EMPLOYMENT AGREEMENT
EXHIBIT
10.4
Execution
Copy
This
AGREEMENT (the “Agreement”) by and between Carrizo Oil & Gas, Inc., a Texas
corporation (the “Company”), and J. Xxxxxxx Xxxxxx (the “Executive”), to be
effective as of June 5th, 2009 (the “Agreement Effective Date”).
In
entering into this Agreement, the Board of Directors of the Company (the
“Board”) desires to provide the Executive with substantial incentives to serve
the Company as one of its senior executives performing at the highest level of
leadership and stewardship, without distraction or concern over minimum
compensation, benefits or tenure, to manage the Company’s future growth and
development, and maximize the returns to the Company’s
stockholders. This Agreement is intended to amend and supersede in
its entirety any prior employment agreement between the Executive and the
Company (the “Prior Employment Agreement”).
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment
Period. As of the Agreement Effective Date, the Company hereby
agrees to employ the Executive and the Executive hereby agrees to accept
employment with the Company, in accordance with, and subject to, the terms and
provisions of this Agreement, for the period (the "Employment Period")
commencing on the Agreement Effective Date and ending on the first anniversary
of the Agreement Effective Date; provided, on the Agreement Effective Date and
on each day thereafter, the Employment Period shall automatically be extended
for an additional one day without any further action by either the Company or
the Executive, it being the intention of the parties that there shall be
continuously a remaining term of not less than one year's duration of the
Employment Period until an event has occurred as described in, or one of the
parties shall have made an appropriate election and notification pursuant to,
the provisions of Section 3.
2. Terms of
Employment.
(a) Position and
Duties. It is contemplated that initially Executive shall be a
full time employee and that upon commencement of his entitlement to Base Salary
under Section 2(b)(i) of this Agreement, the following shall apply:
(i) During
the Employment Period, (A) the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned on the Agreement Effective Date, and (B) the
Executive’s services shall be performed within the Houston, Texas metropolitan
area.
(ii)
During the Employment Period, and excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive agrees to devote full
attention and time during normal business hours to the business and affairs of
the Company and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive’s
reasonable
best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, it shall not be a
violation of this Agreement for the Executive to (A) serve on corporate, civic,
educational, alumni or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions or (C) manage
personal investments, so long as such activities do not materially interfere
with the performance of the Executive’s responsibilities as an employee of the
Company in accordance with this Agreement; provided that the Executive may not
serve on the board of a publicly traded for profit corporation, or similar body
of a publicly traded for profit business organized in other than corporate form,
without the consent of the Nominating and Corporate Governance Committee of the
Board. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Agreement
Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Agreement
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive’s responsibilities to the Company.
(b) Compensation.
(i) Base
Salary. Commencing on the date on which Executive commences
full time employment with the Company and thereafter during his Employment
Period, the Executive shall receive an annual base salary of $300,000 (“Annual
Base Salary”), which shall be paid on a semimonthly basis. During the
Employment Period, the Annual Base Salary shall be reviewed at least annually
and shall be increased at any time and from time to time as shall be
substantially consistent with increases in base salary generally awarded in the
ordinary course of business to executives of the Company and its affiliated
companies. Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such
increase and the term “Annual Base Salary,” as utilized in this Agreement, shall
refer to Annual Base Salary as so increased. As used in this
Agreement, the term “affiliated companies” shall include, when used with
reference to the Company, any company controlled by, controlling or under common
control with the Company.
(ii) Annual
Bonus. In addition to Annual Base Salary, the Executive may be
awarded, for each fiscal year or portion thereof during the Employment Period,
an Annual Bonus (the “Annual Bonus”), in an amount comparable to the Annual
Bonus award to other Company executives, taking into account the Executive’s
position, responsibilities and accomplishments with the Company, prorated for
any period consisting of less than 12 full months.
(iii) Incentive, Savings and
Retirement Plans. During the Employment Period, the Executive
shall be entitled to participate in all incentive, savings and retirement plans
that are tax-qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (“Code”), and all plans that are supplemental
2
to any
such tax-qualified plans, in each case to the extent that such plans are
applicable generally to other executives of the Company and its affiliated
companies, but in no event shall such plans provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit opportunities that are, in each
case, less favorable to the Executive, in the aggregate, than the most favorable
plans of the Company and its affiliated companies. As used in this
Agreement, the term “most favorable” shall, when used with reference to any
plans, practices, policies or programs of the Company and its affiliated
companies, be deemed to refer to the plans, practices, policies or programs of
the Company and its affiliated companies, as in effect at any time during the
Employment Period and provided generally to other executives of the Company or
its affiliated companies, which are most favorable to the
Executive.
(iv) Welfare Benefit
Plans. During the Employment Period, the Executive and/or the
Executive’s family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices, policies
and programs provided by the Company or its affiliated companies (including,
without limitation, medical, prescription, dental, vision, disability, salary
continuance, group life and supplemental group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other executives of the Company or its affiliated companies, but in no event
shall such plans, practices, policies and programs provide the Executive with
benefits that are less favorable, in the aggregate, than the most favorable such
plans, practices, policies and programs of the Company and its affiliated
companies.
(v) Expenses. During
the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of the
Company and its affiliated companies.
(vi) Fringe Benefits and
Perquisites. During the Employment Period, the Executive shall
be entitled to fringe benefits and perquisites in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies applicable to similarly situated executives.
(vii) Office and Support
Staff. During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and other
appointments, and to secretarial and other assistance to the extent needed to
fulfill his corporate responsibilities, at least equal to the most favorable of
the foregoing provided to the Executive by the Company and its affiliated
companies at any time during the Employment Period.
3
(viii) Vacation. During
the Employment Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and practices of
the Company and its affiliated companies.
3. Termination of
Employment.
(a) Death or
Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment
Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 13(d) of this Agreement of its intention to
terminate the Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the “Disability Effective Date”),
provided that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive’s duties. For
purposes of this Agreement, “Disability” shall mean the absence of the Executive
from the Executive’s duties with the Company on a full-time basis for either (i)
180 consecutive business days or (ii) in any two-year period 270 nonconsecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive’s legal
representative (such agreement as to acceptability not to be withheld
unreasonably). In the event the Executive incurs a separation from
service within the meaning of Treasury Regulation § 1.409A-1(h) as a result of
his incapacity, then the Disability Effective Date shall be deemed to be the
date of the Executive’s separation from service.
(b) Cause. The
Company may terminate the Executive’s employment during the Employment Period
for Cause. For purposes of this Agreement, “Cause” shall mean for the
Company’s termination of the Executive’s employment for any of the following:
(i) the Executive’s final conviction of a felony crime that enriched the
Executive at the expense of the Company; provided, however, that after
indictment, the Company may suspend the Executive from the rendition of
services, but without limiting or modifying in any other way the Company’s
obligations under this Agreement; (ii) a material breach by the Executive of a
material fiduciary duty owed to the Company; (iii) a material breach by the
Executive of any of the covenants made by him in Sections 8 and 10 hereof; (iv)
the willful and gross neglect by the Executive of the material duties
specifically and expressly required by this Agreement; or (v) the Executive’s
continuing failure to substantially perform his duties and responsibilities
hereunder (except by reason of the Executive’s incapacity due to physical or
mental illness or injury) for a period of 45 days after the Required Board
Majority, as defined herein, has delivered to the Executive a written demand for
substantial performance hereunder which specifically identifies the bases for
the Required Board Majority’s determination that the Executive has not
substantially performed his duties and responsibilities hereunder (that period
being the “Grace Period”); provided, that for purposes of this clause (v), the
Company shall not have Cause to terminate the Executive’s employment unless (A)
at a meeting of the Board called and held following the Grace Period in the city
in which the Company’s principal executive offices are located, of which the
Executive was given not less than 10 days’ prior written notice and at which the
Executive was afforded the opportunity to be represented by counsel, appear and
be heard, the Required Board Majority shall adopt a written resolution which (1)
sets forth the
4
Required
Board Majority’s determination that the failure of the Executive to
substantially perform his duties and responsibilities hereunder has (except by
reason of his incapacity due to physical or mental illness or injury) continued
past the Grace Period and (2) specifically identifies the bases for that
determination, and (B) the Company, at the written direction of the Required
Board Majority, shall deliver to the Executive a Notice of Termination for Cause
to which a copy of that resolution, certified as being true and correct by the
secretary or any assistant secretary of the Company, is
attached. “Required Board Majority” means at any time a majority of
the members of the Board at that time which includes at least a majority of the
Directors, each of whom has not been an employee of the Company or any
subsidiary of the Company.
(c) Good Reason; Window Period;
Other Terminations. The Executive’s employment may be terminated during
the Employment Period by the Executive for Good Reason, or during a Window
Period by the Executive without any reason or at any time by the Executive other
than for Good Reason or during a Window Period. For the avoidance of
doubt, if the Executive remains employed until the beginning of a Window Period,
the Executive and the Company agree that the Executive shall resign no later
than the end of such Window Period. For purposes of this Agreement,
“Window Period” shall mean the 30-day period immediately following elapse of one
year after any Change of Control as defined in Section 9 of this
Agreement. The Company shall inform the Executive promptly following
the occurrence of a Change of Control of the date on which the Change of Control
occurred, with such supporting detail as may be necessary to establish such
date. For purposes of this Agreement, “Good Reason” shall
mean:
(i) the
assignment to the Executive of any duties materially inconsistent in any respect
with the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
2 of this Agreement, or any other action by the Company which results in a
material diminution, in absolute terms, in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(ii) any
material failure by the Company to comply with any of the provisions of this
Agreement, other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the
Company’s requiring the Executive to be based at any office outside the Houston
metropolitan area;
(iv) any
purported termination by the Company of the Executive’s employment otherwise
than as expressly permitted by this Agreement;
(v) any
failure by the Company to comply with and satisfy the requirements of Section 11
of this Agreement, provided that (A) the successor described in Section 11(c)
has received, at least 10 days prior to the Date of
5
Termination
(as defined in subparagraph (e) below), written notice from the Company or the
Executive of the requirements of such provision and (B) such failure to be in
compliance and satisfy the requirements of Section 11 shall continue as of the
Date of Termination; or
Notwithstanding
any provision to the contrary, in order for any event(s) in subparagraph (i)
through (v) above to constitute “Good Reason” for purposes of this Agreement,
(A) the Executive must notify the Company via Notice of Termination within 90
days following the initial occurrence of the event(s) that the Executive intends
to terminate his employment with the Company because of the occurrence of Good
Reason (which event must be described by the Executive in reasonable detail in
the Notice of Termination) and (B) within 60 days after receiving such Notice of
Termination from the Executive (the “Correction Period”), the Company must fail
to reinstate the Executive to the position he was in, or otherwise cure the
circumstances giving rise to Good Reason. Executive’s termination for
Good Reason may occur only within 60 days following the expiration of the
Correction Period.
(d) Notice of
Termination. Any termination by the Company for Cause, or by
the Executive for Good Reason or without any reason during a Window Period,
shall be communicated by Notice of Termination to the other party hereto given
in accordance with Section 13(d) of this Agreement. The failure by the Company
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Cause shall not waive any right of the Company
hereunder or preclude the Company from asserting such fact or circumstance in
enforcing the Company’s rights hereunder.
(e) Date of
Termination. For purposes of this Agreement, the term “Date of
Termination” means (i) if the Executive’s employment is terminated by the
Company for Cause, or by the Executive during a Window Period or for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive’s employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination, (iii) if the Executive’s employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be and (iv) if the
Executive’s employment is terminated by the Executive other than for Good Reason
or during a Window Period, the date of termination shall be the date of the
receipt of the Notice of Termination or any later date specified therein, but no
later than the end of the Window Period.
4. Obligations of the Company
upon Termination.
(a) Disability, Good Reason or
During a Window Period; Other than for Cause or Death (except during a Window
Period). If, during the Employment Period, (x) the Company
shall terminate the Executive’s employment other than for Cause, including a
termination by reason of Disability (but not by reason of death), or (y) the
Executive shall terminate employment for Good Reason or (z) his employment shall
be terminated during a Window Period by the Company for Cause, by the Executive
during a Window Period without any reason, or by reason of death:
6
(i) the
Company shall pay or provide to or in respect of the Executive the following
amounts and benefits:
A. in a lump
sum in cash, within 10 days after the Date of Termination, an amount equal to
the sum of (1) the Executive’s Annual Base Salary through the Date of
Termination, (2) any accrued but unpaid Annual Bonus for any prior fiscal year,
(3) any deferred compensation previously awarded to or earned by the Executive
(together with any accrued interest or earnings thereon) subject to the terms
and conditions of any plan or arrangement providing such deferred compensation
and (4) any compensation for unused vacation time for which the Executive is
eligible in accordance with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies, in each case to the
extent not theretofore paid (the sum of the amounts described in clauses (1),
(2), (3) and (4) shall be hereinafter referred to as (the “Accrued
Obligation”);
B. in a lump
sum in cash, within 10 days after the Date of Termination, an amount equal to
the Severance Multiplier Percentage (as defined in Exhibit A) multiplied by the
Annual Base Salary (provided that if the termination occurs after the date a
Change of Control occurs the Executive will be entitled to a lump sum cash
payment, within 10 days after the Date of Termination, in an amount equal to the
Change of Control Severance Multiplier Percentage (as defined in Exhibit A) of
Annual Base Salary);
C. in a lump
sum in cash, within 10 days after the Date of Termination, an additional amount
equal to the Supplemental Severance Multiplier Percentage (as defined in Exhibit
A) of Annual Base Salary multiplied by a fraction, the numerator of which is the
number of days in the fiscal year through the Date of Termination and the
denominator of which is 365, provided, however, that if the
Executive is terminated due to Disability or after the date a Change of Control
occurs, the preceding fraction shall be deemed to be equal to 1.0;
and
D.
effective as of the Date of Termination, (1) immediate vesting and
exercisability of, and termination of any restrictions on sale or transfer
(other than any such restriction arising by operation of law) with respect to,
each and every stock option, restricted stock award, restricted stock unit award
and other equity-based award and performance award (each, a “Compensatory
Award”) that is outstanding as of a time immediately prior to the Date of
Termination and (2) unless a longer post-employment term is provided in the
applicable award agreement, the extension of the term during which each and
every Compensatory Award may be exercised by the Executive until the earlier of
(x) the first anniversary of the Date of Termination or (y) the date upon which
the right to exercise any Compensatory Award would have expired if
the
7
Executive
had continued to be employed by the Company under the terms of this Agreement
until the latest possible date of termination of the Employment Period in
accordance with the provisions of Section 1 hereof (the “Final Expiration
Date”).
Anything
in this Agreement to the contrary notwithstanding, if a Change of Control occurs
and if the Executive’s employment with the Company is terminated within 12
months prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment or
cessation of service as an officer (x) was at the request of a third party who
has taken steps reasonably calculated to effect the Change of Control or (y)
otherwise arose in connection with or anticipation of the Change of Control,
then for all purposes of this Agreement, the “date a Change of Control occurs”
shall mean the date immediately prior to the date of such termination of
employment; provided,
however, that the additional Change of Control severance will be paid
within 5 days following the occurrence of the Change of Control.
(ii) for the
period beginning on the Date of Termination and ending on the Final Expiration
Date, or such longer period as any medical or dental plan shall provide, the
Company shall continue benefits to the Executive and/or the Executive’s family
at least equal to those which would have been provided to them in accordance
with the medical and dental plans described in Section 2(b)(iv) of this
Agreement if the Executive’s employment had not been terminated in accordance
with the medical and dental plans of the Company and its affiliated companies,
but with the Company’s medical benefits coverages being secondary to any
coverages provided by another employer. In lieu of continued
participation in plans, practices, programs and policies described in Section
2(b)(iv) of this Agreement (other than the medical or dental plan, as described
above), the Company shall pay the Executive a lump sum payment equal to the
Benefits Continuation Multiplier Percentage (as defined in Exhibit A) of the
Executive’s Annual Base Salary.
(b) Death (except during a
Window Period). If the Executive’s employment is terminated by
reason of the Executive’s death during the Employment Period and other than
during a Window Period in which event the provisions of Section 4(a) shall
govern, this Agreement shall terminate without further obligations to the
Executive’s legal representatives under this Agreement, other than (i) the
payment of Accrued Obligations (which shall be paid to the Executive’s estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination), (ii) providing the Executive with Company-paid term life insurance
protection with a death benefit at least equal to the Supplemental Life
Insurance Benefit (as defined in Exhibit A) multiplied by the Executive’s Annual
Base Salary, with such coverage being supplemental to any other Company-paid
group life insurance policy, (iii) during the period beginning on the Date of
Termination and ending on the first anniversary thereof medical and dental
benefits coverage for the Executive’s dependents determined as if the
Executive’s employment had not terminated by reason of death, and (iv) effective
as of the Date of Termination, (A) immediate vesting and exercisability of, and
termination of any restrictions on sale or transfer (other than any such
restriction arising by operation of law) with respect to, each
8
and every
Compensatory Award outstanding as of the time immediately prior to the Date of
Termination, (B) the extension of the term during which each and every
Compensatory Award may be exercised or purchased by the Executive until the
earlier of (1) the first anniversary of the Date of Termination or (2) the date
upon which the right to exercise or purchase any Compensatory Award would have
expired if the Executive had continued to be employed by the Company under the
terms of this Agreement until the Final Expiration Date.
(c) Cause; Other than for
Disability, Good Reason or During a Window Period. If the
Executive’s employment shall be terminated for Cause during the Employment
Period and other than during a Window Period, in which event the provisions of
Section 4(a) shall govern, this Agreement shall terminate without further
obligations to the Executive other than for Accrued Obligations. If
the Executive terminates employment during the Employment Period, excluding a
termination for any of Disability, Good Reason or without any reason during a
Window Period, in which event the provisions of Section 4(a) shall govern, this
Agreement shall terminate without further obligations to the Executive, other
than for the payment of Accrued Obligations. In such case, all
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination.
5. Non-Exclusivity of
Rights. Except as provided in Section 4 of this Agreement,
nothing in this Agreement shall prevent or limit the Executive’s continuing or
future participation in any plan, program, policy or practice provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which
the Executive is otherwise entitled to receive under any plan, policy, practice
or program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as such plan, policy, practice or program is superseded by this
Agreement.
6. Full Settlement: Resolution
of Disputes.
(a) The
Company’s obligation to make payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
setoff, counterclaim, recoupment, defense, mitigation or other claim, right or
action which the Company may have against the Executive or others. In the event
(i) prior to a Change of Control, the Executive’s employment is terminated for
any reason other than Executive’s voluntary termination (with or without Good
Reason), or (ii) within two years after a Change of Control, the Executive’s
employment is terminated by the Company or the Executive for any reason, the
Company agrees to pay promptly as incurred, to the full extent permitted by law,
all legal fees and expenses which the Executive may reasonably incur as a result
of any arbitration pursuant to Section 6(b) (regardless of the outcome thereof)
initiated by the Company, the Executive or others regarding the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any such payment pursuant to this Agreement), plus
in each case interest on any delayed payment at the annual percentage rate which
is three percentage points above the interest rate shown as the Prime Rate in
the Money Rates column in the then most
9
recently
published edition of The Wall Street Journal (Southwest Edition), or, if such
rate is not then so published on at least a weekly basis, the interest rate
announced by Xxxxx Fargo & Company (or its successor), from time to time, as
its Base Rate (or prime lending rate), from the date those amounts were required
to have been paid or reimbursed to the Employee until those amounts are finally
and fully paid or reimbursed; provided, however, that in no event shall the
amount of interest contracted for, charged or received hereunder exceed the
maximum non-usurious amount of interest allowed by applicable law; provided,
further, that if the Executive is not the prevailing party in any such
arbitration, then he shall, upon the conclusion thereof, repay to the Company
any amounts that were previously advanced pursuant to this sentence by the
Company as payment of legal fees and expenses.
(b) Any
dispute arising out of or relating to this Agreement, including the breach,
termination or validity thereof, shall be finally resolved by arbitration in
accordance with the CPR Institute for Dispute Resolution Rules for
Non-Administered Arbitration in effect on the date of this Agreement by a single
arbitrator selected in accordance with the CPR Rules. The arbitration shall be
governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16, and judgment on the
award rendered by the arbitrator may be entered by any court having jurisdiction
thereof. The place of arbitration shall be in Xxxxxx County, Texas. The
arbitrator’s decision must be based on the provisions of this Agreement and the
relevant facts, and the arbitrator’s reasoned decision and award shall be
binding on both parties. Nothing herein is or shall be deemed to preclude the
Company’s resort to the injunctive relief prescribed in this Agreement,
including any injunctive relief implemented by the arbitrator pursuant to this
Section 6(b). The parties will each bear their own attorneys’ fees and costs in
connection with any dispute, except in the circumstances in which the Company is
required to advance the Executive’s attorneys’ fees in accordance with Section
6(a).
(c) If, upon
a termination within two years following a Change of Control, there shall be any
dispute between the Company and the Executive concerning (i) in the event of any
termination of the Executive’s employment by the Company, whether such
termination was for Cause or Disability, or (ii) in the event of any termination
of employment by the Executive, whether Good Reason existed or whether such
termination occurred during a Window Period, then, unless and until there is a
final, determination by an arbitrator declaring that such termination was for
Cause or not for Disability or that the determination by the Executive of the
existence of Good Reason was not made in good faith or that the termination by
the Executive did not occur during a Window Period, the Company shall pay all
amounts, and provide all benefits, to the Executive and/or the Executive’s
family or other beneficiaries, as the case may be, that the Company would be
required to pay or provide pursuant to Section 4(a) hereof as though such
termination were by the Company without Cause or by the Executive with Good
Reason or during a Window Period; provided, however, that the Company shall not
be required to pay any disputed amounts pursuant to this paragraph except upon
receipt of an undertaking by or on behalf of the Executive to repay all such
amounts to which the Executive is ultimately adjudged by such arbitrator not to
be entitled.
(d)
Notwithstanding any provision of Section 4, except in the case of a termination
of employment within two years following a Change of Control, the Company’s
obligation to pay the amounts due on any termination of employment under Section
4 (other than the Accrued Obligations) are conditioned on the Executive’s
execution (without revocation
10
during
any applicable statutory revocation period) of a waiver and release of any and
all claims against the Company and its affiliates in such form as may be
prescribed by the Company.
7. Certain Additional Payments
by the Company.
(a) Anything
in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 7 (a “Payment”) would be subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the Executive shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b)
Subject to the provisions of Section 7(c), all determinations required to be
made under this Section 7, including whether and when Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by KPMG LLP (or such
other nationally recognized certified public accounting firm that is providing
audit services for the Company immediately prior to the date of a Change of
Control in replacement of KPMG LLP) (the “Accounting Firm”) provided, however,
that the Accounting Firm shall not determine that no Excise Tax is payable by
the Executive unless it delivers to the Executive a written opinion (the
“Accounting Opinion”) that failure to report the Excise Tax on the Executive’s
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. In the event that the Accounting Firm
is serving as accountant or auditor for the individual, entity or group that is
involved in effecting or has any material interest the Change of Control or the
Accounting Firm declines or is unable to serve, the Executive shall appoint
another nationally recognized certified public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company, the Accounting
Firm shall make all determinations required under this Section 7, shall provide
to the Company and the Executive a written report setting forth such
determinations, together with detailed supporting calculations, and, if the
Accounting Firm determines that no Excise Tax is payable, shall deliver the
Accounting Opinion to the Executive. Any Gross-Up Payment, as
determined pursuant to this Section 7, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm’s
determination. Subject to the remainder of this Section 7, any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made (“Underpayment”), consistent
with the calculations required to be made hereunder. In the
event
11
that the
Company exhausts its remedies pursuant to the following provisions of this
Section 7 and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive no later than the time such tax
is due.
(c) The
Executive shall notify the Company in writing of any claims by the Internal
Revenue Service that, if successful, would require the payment by the Company of
the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 30 days after the Executive actually receives
notice in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid; provided,
however, that the failure of the Executive to notify the Company of such claim
(or to provide any required information with respect thereto) shall not affect
any rights granted to the Executive under this Section 7 except to the extent
that the Company is materially prejudiced in the defense of such claim as a
direct result of such failure. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) give the
Company any information reasonably requested by the Company relating to such
claim;
(ii) take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney selected by the
Company and reasonably acceptable to the Executive;
(iii) cooperate
with the Company in good faith in order effectively to contest such claim;
and
(iv) if the
Company elects not to assume and control the defense of such claim, permit the
Company to participate in any proceedings relating to such claim;
provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax, employment tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 7(c), the Company shall have the right, at its sole
option, to assume the defense of and control all proceedings in connection with
such contest, in which case it may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim, and may either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the
12
Company
shall determine; provided, however, that if the Company directs the Executive to
pay such claim and xxx for a refund, the Company shall provide the amount of
such payment to the Executive as an additional payment (“Supplemental Payment”)
(subject to possible repayment as provided in the next paragraph) and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax, employment tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such payment or with respect to any
imputed income with respect thereto; and further provided, that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the
Company’s right to assume the defense of and control the contest shall be
limited to issues with respect to which a Gross-Up Payment or Supplemental
Payment would be payable hereunder and the Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after
the receipt by the Executive of an amount provided by the Company pursuant to
Section 7(c) the Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 7(c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto).
8. Confidential
Information. The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information, knowledge
or data relating to the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the Executive during
the Executive’s employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement)
(referred to herein as “Confidential Information”). After termination
of the Executive’s employment with the Company, the Executive shall not, without
the prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it. In no
event shall an asserted violation of the provisions of this Section 8 constitute
a basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement. Also, within 14 days of the
termination of the Executive’s employment for any reason, the Executive shall
return to Company all documents and other tangible items of or containing
Company information which are in the Executive’s possession, custody or control,
or with respect to equipment that is not Company property that is in the
Executive’s possession, custody or control and which contains Confidential
Information, the Executive shall purge such Confidential Information from such
equipment. Notwithstanding the foregoing, it is understood by the
parties that in the course of his employment with the Company the Executive may
retain mental recollections or other impressions as a result of having had
access to or knowledge of the Company’s Confidential Information, and the
Company agrees that such retained mental impressions shall not impede or
restrict the Executive from engaging in work for a subsequent employer so long
as Confidential Information is not expressly disclosed to such subsequent
employer.
9. Change of
Control. As used in this Agreement, the terms set forth below
shall have the following respective meanings:
13
“Affiliate” shall have the
meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act, as in effect on the date of this Agreement.
“Associate” shall mean, with
reference to any Person, (a) any corporation, firm, partnership, association,
unincorporated organization or other entity (other than the Company or a
subsidiary of the Company) of which such Person is an officer or general partner
(or officer or general partner of a general partner) or is, directly or
indirectly, the Beneficial Owner of 10% or more of any class of equity
securities, (b) any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a similar
fiduciary capacity and (c) any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
“Beneficial Owner” shall mean,
with reference to any securities, any Person if:
(a) such
Person or any of such Person’s Affiliates and Associates, directly or
indirectly, is the “beneficial owner” of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement) such securities or otherwise has the right to vote or
dispose of such securities, including pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a Person
shall not be deemed the “Beneficial Owner” of, or to “beneficially own,” any
security under this subsection (a) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (i) arises solely from a revocable proxy or consent given in
response to a public (i.e., not including a solicitation exempted by Rule
14a-2(b)(2) of the General Rules and Regulations under the Exchange Act) proxy
or consent solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange Act and (ii)
is not then reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report);
(b) such
Person or any of such Person’s Affiliates and Associates, directly or
indirectly, has the right or obligation to acquire such securities (whether such
right or obligation is exercisable or effective immediately or only after the
passage of time or the occurrence of an event) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, other rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to “beneficially own,” (i) securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or exchange
or (ii) securities issuable upon exercise of Exempt Rights; or
(c) such
Person or any of such Person’s Affiliates or Associates (i) has any agreement,
arrangement or understanding (whether or not in writing) with any other Person
(or any Affiliate or Associate thereof) that beneficially owns such securities
for the purpose of acquiring, holding, voting (except as set forth in the
proviso to subsection (a) of this definition) or disposing of such securities or
(ii) is a member of a group (as that term is used in Rule 13d-5(b) of the
General Rules and Regulations under the Exchange Act) that includes any other
Person that beneficially owns such securities; provided, however, that nothing
in this definition shall cause a Person engaged in business as an underwriter of
securities to be the Beneficial
14
Owner of,
or to “beneficially own,” any securities acquired through such Person’s
participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition. For
purposes hereof, “voting” a security shall include voting, granting a proxy,
consenting or making a request or demand relating to corporate action
(including, without limitation, a demand for a stockholder list, to call a
stockholder meeting or to inspect corporate books and records) or otherwise
giving an authorization (within the meaning of Section 14(a) of the Exchange
Act) in respect of such security.
The terms
“beneficially own” and
“beneficially owning”
shall have meanings that are correlative to this definition of the term
“Beneficial Owner.”
“Change of Control” shall mean
any of the following:
(a) any
Person (other than an Exempt Person) shall become the Beneficial Owner of 40% or
more of the shares of Common Stock then outstanding or 40% or more of the
combined voting power of the Voting Stock of the Company then outstanding;
provided, however, that no Change of Control shall be deemed to occur for
purposes of this subsection (a) if such Person shall become a Beneficial Owner
of 40% or more of the shares of Common Stock or 40% or more of the combined
voting power of the Voting Stock of the Company solely as a result of (i) an
Exempt Transaction or (ii) an acquisition by a Person pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (i), (ii) and (iii)
of subsection (c) of this definition are satisfied;
(b) individuals
who, as of the Agreement Effective Date, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
Agreement Effective Date whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; provided, further, that there
shall be excluded, for this purpose, any such individual whose initial
assumption of office occurs as a result of any actual or threatened election
contest that is subject to the provisions of Rule 14a-11 under the Exchange
Act;
(c)
approval by the shareholders of the Company of a reorganization, merger or
consolidation, in each case, unless, following such reorganization, merger or
consolidation, (i) more than 85% of the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger or consolidation
and the combined voting power of the then outstanding Voting Stock of such
corporation beneficially owned, directly or indirectly, by all or substantially
all of the Persons who were the Beneficial Owners of the outstanding Common
Stock immediately prior to such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the outstanding Common Stock, (ii)
no Person (excluding any Exempt Person or any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 40% or more of the Common Stock then outstanding or 40% or more of
the combined voting power of the Voting Stock of the Company then outstanding)
beneficially owns, directly or indirectly, 40% or more of the then outstanding
shares of common
15
stock of
the corporation resulting from such reorganization, merger or consolidation or
the combined voting power of the then outstanding Voting Stock of such
corporation and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the execution
of the initial agreement or initial action by the Board providing for such
reorganization, merger or consolidation; or
(d) approval
by the shareholders of the Company of (i) a complete liquidation or dissolution
of the Company unless such liquidation or dissolution is approved as part of a
plan of liquidation and dissolution involving a sale or disposition of all or
substantially all of the assets of the Company to a corporation with respect to
which, following such sale or other disposition, all of the requirements of
clauses (ii)(A), (B) and (C) of this subsection (d) are satisfied, or (ii) the
sale or other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which, following such sale
or other disposition, (A) more than 85% of the then outstanding shares of common
stock of such corporation and the combined voting power of the Voting Stock of
such corporation is then beneficially owned, directly or indirectly, by all or
substantially all of the Persons who were the Beneficial Owners of the
outstanding Common Stock immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the outstanding Common Stock, (B) no Person
(excluding any Exempt Person and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, 40% or more of
the Common Stock then outstanding or 40% or more of the combined voting power of
the Voting Stock of the Company then outstanding) beneficially owns, directly or
indirectly, 40% or more of the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding Voting Stock
of such corporation and (C) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement or initial action of the Board providing
for such sale or other disposition of assets of the Company.
“Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.
“Exempt Person” shall mean the
Company, any subsidiary of the Company, any employee benefit plan of the Company
or any subsidiary of the Company, and any Person organized, appointed or
established by the Company for or pursuant to the terms of any such
plan.
“Exempt Rights” shall mean any
rights to purchase shares of Common Stock or other Voting Stock of the Company
if at the time of the issuance thereof such rights are not separable from such
Common Stock or other Voting Stock (i.e., are not transferable
otherwise than in connection with a transfer of the underlying Common Stock or
other Voting Stock) except upon the occurrence of a contingency, whether such
rights exist as of the Agreement Effective Date or are thereafter issued by the
Company as a dividend on shares of Common Stock or other Voting Securities or
otherwise.
“Exempt Transaction” shall
mean an increase in the percentage of the outstanding shares of Common Stock or
the percentage of the combined voting power of the outstanding
16
Voting
Stock of the Company beneficially owned by any Person solely as a result of a
reduction in the number of shares of Common Stock then outstanding due to the
repurchase of Common Stock or Voting Stock by the Company, unless and until such
time as (a) such Person or any Affiliate or Associate of such Person shall
purchase or otherwise become the Beneficial Owner of additional shares of Common
Stock constituting 1% or more of the then outstanding shares of Common Stock or
additional Voting Stock representing 1% or more of the combined voting power of
the then outstanding Voting Stock, or (b) any other Person (or Persons) who is
(or collectively are) the Beneficial Owner of shares of Common Stock
constituting 1% or more of the then outstanding shares of Common Stock or Voting
Stock representing 1% or more of the combined voting power of the then
outstanding Voting Stock shall become an Affiliate or Associate of such
Person.
“Person” shall mean any
individual, firm, corporation, partnership, association, trust, unincorporated
organization or other entity.
“Voting Stock” shall mean,
with respect to a corporation, all securities of such corporation of any class
or series that are entitled to vote generally in the election of directors of
such corporation (excluding any class or series that would be entitled so to
vote by reason of the occurrence of any contingency, so long as such contingency
has not occurred).
10. Non-Compete and
Non-Solicitation.
(a) The
Executive recognizes that in each of the highly competitive businesses in which
the Company is engaged, personal contact is of primary importance in securing
new customers and in retaining the accounts and goodwill of present customers
and protecting the business of the Company. The Executive, therefore, agrees
that during the Employment Period and, if the Date of Termination occurs by
reason of the Executive terminating his employment for reasons other than
Disability or Good Reason and other than during a Window Period, for a period of
one year after the Date of Termination, he will not either within 20 miles of
any geographic location of any Shale play with respect to which he has devoted
substantial attention to the material business interests of the Company or any
of its affiliated companies or with respect to any immediate geologic trends in
any non-Shale plays, in either case, in which the Company or any of its
affiliated companies have active leases or are actively pursuing leases through
direct employee activity or hired brokers as of the Date of Termination, without
regard, in either case, to whether the Executive has worked at such location
(the “Relevant Geographic Area”), (i) accept employment or render service to any
Person that is engaged in a business directly competitive with the business then
engaged in by the Company or any of its affiliated companies in the Relevant
Geographic Area, (ii) enter into or take part in or lend his name, counsel or
assistance to any business, either as proprietor, principal, investor, partner,
director, officer, executive, consultant, advisor, agent, independent
contractor, or in any other capacity whatsoever, for any purpose that would be
competitive with the business of the Company or any of its affiliated companies
in the Relevant Geographic Area or (iii) regardless of whether it is in the
Relevant Geographic Area, directly or indirectly, either as principal, agent,
independent contractor, consultant, director, officer, employee, employer,
advisor, stockholder, partner or in any other individual or representative
capacity whatsoever, either for his own benefit or for the benefit of any other
person or entity either (A) hire, contract or solicit, or attempt any of the
foregoing, with respect to hiring any employee of the Company or its affiliated
companies, or
17
(B)
induce or otherwise counsel, advise or encourage any employee of the Company or
its affiliated companies to leave the employment of the Company or its
affiliated companies (all of the foregoing activities described in (i), (ii) and
(iii) are collectively referred to as the “Prohibited
Activity”). Notwithstanding anything contained in this Section 10 to
the contrary, the Prohibited Activity shall not be applicable to the state or
federal waters of the Gulf of Mexico or outside of the United States except as
to the area covered by any U.S. or foreign state or federal oil and gas lease,
license or permit in which the Company owns a working interest which was
acquired by the Company prior to or during the Employment Period and further
limited to the depths in which the Company owns such working or operating rights
interest. For the avoidance of doubt, the provisions of this Section 10 will not
apply following a termination of the Executive’s employment by the Company with
or without Cause, by the Executive due to Disability or Good Reason or by the
Executive during a Window Period.
(b) In
addition to all other remedies at law or in equity which the Company may have
for breach of a provision of this Section 10 by the Executive, it is agreed that
in the event of any breach or attempted or threatened breach of any such
provision, the Company shall be entitled, upon application to any court of
proper jurisdiction, to a temporary restraining order or preliminary injunction
(without the necessity of (i) proving irreparable harm, (ii) establishing that
monetary damages are inadequate or (iii) posting any bond with respect thereto)
against the Executive prohibiting such breach or attempted or threatened breach
by proving only the existence of such breach or attempted or threatened breach.
If the provisions of this Section 10 should ever be deemed to exceed the time,
geographic or occupational limitations permitted by the applicable law, the
Executive and the Company agree that such provisions shall be and are hereby
reformed to the maximum time, geographic or occupational limitations permitted
by the applicable law.
(c) The
covenants of the Executive set forth in this Section 10 are independent of and
severable from every other provision of this Agreement; and the breach of any
other provision of this Agreement by the Company or the breach by the Company of
any other agreement between the Company and the Executive shall not affect the
validity of the provisions of this Section 10 or constitute a defense of the
Executive in any suit or action brought by the Company to enforce any of the
provisions of this Section 10 or seek any relief for the breach thereof by the
Executive.
(d) The
Executive acknowledges, agrees and stipulates that: (i) the terms and provisions
of this Agreement are reasonable and constitute an otherwise enforceable
agreement to which the terms and provisions of this Section 10 are ancillary or
a part of as contemplated by TEX. BUS. & COM. CODE XXX. Sections
15.50-15.52; (ii) the consideration provided by the Company under this Agreement
is not illusory; and (iii) the consideration given by the Company under this
Agreement, including, without limitation, the provision by the Company of
Confidential Information to the Executive as contemplated by Section 8, gives
rise to the Company’s interest in restraining and prohibiting the Executive from
engaging in the Prohibited Activity within the Relevant Geographic Area as
provided under this Section 10, and the Executive’s covenant not to engage in
the Prohibited Activity within the Relevant Geographic Area pursuant to this
Section 10 is designed to enforce the Executive’s consideration (or return
promises), including, without limitation, the Executive’s promise to not
disclose Confidential Information under this Agreement.
18
11. Successors.
(a) This
Agreement is personal to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive’s heirs, executors and other
legal representatives.
(b) This
Agreement shall inure to the benefit of and be binding upon the Company and may
only be assigned to a successor described in Section 11(c).
(c) The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used
in this Agreement, “Company” shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
12. Section
409A.
(a) This
Agreement is intended to provide payments that are exempt from or compliant with
the provisions of Section 409A of the Code and related regulations and Treasury
pronouncements (“Section 409A”), and the Agreement shall be interpreted
accordingly. Notwithstanding any provision of this Agreement to the
contrary, the parties agree that any benefit or benefits under this Agreement
that the Company determines are subject to the suspension period under Code
Section 409A(a)(2)(B) shall not be paid or commence until a date following six
months after the Executive’s termination date, or if earlier, the Executive’s
death.
(b) Each
payment under this Agreement is intended to be (i) excepted from Section 409A,
including, but not limited to, by compliance with the short-term deferral
exception as specified in Treasury Regulation § 1.409A-1(b)(4) and the
involuntary separation pay exception within the meaning of Treasury Regulation §
1.409A-1(b)(9)(iii), or (ii) in the event any Gross Up Payment is made pursuant
to Section 7(a) herein, in compliance with Section 409A, including, but not
limited to, being paid pursuant to a fixed schedule or specified date pursuant
to Treasury Regulation § 1.409A-3(i)(1)(v), and the provisions of this Agreement
will be administered, interpreted and construed accordingly (or disregarded to
the extent such provision cannot be so administered, interpreted, or
construed). In the event that any additional tax is imposed on the
Executive pursuant to Section 409A, the Company agrees to reimburse the
Executive for any such tax imposed by Section 409A, together with any taxes
imposed on such reimbursement. Such reimbursement shall be promptly
paid by the Company to or for the benefit of the Executive no later than the
time such tax is due.
(c) All
reimbursements or provision of in-kind benefits pursuant to this Agreement shall
be made in accordance with Treasury Regulation § 1.409A-3(i)(1)(iv) such that
the reimbursement or provision will be deemed payable at a specified time or on
a fixed schedule relative to a permissible payment
event. Specifically, the amount reimbursed or in-kind benefits
provided under this Agreement during the Executive’s taxable year may not affect
the amounts
19
reimbursed
or provided in any other taxable year (except that total reimbursements may be
limited by a lifetime maximum under a group health plan), the reimbursement of
an eligible expense shall be made on or before the last day of the Executive’s
taxable year following the taxable year in which the expense was incurred, and
the right to reimbursement or provision of in-kind benefit is not subject to
liquidation or exchange for another benefit.
13. Miscellaneous.
(a) This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas, without reference to principles of conflict of laws that would
require the application of the laws of any other state or
jurisdiction.
(b) The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect.
(c) This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and heirs,
executors and other legal representatives.
(d) All
notices and other communications hereunder shall be in writing and shall be
given, if by the Executive to the Company, by telecopy or facsimile transmission
at the telecommunications number set forth below and, if by either the Company
or the Executive, either by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the
Executive:
Xxxx X.
Xxxxxx
|
|
Carrizo
Oil & Gas, Inc.
|
|
|
0000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
|
|
|
Xxxxxxx,
Xxxxx 00000
|
If to the
Company:
Carrizo Oil & Gas,
Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax Number: (000) 000-0000
Telephone Number: (000) 000-0000
Attention: Corporate
Secretary
or to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(e) The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
20
(f) The
Company may withhold from any amounts payable under this Agreement such federal,
state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(g) The
Executive’s or the Company’s failure to insist upon strict compliance with any
provision hereof or any other provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement; provided, however, that any claim for “Good Reason”
termination must be raised within 90 days following the occurrence of the event
giving rise to the right to terminate for “Good Reason” as set forth in Section
3(c) hereof.
(h) This
Agreement contains the complete and total understanding of the parties
concerning the subject matter hereof and expressly supersedes any previous
agreement between the parties relating to the subject matter hereof, including
without limitation the Prior Employment Agreement.
IN WITNESS WHEREOF, the Executive has
hereunto set his hand and, pursuant to the authorization from its Board, the
Company has caused these presents to be executed in its name on its behalf, all
to be effective as of the Agreement Effective Date.
CARRIZO
OIL & GAS, INC.
By: /s/Xxxx X. Xxxxxx
Name: Xxxx
X. Xxxxxx
Title: Chief
Financial Officer, Vice President, Secretary
and Treasurer
EXECUTIVE
/s/J.
Xxxxxxx Xxxxxx
Name: J.
Xxxxxxx Xxxxxx
21
EXHIBIT A TO EMPLOYMENT
AGREEMENT DATED JUNE 5, 2009
1. For
purposes of this Agreement, the following capitalized words shall have the
meanings indicated below:
“Benefits
Continuation Multiplier Percentage” means 3%.
“Change
of Control Severance Multiplier Percentage” means 266%.
“Severance
Multiplier Percentage” means 145%.
“Supplemental
Life Insurance Benefit” means 1.9.
“Supplemental
Severance Multiplier Percentage” means 90%.
22
