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EXHIBIT 10.12
EMPLOYMENT AND UNITED STATES OF AMERICA
STOCK OWNERSHIP
AGREEMENT STATE OF LOUISIANA
BY AND BETWEEN PARISH OF ORLEANS
ENERGY PARTNERS, LTD.
AND
XXXXXXX X. XXXX
THIS EMPLOYMENT AND STOCK OWNERSHIP AGREEMENT (the "Agreement"),
entered into in New Orleans, Louisiana on this 18th day of March, 2000, to be
effective April 17, 2000, by and between Xxxxxxx X. Xxxx, an individual of the
full age of majority domiciled in the County of Xxxxxx, State of Texas
(hereinafter called "Employee") and Energy Partners, Ltd., a corporation
organized and existing under the laws of the State of Delaware (hereinafter
called "Company"), represented herein by its duly authorized President, Xxxxxxx
X. Xxxxxxxx.
1.0 TERMS AND CONDITIONS OF EMPLOYMENT.
1.1 LENGTH OF EMPLOYMENT. In consideration for the compensation
set forth in Subparagraph 1.2, Employee shall be employed as
Company's Chief Financial Officer for a period of three (3)
years (or for such lesser time period as mandated by law) from
the date of execution of this Agreement (the "Term"). Company
may terminate employment at any time for "Cause". "Cause" as
used herein shall consist of the following: (a) willful
refusal to perform assigned functions; (b) insubordination;
(c) embezzlement; (d) intoxication or drug abuse which
interferes with job performance; (e) wrongful disclosure of
confidential company information: (f) conflict of interest
which is undisclosed and not Board approved; (g) conviction of
a felony; (h) engaging, directly or indirectly, in a business
which is competitive to the business of the Company, as an
employee, officer, director, shareholder, partner, agent or
independent contractor which is undisclosed and not Board
approved; and (i) incompetence. Within thirty (30) days of
execution of this Agreement, Employee shall prepare a written
disclosure statement of all business relationships in which he
may continue to be an employee, officer, director,
shareholder, partner, agent or independent contractor. A Cause
determination shall be in the Company's sole discretion.
Company may terminate employment upon ninety (90) days'
written notice for any reason whatsoever in which case
Employee shall not be entitled to the balance of compensation
for the remainder of the Term following such ninety (90) day
notice.
1.2 CONSIDERATION. As compensation, Employee shall receive a
minimum annual salary of $185,000 payable in accordance with
the normal payroll practices of the Company as set forth on
Exhibit "A" attached hereto and made a part hereof. Employee
will receive annual salary reviews. After the first
anniversary, her salary will be adjusted to the industry
standard for her position. Industry standard is defined as the
75th percentile of a reasonable sample of public and private
independent oil and gas companies of similar size. The Company
shall offer group health care coverage as determined by the
Board of Directors. By mutual written agreement between the
parties, Exhibit "A" may be modified substituted or replaced
from time to time so as to reflect adjustments to compensation
or other benefits as determined by the Board of Directors.
Only the President of the Company shall have the authority on
the Company's behalf to modify, substitute or replace Exhibit
"A."
1.3 VACATION TIME. Employee shall be entitled to six (6) weeks of
paid vacation per calendar year as set forth in Exhibit "A",
which shall be taken at times mutually agreeable to Employee
and Company. The Company, in its discretion, may advance
vacation days as requested by Employee. The vacation time must
be used in each calendar year and will not be carried forward
to succeeding years.
1.4 LIABILITY. Company shall indemnify and hold harmless Employee
from and against any and all claims and liabilities to which
Employee may be or become subject by reason of Employee now or
hereafter being or having heretofore been an employee of
Company and/or by reason of Employee's alleged
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acts or omissions as such employee, whether or not Employee
continues to be such employee at the time when any such claim
or liability is asserted, and shall reimburse Employee for all
legal and other expenses reasonably incurred by Employee in
connection with defending any or all such claims or
liabilities, including amounts paid or agreed to be paid in
connection with reasonable settlements made before final
adjudication with the approval of the Board of Directors,
whether or not Employee continues to be an employee at the
time such expenses are incurred; provided, however, that
Employee shall not be indemnified against any claim or
liability to the extent that it arises out of Employee's own
gross negligence or willful misconduct finally determined by a
court of competent jurisdiction, and shall not be indemnified
against or reimbursed for any expenses incurred in defending
any or all such claims or liability or in settling the same.
1.5 NON-COMPETITION AGREEMENT. Company and Employee acknowledge
that Company is engaged in the business of owning, operating,
producing and exploring for mineral interests, and other
related activities. For a period of two (2) years following
termination of employment (the last day on which Employee is
actively engaged in employment on Company's behalf), Employee
will not compete directly or indirectly with the Company as to
any existing contract to which Company is a party, and/or as
to any business of the Company evidenced by contracts,
agreements, letters of intent, confidentially agreements, or
written proposals in existence on the date of termination of
employment in those Parishes in Louisiana set forth in Exhibit
"B", and in the states and subdivisions of those states as
provided in Exhibit "B." The parties acknowledge that the
remedy at law for any breach, whether jointly or severally, of
this non-competition clause of this Agreement, all of which is
deemed material, will be inadequate and the parties hereby
agree that the Company shall be entitled to injunctive relief
by a court of competent jurisdiction enjoining and restraining
him from the continuance of any such act which constitutes a
breach hereof. In addition to injunctive relief, Company
reserves the right to seek any damages to which it may be
entitled as consequence of employee's breach of this
Agreement.
1.6 WAGES. Should Employee Resign (as defined in Subparagraph 2.7
below), and if Employee does not have any just cause of
complaint against the Company, Employee shall then forfeit all
of the future wages that may be due and payable to Employee.
However, Employee shall not be compelled to repay any monies
Employee has received as wages, whether in advance of the
current year or at the time of Employee's engagement.
2.0 SHAREHOLDER'S AGREEMENT.
2.1 RECEIPT OF SHARES. Subject to the terms and conditions of this
Agreement, Employee shall receive sixty (60) shares of
restricted stock of the Company, which will vest as follows:
Employee receives twenty (20) shares upon execution of this
Agreement, twenty (20) shares at the first anniversary of this
Agreement, and twenty (20) shares at the second anniversary of
this Agreement.
2.2 RECEIPT OF OPTIONS. Subject to the terms and conditions of
this Agreement, Employee shall receive an option to purchase
an additional 250 shares of stock of the Company, as follows:
Employee receives an option to purchase 100 shares of the
Company at a price equal to $11,500 per share at the first
anniversary of this Agreement, an option to purchase 100
shares of the Company at a price equal to $13,225 per share at
the second anniversary of this Agreement and an option to
purchase 50 shares of the Company at a price equal to $15,208
per share at the third anniversary of this Agreement. Employee
must exercise each option within five (5) years from the
option date or the option will lapse.
2.3 TRANSFER OF SHARES. No Shares may be sold, assigned, pledged,
transferred or otherwise alienated (each, "Transferred")
except in accordance with and pursuant to the terms and
conditions of this Agreement. Additionally, as a condition
precedent to any Transfer, the transferee must validly execute
the Stockholder's Agreement. Unless otherwise prohibited in
the Stockholder's Agreement, the Shares may be pledged with
the Company's consent, provided that any lender's recourse for
liquidation on debt repayment shall be limited to selling the
pledged Shares under the same terms and conditions as though
it was an Employee. The lender shall agree to the foregoing
provisions as terms of the pledge.
2.4 RESTRICTIONS ON TRANSFER. Any Transfer or attempted Transfer
by Employee in violation of this Agreement shall be null and
void and of no force or effect whatever. Any purported
transferee shall not be deemed to be a shareholder of the
Company and shall not be entitled to receive a new certificate
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or any distributions on or with respect to the Shares.
Employee hereby acknowledges the reasonableness of the
restrictions on Transfer imposed by this Agreement in view of
the Company's purposes and the relationship of the Employee
with the Company. Accordingly, the restrictions on Transfer
contained herein shall be specifically enforceable. Employee
hereby further agrees to hold the Company and each other
shareholder (each shareholder's successors and assigns) wholly
and completely harmless from any cost, liability or damage
(including, without limitation, liabilities for income taxes
and costs of enforcing this indemnity) incurred by any of such
indemnified persons as a result of a Transfer or attempted
Transfer in violation of this Agreement.
2.5 SUBSEQUENTLY ISSUED SHARES. All Shares hereinafter issued to
Employee or to Employee's beneficiaries, heirs, successors in
interest, representatives or assigns with respect to any
Shares subject to this Agreement, whether by stock split,
stock dividend or otherwise, shall bear the same endorsement
and be subject to all the terms and conditions hereof.
2.6 LEGEND. In addition to other legends required under the
Stockholders' Agreement and applicable securities laws, the
Shares, which are subject to this Agreement, shall contain the
following legend:
"The shares represented by this certificate are
subject to repurchase by Energy Partners, Ltd. and
such shares may not be sold or otherwise transferred
except pursuant to the Employment and Stock Ownership
Agreement, dated March 18, 2000, by and between the
shareholder to whom this certificate was issued, the
shareholder's spouse and Energy Partners, Ltd., a
copy of which is on file in the office of the
Corporate Secretary of the Company."
2.7 INTERNAL REVENUE CODE SECTION 83(b) ELECTION. The Employee
shall execute a valid election under Internal Revenue Code
Section 83(b), in accordance with the procedures prescribed in
the regulations thereunder and the form attached hereto and
made hereof as Exhibit "C".
2.8 SHAREHOLDER RIGHTS UPON JUDGMENT OF SEPARATION OR DIVORCE. In
the event of a judgment of separation or divorce involving
Employee in which a portion of Employee's Shares are
transferred to Employee's spouse/ex-spouse, Employee shall
have sixty (60) days from the date of such transfer to
purchase said Shares from the spouse/ex-spouse. If Employee
does not purchase said Shares within the sixty (60) day time
period, then within four (4) months of said transfer, all of
Employee's rights to the Shares transferred to Employee's
spouse/ex-spouse may be acquired as set forth in Section 2.12
hereof. If the Shares are owned as community property or in
joint ownership, Employee's spouse shall execute this
Agreement in acknowledgment and agreement to such sale of
Shares. The spouse, by executing this Agreement, shall also
acknowledge and agree that following such sale of their
Shares, the spouse will have no further interest whatsoever in
this Agreement or any claims under it. This provision shall be
inapplicable to any Employee whose spouse/ex-spouse is also an
employee of the Company and holds Shares in their own name.
2.9 PURCHASE PRICE UPON JUDGMENT OF SEPARATION OR DIVORCE. (a) If
the Employee purchases the spouse/ex-spouse's Shares, the
purchase price shall be based upon the "fair market value" of
the Shares as of the end of the fiscal year of the Company
immediately preceding the date of said judgment and payment
shall be made in cash. "Fair market value" shall be determined
by both the Employee and the spouse/ex-spouse by obtaining two
(2) separate appraisals of the Shares by each party, and
reaching an agreement on the fair market value based upon the
two (2) appraisals. However, if no agreement can be reached
within five (5) business days of the date of the latest
appraisal, the Company will obtain a third appraisal, with
costs split evenly between the Employee and the
spouse/ex-spouse, and the fair market value will be the
average of the three (3) appraisals. (b) If the Employee does
not purchase the Shares from the spouse/ex-spouse, then the
Shares may be acquired as set forth in Section 2.12 hereof for
the fair market value established based upon the average of an
appraisal obtained by Company and an appraisal obtained by
Employee determined as of the end of the fiscal year of the
Company immediately preceding the date of said judgment within
four (4) months of the transfer to the spouse/ex-spouse.
2.10 INTERESTS OF EMPLOYEE SPOUSE UPON DEATH. By executing this
Agreement, the spouse of Employee agrees to execute within
sixty (60) days hereof, a valid last will and testament
containing a legacy to Employee consisting of all interests in
the Shares that the spouse owns jointly or through a community
property regime. The last will and testament shall also
contain a provision that should such disposition
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impinge upon the legitime of the spouse's forced heirs, that
Employee shall have the right within six (6) months of the
spouse's death to purchase such Shares at a price based upon
an independent appraisal determined as of the December
thirty-first (31st) immediately prior to the date of the
spouse's death. Should Employee fail to purchase such Shares,
the Shares may be acquired as set forth in Section 2.12 hereof
at the fair market value as determined using the procedure set
forth in Subparagraph 2.9(b) above, within four (4) months of
the spouse's death.
2.11 OPTION TO PURCHASE. As more fully described in Section 2.2 of
the Stockholders' Agreement, any right or option to purchase
any shares pursuant to this Agreement shall first be
exercisable by Xxxxxxx X. Xxxxxxxx, or his designee, who shall
first have the option to purchase all of the Shares under the
applicable terms and conditions. So long as the Stockholder
Agreement is in effect, the Evercore Entities (as defined in
the Stockholder Agreement) shall have the option to purchase
or redeem the Shares if not purchased by Xxxxxxx X. Xxxxxxxx
under the same applicable terms and conditions. The other
Management Shareholders (as defined in the Stockholder
Agreement) shall have the option to purchase all of the Shares
not purchased by Xxxxxxx X. Xxxxxxxx or the Evercore Entities
under the same applicable terms and conditions.
2.12 EMPLOYEE'S FOR "CAUSE" TERMINATION. The Company may terminate
Employee's employment and all of the Company's obligations
under this Agreement at any time for "Cause" as defined in
Subparagraph 1.1 above. If Employee is terminated for "Cause",
all stock received and vested as set forth in Section 2.1
shall be the property of Employee, but any right to receive
stock after the termination date will be cancelled and
forfeited. Similarly, if Employee is terminated for cause, all
options described in Section 2.2 which have vested prior to
termination shall be the property of and exercisable by
Employee, but any option rights which otherwise would mature
after termination will lapse, be cancelled, and forfeited.
2.13 EMPLOYEE'S TERMINATION UPON DEATH OR DISABILITY. Employee's
employment and the Company's obligations under this Agreement
shall terminate automatically, effective immediately and
without any notice, upon Employee's death or a determination
of Disability of Employee. For purposes of this Agreement,
"Disability" means the inability of Employee, due to a
physical or mental impairment, for 90 days (whether or not
consecutive) during any period of 360 days to perform the
duties and functions contemplated by this Agreement. A
determination of Disability shall be made by the Board of
Directors in consultation with a physician satisfactory to the
Company, and Employee shall cooperate with the efforts to make
such determination. Any such determination shall be conclusive
and binding on the parties. Any determination of Disability
under this Section 2.13 is not intended to alter any benefits
any party may be entitled to receive under any long-term
disability insurance policy maintained by either the Company
or Employee with respect to Employee, which benefits shall be
governed solely by the terms of any such insurance policy. If
Employee is terminated due to death or disability, as defined
above, all stock received prior to termination becomes vested
and any future stock or options which were scheduled for
receipt will lapse.
2.14 EMPLOYEE'S TERMINATION WITHOUT CAUSE. The Company may
terminate Employee's employment and all of the Company's
obligations under this Agreement at any time by written notice
to Employee without cause. If Employee is terminated without
cause, all stock received and any future stock or options
scheduled for receipt as defined in Subparagraphs 2.1 and 2.2
above, becomes vested.
3.0 MISCELLANEOUS.
3.1 ENTIRE AGREEMENT. The parties to this Agreement acknowledge
that they have concurrently executed the Stockholder
Agreement. In any circumstance where there is a conflict
between the provisions of the Stockholders' Agreement and this
Agreement, the provisions of the Stockholders' Agreement shall
prevail, but only so long as the Stockholders' Agreement is in
force and effect. Capitalized terms not defined herein shall
have the meaning set forth in the Stockholders' Agreement.
Without limiting the generality of the foregoing, this
Agreement embodies the entire agreement between the parties
hereto regarding to the subject matter hereof, and shall
supersede any and all prior agreements whether written or oral
relating to employment and/or Shares of the Company owned by
Employee, and shall be binding upon Employee and Employee's
heirs, legatees, legal representatives, successors, donees,
transferees and assigns, and Employee does hereby authorize
and obligate Employee's executors, heirs and legatees to
comply with the terms of this Agreement. The parties shall not
be bound by or be
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liable for any statement, representation, promise, inducement
or understanding of any kind or nature regarding the subject
matter hereof which is not set forth herein. No changes,
amendments or modifications of any of the terms or conditions
of this document shall be valid unless reduced to writing and
signed by all parties hereto, Company being represented by its
President or his designee.
3.2 REGISTRATION RIGHTS AGREEMENT AND STOCKHOLDER AGREEMENT. The
Registration Rights Agreement as set forth on Exhibit "D"
attached hereto and made a part hereof, is hereby acknowledged
and accepted as binding upon Employee and Company as though
employee was an original signatory of such agreement. The
Stockholder Agreement dated as of November 17, 1999 as set
forth on Exhibit "E" attached hereto and made a part hereof,
is hereby acknowledged and accepted as binding upon Employee
and Company as though employee was an original signatory of
such agreement.
3.2 SEVERABILITY. If any provision of this Agreement shall be
declared unlawful or incapable of execution or in conflict
with the Stockholders' Agreement, such facts shall in no way
affect the validity of any other portion hereof which can be
given reasonable effect without the provision declared invalid
or incapable of execution; nor shall such fact operate to
nullify or rescind this Agreement, but shall only serve to
render ineffective the provisions declared invalid of the
remainder, or the intent of the Agreement as a whole.
3.3 APPLICABLE LAW. This document shall be construed for all
purposes as a Louisiana document and shall be interpreted and
enforced in accordance with the laws of the State of
Louisiana; provided however, that the non-compete provisions
set forth in Subparagraph 1.5 hereof shall governed by the law
of the state where the alleged competition occurs, whether in
Louisiana or some other state.
3.4 NUMBER AND GENDER. As used herein, the singular shall include
the plural and vice versa and words used in one gender shall
include all others as appropriate.
3.5 ADDITIONAL DOCUMENTS. The parties hereto agree to execute
whatever documents or instruments and to perform whatever acts
may be reasonably required to fulfill the requirements and/or
intents hereof.
3.6 LEGAL ASSISTANCE. The parties hereto have each consulted with
legal counsel or have had the opportunity to consult with
legal counsel regarding the terms and conditions of this
Agreement.
3.7 TERMINATION. The Terms and Conditions of Sections 1.0 to 1.4
of this Agreement shall terminate on the third anniversary of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have set forth their hand and
seal on the day, month and year first above written in multiple originals, each
of which shall have the same force and effect as if it were the sole original.
WITNESSES: ENERGY PARTNERS, LTD.
By:
----------------------------- -------------------------------
Xxxxxxx X. Xxxxxxxx
----------------------------- President and Chief Executive Officer
----------------------------- By:
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----------------------------- Xxxxxxx X. Xxxx
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