AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
Exhibit 10.4
This Amendment No. 1 (the “Amendment”) to the Employment Agreement (the “Agreement”), dated
March 27, 2006, by and between The Houston Exploration Company, a Delaware corporation (the
“Company”) and Xxxxxxx X. Xxxxxxxx (the “Executive”) is made this 24th day of October, 2006.
WITNESSETH:
WHEREAS, the Company and the Executive have previously entered into the Agreement.
WHEREAS, the Company and the Executive now wish to amend the Agreement to help ensure
compliance with Section 409A of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants, and conditions set
forth herein and the performance of each, it is hereby agreed as follows:
Section 1. Amendments. The Company and the Executive hereby agree to the following
amendments:
1) The definition of “Severance Payment Date” contained in Section 7(e) is hereby
deleted.
2) Section 7(e)(i) is hereby deleted and replaced with the following new Section
7(e)(i):
(i) “pay to the Executive, within thirty (30) days
after the date of such termination, a lump sum cash payment
equal to 2.99 times the Executive’s then current annual rate
of Total Compensation;”
3) Section 7(e)(iii) is hereby deleted and replaced with the following new Section
7(e)(iii):
(iii) “pay the Executive’s COBRA premiums for
continuation coverage under the Company’s group health plan
for the lesser of (a) twelve (12) months following the date
of termination; (b) until such time as the Executive is no
longer eligible for COBRA coverage; or (c) until such time
as the Executive becomes eligible for comparable benefits
from a subsequent employer.”
4) Section 20 is hereby deleted and replaced with the following new
Section 20:
“20. Compliance with Section 409A of the Code.
(a) Notwithstanding any provision of the Agreement to
the contrary and except as provided by this clause (a), if
the Executive is a “specified employee” as defined under
Section 409A (“Section 409A”) of the Internal Revenue Code
of 1986, as amended or any regulations or Treasury guidance
promulgated thereunder, the Executive shall not be entitled
to any payments or benefits in the nature of non-qualified
deferred compensation within the meaning of Section 409A
(“Deferred Compensation”) and the Company shall not pay or
provide such Deferred Compensation, upon a separation of her
service until the earlier of: (i) the date which is six (6)
months after the Executive’s separation from service for any
reason other than death or (ii) the date of her death (the
“Payment Date”). The provisions of this Section 20(a) shall
apply only if necessary to avoid the imposition of taxes and
penalties under Section 409A relating to the payment of
non-qualified deferred compensation to specified employees
upon their separation from service. The determination of
whether Section 409A is deemed to apply to the payment of
any amounts hereunder shall be made in good faith by the
Company after consultation with and advice from its legal or
accounting advisors and after consulting with the Executive.
If this Section 20(a) becomes applicable such that the
payment of Deferred Compensation is delayed, any payments
that are so delayed shall accrue interest, from the date of
a separation of service through the Payment Date, at the
“prime rate” as reported in the Wall Street Journal (or such
other nationally recognized source if no such rate is then
available) on the date of such separation (or the first
business day following such date if such separation does not
occur on a business day) and shall be paid in a lump sum on
the Payment Date.
(b) If any provision of this Agreement (or of any award
of compensation, including equity compensation or benefits)
would cause the Executive to incur any additional tax or
interest under Section 409A, the Company shall, after
promptly consulting with and receiving the approval of the
Executive (which shall not be unreasonably withheld), reform
such provision; provided that, the Company
agrees (both in the application of this subsection
(b) and the above subsection (a)) to maintain, to the
maximum extent practicable, the original intent and
economic benefit to the Executive of the applicable provision without
violating the provisions of Section 409A.
(c) This Section 20 shall survive any termination of
this Agreement.”
Section 2. Defined Terms. Except as otherwise expressly provided herein, any
capitalized term used in this Amendment that is not defined herein has the meaning ascribed to such
term in the Agreement.
Section 3. No Other Amendment. Except as otherwise expressly provided in this
Amendment, all terms, conditions and provisions of the Agreement are hereby ratified and remain in
full force and effect.
Section 4. Governing Law. This Amendment shall in all respects be construed according
to the internal laws of the State of Texas. Venue and jurisdiction of any action relating to the
Amendment shall lie in Xxxxxx County, Texas.
Section 5. Entire Agreement. This Amendment, together with the Agreement, sets forth
the entire agreement and understanding of the parties relating to the subject matter herein. No
modification of or amendment to this Amendment, nor any waiver of any rights under this Amendment,
shall be effective unless given in a writing signed by the party to be charged.
Section 6. Counterparts. This Amendment may be executed originally or by facsimile
signature, in multiple counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
EXECUTED as of the date set forth above.
| THE HOUSTON EXPLORATION COMPANY | ||||||
| By: | /s/ Xxxxx X. Xxxx | |||||
| Name: | Xxxxx X. Xxxx | |||||
| Title: | Senior Vice President — Administration | |||||
| EXECUTIVE | ||||||
| /s/ Xxxxxxx X. Xxxxxxxx | ||||||
| Xxxxxxx X. Xxxxxxxx | ||||||
