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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
this 9th day of April, 1998, by and between UTI Energy Corp., a Delaware
corporation (the "Company"), and Xxxxx Xxxxxxxx, an individual whose primary
residence is located at 0000 Xxxxxxx Xxx, Xxxxxxx, Xxxxx 00000 (the
"Employee").
W I T N E S S E T H :
WHEREAS, in connection with the Agreement and Plan of Merger dated
April 9, 1998 between the Company, PDC Acquisition Company, Xxxxxxxx Drilling
Company ("PDC") and the shareholders of PDC signatories thereto, the Company
desires to employ Employee on the terms set forth below to provide management
services to the Company, and Employee is willing to accept such employment and
provide such services 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, the following terms
have the meanings set forth below:
A. "Affiliates" means the subsidiaries of the Company.
B. "Board" means the Company's board of directors.
C. "Cause" shall be deemed to exist if:
i. Employee is convicted in a court of law of
any crime (a) that constitutes a felony
relating to the Company or its Affiliates or
any other business endeavor or (b) that
constitutes a felony which involves moral
turpitude;
ii. Employee engaged in gross misconduct or any
breach of or failure to perform in any
material respect his duties and
responsibilities hereunder; or
iii. Employee shall have violated any material
corporate policy that results in a material
negative affect on the Company.
D. "Disability" shall be deemed to have occurred when
Employee shall have been unable 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 Board
of Directors of the Company shall determine whether Employee is and
continues to be disabled.
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
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circumstances claimed to provide a basis for termination of Employee's
employment.
F. "Good Reason" shall be deemed to exist, if any of the
following were to occur without the written consent of Employee, and
the Employee has given the Company written notice of such situation or
event and the Company has not cured such situation or event within 30
days following receipt of such written notice:
i. any action by the Company that results in a
substantial diminution of Employee's duties as a manager of
Xxxxxxxx Drilling Company ("PDC") of PDC from those in effect
on the day following the date hereof (the parties acknowledge
that changes in Employee's duties due to the fact that PDC
will be a subsidiary of a publicly-traded company will not in
and of itself constitute "Good Reason"; or
ii. the Company requiring Employee to be based
anywhere other than Midland, Texas, it being agreed that the
duties of Employee will entail travel in the region in which
PDC operates.
2. Term. The term of employment of Employee under this Agreement
shall commence on the date hereof (the "Commencement Date") and shall continue
for a period of three years following the date hereof (the "Scheduled Term of
Employment"), unless sooner terminated in accordance with this Agreement.
3. Duties. During the term of his employment as provided in
Section 2, the Company will employ Employee in a managerial or executive
capacity, with such responsibilities as the Company may from time to time
determine during the term of this Agreement. Employee will comply with all
provisions of all applicable laws, with all corporate documents governing the
conduct of the business and affairs of the Company and its Affiliates and with
all applicable policies of the Company and its Affiliates, including any
policies regarding transactions of the Company or its Affiliates in foreign
countries. Employee agrees to devote substantially all of his business time to
the performance of his duties hereunder.
4. Compensation.
A. The Company agrees to pay to Employee a minimum base
annual salary of $90,000 ("Annual Base Salary") for all services
provided under this Agreement, payable in accordance with the normal
payroll practices of the Company.
B. On the date hereof, the Company shall deliver to
Employee a Stock Option Agreement (the "Option Agreement") granting to
Employee an option (the "Option") to purchase 20,000 shares of the
common stock of the Company, par value $.001 (the "Common Stock"), at
an option price equal to the last reported sale price for the Common
Stock on the American Stock Exchange on the date hereof. The Option
shall vest in equal 1/3 increments over three years
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and shall be subject to such other terms and conditions as contained
in the Option Agreement.
C. In addition to the payments set forth in Section 4(A)
above, Employee shall be entitled to reimbursement of business
expenses in accordance with the Company's policies and be eligible to
participate in the employee benefit plans maintained by the Company
for its employees in general Employee shall also be entitled to such
fringe benefits and vacation time as are made available to other
managers or executives of the Company having similar responsibilities
to Employee. For purposes of participating in such plans, Employee
shall receive credit for the years of service devoted to Xxxxxxxx
Drilling Company and its predecessors. The Company shall have the
right to deduct from all payments to be made under this Agreement any
federal, state, provincial or local taxes and pension or unemployment
contributions required by law to be withheld from such payments.
5. Nondisclosure of Confidential Information.
A. Employee agrees that he will not, except with the
consent of the Company, disclose to others (except for advising agents
and employees of the Company), directly or indirectly, any
confidential, non-public information relating to the business,
prospects, or plans of the Company or its Affiliates and that he will
not use such information except in the performance of his duties
hereunder. Notwithstanding the previous sentence, Employee 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 (an
"Ordered Disclosure") provided Employee has notified the Company or
its Affiliates of such Ordered Disclosure within five business days of
being personally served with such Ordered Disclosure. Employee 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 Employee to take action or otherwise cause Employee to be in
violation of any law or result in contempt of such Ordered Disclosure.
B. Upon termination of his employment with the Company,
Employee shall surrender to the Company any and all work papers,
reports, manuals, documents, and the like (including all originals and
copies thereof) in his possession which contain confidential
information relating to the business, prospects or plans of the
Company or its Affiliates.
C. Employee agrees that during the effectiveness of his
covenant not to compete set forth in Section 6.A, he will endorse
strategies of the Company, and following his termination of employment
with the Company, 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 Affiliates, the management
of the Company or its Affiliates, any product or service provided by
the Company or its Affiliates or the future prospects of the Company
or its Affiliates; provided that following termination of the covenant
no to compete in
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Section 6 below and in the event Employee is competing with the
Company, Employee may make comments and disclose information as is
reasonable and customary by a competitor in the land drilling business
in New Mexico, Texas, Oklahoma or Louisiana so long as the disclosure
of information does not violate Sections 5(a) or 5(b) above. The
Company may seek the assistance, cooperation or testimony of Employee
following any termination of his employment with the Company in
connection with any investigation, litigation or proceeding arising
out of matters within the knowledge of Employee and related to his
position as an officer or employee of the Company, and in any such
instance, Employee shall provide such assistance, cooperation or
testimony as is reasonably requested and the Company shall pay
Employee's reasonable costs and expenses in connection therewith. In
addition, if such assistance, cooperation or testimony requires more
than a nominal commitment of Employee's time, the Company will
compensate Employee for such time at a per diem rate derived from
Employee's salary from the Company at the time of Employee's
termination.
6. COVENANT NOT TO COMPETE WITH THE COMPANY.
A. EMPLOYEE AGREES THAT, DURING THE SCHEDULED TERM OF
EMPLOYMENT, NEITHER HE NOR ANY ENTITY CONTROLLED BY HIM, WILL, WITHOUT
THE CONSENT OF THE COMPANY, DIRECTLY OR INDIRECTLY, ENGAGE IN THE
CONTRACT LAND DRILLING BUSINESS IN THE STATES OF NEW MEXICO, TEXAS,
OKLAHOMA OR LOUISIANA.
B. EMPLOYEE ACKNOWLEDGES THAT A REMEDY AT LAW FOR ANY
BREACH OR ATTEMPTED BREACH OF THIS SECTION 6 WILL BE INADEQUATE AND
FURTHER AGREES THAT ANY BREACH OF THIS SECTION 6 WILL RESULT IN
IRREPARABLE HARM TO THE COMPANY AND ITS BUSINESS AND THE COMPANY
SHALL, IN ADDITION TO ANY OTHER REMEDY THAT MAY BE AVAILABLE TO IT, BE
ENTITLED TO SPECIFIC PERFORMANCE AND INJUNCTIVE AND OTHER EQUITABLE
RELIEF IN CASE OF ANY SUCH BREACH OR ATTEMPTED BREACH. EMPLOYEE
ACKNOWLEDGES THAT THIS COVENANT NOT TO COMPETE IS BEING PROVIDED IN
CONNECTION WITH THE COMPANY'S EMPLOYMENT OF EMPLOYEE AND THAT THIS
SECTION 6 CONTAINS REASONABLE LIMITATIONS AS TO TIME, GEOGRAPHICAL
AREA AND SCOPE OF ACTIVITY TO BE RESTRAINED THAT DO NOT IMPOSE A
GREATER RESTRAINT THAN IS NECESSARY TO PROTECT THE GOODWILL OR OTHER
BUSINESS INTEREST OF THE COMPANY.
C. WHENEVER POSSIBLE, EACH PROVISION OF THIS SECTION 6
SHALL BE INTERPRETED IN SUCH A MANNER AS TO BE EFFECTIVE AND VALID
UNDER APPLICABLE LAW BUT IF ANY PROVISION OF THIS SECTION 6 SHALL BE
PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINING PROVISIONS OF THIS SECTION 6. IF ANY
PROVISION OF THIS SECTION 6 SHALL, FOR ANY REASON, BE JUDGED BY ANY
COURT OF COMPETENT JURISDICTION TO BE INVALID OR UNENFORCEABLE, SUCH
JUDGMENT SHALL NOT AFFECT, IMPAIR OR INVALIDATE THE REMAINDER OF THIS
SECTION 6 BUT SHALL BE CONFINED IN ITS OPERATION TO THE PROVISION OF
THIS SECTION 6 DIRECTLY INVOLVED IN THE CONTROVERSY IN WHICH SUCH
JUDGMENT SHALL HAVE BEEN RENDERED. IN THE EVENT THAT THE PROVISIONS
OF THIS SECTION 6 SHOULD EVER BE DEEMED TO EXCEED THE TIME OR
GEOGRAPHIC LIMITATIONS PERMITTED BY APPLICABLE LAWS, THEN SUCH
PROVISION SHALL
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BE REFORMED TO THE MAXIMUM TIME OR GEOGRAPHIC LIMITATIONS PERMITTED BY
APPLICABLE LAW.
7. Termination.
A. The employment of Employee by the Company hereunder
shall automatically terminate upon Employee's death or Disability. In
addition, the employment of Employee by the Company may be terminated
by Employee or the Company at any time for any reason whatsoever. Any
termination of Employee's employment by the Company or by Employee
(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 13. Employee
understands and agrees that the Company may terminate the Employment
of Employee at any time with or without Cause by notice to the
Employee as provided herein.
B. Upon termination of the employment of Employee for
any reason, Employee shall be entitled to receive, and the Company
shall pay Employee (or, if such termination is caused by Employee's
death, his estate or as may be directed by the legal representatives
of such estate) within 30 days following the termination date, any
unpaid amounts payable to Employee under Section 4(A) through the date
of termination.
C. In addition to the amounts to which Employee is
entitled under Section 7(B), if Employee's employment is terminated by
the Company prior to the end of the term of this Agreement for any
reason other than for Cause or if Employee terminates his employment
for Good Reason prior to the expiration of the term of this Agreement,
the Company shall, within 30 days following the termination date, pay
to Employee a lump sum equal to one year's Annual Base Salary as
provided under Section 4(A). Such compensation shall be the only
compensation payable as a result of such termination and, except as
may otherwise be expressly provided in any employee benefit plans in
which the Employee is participating at the date of his termination,
Employee shall not be entitled to any other rights he may have under
any other 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 Employee as provided herein.
8. Additional Remedies. In the event of a breach or a threatened
breach of the terms of Section 5 and 6 by Employee, the Company shall, in
addition to all other remedies, be entitled to a temporary or permanent
injunction 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.
9. Nonassignment. This Agreement is personal to Employee and
shall not be assigned by him. Employee shall not hypothecate, delegate,
encumber, alienate, transfer, or otherwise dispose of his rights and duties
hereunder. The Company may
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assign this Agreement without Employee's consent to any Affiliate or 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.
10. Mitigation. Employee shall not be required to mitigate his
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment to
Employee under this Agreement be reduced by any compensation earned by Employee
as a result of employment by another employer after termination, or otherwise.
11. Indemnification. Employee shall be entitled to
indemnification rights as set forth in the Company's Bylaws, as they may exist
from time to time.
12. Waiver. The waiver by the Company of a breach by Employee of
any provision of this Agreement shall not be construed as a waiver of any
subsequent breach by Employee.
13. Severability. Should any provision of this Agreement be held
unenforceable or invalid, then the parties hereto agree that such provision
shall be deemed modified to the extent necessary to render it lawful and
enforceable, or if such a modification is not possible without materially
altering the intention of the parties hereto, then such provision shall be
severed from this Agreement. In such case the validity of the remaining
provisions shall not be affected and this Agreement shall be construed as if
such provision were not contained herein.
14. Governing Law. This Agreement shall be construed by, subject
to, and governed in accordance with the laws of the State of Texas without
regard to its choice of law provisions.
15. Notices. Any notice, request, communication, instruction or
other document to be given hereunder by any party hereto to any other party
shall be in writing and delivered personally, by facsimile (with receipt
confirmed) or by registered or certified mail, postage prepaid:
A. If to the Company:
UTI Energy Corp.
00000 Xxxxxxxxxxx Xxxx, Xxxxx 000X
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Drum
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B. If to Employee:
Xxxxx Xxxxxxxx
000 Xxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Any notice which is delivered personally in the manner provided herein
shall be deemed to have been duly given to the party to whom it is directed
upon actual receipt by such party (or its agent for notices hereunder). Any
notice which is addressed and mailed in the manner herein provided shall be
conclusively presumed to have been duly given to the party to which it is
addressed at the close of business, local time of the recipient, on the third
day after the day it is so placed in the mail. Any notice which is sent by
facsimile shall be deemed to have been duly given to the party to which it is
addressed upon telephonic confirmation of the same as provided herein. A copy
of any notices delivered by facsimile shall promptly be mailed in the manner
herein provided to the party to which such notice was given.
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 Employee.
17. Construction. 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.
18. Counterparts. This Agreement may be executed in separate
counterparts, each of which will be deemed to be an original, but all of which
shall be considered one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
COMPANY:
UTI ENERGY CORP.
By: /s/ XXXXXX X. DRUM
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Xxxxxx X. Drum
President and Chief Executive Officer
EMPLOYEE:
/s/ XXXXX XXXXXXXX
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Xxxxx Xxxxxxxx
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