1
Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of the 17th day of
September, 1992 (the "Effective Date"), by and between PORTFIELD INVESTMENTS,
INC., a Colorado corporation (the "Company"), and XXXXX X. XXXXXX
("Executive"), residing at 000 Xxxxxxx Xxxx Xxxx Xxxxx, Xxxxx Xxxxxxxx,
Xxxxxxxx 00000.
BACKGROUND FACTS
A. Executive is currently serving as an executive
officer and director of the Company.
B. In order to obtain the continued services of
Executive, the Company and Executive each desire to enter into this Agreement
whereby Executive will be employed by the Company on the terms and conditions
set forth herein.
AGREEMENT
For and in consideration of the mutual benefits to be received
and other good and valuable consideration the receipt and sufficiency of which
is hereby acknowledged, it is agreed as follows:
1. Employment. The Company agrees to employ Executive and
Executive agrees to be employed by the Company for the compensation, duration
and subject to the terms and conditions hereinafter set forth, effective as of
the Effective Date.
2. Term. The term of employment hereunder hall be until such
date Executive's employment hereunder is terminated pursuant to Section 8
hereof.
3. Duties. During the entire term of this Agreement, Executive
shall render full-time services as President of the Company and Wescourt Group,
Inc. ("Wescourt") and in such other capacities as may be required from time to
time by the Board of Directors of the Company (the "Board"), including services
for any other affiliates or subsidiaries of the Company to the extent that it
is feasible for him to provide such services. For purposes of this Section 3,
all references to the Company shall include Wescourt and all other direct and
indirect subsidiaries of the Company. Executive shall have primary
responsibility for the Company's day-to-day operations and shall perform such
additional services as are requested of him by the Board. Executive shall have
specific responsibility for finance (including budgeting, planning, cash flow
management, expense approval, direct accounting functions), and overall
responsibility for operations and development of Company business.
Notwithstanding the generality of the foregoing, Executive understands that the
decisions made by Executive are subject to the discretion vested in the Board
of Directors of the Company under Colorado law. If Executive is elected or
appointed a director of the Company or a director or officer of any subsidiary
2
or affiliate of the Company, Executive will serve in the capacity or capacities
without further compensation. Executive agrees to provide the services
contemplated by this Agreement without regard to whether any of the Company's
operations are conducted directly by the Company through unincorporated
divisions or through subsidiaries or affiliates of the Company. Executive shall
devote his attention and energies on a substantially full-time basis to the
business of the Company and to the discharge of his duties as President.
Subject to the provisions in Section 11(a) hereof, nothing herein shall
preclude Executive from pursuing other passive activities (such as investment
activities), which do not materially interfere with Executive's performance of
his duties hereunder.
4. Salary. As compensation for the services to be rendered by
Executive hereunder, the Company shall pay to Executive during the term hereof
the annual base salary of $75,000, as the same may from time to time be
increased by the Board of the Company (the "Base Salary"). The Base Salary
payable to Executive hereunder shall be paid in accordance with the Company's
normal payroll procedures.
5. Incentive Compensation. As further compensation for the
services of Executive hereunder, the Company may pay to Executive an annual
incentive compensation bonus as determined by the Board in its sole discretion.
6. Additional Benefits. Executive shall be entitled to receive
all other benefits of employment generally available to other executive
officers of the Company, which benefits are now in effect or hereafter
instituted during the term of this Agreement, including (but not limited to)
qualified employee benefit plans (including deferred compensation plans),
employee loan plans, group health, disability or life insurance benefits and
other perquisites. The company shall provide disability coverage in the amount
of $250,000, a key-man life insurance policy with benefits payable to Executive
in the amount of $250,000 and group health insurance coverage for Executive.
7. Reimbursement of Expenses. Executive shall be reimbursed by
the Company for all reasonable expenses incurred by him on behalf of the
Company in performance of his duties pursuant to this Agreement.
8. Termination by Executive or the Company. The Company or the
Executive shall be entitled to terminate Executive's employment hereunder as
follows:
(a) Executive. Executive shall have the right to terminate
his employment pursuant to this Agreement for Good Reason (as defined in
Section 8(e) below) or otherwise by delivering written notice to the Company
indicating a termination date not less than thirty (30) days after the date of
delivery of such writing.
(b) Death or Disability.
(i) Disability. Executive's employment hereunder
shall be terminated by the Company if Executive becomes physically or
mentally incapacitated and is therefore unable for a period of 120
consecutive days or six
2
3
(6) months out of any 12 month period to perform his duties (such
incapacity is hereinafter referred to as "Disability"). Any question
as to the existence of the Disability of the Executive as to which
the Executive and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to
the Executive and the Company.
(ii) Death. This Agreement shall terminate upon the
death of Executive. Upon termination for death, Executive shall be
entitled to his Base Salary at the rate in effect at the time of
Executive's death through the end of the month in which his death
occurs plus $250,000 from the key-man life insurance policy
maintained by the Company of Executive's life.
(iii) Death or Disability Benefits. All other
benefits to which Executive may be entitled following Executive's
termination for death or disability shall be determined in accordance
with the plans, policies and practices of the Company. In addition,
upon the Executive's death or disability, Executive shall be entitled
to a pro rata portion of any Bonus (as calculated pursuant to Section
8(d)(i) below) determined as of the date of death or the beginning of
any period of disability.
(c) For Cause by the Company. Executive's employment
hereunder may be terminated by the Company for "Cause." For purposes of this
Agreement, "Cause" shall mean (i) Executive's willful failure to perform his
material duties hereunder (other than for Disability or as a result of
termination by Executive for Good Reason), (ii) Executive's dishonesty in the
performance of his duties hereunder or (iii) Executive's conviction of a felony
under the laws of the United States or any state thereof. If Executive is
terminated for Cause, or if Executive voluntarily terminates employment
hereunder other than for Good Reason, he shall be entitled to receive his Base
Salary through the date of termination. All other benefits, if any, payable to
Executive following such termination of Executive's employment shall be
determined in accordance with the plans, policies and practices of the Company.
(d) Termination Payments. If Executive's employment
hereunder is terminated by the Company without Cause or by Executive with Good
Reason, executive shall be entitled to receive the following benefits:
(i) an amount equal to the sum of his Base Salary in
effect at the time of such termination or, in the event of
termination by the Executive on account of an event described in
Section 8(e)(iv) below, the Base Salary as in effect immediately
prior to the reduction or reductions referred to therein (the "Salary
Amount") times two plus a pro rata portion of the bonus the Executive
would have earned in respect of the year of termination under any
Company incentive compensation plan in effect at the date of
termination or, in the event of a termination by Executive by reason
of an event described in Section 8(e)(vi) below, the plan in effect
prior to the elimination referred to therein, determined as if the
Executive had been employed by the Company for the full year and
without
3
4
regard to any right reserved by the Company to decrease or eliminate
such bonus, based on the level of actual performance by Executive as
of the termination date as compared to the performance objectives
established for such year pursuant to the plan. (For example, if
Executive was entitled to at $100,000 bonus if the Company's net
profits for the year reached $1,000,000 and at the time of
Executive's termination, the Company's net profits were $100,000,
Executive would be entitled to 1/10th of the $100,000 bonus or
$10,000) (the "Bonus");
(ii) the Salary Amount shall be paid by the Company
to the Executive at the time of his regular payroll payments for a
period of one year following such termination and, at the end of such
one year period, the Company shall pay Executive a lump sum equal to
the Salary Amount plus the Bonus, if any;
(iii) for a 12-month period after such termination,
the Company shall cause Executive to be provided with life, accident,
medical, dental and prescription insurance benefits substantially
similar to, and on the same terms, if any, as, those benefits elected
and received by Executive under the Company's and Wescourt's benefit
programs in effect immediately prior to such termination; provided
that Executive shall be charged an amount equal to any monthly
payroll deduction charged for similar benefits to executives in
positions similar to that which Executive held before his
termination;
(iv) in addition to all other amounts payable to
Executive under this Section 8(d), Executive shall be entitled to
receive all benefits payable to Executive under any other plan,
policy or agreement, if any, relating to retirement or other benefits
in accordance with the terms of such plans, policies or agreements,
if any.
(e) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) a material reduction in Executive's
responsibilities, authorities or duties, all as contemplated by
Section 3 hereof; provided, however, that such reduction by reason of
a termination for Cause, death, Disability or with Executive's
written consent shall not constitute Good Reason;
(ii) Executive's job is eliminated without his
consent other than by reason of promotion or termination for Cause,
death or Disability;
(iii) the Company fails to pay Executive any amount
otherwise vested and due hereunder or under any plan or policy of the
Company or Wescourt;
(iv) a reduction in Executive's Base Salary,
equal to or greater than five percent (5%) of the Base Salary in
anyone year period except in the event of an across-the-board
reduction at the Company or the "business unit" in which Executive is
employed;
4
5
(v) a reduction in Executive's benefit levels,
except in the event of an across-the-board reduction at the Company
or the "business unit" in which Executive is employed;
(vi) the elimination of an incentive compensation
plan in which Executive was a participant by the Company or Wescourt,
which plan by its terms provides for continuing participation by
Executive for more than a one-year period; or
(vii) the Executive's office is relocated outside of
a 00-xxxx xxxxxx xx Xxxxx Xxxxxxxx xx Xxxxxx, Xxxxxxxx without his
prior written consent.
Executive shall provide to the Company written notice of termination
in connection with an event described in clauses (i) through (vii) above. The
Company shall have ten (10) business days from the date of receipt of such
written notice to effect a cure of the event described therein, and upon cure
thereof by the Company, which in the case of clause (i) only must be to
Executive's reasonable satisfaction, such event shall no longer constitute Good
Reason for purposes of this Agreement.
9. Effect of Expiration or Termination. Termination of employment
of Executive hereunder for any reason shall end the obligation of Executive to
perform services hereunder, the obligation of the Company to employ Executive,
and the obligation of the Company to reimburse expenses hereunder except to the
extent accrued or incurred prior to the effective date of termination.
Executive shall not be subject to any liability for breach of this Agreement by
reason of his termination of his employment hereunder; provided such
termination is effected in accordance with the terms of this Agreement.
10. Indemnification. The Company shall indemnify, defend and hold
Executive harmless, to the full extent permitted by applicable law, from and
against any expense, loss, liability or damage incurred or suffered by him by
reason of any act performed or omitted to be performed by him (other than
Executive's gross negligence, willful misconduct or fraud) with respect to his
employment or service in any capacity to the Company or by reason of any
guarantee of any liability or obligation of the Company or any of its direct or
indirect subsidiaries by Executive (whether delivered prior to the date hereof
or hereafter), including attorneys' fees and costs incurred by him in
connection with any threatened, pending or completed action or proceeding
(whether civil, criminal, administrative or investigative) based on any such
act or omission, which attorneys' fees and costs shall be paid by the Company
as incurred by him, except to the extent prohibited by applicable law.
Executive shall be entitled to the protection of any insurance policies the
Company may elect to maintain generally for the benefit of its directors and
officers and to the extent the Company maintains such insurance policies,
Executive shall be covered by such policies, in accordance with their terms, to
the maximum extent of the coverage available for any Company officer or
director.
5
6
11. Non-Compete.
(a) Non-Compete Agreement. During the term of this Agreement
and for two years thereafter (the "Non-Compete Period"), Executive shall not
within the states of Colorado, Nebraska, Utah, New Mexico, Wyoming, Montana,
North Dakota, South Dakota and Idaho directly or indirectly (whether as
employee, director, owner, stockholder, consultant, partner (limited or
general) or otherwise) engage in any business engaged in or actively
contemplated by the Company, its subsidiaries or affiliates as of the date of
termination of employment hereunder (the "Businesses"), or have any interest,
directly or indirectly in any such Businesses; provided that Executive may own
directly or indirectly not more than 5% of the outstanding capital stock of any
publicly-traded corporation or business entity engaged in any of the
Businesses.
(b) Confidentiality. Executive acknowledges that the
information, observations and data obtained by him during the course of his
performance under this Agreement concerning the business or affairs of the
Company, its subsidiaries or affiliates are the property of the Company.
Therefore, Executive agrees that he shall not disclose to any person (other
than a person with a need to know such information) or use for his own account
any of such information, observations or data without the Board's written
consent, unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a result
of Executive's acts or omissions to act. Executive agrees to deliver to the
Company at the termination of his employment, or at any other time the Company
may request, all memoranda, notes, plans, records, reports and other documents
(and copies thereof) relating to the business of the Company, its subsidiaries
or affiliates which he may then possess or have under his control.
(c) Non-Solicitation. Executive hereby agrees that, during
the Non-Compete Period, he will not knowingly either directly or indirectly,
for himself or for any other person or entity, call on, solicit or take away,
or attempt to call on, solicit or take away an employee of the Company, its
subsidiaries or affiliates.
12. Assignment. This agreement shall not be assignable, in
whole or in part, by Executive. This Agreement may be assigned by the Company
in connection with a merger, consolidation, sale of all or substantially all of
the assets or similar transactions with respect to the Company. This Agreement
shall be binding upon and inure to the benefit of the permitted successors and
assigns of the parties hereto (whether by operation of law or otherwise).
13. Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
6
7
14. Waiver. Either party's failure to enforce any provision of
this Agreement shall not in any way be construed as a waiver of any such
provision, or prevent such party thereafter from enforcing each and every
provision of this Agreement.
15. Notices. Any notice given with respect to this Agreement
shall be deemed given and received when personally delivered in writing or
forty-eight (48) hours after the same is deposited in the United States mail,
postage prepaid, registered or certified mail, addressed to a party at the
address set forth below, or at such other address as a party may from time to
time designate by five (5) days' written notice to the other:
If to the Company:
Portfield Investments Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Board of Directors
With copies to:
Petroleum Holdings, Ltd
Xxxxx 0000
Xxx Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
and
Xxxxxxxx X. Xxxxxxxxxx, Esq.
Greenberg, Traurig, Hoffman,
Lippoff, Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
If to Executive:
Xxxxx X. Xxxxxx
000 Xxxxxxx Xxxx Xxxx Xxxxx
Xxxxx Xxxxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Xxxxx, Johnson, Robinson,
Xxxx & Xxxxxxxxx, P.C.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
7
8
16. Further Actions. At all times after the date hereof, each
party shall execute and deliver such other documents and take such other
actions as the other party may reasonably require to carry out the transactions
contemplated by this Agreement.
17. Applicable Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Colorado.
18. Modification. This Agreement may not be amended or modified
except in writing executed by the parties hereto.
19. Entire Agreement. This Agreement constitutes the entire
understanding between the parities with respect to the subject matter thereof.
20. Partial Invalidity. If any provision of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provisions shall nevertheless continue in full force without
being impaired or invalidated in any way.
21. Captions. Captions to the Sections of this Agreement are
for the convenience of the parties, are not a part of this Agreement and shall
not be used for the interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first written above.
THE COMPANY:
PORTFIELD INVESTMENTS INC.,
a Colorado corporation
By:_____________________________
Title:__________________________
EXECUTIVE:
_______________________________
Xxxxx X. Xxxxxx
