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EXHIBIT 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated effective as of May
1, 1999, (the "Start Date") is between Petsec Energy Inc., a corporation formed
under the laws of Nevada (the "Company"), and Xxxxxx X. Xxxxxx, an individual
resident of the State of Louisiana (the "Executive").
W I T N E S S E T H:
WHEREAS, Company and Executive desire to enter into a written agreement
providing for the continued employment of Executive by Company upon the terms
and subject to the conditions set forth herein;
WHEREAS, Executive will report to the Chief Executive Officer (the
"CEO") of the Company or his designee, and he shall have the right, under the
terms and conditions specified in this Agreement, to recommend to Company's
Board of Directors (the "Company Board") any determination made under the
Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements herein contained, and other good and valuable consideration, the
receipt, adequacy and sufficiency of which hereby are acknowledged, the parties
agree as follows:
1. EMPLOYMENT. Subject to the provisions of this Agreement,
Company hereby agrees to employ Executive and Executive hereby
agrees to accept such employment with, and to provide to
Company the services described in Section 3 below.
2. TERM. Executive shall be employed by Company for a period
commencing on the Start Date and, except as otherwise provided
herein, ending on the third anniversary of the Start Date. The
term of this Agreement shall be extended annually without the
necessity of any affirmative action by any party for an
additional one year term (to make an aggregate three year
commitment on the part of Company and Executive) on May 1 of
each year that Executive is employed by Company, unless prior
to May 1 of each such year Company terminates this Agreement
by sending written notice to Executive (in which case, the
provisions of Section 8.1 shall apply). The period during
which Company employs Executive shall hereinafter be referred
to as the "Term of Employment."
3. NATURE OF SERVICE. During the Term of Employment, Executive
agrees to perform such services as are consistent with his
position as Vice-President--Operations or as from time to
time shall be assigned to him by the CEO or his designee.
Executive
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shall devote so much of his time, attention and skills to the
business of Company as is necessary to properly perform his
duties and responsibilities. Executive shall not, during the
Term of Employment, be engaged in, or represent any party
other than Company in connection with the provision of any
services whatsoever without the prior written consent of the
CEO or his designee. Executive shall perform his duties under
this Agreement diligently with fidelity and loyalty and in a
competent manner consistent with the level of his
responsibilities.
4. COMPENSATION.
4.1. BASE SALARY. During the Term of Employment, Company
shall pay to Executive a base salary payable in equal
periodic installments in accordance with the
established payroll practices of Company. Initially,
the Executive's base salary shall be $170,000 per
year. Executive's base salary shall be reviewed
annually on or before July 1 by the Remuneration
Committee (the "Committee") of the Petsec Energy
Ltd's (the "Parent") Board of Directors (the " Parent
Board"). (If the Parent no longer has beneficial
ownership of at least a majority of the outstanding
voting stock of the Company, then the
responsibilities of the Committee shall be performed
by the Company Board.) The Committee may recommend
increases to the Executive's base salary, which if
accepted by the Company Board, shall become effective
in the manner determined by the Company Board. ("Base
Salary," as used hereinafter, shall mean at any
particular time the periodic payment last paid to
Executive pursuant to this Section 4.1, multiplied by
the appropriate factor to arrive at an annualized
number.)
4.2. CASH INCENTIVE COMPENSATION. On or before April 1 of
each year, the Committee shall recommend to the
Company Board the amount, if any, that shall be
awarded to all senior executives (including
Executive) of the Company who are eligible to
participate in the cash incentive compensation
program. The Committee shall recommend to the Company
Board the cash award, if any, to be paid to Executive
up to a maximum of 100% of Executive's Base Salary.
The amounts available for distribution under the
Company's cash incentive compensation program shall
take into account Company financial and operating
results. The incentive compensation amount awarded to
Executive shall be weighted evenly between Company
performance and individual performance to reward both
cooperative management efforts to attain Company
objectives and individual achievement. Fifty percent
of the cash incentive compensation available to
Executive shall be based on Company performance and
50% shall be based on the individual performance of
Executive. Company performance shall be measured
subjectively by the Committee with input from the
CEO. The Committee shall evaluate individual
performance of the Executive with input
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from the CEO. The cash incentive compensation, if
paid, will be paid to Executive in a lump sum in
April of each year.
4.3. TAXES. All taxes and governmentally required
withholdings shall be deducted in conformity with
applicable laws.
5. STOCK OPTIONS.
5.1. GRANT OF OPTION. As additional compensation to
Executive, Parent has issued to Executive as of the
Start Date options to purchase 375,000 ordinary
shares of Parent, and from time to time the Parent
may issue additional options (collectively, the
"Options"). The Options are governed by the Petsec
Energy Ltd Employee Option Plan, as may be amended
from time to time and one or more times (the "Option
Plan"). Executive agrees that the issue and exercise
of the Options are governed by the rules of the Plan,
and by the additional terms and conditions set by the
Committee and described in the Option Certificates
delivered to Executive with respect to the Options.
Copies of the Option Certificates are attached hereto
as Exhibit A. Award of additional Options to
Executive shall be considered annually on or before
May 1 of each year by the Committee, and a
recommendation with respect thereto made to the
Parent Board.
5.2. TAX CONSEQUENCES. Executive shall be responsible for
the payment of all income taxes, alternative minimum
taxes or other taxes or governmental charges that may
accrue on account of the issuance or exercise of the
Options or the acquisition or sale by Executive of
Parent stock acquired with respect to the Options.
Executive should consult his own tax advisor
regarding the specific tax consequences of
participation in the Plan, including the application
of any federal, state and local tax laws and the
effect of other state and local laws, including
community property laws. Executive agrees to defend
and indemnify Company and Parent for any claims made
against Company, Parent or Executive by any taxing
authority for income or alternative minimum taxes
that may be owed by Executive on account of the
issuance, exercise or sale of the options or the
acquisition or sale by Executive of any Parent stock
acquired with respect to any Options.
6. BENEFITS. Executive shall receive the employee benefits as may
be provided by Company from time to time to employees of
Company holding executive offices and positions, all as
approved by the Company Board. These benefits shall include:
6.1. VACATION TIME. Executive will be eligible for twenty
working days of vacation time per year together with
all public holidays recognized by Company. The use
and accrual of such vacation time shall be governed
by the
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Company's vacation policy, as the same may be amended
from time to time and one or more times.
6.2. DEATH BENEFIT. The Company shall maintain life
insurance for the benefit of the beneficiary(ies) of
Executive that shall pay to Executive's
beneficiary(ies) a death benefit in an amount equal
to at least three times the lowest Base Salary in
effect during the twelve months preceding Executive's
death.
6.3. DISABILITY BENEFIT. The Company shall maintain
disability insurance for the benefit of Executive
that is commensurate with the disability policy in
place as of the Start Date.
6.4. SEVERANCE BENEFIT. Executive shall receive the
severance benefit provided for in Section 8.4.2.
7. REIMBURSEMENT OF BUSINESS EXPENSES. Company shall reimburse
Executive for all reasonable and proper travel and
out-of-pocket expenses (including but not limited to industry
association fees and industry entertainment expenses) incurred
by him for the purpose of and in connection with the
performance of his duties pursuant to this Agreement during
the Term of Employment, all in accordance with the policies
relating to the allowable amount of such expenses and the
provision of itemized reports and receipts with respect
thereto that may from time to time be adopted by Company.
8. TERMINATION.
8.1. TERMINATION BY COMPANY.
8.1.1. FOR CAUSE. Executive's employment under this
Agreement may be terminated for cause at any
time, effective immediately, after formal
action by the CEO acting at the direction of
the Company Board following a meeting of the
Company Board, duly called for the purpose
of considering the termination of Executive
for "cause," as defined herein. As used in
this Section 8.1.1, "cause" shall mean that
the Company Board in good faith either
determines or has reasonable suspicions that
one or more of the following has occurred:
(1) Executive has engaged in gross
negligence or willful misconduct in the
performance of his duties; (2) Executive has
willfully refused without proper legal
reason to perform his duties and
responsibilities; (3) Executive has
materially breached any material provision
of any agreement between Executive and
Company; (4) Executive has materially
breached any material corporate policy of
the Company; or (5) Executive has engaged in
illegal conduct, or has violated any
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statute, rule or regulation under federal
securities laws, or has engaged in any act
of serious dishonesty which adversely
affects, or reasonably could in the future
adversely affect, Executive's value,
reliability or performance in a material
manner or the business reputation of the
Company. In the event that Company acts to
terminate Executive for cause in accordance
with this Section 8.1.1, Executive shall be
entitled to receive only the compensation
provided for in Section 8.4.1 and any rights
provided under the Option Plan with respect
to the Options.
8.1.2. WITHOUT CAUSE. Company may terminate
Executive's employment under this Agreement
at any time, in which case Executive will be
entitled to receive only the compensation
provided for in Section 8.4.1, the severance
benefit provided for in Section 8.4.2 and
any rights provided under the Option Plan
with respect to the Options.
8.2. TERMINATION BY EXECUTIVE.
8.2.1. FOR CAUSE. Executive may terminate his
employment under this Agreement if Company
does any one or more of the following: (1)
Company makes a material reduction in
Executive's job duties, authority or
responsibilities with the Company from that
exercised by him immediately prior to such
change (however, a reduction in the size of
Company and/or in the number of employees
working under the supervision of Executive,
shall not constitute a material reduction
hereunder); (2) a reduction of more than 10%
in any twelve month period from the Base
Salary paid by the Company to Executive
during the twelve months immediately
preceding such Base Salary reduction; (3) a
change in location of Executive's primary
place of employment by the Company by more
than 30 miles from the location where he was
primarily employed prior to such change; (4)
a material reduction in the value of or
change in the scope or terms of the benefits
to which the Executive, taken as a whole,
was entitled prior to such reduction or
change; or (5) Company otherwise fails to
comply with any material provision of this
Agreement. Before terminating his employment
for cause under this Section 8.2.1,
Executive shall first provide the Company
with written notice specifying in detail the
reasons why Executive believes he has the
right to terminate his employment for cause
and allowing Company ten (10) days to cure
any such default. If Executive provides such
a notice to Company and then fails to
terminate his employment for cause within
five days after the expiration of the (10)
day cure period (because Company has cured
such default, because Executive decides
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he no longer wants to terminate this
Agreement or for any other reason),
Executive shall be deemed to have waived his
right to terminate this Agreement for the
reasons specified in the notice. If
Executive does terminate his employment for
cause under this Section 8.2.1, Executive
will be entitled to receive only the
compensation provided for in Section 8.4.1,
the severance benefit provided for in
Section 8.4.2 and any rights provided under
the Option Plan with respect to the Options.
8.2.2. WITHOUT CAUSE. Executive may terminate his
employment under this Agreement without
cause by giving Company at least sixty (60)
days' prior written notice of the effective
date of his termination of employment. In
the event that Executive terminates his
employment under this Section 8.2.2,
Executive shall be entitled to receive only
the compensation provided for in Section
8.4.1 and any rights provided under the
Option Plan with respect to the Options.
Provided that Executive complies with this
Section, Executive shall not be liable for
any damages to Company on account of such
termination.
8.3. TERMINATION UPON DEATH OR DISABILITY.
8.3.1. If Executive becomes permanently disabled so
as to become eligible for permanent
disability insurance benefits under a long
term disability policy maintained by the
Company for the benefit of Executive, at
such time as Executive is determined to be
permanently disabled, Executive's employment
shall be deemed terminated. In the event
that Executive's employment is terminated
under this Section 8.3.1, Executive shall be
entitled to receive only the compensation
provided for in Section 8.4.1, the benefit
provided under Section 6.3, and any rights
provided under the Option Plan with respect
to the Options.
8.3.2. If Executive dies, his employment shall be
deemed to be terminated as of the date of
his death. In such a case, Executive's heirs
or successors shall be entitled to receive
only the benefit provided for in Section
6.2, the compensation provided for in
Section 8.4.1 and any rights provided under
the Option Plan with respect to the Options.
8.4. DAMAGES TO EXECUTIVE IN THE EVENT OF TERMINATION.
8.4.1. COMPENSATION IN THE EVENT OF TERMINATION.
Upon the termination of Executive's
employment with Company, Company shall pay
to Executive (or Executive's heirs or
successors) all unpaid Base Salary
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for the period through the date of
termination and reimbursement for allowable
expenses incurred by Executive through such
date. Company shall not be obligated to pay
Executive any Base Salary for periods beyond
the date of termination.
8.4.2. SEVERANCE BENEFIT. Upon the termination of
Executive's employment with Company under
circumstances set forth in Sections 8.1.2 or
8.2.1, Company shall pay to Executive in a
lump sum an amount equal to the product of
(a) the number of months (prorated for a
partial month) remaining on the term of this
Agreement (which number shall be greater
than or equal to 24 and less than or equal
to 36) times (b) the quotient of the Base
Salary divided by 12. This lump sum payment
shall be made within five days of the
termination of Executive's employment. The
severance benefit provided for under this
Section 8.4.2 shall be reduced dollar for
dollar by any amount to which Executive is
or may become entitled pursuant to the
Petsec Energy Inc. Change in Control Bonus
and Severance Plan or any similar plan.
8.4.3. OPTIONS. Upon Executive's termination of
employment for any reason, Executive's
rights and Company's obligations with
respect to the Options shall be governed by
the Employee Option Plan.
9. CERTAIN COVENANTS OF EXECUTIVE.
9.1. Executive agrees that during the Term of
Employment, he will not (a) directly or
indirectly engage or invest in any business
other than Company's business without the
prior approval of the CEO or his designee or
(b) otherwise act as a director, officer,
employee, agent, owner, partner or
consultant to any such business. It is
understood and agreed that Executive shall
not be deemed to be in default with respect
to this Section 9.1 as a result of any
investment he may make in not more than five
percent of the outstanding shares or other
units of any security registered pursuant to
Section 12 of the Securities Exchange Act of
1934, as amended (the "1934 Act") or in not
more than fifty percent of the outstanding
shares or other units of any security not
registered pursuant to Section 12 of the
0000 Xxx.
9.2. Executive will not during his employment or
thereafter (except in the course of his duties as
authorized by Company or as required by law) use or
disclose to any person any confidential information
or trade secrets belonging or relating to Company or
any person or entity with whom Executive have come
into contact as a result of his employment. Upon
termination of this Agreement, Executive promptly
shall return all originals and copies of such
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papers, lists, documents and records that are in his
possession, custody or control.
9.3. If the provisions contained in this Section 9 are
more restrictive than permitted by applicable law,
the parties agree that the covenants contained in
this Section 9 shall be enforceable and in force to
the extent permitted by law.
10. AMENDMENT. This Agreement may not be modified or amended
except by a written instrument executed by or on behalf of
both Company and Executive.
11. WAIVERS. The observance of any term of this Agreement may be
waived (either generally or in a particular instance and
either retroactively or prospectively) by the party entitled
to enforce such term, but except as otherwise expressly
provided herein, such waiver shall be effective only if in a
writing signed by the party or parties against which such
waiver is to be asserted. Except as otherwise expressly
provided herein, no delay or omission on the part of any party
in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part
of any party of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege
hereunder, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege hereunder. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall
be cumulative and not alternative.
12. ENTIRE AGREEMENT. This Agreement and the documents expressly
referred to herein constitute the entire agreement between the
parties with respect to the matters covered hereby, and any
other prior or contemporaneous oral or written understandings
or agreements with respect to the matters covered hereby are
expressly superseded by this Agreement, including without
limitation, that certain employment agreement dated June 1,
1995 as amended from time to time (including without
limitation amendments dated July 18, 1996 and April 15, 1998).
There are no unwritten or oral agreements between the parties.
13. SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any person or circumstance,
shall be declared judicially to be invalid, unenforceable or
void, such decision will not have the effect of invalidating
or voiding the remainder of this Agreement or affect the
application of such provision to other persons or
circumstances, and the parties agree that the part or parts of
this Agreement so held to be invalid, unenforceable or void
will be deemed to have been stricken here from and the
remainder of this Agreement will have the same force and
effect as if such part or parts had never been included
herein. Any such finding of invalidity or unenforceability
shall not prevent the enforcement of such provision in any
other jurisdiction to the maximum extent permitted by
applicable law.
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14. NOTICES. Unless otherwise expressly provided herein, all
notices, requests, demands, consents, waivers, instructions,
approvals and other communications hereunder shall be in
writing and shall be deemed to have been duly given if
personally delivered to or mailed, certified mail, return
receipt requested, first-class postage paid, or delivered by
messenger service with receipt acknowledged, addressed as
follows:
If to Company:
Xxxxx 00, 0 Xxxxxx Xxxxxx
Xxxxxx, XXX 0000, Xxxxxxxxx
Attn: Xxxxxxxx X. Xxxx
If to Executive:
Xxxxxx X. Xxxxxx
000 Xxx Xxxxxx
Xxxxxxxxx, XX 00000
or to such other address or to such other individuals as any
party shall have last designated by notice to the other party.
All notices and other communications given to any party in
accordance with the provisions of this Agreement shall be
deemed to have been given when delivered to the intended
recipient thereof in accordance with the provisions of this
Section 14.
15. GOVERNING LAW; FORUM; CONSENT TO JURISDICTION. This Agreement
shall be construed in accordance with, and the rights of the
parties governed by, the laws of the State of Louisiana
without regard to the principles of conflict of laws. The
parties agree that all disputes in any way relating to,
arising under, connected with, or incident to this Agreement,
and over which the federal courts have subject matter
jurisdiction, shall be litigated exclusively in the United
States District Court for the Western District of Louisiana,
Lafayette Division, and, if necessary, the corresponding
appellate courts. The parties further agree that all disputes
in any way relating to, arising under, connected with, or
incident to this Agreement, and over which the federal courts
do not have subject matter jurisdiction, shall be litigated,
if at all, exclusively in the Courts of the State of
Louisiana, in Lafayette Parish, and, if necessary, the
corresponding appellate courts. The parties expressly submit
themselves to the personal jurisdiction of the State of
Louisiana.
16. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, Executive agrees on behalf of himself and his
executors and administrators, heirs, legatees, distributees
and any other person or persons claiming any benefits under
him by virtue of this Agreement, that this Agreement and the
rights, interests and benefits
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hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by Executive or any executor,
administrator, heir, legatee, distributee or person claiming
under Executive by virtue of this Agreement and shall not be
subject to execution, attachment or similar process. Except as
otherwise expressly provided herein, Company agrees that this
Agreement shall not be assigned or transferred to any other
party; provided, however, a merger or consolidation of Company
into a successor entity other than Company shall not be
considered a transfer or assignment. Any attempt at
assignment, transfer, pledge or hypothecation or other
disposition of this Agreement or of such rights, interest and
benefits contrary to the foregoing provisions, or the levy of
any attachment or similar process thereupon, shall be null and
void and without effect.
17. THIRD PARTY BENEFICIARIES. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by
any person or entity not a party to this Agreement (except as
otherwise provided in Section 8.3.2 or in Section 16).
18. HEADINGS. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter
or affect the meaning or interpretation of any provisions
hereof.
19. ARBITRATION. Any controversy or claim arising out of or
relating to this contract, or the breach thereof, shall be
settled by arbitration in Lafayette, Louisiana, in accordance
with the applicable Rules of the American Arbitration
Association using three (3) impartial arbitrators and judgment
upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. Each party shall select
one arbitrator and the selected arbitrator shall designate a
third arbitrator. If unable to agree to a third arbitrator,
the presiding judge in the United States District Court for
the Western District of Louisiana shall designate the third
arbitrator. This Section 19 shall take precedence over the
provisions of Section 15.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original
and all of which together shall be deemed to be one and the
same instrument.
21. CURRENCY REFERENCES. All references to "$" are to United
States currency unless otherwise specifically stated in the
Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
to be effective as of the date first above written.
WITNESSES: COMPANY:
PETSEC ENERGY INC.
Printed Name:
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Printed Name: By: /s/ Xxxxxxxx X. Xxxx
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Xxxxxxxx X. Xxxx
Chief Executive Officer
EXECUTIVE:
Printed Name:
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/s/ Xxxxxx X. Xxxxxx
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Printed Name: Xxxxxx X. Xxxxxx
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