EXHIBIT 10.33
EXECUTION COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "AGREEMENT"), dated September 12, 2000, by and
between Khanty Mansiysk Oil Corporation, a Delaware corporation (the "COMPANY"),
and Xx. Xxxx Xxxxxxx (the "EXECUTIVE").
WHEREAS, in recognition of the Executive's experience and abilities, the
Company desires to assure itself of the employment of the Executive in
accordance with the terms and conditions provided herein; and
WHEREAS, the Executive wishes to perform services for the Company in
accordance with the terms and conditions provided herein.
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to perform services for the Company, on the terms
and conditions set forth herein.
2. TERM. This Agreement is for the two year period (the "TERM") commencing on
May 22, 2000 (the "COMMENCEMENT DATE"), and terminating on May 21, 2002 or
upon the Executive's earlier death, disability or other termination of
employment pursuant to Section 7 hereof; PROVIDED, HOWEVER, that on May
22, 2002, and on each anniversary thereafter, the Term shall automatically
be extended for one additional year unless, not later than 90 days prior
to such dates, either party hereto shall have notified the other party
hereto in writing that such extension shall not take effect. This
Agreement shall be deemed to have been effective as of the Commencement
Date.
3. POSITION. During the Term, the Executive shall hold the title of Executive
Vice President and Chief Financial Officer.
4. DUTIES. Subject to the direction and control of the Chief Executive
Officer of the Company (the "CEO"), the Executive shall render services
during the Term to the best of her abilities in supervising, conducting
and being primarily responsible for the financial affairs of the Company,
and performing such other duties as may be requested by the CEO from time
to time. During the Term, the Executive shall devote all of her working
time to such employment, shall devote her best efforts to advance the
interests of the Company and shall not engage in any other business
activities, as an employee, director, consultant or in any other capacity,
whether or not she receives any compensation therefore, without the prior
written consent of the CEO. It shall not be a violation of this Agreement
for the Executive to serve on civic or charitable boards or committees, or
on those corporate boards or committees on which the Executive is serving
as of the Commencement Date (provided that each shall have been disclosed
by the Executive to the Company in writing), provided that such activities
do not materially interfere with the performance of the Executive's duties
hereunder.
5. PLACE OF PERFORMANCE. The Executive shall perform her duties and conduct
her business at the offices of the Company in New York City; PROVIDED,
HOWEVER, that the Executive may, from time to time, be required to perform
her duties and conduct her business at other locations to the extent
reasonable and necessary in connection with the business of the Company.
6. COMPENSATION AND RELATED MATTERS.
(a) ANNUAL BASE SALARY. The Company shall pay to the Executive an annual
base salary (the "BASE SALARY") of $180,000 or such higher salary as
may from time to time be determined by the Company, such salary to
be paid in conformity with the Company's payroll policies (which
policy
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shall provide for payment of such annual base salary in no fewer
than 12 equal monthly installments).
(b) BONUS AND INCENTIVE PLANS. During the Term, the Executive shall be
eligible to participate in stock option, bonus, economic incentive
and other compensation plans, programs and arrangements that are
available to other employees of the Company (the "INCENTIVE PLANS").
The Executive shall be provided benefits under the Incentive Plans
which, as determined by the Board of Directors of the Company or the
Compensation Committee thereof (the "BOARD") in its sole discretion,
acting in good faith, are reasonable after considering the status
and responsibilities of the Executive. Any awards granted to the
Executive under the Incentive Plans shall be evidenced by agreements
containing terms and conditions established by the Board in its sole
discretion.
(c) PENSION AND WELFARE BENEFITS. During the Term, the Executive shall
be eligible to participate in the pension, retirement and health and
welfare plans ("BENEFIT PLANS") provided to other employees of the
Company. The Executive shall be provided benefits under the Benefit
Plans, which, as determined by the Board in its sole discretion,
acting in good faith, are reasonable after considering the status
and responsibilities of the Executive. Without limiting the
generality of the foregoing, the Executive shall be entitled to
receive a level of benefits under the Benefit Plans no less
favorable in the aggregate than those described on Annex A hereto.
(d) BUSINESS EXPENSES. The Executive shall be reimbursed for all
ordinary and necessary business expenses incurred by the Executive
in connection with her employment upon submission by the Executive
and approval by the Company of receipts and other documentation in
accordance with the Company's normal reimbursement procedures.
(e) INDEMNIFICATION. During the Term, the Company will, to the extent
permitted by applicable law, indemnify the Executive against any
claims arising in connection with the Executive's employment with
the Company. Notwithstanding the foregoing, the Company shall not
have any obligation to the Executive under this section for any acts
of the Executive that constituted malfeasance, a knowing and willful
violation of applicable law, or were otherwise outside the scope of
the Executive's employment hereunder.
(f) D&O INSURANCE. The Company will maintain for the benefit of the
Executive Directors and Officers insurance on a basis no less
favorable than that provided in respect of other senior executives
of the Company.
7. TERMINATION. The Executive's employment hereunder may be terminated under
the following circumstances:
(a) DEATH. The Executive's employment hereunder shall terminate upon the
Executive's death.
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness (as certified in writing by a physician
mutually satisfactory to the Executive and the Company), the
Executive shall have been absent from her duties hereunder for the
entire period of eight consecutive weeks, the Company may terminate
the Executive's employment hereunder for "DISABILITY."
(c) CAUSE. The Company may terminate the Executive's employment
hereunder for "CAUSE". For purposes of this Agreement, the Company
shall have "CAUSE" to terminate the Executive's employment hereunder
(i) upon the Executive's conviction for the commission of an act or
acts constituting a felony, or (ii) upon the executive's willful and
continued failure to substantially perform her duties hereunder
(other than any such failure resulting from the Executive's
incapacity due to physical or mental illness), after written notice
has been delivered to the Executive by the Company, which notice
specifically identifies the manner in which the Executive has not
substantially
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performed her duties, and the Executive's failure to substantially
perform her duties is not cured within ten business days after
notice of such failure has been given to the Executive.
(d) TERMINATION NOT FOR CAUSE; VOLUNTARY TERMINATION. The Company may
terminate the Executive's employment for any reason at any time. The
Executive may terminate her employment hereunder at any time upon 60
days' notice.
(e) TERMINATION BY THE EXECUTIVE. The Executive may terminate her
employment hereunder for "GOOD REASON". "GOOD REASON" for
termination by the Executive of the Executive's employment shall
mean the occurrence (without the Executive's consent) of any one of
the following acts by the Company, or failures by the Company to
act: (i) a material failure to comply with its obligations under
Section 6 of this Agreement; (ii) a substantial and continued
diminution in the nature or status of the Executive's
responsibilities, duties, offices, or titles; or (iii) the
relocation of the Executive's principal place of employment to a
location more than 25 miles from the Company's offices in New York
City.
(f) NOTICE OF TERMINATION. Any termination of the Executive's employment
by the Company or by the Executive (other than termination under
Section 7(a) hereof) shall be communicated by written notice of
termination to the other party hereto in accordance with Section 13
hereof.
(g) DATE OF TERMINATION. "DATE OF TERMINATION" shall mean (i) if the
Executive's employment is terminated by her death, the date of her
death and (ii) if the Executive's employment is terminated pursuant
to Section 7(b), (c) (d) or (e) hereof, the date specified in the
notice of termination.
8. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) DISABILITY OR DEATH. During any period in which the Executive fails
to perform her duties hereunder as a result of Disability, the
Executive shall continue to receive her full Base Salary, as well as
other applicable employee benefits, until her employment is
terminated pursuant to Section 7(b) hereof. In the event the
Executive's employment is terminated pursuant to Section 7(a) or
7(b) hereof, then, as soon as practicable thereafter, the Company
shall pay the Executive or the Executive's Beneficiary (as defined
in Section 12(b) hereof), as the case may be, (i) all unpaid
amounts, if any, to which the Executive was entitled as of the Date
of Termination under Section 6(a) hereof and (ii) all unpaid amounts
to which the Executive was then entitled under the Incentive Plans,
the Benefit Plans and any other unpaid employee benefits,
perquisites, vacation pay or other reimbursements (the amounts set
forth in clauses (i) and (ii) above being hereinafter referred to as
the "ACCRUED OBLIGATIONS"). In the event the Executive's employment
is terminated pursuant to Section 7(b) hereof, then the Company also
shall pay premiums for COBRA benefits on behalf of the Executive for
a period of six months following the Date of Termination.
(b) TERMINATION FOR CAUSE; VOLUNTARY TERMINATION WITHOUT GOOD REASON. If
the Executive's employment is terminated (i) by the Company for
Cause or (ii) by the Executive other than for Good Reason, then the
Company shall pay all unpaid amounts, if any, to which the Executive
was entitled as of the Date of Termination under Section 6(a) hereof
to the Executive, within thirty (30) days after the Date of
Termination, and the Company shall have no further obligations to
the Executive under this Agreement.
(c) TERMINATION WITHOUT CAUSE: TERMINATION FOR GOOD REASON.
If (i) the Company shall terminate the Executive's employment for
any reason other than for Disability or for Cause, or (ii) the
Executive shall terminate her employment for Good Reason, then the
Company shall pay to the Executive, as the Executive's sole and
exclusive remedy hereunder, within thirty (30) days after the Date
of Termination:
(1) the Accrued Obligations;
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(2) premiums for COBRA benefits on behalf of the Executive for a
period of six months following the Date of Termination; and
(3) a severance payment, the amount of which shall be determined
in accordance with the terms set forth on Annex A hereto.
9. SPECIAL CHANGE IN CONTROL PROVISION.
(a) Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the
Executive in connection with a Change in Control (as defined in the
Khanty Mansiysk Oil Corporation 2000 Stock Plan (a "CHANGE IN
CONTROL")) or the termination of the Executive's employment (whether
pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person (as defined in
the Stock Plan (a "PERSON") whose actions result in a Change in
Control or any Person affiliated with the Company or such Person)
(all such payments and benefits, the "TOTAL PAYMENTS") would be
subject (in whole or part), to the excise tax (the "EXCISE TAX")
imposed under section 4999 of the Internal Revenue Code of 1986, as
amended (the "CODE"), then, after taking into account any reduction
in the Total Payments provided by reason of section 280G of the Code
in such other plan, arrangement or agreement, the cash payments
under this Agreement shall first be reduced, and the non-cash
payments under this Agreement shall thereafter be reduced, to the
extent necessary so that no portion of the Total Payments is subject
to the Excise Tax but only if (I) the net amount of such Total
Payments, as so reduced (and after subtracting the net amount of
federal, state and local income taxes on such reduced Total
Payments) is greater than or equal to (II) the net amount of such
Total Payments without such reduction (but after subtracting the net
amount of federal, state and local income taxes on such Total
Payments and the amount of Excise Tax to which the Executive would
be subject in respect of such unreduced Total Payments); provided
that the Executive may elect to have the non-cash payments under
this Agreement reduced (or eliminated) prior to any reduction of the
cash payments under this Agreement.
(b) For purposes of determining whether and the extent to which the
Total Payments will be subject to the Excise Tax, (i) no portion of
the Total Payments the receipt or enjoyment of which the Executive
shall have waived at such time and in such manner as not to
constitute a "payment" within the meaning of section 280G(b) of the
Code shall be taken into account, (ii) no portion of the Total
Payments shall be taken into account which, in the opinion of tax
counsel ("TAX COUNSEL") reasonably acceptable to the Executive and
selected by the accounting firm (the "AUDITOR") which was,
immediately prior to the Change in Control, the Company's
independent auditor, does not constitute a "parachute payment"
within the meaning of section 280G(b)(2) of the Code (including by
reason of section 280G(b)(4)(A) of the Code) and, in calculating the
Excise Tax, no portion of such Total Payments shall be taken into
account which, in the opinion of Tax Counsel, constitutes reasonable
compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, in excess of the Base Amount
(within the meaning of section 280G(b)(3) of the Code) allocable to
such reasonable compensation, and (iii) the value of any non-cash
benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Auditor in accordance with the
principles of sections 280G(d)(3) and (4) of the Code.
10. NON-DISCLOSURE; CONFIDENTIALITY. The parties hereto agree, recognize and
acknowledge that during the Term the Executive will obtain knowledge of
confidential information regarding the business and affairs of the
Company. It is therefore agreed that the Executive shall respect and
protect the confidentiality of all confidential information pertaining to
the Company, not disclose in any fashion such confidential information to
any person at any time during the Term unless doing so is reasonably
required in the course of the Executive's employment hereunder or required
by applicable law, rules, regulations or court, governmental or regulatory
authority order or decree.
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11. COVENANT NOT TO COMPETE.
(a) The Executive hereby agrees that in the event the Executive's
employment with the Company is terminated (1) by the Company for
Cause or (2) by the Executive other than for Good Reason, then for a
period beginning on the date of such termination and ending on the
second anniversary of the date of such termination (the "RESTRICTED
PERIOD"), the Executive shall not, directly or indirectly, whether
acting individually or through any person, firm, corporation,
business or any other entity:
(i) engage in, or have any interest in any person, firm,
corporation, business or other entity (as an officer,
director, employee, agent, stockholder or other security
holder, creditor consultant or otherwise) that engages in any
business activity anywhere within the Russian Federation at
any time during the Restricted Period, which business activity
is the same as, similar to or competitive with the Company as
the same may be conducted or planned to be conducted from time
to time; provided, however, that the provisions of this clause
(i) shall not preclude the Executive from (x) being employed
during the Restricted Period as an officer or employee by any
person, firm, corporation, business or other entity that
engages in a business activity conducted or planned to be
conducted within the Russian Federation so long as the
Executive, at all times during the Restricted Period, is not
engaged or otherwise associated or active in such business
activity; or (y) holding an equity investment which represents
less than 5% ownership in a publicly registered company as
long as the investment is passive;
(ii) interfere with any contractual relationship of the Company
that may exist from time to time including, but not limited
to, any contractual relationship with any director, officer,
employee, or sales agent, or supplier of the Company; or
(iii) solicit, induce or influence, or seek to induce or influence,
any person who currently is, or from time to time may be,
engaged or employed by the Company as an officer, director,
employee, agent or independent contractor, to terminate his or
her employment or engagement by the Company.
(b) The Executive acknowledges that the non-competition provisions
contained in this Agreement are reasonable and necessary, in view of
the nature of the Company and her knowledge thereof, in order to
protect the legitimate interests of the Company.
(c) The Executive acknowledges that the services to be rendered by her
hereunder are of a character giving them unique value, the loss of
which cannot be adequately compensated for in damages, and in the
event of a breach of this Agreement by the Executive, the Company
shall be entitled to seek equitable relief by way of injunction or
any other equitable remedies.
(d) The Executive and the Company agree that the foregoing covenants are
reasonable and further agree that if in the opinion of any court of
competent jurisdiction such restraint is not reasonable in any
respect, such court shall have the right, power and authority to
excise or modify such provision or provisions that to the court
shall appear not reasonable and to enforce the remainder of the
covenant as so amended.
12. SUCCESSORS; BINDING AGREEMENT.
(a) The Company shall require any successor (whether direct or indirect,
by asset purchase, stock purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets
of the Company, by agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume 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
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and any successor to its business and/or assets as aforesaid or that
otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die
while any amounts would still be payable to her hereunder if she had
continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement
to the Executive's devisee, legatee, or other designee or, if there
be no such designee, to the Executive's estate (the "BENEFICIARY").
13. NOTICE. For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Company:
Xx. Xxxx X. Xxxxxxxxxxx
Khanty Mansiysk Oil Corporation
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
If to the Executive:
Xx. Xxxx Xxxxxxx
000 Xxxxxx Xxxxxx #00X
Xxx Xxxx, XX 00000-0000
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
14. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Chief Executive Officer of the
Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof
have been made by either party, which are not set forth expressly in this
agreement.
15. WITHHOLDING; PAYMENT. Notwithstanding any other provision of this
Agreement, the Company may withhold from amounts payable under this
Agreement (i) all federal, state, local, and foreign taxes that are
required to be withheld by applicable laws or regulations and (ii)
standard Company deductions. All cash amounts required to be paid
hereunder shall be paid in United States dollars.
16. GOVERNING LAW; ARBITRATION. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the state
of New York without regard to its conflicts of law principles. Any
dispute, controversy or claim arising out of or relating to this
Agreement, including the breach, validity or termination thereof, shall be
finally settled by binding arbitration in New York, New York by one
arbitrator in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. Judgment upon the award
of the arbitrator may be entered in any court of competent jurisdiction.
The arbitration shall be governed by the United States Arbitration Act, 9
U.S.C.ss.1-16.
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17. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
18. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
19. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and
supersedes any and all other prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral
or written, by any officer, employee or representative of any party
hereto; and any prior agreement of the parties hereto in respect of the
subject matter contained herein is hereby terminated and cancelled.
20. LEGAL FEES. The Company shall reimburse to the Executive reasonable legal
fees and reasonable professional expenses incurred directly on behalf of
the Executive (i) in disputing in good faith any issue hereunder relating
to the termination of the Executive's employment or (ii) in seeking in
good faith to obtain or enforce any benefit or right provided by this
Agreement or (iii) in connection with any tax audit or proceeding to the
extent attributable to the application of Section 4999 of the Code to any
payment or benefit provided hereunder; provided, however, that such
reimbursement shall be subject to a maximum of $5,000 unless it arises in
an event described in clauses (i) or (ii) above and the Executive prevails
in the matter at issue, in which case the maximum reimbursement shall be
$200,000. Such payments shall be made within ten (10) business days after
delivery of the Executive's written request(s) for payment accompanied by
such evidence of fees and expenses incurred as the Company reasonably may
require.
21. NO MITIGATION. The Company agrees that, if the Executive's employment with
the Company terminates during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to this Agreement.
Further, the amount of any payment or benefit provided for in this
Agreement shall not be reduced by any compensation earned by the Executive
as the result of employment by another employer or by retirement benefits.
The amount of any payment or benefit provided for in this Agreement may,
however, be reduced by the present value of any amount owed by the
Executive to the Company or its affiliates, as determined by the Company
in its sole discretion.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
KHANTY MANSIYSK OIL CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxxx
-----------------------
Name: Xx. Xxxx X. Xxxxxxxxxxx
Title: President and Chief Executive Officer
EXECUTIVE
By: /s/ Xxxx Xxxxxxx
----------------
Name: Xx. Xxxx Xxxxxxx
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ANNEX A TO XX. XXXXXXX'X EMPLOYMENT AGREEMENT
Pension and Welfare Benefits:
Vacation Time 4 weeks annually
Pension Benefits 401(k) with applicable matching contributions
Health Insurance 100% of the premium for the Executive
Life Insurance 2x base salary
Travel/Accident Insurance $ 1 million
Prepaid Bonus $ 20,000 at signing
Severance Payment:
If the Executive terminates her employment for Good Reason or if the Company
terminates the employment of the Executive for any reason other than for
Disability or for Cause, the Company shall pay to the Executive, in a cash lump
sum, one and one half (1 1/2) times her Base Salary; PROVIDED, HOWEVER, that the
payment shall be two (2) times her Base Salary if such termination of employment
occurs within eighteen (18) months following a Change in Control.
