EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") entered into effective as of
June 1, 1998, by and between Xxxxxxx X. Xxxxxx (the "Executive"), and Bellwether
Exploration Company, a Delaware corporation having its principal place of
business at 0000 Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000 (the "Company");
W I T N E S S E T H:
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WHEREAS, the Company wishes to employ the Executive as the Senior Vice
President and Chief Financial Officer and to perform services incident to such
position for the Company, and the Executive wishes to be so employed by the
Company, all upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and mutual covenants and
obligations herein set forth and for other good and valuable consideration, the
receipt, sufficiency and adequacy of which is hereby acknowledged, accepted and
agreed to, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Employment and Term. The Company hereby employs the Executive to
serve as the Senior Vice President and Chief Financial Officer of the Company.
The term of this Agreement (the "term of this Agreement") shall be effective as
of the date first above written and shall terminate twenty-four (24) months from
the date hereof (the "Termination Date"), unless earlier terminated by either
party hereto in accordance with the provisions of Section 5 hereof, provided,
however, that upon the occurrence of a Change in Control (as such term is
defined in Section 5(g) hereof) the Termination Date shall automatically extend
to a date twenty-four months following the date of such Change in Control
without further action by the Company or the Executive. During the term of this
Agreement, the terms of employment shall be as set forth herein unless modified
by the Executive and the Company in accordance with the provisions of Section 11
hereof. The Executive hereby agrees to accept such employment and to perform the
services specified herein, all upon the terms and conditions hereinafter set
forth.
2. Position and Responsibilities. The Executive shall serve as the
Senior Vice President and Chief Financial Officer of the Company and shall
report to, and be subject to the general direction and control of, the Board of
Directors of the Company and the Chief Executive Officer of the Company. The
Executive shall have obligations, duties, authority and power to do all acts and
things as are customarily done by a person holding the same or equivalent
position or performing duties similar to those to be performed by the chief
financial officers in corporations of similar size to the Company and shall
perform such managerial and administrative duties and responsibilities for the
Company as may be reasonably assigned to him by the Board of Directors of the
Company and, at no additional remuneration, shall serve in such other comparable
positions with any subsidiary corporation of the Company, or any partnership,
limited liability company or other entity in which the Company has an interest
(herein collectively called "affiliates"), as the Board of Directors of the
Company may from time to time determine. Unless otherwise agreed to by the
Executive, the Executive shall be based at the Company's principal executive
offices located in the greater Houston, Texas metropolitan area.
3. Extent of Service. The Executive shall devote his full business time
and attention to the business of the Company, and, except as may be specifically
permitted by the Company, shall not be engaged in any other business activity
during the term of this Agreement. The foregoing shall not be construed as
preventing the Executive from making passive investments in other businesses or
enterprises, provided, however, that such investments will not require services
on the part of the Executive which would in any way impair the performance of
his duties under this Agreement.
4. Compensation.
(a) In consideration of the services to be rendered by the Executive
to the Company, the Company will pay the Executive a salary ("Salary") of
$174,000 per year during the Term of this Agreement. Such Salary shall be
payable in conformity with the Company's prevailing practice for executives'
compensation as such practice shall be established or reasonably modified from
time to time. Salary payments shall be subject to all applicable federal and
state withholding, payroll and other taxes. From time to time during the Term of
this Agreement, the amount of the Executive's Salary may be increased by, and at
the sole discretion of, the Compensation Committee of the Company's Board of
Directors, which shall review the Executive's Salary no less regularly than
annually.
(b) Any cash or stock bonuses paid to the Executive shall be based on
performance and be at the sole discretion of the Compensation Committee of the
Company's Board of Directors or pursuant to a plan adopted by the Compensation
Committee.
(c) The Company agrees to reimburse the Executive for the monthly dues
incurred by him in maintaining a membership in the following clubs: The Houston
Center Club/Houston Society.
(d) During the term of this Agreement, the Company shall pay or
reimburse the Executive for all reasonable out-of-pocket expenses for travel,
meals, hotel accommodations, entertainment and the like incurred by him in
connection with the business of the Company upon submission by him of an
appropriate statement documenting such expenses as required by the Internal
Revenue Code of 1986, as amended (the "Code").
(e) The Executive shall be entitled to four (4) weeks of paid vacation
for the first year of his employment hereunder and five (5) weeks of paid
vacation for each year thereafter during the term of this Agreement. Vacation
shall accrue on the first day of each calendar year. The Company shall pay the
Executive for any unused portion of vacation and any such unused portion of
vacation shall not be carried forward to the next year.
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(f) During the term of this Agreement, the Company shall pay to the
Executive an automobile allowance of $500 per month.
(g) During the term of this Agreement, the Company shall continue to
maintain, at its sole cost and expense, the individual disability insurance
currently provided to the Executive. In addition, the Executive shall be
entitled to participate in and to receive all rights and benefits under any
life, disability, medical and dental, health and accident and profit sharing or
deferred compensation plans and such other plan or plans as may be implemented
by the Company during the term of this Agreement. The Executive shall also be
entitled to participate in and to receive all rights and benefits under any plan
or program adopted by the Company for any other or group of other executive
employees of the Company, including without limitation, the rights and benefits
under the directors' and officers' liability insurance currently in place under
the Company's insurance program for the directors and officers of the Company.
5. Termination.
(a) Termination by Company; Discharge for Cause. The Company shall be
entitled to terminate this Agreement and the Executive's employment with the
Company at any time and for whatever reason; or at any time for "Cause" (as
defined below) by written notice to the Executive. Termination of the
Executive's employment by the Company shall constitute a termination for "Cause"
if such termination is for one or more of the following reasons: (i) the willful
failure or refusal of the Executive to render services to the Company in
accordance with his obligations under this Agreement, including, without
limitation, the failure or refusal of the Executive to comply with the work
rules, policies, procedures, and directives as established by the Board of
Directors and consistent with the Agreement; such failure or refusal to be
uncured and continuing for a period of not less than fifteen (15) days after
notice outlining the situation is given by the Company to the Executive; (ii)
the commission by the Executive of an act of fraud or embezzlement; (iii) the
commission by the Executive of any other action with the intent to injure the
Company; (iv) the Executive having been convicted of a felony or a crime
involving moral turpitude; (v) the Executive having misappropriated the property
of the Company; (vi) the Executive having engaged in personal misconduct which
materially injures the Company; or (vii) the Executive having wilfully violated
any law or regulation relating to the business of the Company which results in
material injury to the Company. In the event of the Executive's termination by
the Company for Cause hereunder, the Executive shall be entitled to no severance
or other termination benefits except for any unpaid Salary accrued through the
date of termination. A termination of this Agreement by the Company without
Cause pursuant to this Section 5(a) shall entitle the Executive to the Severance
Payment and other benefits specified in Section 5(f) hereof.
(b) Death. If the Executive dies during the term of this Agreement
and while in the employ of the Company, this Agreement shall automatically
terminate and the Company shall have no further obligation to the Executive or
his estate except that the Company shall pay to the Executive's estate that
portion of his Salary and benefits accrued through the date of death. All such
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payments to the Executive's estate shall be made in the same manner and at the
same time as the Executive's Salary.
(c) Disability. If during the term of this Agreement, the Executive
shall be prevented from performing his duties hereunder by reason of disability,
then the Company, on 30 days' prior notice to the Executive, may terminate this
Agreement. For purposes of this Agreement, the Executive shall be deemed to have
become disabled when the Board of Directors of the Company, verified by a
physician designated by the Company, shall have determined that the Executive
has become physically or mentally unable (excluding infrequent and temporary
absences due to ordinary illness) to perform the essential functions of his
duties under this Agreement with reasonable accommodation. In the event of a
termination pursuant to this paragraph (c), the Company shall be relieved of all
its obligations under this Agreement, except that the Company shall pay to the
Executive or his estate in the event of his subsequent death, that portion of
the Executive's Salary and benefits accrued through the date of such
termination. All such payments to the Executive or his estate shall be made in
the same manner and at the same time as his Salary and would have been paid to
him had he not become disabled.
(d) Termination for Good Reason. The Executive shall be entitled to
terminate this Agreement and his employment with the Company at any time upon
thirty (30) days written notice to the Company for "Good Reason" (as defined
below). The Executive's termination of employment shall be for "Good Reason" if
such termination is a result of any of the following events which is not cured:
(i) the Executive is assigned any responsibilities or duties
materially and adversely inconsistent with his position, duties,
responsibilities and status with the Company as in effect at the date of this
Agreement or as may be assigned to the Executive pursuant to Section 2 hereof,
or his title or offices as in effect at the date of this Agreement or as the
Executive may be appointed or elected to in accordance with Section 2 are
materially and adversely changed;
(ii) there is a Change in Control of the Company;
(iii) there is a reduction in the Salary (as such Salary shall
have been increased from time to time) payable to the Executive pursuant to
Section 4(a) hereof;
(iv) failure by the Company or any successor to the Company or its
assets to continue to provide to the Executive any material benefit, bonus,
profit sharing, incentive, remuneration or compensation plan, stock ownership or
purchase plan, stock option plan, life insurance, disability plan, pension plan
or retirement plan in which the Executive was entitled to participate in as at
the date of this Agreement or subsequent thereto, or the taking by the Company
of any action that materially and adversely affects the Executive's
participation in or materially reduces his rights or benefits under or pursuant
to any such plan or the failure by the Company to increase or improve such
rights or benefits on a basis consistent with practices in effect prior to the
date of this Agreement or with practices implemented and subsequent to the date
of this Agreement
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with respect to the executive employees of the Company generally, whichever is
more favorable to the Executive, but excluding such action that is required by
law;
(v) without Executive's consent, the Company requires the
Executive to relocate to any city or community other than one within the greater
Houston, Texas metropolitan area, except for required travel on the Company's
business to an extent substantially consistent with the Executive's business
obligations under this Agreement; or
(vi) there is any material breach by the Company of any provision
of this Agreement.
Upon the Executive's termination of this Agreement for Good
Reason, the Executive shall be entitled to the Severance Payment and other
benefits specified in Section 5(f) hereof.
(e) Voluntary Termination. Notwithstanding anything to the contrary
herein, the Executive shall be entitled to voluntarily terminate this Agreement
and his employment with the Company at his pleasure upon sixty (60) days written
notice to such effect. In such event, the Executive shall not be entitled to any
further compensation other than any unpaid Salary and benefits accrued through
the date of termination. At the Company's option, the Company may pay to the
Executive the salary and benefits that the Executive would have received during
such sixty (60) day period in lieu of requiring the Executive to remain in the
employment of the Company for such sixty (60) day period.
(f) Termination Benefits Upon Involuntary Termination or Termination
for Good Reason. In the event that (i) the Company terminates this Agreement
and the Executive's employment with the Company for any reason other than for
Cause (as defined in Section 5(a) hereof) or the death or disability of the
Executive, or (ii) the Executive terminates this Agreement and his employment
with the Company for Good Reason (as set forth in Section 5(d) hereof), then the
Company shall pay the Executive, within thirty (30) days after the date of
termination, an amount (the "Severance Payment") equal to the sum of (x) the
Executive's highest annual Salary during the last two (2) years of employment
immediately preceding the date of termination, plus (y) the highest annual bonus
paid to the Executive during such two-year period (or, in the event such
termination occurs during the first year of the term of this Agreement, an
amount equal to the greater of the annualized amount of any bonus paid during
such year or 25% of his annualized Salary). In addition, following such
termination, the Executive shall be entitled to the following benefits
(collectively, the "Additional Benefits"):
(i) immediate vesting of any of the Executive's options to
purchase securities of the Company which were not vested by their own terms on
the date of termination and the extension of the Executive's right to exercise
all of the Executive's options to purchase securities of the Company for a
period equal to the lesser of (A) one year following the date of termination or
(B) the remaining term of the applicable option;
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(ii) immediate vesting and lapse of restrictions on any restricted
stock grants outstanding at the time of such termination;
(iii) continued coverage, at the Company's cost, under the
Company's medical, dental and health benefits (but not life or disability
insurance) set forth in Section 3(g) hereof for a period of eighteen (18) months
from the date of termination;
(iv) outplacement assistance in an amount not to exceed (15%) of
the Executive's annual Salary in effect on the date of a Change in Control;
(v) within 30 days following the date of termination and to the
extent permitted by law, the Company shall contribute to the Executive's 401(k)
or substitute equivalent plan an amount equal to the aggregate amount
contributed by the Executive to such plan during the year in which the
termination occurs plus any profit sharing contribution in a proportionate
amount to the amount paid in the year prior to termination, and shall contribute
to the deferred compensation plan any matching contributions to which Executive
would have been entitled through the date of termination; and
(vi) an amount, in cash, equal to the sum of (A) any unreimbursed
expenses incurred by the Executive in the performance of his duties hereunder
through the date of termination, plus (B) any accrued and unused vacation time
or other unpaid benefits as of the date of termination.
The parties agree that, because there can be no exact measure of
the damages which would occur to the Executive as a result of termination of
employment, such payments contemplated in this Section 5(f) shall be deemed to
constitute liquidated damages and not a penalty and the Company agrees that the
Executive shall not be required to mitigate his damages. The termination
compensation in this Section 5(f) shall be paid only if the Executive executes a
termination agreement releasing all legally waivable claims arising from the
Executive's employment.
(g) Termination and Benefits upon a Change in Control. In the event
that (i) the Company terminates this Agreement and the Executive's employment
with the Company for any reason other than for Cause (as defined in Section 5(a)
hereof) or the death or disability of the Executive or (ii) the Executive
terminates this Agreement and his employment with the Company for Good Reason
(as defined in Section 5(d) hereof), within twenty four months following a
Change in Control (as defined in this Section 5(g)), then in lieu of the
Severance Payment contained in Section 5(f) hereof, the Company shall pay to the
Executive an amount equal to two (2) times the sum of: (x) the Executive's
highest annual Salary during the last two (2) years immediately preceding the
termination, plus (y) the highest annual bonus paid to the Executive in such
period (or, in the event such termination occurs during the first year of the
term of this Agreement, an amount equal to the greater of the annualized amount
of any bonus paid during such year or 25% of his annualized Salary). In the
event that the excise tax relating to "parachute payments" under Section 280G of
the Code applies to the Severance Payment, then the Company shall pay the
Executive an
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additional payment in an amount such that, after payment of federal income taxes
(but not the excise tax) on such additional payment, the Executive retains an
amount equal to the excise tax originally imposed on the Severance Payment. The
Executive shall also be entitled to receive the Additional Benefits. "Change
of Control" means or shall be deemed to have occurred if and when: (a) the
acquisition, by whatever means (including without limitation, amalgamation,
consolidation, liquidation, arrangement or merger), by a person (or two or more
persons who in such acquisition have acted jointly or in concert or intend to
exercise jointly or in concert any voting rights attaching to the securities
acquired), directly or indirectly, of the beneficial ownership of such number of
voting securities or rights to voting securities of the Company, which together
with such person's then owned voting securities and rights to voting securities,
if any, represent (assuming the full exercise of such rights to voting
securities) more than 20% of the combined voting power of the Company's then
outstanding voting securities, together with the voting securities that would be
outstanding on the full exercise of the rights to voting securities acquired and
such person's previously owned rights to voting securities; provided, however,
that for purposes of this subsection (a), the following acquisitions shall not
constitute a Change in Control: (A) any acquisition directly from the Company,
(B) any acquisition by the Company, or (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company; or (b)
individuals who were members of the board of directors of the Company
immediately prior to a meeting of the shareholders of the Company involving a
contest for or on an item of business relating to the election of directors
shall not constitute a majority of the board of directors following such
election.
(h) Survival. Notwithstanding the termination of this Agreement under
this Section 5, the provisions of Sections 7 and 8 of this Agreement, and all
other provisions hereof which by their terms are to be performed following the
termination hereof shall survive such termination and be continuing obligations.
6. Consent and Waiver by Third Parties. The Executive hereby represents
and warrants that he has obtained all necessary waivers and/or consents from
third parties as to enable him to accept employment with the Company on the
terms and conditions set forth herein and to execute and perform this Agreement
without being in conflict with any other agreement, obligations or understanding
with any such third party.
7. Confidential Information. The Executive acknowledges that in the
course of his employment with the Company, he has received and will receive
access to confidential information of a special and unique value concerning the
Company and its business, including, without limitation, trade secrets, know-
how, lists of customers, employee records, books and records relating to
operations, costs of providing service and equipment, operating and maintenance
costs, pricing criteria and other confidential information and knowledge
concerning the business of the Company and its affiliates (hereinafter
collectively referred to as "information") which the Company desires to protect.
The Executive acknowledges that such information is confidential and the
protection of such confidential information against unauthorized use or
disclosure is of critical importance to the Company. The Executive agrees that
he will not reveal such information to anyone outside the Company. The Executive
further agrees that during the term of this Agreement and thereafter he will
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not use or disclose such information. Upon termination of his employment
hereunder, the Executive shall surrender to the Company all papers, documents,
writings and other property produced by him or coming into his possession by or
through his employment hereunder and relating to the information referred to in
this Section 7, and the Executive agrees that all such materials will at all
times remain the property of the Company. The obligation of confidentiality,
non-use and non-disclosure of know-how set forth in this Section 7 shall not
extend to know-how (i) which was in the public domain prior to disclosure by the
disclosing party, (ii) which comes into the public domain other than through a
breach of this Agreement, (iii) which is disclosed to the Executive after the
termination of this Agreement by a third party having legitimate possession
thereof and the unrestricted right to make such disclosure, or (iv) which is
necessarily disclosed in the course of the Executive's performance of his duties
to the Company as contemplated in this Agreement. The agreements in this
Section 7 shall survive the termination of this Agreement.
8. No Solicitation.
To support the agreements contained in Section 7 hereof, from the date
hereof and for a period of twelve (12) months after the Executive's employment
with the Company is terminated for any reason, the Executive shall not, either
directly or indirectly, through any person, firm, association or corporation
with which the Executive is now or may hereafter become associated, (i) hire,
employ, solicit or engage any then current employee of the Company or its
affiliates, or (ii) use in any competition, solicitation or marketing effort any
information as to which the Executive has a duty of confidential treatment under
paragraph 7 above.
9. Notices. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date personally delivered or on the date mailed, postage
prepaid, by certified mail, return receipt requested, or telegraphed and
confirmed if addressed to the respective parties as follows:
If to the Executive: Xxxxxxx X. Xxxxxx
00000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
If to the Company: Bellwether Exploration Company
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Chairman, Compensation Committee
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.
10. Specific Performance. The Executive acknowledges that a remedy at law
for any breach or attempted breach of Section 7 or 8 of this Agreement will be
inadequate, agrees that the Company shall be entitled to specific performance
and injunctive and other equitable relief in case
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of any such breach or attempted breach, and further agrees to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or any other equitable relief.
11. Waivers and Modifications. This Agreement may be modified, and the
rights and remedies of any provision hereof may be waived, only in accordance
with this Section 11. No modification or waiver by the Company shall be
effective without the consent of at least a majority of the Compensation
Committee of the Board of Directors then in office at the time of such
modification or waiver. No waiver by either party of any breach by the other or
any provision hereof shall be deemed to be a waiver of any later or other breach
thereof or as a waiver of any other provision of this Agreement. This Agreement
sets forth all of the terms of the understandings between the parties with
reference to the subject matter set forth herein and may not be waived, changed,
discharged or terminated orally or by any course of dealing between the parties,
but only by an instrument in writing signed by the party against whom any
waiver, change, discharge or termination is sought.
12. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Texas.
13. Severability. In case of one or more of the provisions contained in
this Agreement for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had never
been contained herein.
14. Arbitration. In the event that a dispute or controversy should arise
between the Executive and the Company as to the meaning or application of any
provision, term or condition of this Agreement, such dispute or controversy
shall be settled by binding arbitration in Houston, Texas and for said purpose
each of the parties hereto hereby expressly consents to such arbitration in such
place. Such arbitration shall be conducted in accordance with the then existing
rules and regulations of the American Arbitration Association governing
commercial transactions. The expense of the arbitrator shall be borne by the
Company.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date and year first above written.
BELLWETHER EXPLORATION COMPANY
By: /s/ X. XXXXX SERE
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Name: X. Xxxxx Sere
Title: Chairman, President & Chief
Executive Officer
EXECUTIVE:
/s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
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