation. The Employee will be compensated during the Employment
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as follows:
a. Salary. The Employee will be paid an initial annual salary of at
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least $_____________, subject to adjustment as provided below, which will
be payable in equal periodic installments according to the Company's
customary payroll practices, but no less frequently than monthly. The
Employee's salary will be reviewed by the Company's Compensation Committee
not less frequently than annually, and may be adjusted upward or downward
in the sole discretion of the Board of Directors, but in no event will the
salary be less than $______________ per year.
b. Bonus. The Employee will be eligible to participate in any bonus
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program covering the position in which the Employee serves, on the terms
set forth in such bonus program. The terms of any present or future bonus
programs are subject to revision from time to time in the Company's
discretion.
c. Benefits. The Employee will, during the term of Employment, be
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permitted to participate in such pension, 401(k), profit sharing, life
insurance, health insurance, and other employee benefit plans of the
Company that may be in effect from time to time, to the extent the Employee
is eligible under the terms of those plans (collectively, the "Benefits").
d. Business Expenses. The Company will reimburse the Employee for
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reasonable ordinary and necessary business expenses incurred in the
performance of duties on behalf of the Company, subject to Employee's
prompt submission of proper documentation for tax and accounting purposes
and, if applicable, subject to the approval of the respective Supervisor.
e. Plan Terms and Changes. The terms of applicable insurance
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policies and benefit plans in effect from time to time will govern with
regard to specific issues of coverage and benefit eligibility. It is
understood that all benefit programs are subject to change or cancellation
in the discretion of the Company.
5. Termination of Employment. During the term of this Agreement,
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Employee's Employment may be terminated in the following circumstances:
a. Death. The Employment will terminate automatically in the event
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of Employee's death.
b. Disability. If Employee becomes "disabled", the Company may elect
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to terminate Employee's Employment due to such disability. For the
purposes of this Agreement, the Employee will be deemed to be "disabled"
if, for physical or mental reasons, the Employee is unable to perform the
essential functions of the Employee's duties under this Agreement for 120
consecutive days, or 180 days during any twelve-month period, as determined
in accordance with this Paragraph. The disability of the Employee will be
determined by a medical doctor selected by written agreement of the Company
and the Employee upon the request of either party by notice to the other.
If the Company and the Employee cannot agree on the selection of a medical
doctor, each of them will select a medical doctor and the two medical
doctors will select a third medical doctor who will determine
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whether the Employee is disabled. The determination of the medical doctor
selected under this Paragraph will be binding on both parties.
c. Termination by Company for Cause. The Company may terminate the
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Employment immediately for Cause, defined as Employee's material breach of
this Agreement, including but not limited to, neglect, continued failure of
inability to perform, or poor performance of duties, consistent failure to
attain assigned objectives, misappropriation of Company property,
intentional damage to Company property, activities in aid of a competitor,
insubordination, dishonesty, conviction of a crime involving moral
turpitude, or performance of any act (including any dishonest or fraudulent
act) detrimental to the interests of the Company.
d. Termination by Employee for Good Reason. Employee may terminate
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the Employment for Good Reason if:
(i) the Company materially breaches its obligations to
Employee under this Agreement; and
(ii) Employee notifies the Board of Directors in writing,
within 60 days after the act or omission in question, asserting that
the act or omission in question constitutes Good Reason and explaining
why such act or omission constitutes a material breach; and
(iii) the Company fails, within 45 days after such notification,
to take reasonable steps to cure the breach; and
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(iv) Employee resigns by written notice within 30 days after
expiration of the 45 day period under (iii) above.
If Employee terminates the Employment for Good Reason, Employee will be
paid Severance Pay as provided in Paragraph 6. Employee's failure to
object to a material breach as provided above will not waive Employee's
right to resign with Good Reason after following the above procedure with
regard to any future material breach.
e. Discretionary Termination by Employee. Employee may terminate the
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Employment at will, with at least 60 days advance written notice, and
Employee agrees not to prepare to leave the Employment with Company without
giving such notice.
f. Discretionary Termination by Company. Company may terminate the
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Employee's Employment at will, but if it does so it will pay Employee
Severance Pay as provided in Paragraph 6.
A temporary layoff (with or without pay) shall not be considered a
termination of employment.
Employee agrees to cooperate during the 90-day period following any
termination of the Employment by consulting upon request to assist in
transition of Employee's duties and knowledge about the Company's business, such
consulting to be performed at Employee's reasonable convenience by telephone,
and Company to pay a consulting fee computed as Employee's weekly salary divided
by 40 for each hour of consultation (unless Employee is receiving Severance Pay
under Paragraph 6).
6. Payments After Termination of Employment.
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a. Upon termination of Employee's Employment, Employee shall not be
entitled to any further compensation from Company or any Affiliate, except:
(i) unpaid salary installments through the end of the week in which the
Employment terminates; and (ii) any vested benefits accrued prior to the
date the Employment terminates under the terms of any written Company
benefit plan that expressly calls for payments or rights after termination
of employment; (iii) COBRA continuation coverage at Employee's expense, if
Employee is eligible under applicable law; and (iv) Severance Pay (if any)
becoming due under Paragraph 6.
b. The Company will pay Employee the Severance Pay described in this
Paragraph if the Company terminates the Employee's Employment during the
term of this Agreement other than Paragraph 5(c) ("Cause"), except that no
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Severance Pay will be owing from the Company if this Agreement is assigned
to and assumed by a Successor Company, as provided in Paragraph 14. A
purported termination of the Employment under Paragraph 5(c) ("Termination
by Company for Cause") that is ultimately found to have been improper shall
be deemed to have been a termination under Paragraph 5(f) ("Discretionary
Termination by Company"). The Company will also pay Employee the Severance
Pay described in this Paragraph if the Employee terminates his Employment
during the term of this Agreement for Good Reason, as provided in Paragraph
5(d) ("Termination by Employee for Good Reason").
c. Amount and Duration of Severance Pay. Subject to the other
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provisions of this Paragraph 6, the Severance Pay will consist of:
(i) continuation of Employee's weekly salary for __ weeks (the
"Severance Pay Period"); and
(ii) continuation during the Severance Pay Period, at Company's
expense, of Employee's employee and dependent health, dental and
prescription drug coverage for the remaining term of this Agreement
(without affecting Employee's right to elect COBRA continuation
coverage beginning on the expiration date of this Agreement), subject
to Employee's continuing payment of the normal employee contribution;
and
(iii) if Employee dies during Severance Pay period, Severance
Pay will continue for the benefit of the Employee's designated
beneficiary.
d. Conditions to Severance Pay. In order to be eligible for the
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Severance Pay, Employee must meet the following conditions:
(i) Employee must comply with Employee's obligations under
Paragraphs 8, 9 and 10 of this Agreement;
(ii) Employee must not claim unemployment compensation for any
week for which Employee receives Severance Pay;
(iii) Employee must promptly sign and continue to honor a
general release form acceptable to the Company of any and all claims
against Company and its affiliates (defined for purposes of this
Agreement as entities having an ownership interest in the Company, and
subsidiaries and other entities in which the Company
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has an ownership interest), and all of their officers, directors,
employees and agents. The release will not waive the Employee's right
to any payments due under this Paragraph 6;
(iv) Employee must resign, upon written request by Company,
from all positions with or representing Company or any Affiliate,
including but not limited to membership on boards of directors; and
(v) Employee must provide the Company during the Severance Pay
Period (without additional compensation) with consulting services
regarding matters within the scope of Employee's former duties, upon
request by the Board of Directors, provided that Employee will only be
required to provide such services by telephone at Employee's
reasonable convenience, and not for more than forty (40) hours in any
month.
e. Offsets to Severance Pay. The Severance Pay due to Employee for
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any week will be reduced by:
(i) any earnings from other employment or self-employment
received or accrued for Employee's benefit during such week, with any
excess of such other earnings over the Severance Pay for any week to
be carried forward and applied to reduce Severance Pay for subsequent
weeks;
(ii) any disability benefits received by Employee; and
(iii) if Severance Pay continues after the date of Employee's
death, the death benefit under any life insurance policy provided to
Employee by Company as a fringe benefit.
7. Conflicts of Interest. During the Employment, the Employee will not
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acquire any financial interest in, accept gifts or favors from, or establish any
relationship other than on behalf of the Company with, any customer, supplier,
distributor, or other person who does or seeks to do business with the Company,
unless Employee has disclosed the financial interest, gift, favor, or
relationship to the Company's Chief Executive Officer, in writing, and has
received the written approval of Chief Executive Officer for such activity or
transaction. If any member of Employee's family engages or proposes to engage
in any relationship or activity which would be covered by the preceding
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sentence if engaged in by Employee, Employee will immediately report such
proposed or actual relationship or activity to the Chief Executive Officer in
writing.
8. Loyalty and Confidentiality; Company Property. The Employee will be
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loyal to the Company during the Employment and will forever hold in strictest
confidence and will not use or disclose any information regarding the Company's
techniques, processes, developmental or experimental work, prospects, trade
secrets, customer or prospect names or information, or proprietary or
confidential information relating to the current or planned areas of activity,
prospects, areas of interest, services, sales, employees or business of the
Company, except as such disclosure or use may be required in connection with the
Employee's work for the Company. Upon termination of the Employment, the
Employee will deliver to the Company any and all materials relating to the
Company's business, including without limitation all customer lists and
information, keys, financial information, business notes, business plans,
Company provided autos or other equipment, credit cards, memoranda, prospects,
seismic information, specifications and documents. All Company property will be
returned promptly and in good condition except for normal wear. The Employee
agrees not to retain any copies, reproductions or summaries of any such
materials. This covenant will continue in effect after termination of the
Employment and shall survive expiration of this Agreement. The parties agree
that any breach or threatened breach of the Employee's covenants in this
Paragraph 8 would cause the Company irreparable harm, and that injunctive relief
would be appropriate.
9. Ideas, Concepts and Inventions Relating to Company's Business. All
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business ideas and concepts and all inventions, improvements and developments
made or conceived by the Employee, either solely or in collaboration with
others, during the Employment, whether or not during working hours, and relating
to the Company's business or any aspect thereof, or to any business, product,
prospect, areas of activity or areas of interest the Company is considering
entering or developing, shall become and remain the exclusive property of the
Company, its successors and assigns. The Employee shall disclose promptly in
writing to the Company all such inventions, improvements and developments, and
will cooperate in confirming, protecting and obtaining legal protection of the
Company's ownership rights, and leasehold interest. This provision shall
continue in effect after termination of the Employment and shall survive
expiration of this Agreement as to ideas, concepts, inventions, improvements,
developments, and prospects made or conceived in whole or in part prior to the
date the Employment terminates. The parties agree that any breach of the
Employee's covenants in this Paragraph 9 would cause the Company irreparable
harm, and that injunctive relief would be appropriate.
The Employee understands and agrees that the ideas, concepts,
prospects, production, areas of activity, areas of interest, inventions,
improvements, developments which the Employee invented, conceived or
participated in prior to becoming employed by the Company, and to which the
Employee, or any assignee of the Employee, now claims title, are available for
development, exploration, and can be capitalized upon, utilized by the Company
for its own gain. Any exceptions are completely described on an
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exhibit signed by the parties and attached to this Agreement. If no such exhibit
is attached, then Employee represents and warrants that there are no such
inventions, improvements, developments or prospects to which the Company would
be restricted.
10. Covenant Not to Compete. During the Employment, and for six (6)
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months after termination of the Employment, the Employee will not (i) engage in
the domestic oil and gas exploration or development business or any other
business in which the Company is engaged or planning to engage on the date the
Employment terminates; or (ii) directly or indirectly compete with the Company;
or (iii) perform services for, advise, be financially interested in, or own any
interest in or loan money to, any other business engaged (or seeking the
Employee's services with a view to becoming engaged) in any business in which
the Company is engaged or planning to engage on the date the Employment
terminates; or (iv) solicit or suggest, or provide assistance to anyone else
seeking to solicit or suggest, that any person having or contemplating a Covered
Relationship with Company or an affiliate refrain from entering into or
terminate such relationship, or enter into any similar relationship with anyone
else instead of Company or such affiliate (as used in this Paragraph 10, a
"Covered Relationship includes a customer relationship, a vendor relationship,
or any other contractual or independent contractor relationship). The
Employee's commitments in this paragraph will continue in effect after
termination of the Employment for the six (6) month period provided above, but
will only be in effect during that period in the counties or parishes where the
Company has a leasehold interest or active or pending seismic programs. The
parties agree that any breach or threatened breach of the Employee's commitments
in this Paragraph 10 would cause the Company irreparable harm, and that
injunctive relief would be appropriate.
It is agreed that the decision of the Company's Board of Directors as
to whether a post-employment activity by Employee violates this Paragraph 10
will be conclusive, if reasonable.
11. Entire Agreement. No agreements or representations, oral or
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otherwise, express or implied, with respect to the Employee's Employment with
the Company or any of the subjects covered by this Agreement have been made by
either party which are not set forth expressly in this Agreement, and this
Agreement supersedes any pre-existing employment agreements and any other
agreements on the subjects covered by this Agreement.
12. Amendment and Waiver. No provisions of this Agreement may be
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amended, modified, waived or discharged, and no additional obligations
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may be imposed on the Employee, unless such waiver, modification, discharge or
obligation is agreed to in a written agreement signed by the Chief Executive
Officer, and the Employee. No waiver by either party at any time of any breach
or non-performance of this Agreement by the other party shall be deemed a waiver
of any prior or subsequent breach or non-performance.
13. Severability. The invalidity or unenforceability of any provision of
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this Agree ment will not affect the validity or enforceability of any other
provision of this Agreement, which will remain in full force and effect. If a
court of competent jurisdiction ever determines that any provision of this
Agreement (including but not limited to all or any part of the non-competition
covenant in Paragraph 10) is unenforceable as written, it is the intent of the
parties that such provision shall be deemed narrowed or revised in such
jurisdiction (as to geographic scope, duration, or any other matter) to the
extent necessary to allow its enforcement. Such revision shall thereafter
govern in such jurisdiction, subject only to any allowable appeals of such court
decision.
14. Assignability. This Agreement contemplates personal services by the
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Employee, and Employee may not transfer or assign Employee's rights or
obligations under this Agreement, except that Employee may designate
beneficiaries for Severance Pay in the event of Employee's death during the
Severance Pay Period, and may designate beneficiaries for benefits as allowed by
the Company's benefit programs. This Agreement may be assigned by the Company
to any subsidiary or parent corporation or a division of such corporation, or to
any entity which succeeds to all or substantially all of the Company's
businesses ("Successor Company"). The Company is not required to assign this
Agreement, but if it is assigned as provided above, the Employee will be given
notice and this Agreement and the Employee's Employment hereunder will continue
in effect. If the Company does not assign or the Successor Company does not
assume this Agreement, the Employee may resign for Good Reason under Paragraph
5(d).
15. Notices. Notices to a party under this Agreement must be personally
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delivered First Class mail, Facsimile, or sent by certified mail (return receipt
requested) and will be deemed given upon post office delivery or attempted
delivery to the recipient's last known address. Notices to the Company must be
sent to the attention of the Company's Chief Executive Officer.
16. Arbitration. The Company and the Employee agree that the sole and
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exclusive method for resolving any dispute between them regarding this Agreement
or its interpretation application or any other dispute or claim relating to the
employment relationship between them or its termination shall be arbitration
under the procedures set forth in this Paragraph; provided, however, that
nothing in this Paragraph prohibits a party from seeking preliminary or
permanent injunctive relief from a court of competent jurisdiction, or from
seeking judicial enforcement of the arbitration award. The arbitrator(s) for
determining any dispute covered by this Paragraph
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shall be selected by mutual agreement of the Company and the Employee. If either
party demands arbitration of a dispute covered by this Paragraph, an arbitrator
shall be selected, and the arbitrator shall hold a hearing at which both parties
may appear, with or without counsel, and present evidence and argument. Pre-
hearing discovery shall be allowed in the discretion of and to the extent deemed
appropriate by the arbitrator, and the arbitrator shall have subpoena power. The
procedural rules for an arbitration hearing under this Paragraph shall be the
rules of the American Arbitration Association for Commercial Arbitration
Hearings and such rules as the arbitrator may determine. The hearing shall be
held in Traverse City, Michigan. The award of the arbitrator(s) shall be final
and binding and may be enforced by and certified as a judgment of any court of
competent jurisdiction. The fees and expenses of the arbitrator shall be paid by
equally by the Company and the Employee. The attorney fees and expenses incurred
by the parties shall be paid by the losing party.
17. Governing Law. The validity, interpretation, and construction of this
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Agreement are to be governed by the laws of the State of Michigan, without
regard to principles of conflicts of law.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
and year first above written.
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"Employee"
XXXXXX EXPLORATION COMPANY
By
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Its
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