EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT 10.1
THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of the 6th day of February, 2014 (the “Effective Date”), by and between American Standard Energy Corp., a Delaware corporation (the “Company”), and J. Xxxxxx Person, a resident of Midland, Texas (“Employee”).
WHEREAS, the Company is an independent oil and natural gas production company engaged in the acquisition and development of oil and natural gas properties. The Company continues to grow and expand its operations and business opportunities. For purposes of this Agreement, and specifically the restrictive covenants set forth herein, the aforementioned activities and all related activities, of whatever nature, either being performed or planned by the Company during any part of the term of this Agreement are to be considered as part of “the Business” protected by this Agreement (sometimes also referred to as “the Company’s Business”).
WHEREAS, Employee acknowledges that it is in Employee’s best interest to enter into an employment relationship with the Company;
WHEREAS, the Company desires to employ the Employee as its President and Chief Executive Officer, who shall perform such services as the Company's Board of Directors (the “Board”) may direct;
WHEREAS, in the course of performing his duties for the Company, Employee is likely to gain certain confidential and proprietary information belonging to the Company, develop relationships that are vital to the Company’s goodwill, and acquire other important benefits to which the Company has a protectable interest; and
WHEREAS, the Company has agreed to hire Employee and Employee has agreed to accept such employment by the Company upon the terms, conditions, and restrictions contained in this Agreement.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises, and the agreements, covenants, representations and warranties hereinafter set forth, and other good and valuable consideration, the receipt and adequacy all of which are forever acknowledged and confessed, the parties hereto hereby agree as follows as of the Effective Date:
Section 1. Employment. In reliance on the representations and warranties made herein, the Company hereby agrees to retain Employee to be its President and Chief Executive Officer, to perform services relating to ensuring that the financial and business operations conform with the Company’s overall corporate strategy, and to perform such duties and services as may from time to time be assigned to Employee by the Board.
Section 2. Performance. Employee shall use Employee’s best efforts and skills, on a full-time basis, to perform the duties of his employment, as they may be established from time to time by the Board, consistently with the position and office occupied by the Executive.
Employee shall obey all rules and regulations of the Company, follow all laws and regulations of appropriate government authorities, and be governed by any and all decisions and instructions of the Board.
Section 3. Compensation. Except as otherwise provided for herein, for all services to be performed by Employee in any capacity hereunder, including without limitation any services as an officer, director, member of any committee, or any other duties assigned him, throughout the Employment Period (as defined herein), the Company shall pay or provide Employee with the following, and Employee shall accept the same, as compensation for the performance of his undertakings and the services to be rendered by him:
(a) Base Salary. Employee will be entitled to an annual gross salary of Two-Hundred Thousand Dollars and no cents ($200,000.00) (the “Base Salary”), which shall be paid in accordance with the Company’s policies and procedures. Any and all increases to Employee's Base Salary shall be determined by the Board in its sole discretion. (References to “Board” in this Section 3 shall include any Compensation Committee of the Board, whichever shall have taken action in the relevant circumstances.)
(b) Bonus. In addition to the Base Salary, prior to the end of each fiscal year, Employee shall be eligible to receive an annual bonus (the “Annual Bonus”). However, the decision to provide any Annual Bonus and the amount and terms of any Annual Bonus shall be in the sole discretion of the Board.
(c) Equity Awards. With respect to each fiscal year of the Company ending during the Employment Period, Employee shall be eligible to receive an annual long-term incentive award upon the terms and conditions as determined in the sole discretion of the Board.
(d) Benefit Plans. Employee shall receive, subject to the applicable plan, contract, policy or agreement terms, all available employee benefit plans, policies, practices, and arrangements, as may be offered by the Company from time to time, including without limitation any stock option or equity plan, defined benefit retirement plan, excess or supplementary plan, profit sharing plan, savings plan, health and dental plan, disability plan, survivor income and life insurance plan, executive financial planning program, other arrangement, or any successors thereto, and such other benefit plans (collectively hereinafter referred to as the “Benefit Plans”). Employee’s eligibility and entitlement to any compensation or benefit shall be determined in accordance with the terms and conditions of the Benefit Plans and other applicable programs, practices, and arrangements then in effect.
(e) Vacation and Fringe Benefits. All fringe benefits and perquisites will be in accordance with the Company’s existing policies, and the same may be amended from time to time, in the Company’s discretion.
(f) Vehicle Allowance. Employee shall be entitled to a car allowance of $1,000 per month, which shall be paid periodically together with Employee's Base Salary.
(g) Withholding Taxes. The Company shall have the right to deduct from all payments made to Employee hereunder any federal, state, or local taxes required by law to be withheld.
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(h) Expenses. During Employee’s employment, the Company shall promptly pay or reimburse Employee for all reasonable out-of-pocket expenses incurred by Employee in the performance of duties hereunder in accordance with the Company’s policies and procedures then in effect. Such policies will be subject to change in the Company’s discretion.
Section 4. Restrictions.
(a) Acknowledgements. Employee acknowledges and agrees that during the term of Employee’s employment because of the nature of Employee’s responsibilities and the resources provided by the Company: (1) Employee will acquire valuable and confidential skills, information, trade secrets, and relationships with respect to the Company’s business practices and operations; (2) Employee may develop on behalf of the Company a personal acquaintance and/or relationship with various persons, including, but not limited to, customers and suppliers, which acquaintances may constitute Employee’s only contact with such persons, and, as a consequence of the foregoing, (3) Employee will occupy a position of trust and confidence with respect to the Company’s affairs and the Business involved, as described earlier, throughout the entire world; (4) the Company’s competitors, both in the United States and internationally, consist of both domestic and international businesses, and the services to be performed by Employee for the Company involve aspects of both the Company’s domestic and international business; and (5) it would be impossible or impractical for Employee to perform his duties for the Company without access to the Company’s confidential and proprietary information and contact with persons that are valuable to the goodwill of the Company. Therefore, Employee acknowledges that if he went to work for or otherwise performs services for a third party engaged in a business similar to the Business of the Company, the disclosure by Employee to a third party of such confidential and proprietary information and/or the exploitation of such relationships would be inevitable.
(b) Reasonableness. In view of the foregoing and in consideration of the remuneration to be paid to Employee, Employee agrees that it is reasonable and necessary for the protection of the goodwill and business of the Company that Employee make the covenants contained in this Agreement regarding the conduct of Employee during and subsequent to Employee’s employment by the Company, and that the Company will suffer irreparable injury if Employee engages in conduct prohibited by this Agreement.
(c) Non-Compete. During the term of Employee’s employment by the Company, and for a period of twelve (12) months following termination of employment, in the event that Employee voluntarily terminates his employment with the Company or Employee is terminated for Cause, neither Employee nor any other person or entity with Employee’s assistance, shall manage, operate, control, be employed by, solicit sales for, participate in, advise, consult with, or be connected with the ownership, management, operation, or control of any business within the United States which is engaged, in whole or in part, in any business that is directly competitive with the Company’s Business or any portion thereof.
(d) No Raiding. In addition, during the term of Employee’s employment by the Company, and for a period of twelve (12) months following termination of employment, in the event that Employee voluntarily terminates his employment with the Company or Employee is terminated for Cause, neither Employee nor any person or entity with his assistance nor any
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(e) Confidentiality. Without the express written consent of the Company, Employee shall not at any time (either during or after the termination of Employee’s employment) use (other than for the benefit of the Company) or disclose to any other business entity proprietary or confidential information concerning the Company, any of their affiliates, or any of its officers. Neither shall Employee disclose any of the Company’s or the Company’s affiliates’ trade secrets or inventions of which Employee has gained knowledge during his employment with the Company. This paragraph shall not apply to any such information that: (1) Employee is required to disclose by law; (2) has been otherwise disseminated, disclosed, or made available to the public; or (3) was obtained after his employment with the Company ended and from some source other than the Company, which source was under no obligation of confidentiality.
(f) Effect of Breach. Employee agrees that a breach of any obligation in this Section 4 cannot adequately be compensated by money damages and, therefore, the Company shall be entitled, in addition to any other right or remedy available to it (including, but not limited to, an action for damages), to an injunction restraining such breach or a threatened breach and to specific performance of such provisions, and Employee hereby consents to the issuance of such injunction and to the ordering of specific performance, without the requirement of the Company to post any bond or other security.
(g) Other Rights Preserved. Nothing in this Section 4 eliminates or diminishes rights which the Company may have with respect to the subject matter hereof under other agreements, the governing statutes, or under provisions of law, equity, or otherwise. Without limiting the foregoing, this section does not limit any rights the Company may have under any agreement with Employee regarding trade secrets and confidential information.
Section 5. Termination. This Agreement shall terminate upon the following circumstances:
(a) General. This Agreement shall be effective as of the Effective Date and shall terminate on the first anniversary following the Effective Date, unless terminated earlier as provided hereunder (the “Employment Period”); provided, however, that this Agreement shall be automatically renewed for successive one (1) year periods, unless Employee or the Company notifies the other in writing at least 120 days prior to the termination date of the Agreement of the party’s intent not to renew this Agreement, in which event this Agreement shall terminate on the termination date.
(b) Termination Without Cause. This Agreement may be terminated at any time at the election of either Employee or the Company for any reason, no reason, or Good Reason, or without cause, but subject to the provisions of this Agreement. It is expressly understood that Employee’s employment is strictly “at will.”
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(c) Cause. This Agreement may be terminated at any time by the Company for Cause. “Cause” for this purpose shall mean (i) Employee committing a material breach of this Agreement or is convicted of any crime involving moral turpitude, including such acts as fraud, dishonesty, disclosure of confidential information, or the commission of a felony, or direct and deliberate acts constituting a material breach of his duty of loyalty to the Company, or (ii) Employee willfully or recklessly refusing to perform the material duties reasonably assigned to him by the Company's Board that are consistent with the provisions of this Agreement, when such willful or reckless refusal does not result from a Disability, or (iii) Employee's willful or gross malfeasance or nonfeasance of the material duties reasonably assigned to him by the Company's Board that are consistent with the provisions of this Agreement, when such malfeasance or nonfeasance does not result from a Disability,
(d) Death/Disability. This Agreement may be terminated by the Company upon Employee’s death or his being unable to render the services required to be rendered by him during the Employment Period for a period of one hundred eighty (180) days during any twelve-month period (“Disability”).
(e) Implied Covenant of Good Faith and Fair Dealing. The parties acknowledge that the State of Texas recognizes that an implied covenant of good faith and fair dealing is a part of every contract, even an employee at will contract. Although such covenant cannot change the express terms of this contract, such covenant applies to this contract.
Section 6. Effect of Termination.
(a) If Employee’s employment is terminated (i) voluntarily by Employee without Good Reason, or (ii) by the Company for Cause, the Company shall pay Employee’s compensation only through the last day of the Employment Period and, except as may otherwise be expressly provided in this Agreement or in any Benefit Plan, the Company shall have no further obligation to Employee.
(b) If Employee’s employment is terminated by the Company other than for Cause, including any discharge without Cause, liquidation or dissolution of the Company (other than due to the bankruptcy), discharge upon a Change of Control (as defined below), or a termination caused by death or Disability, or if Employee voluntarily resigns for Good Reason, for so long as Employee is not in breach of his continuing obligations under Section 4, the Company shall continue to pay Employee (or his estate) an amount equal to his Base Salary in effect immediately prior to the termination of his employment for a period of twelve (12) months, to be paid in accordance with the Company’s regular payroll practices through the end of the fiscal year in which termination occurs and then in one lump sum payable to Employee in the first month of the calendar year following termination, as well as any pro rated bonuses determined by the Board, plus benefits on a substantially equivalent basis to those which would have been provided to Employee in accordance with the Benefit Plans described in Section 3(d) of this Agreement. Except as may otherwise be expressly provided in this Agreement, the Company shall have no further obligation to Employee. For purposes of this Section 6(b), “Good Reason” shall mean:
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(i)
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the diminution in the overall importance of Employee’s role, as determined by (a) an adverse change in Employee's title, authority, duties or responsibilities; or (b) a reduction in Employee’s Base Salary or Annual Bonus opportunity;
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(ii)
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any failure by the Company to comply with any material provision of this Agreement other than an isolated, insubstantial and inadvertent failure not occurring in bad faith that is remedied by the Company promptly after receipt of notice thereof given by Employee; or
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(iii)
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the requirement by the Company that the Subscriber relocate more than fifty (50) miles outside of Midland, Texas.
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Notwithstanding the foregoing, in the event that a Change of Control (as defined below) occurs during the Employment Period, Employee may terminate Employee's employment for any reason during the 90-day period following the effective date of the Change of Control and such termination shall be deemed to be for Good Reason.
For purposes of this Agreement, “Change of Control” shall mean the sale of all or substantially all the assets of the Company; any merger, consolidation or acquisition of the Company with, by or into another corporation, entity or person; or any change in the ownership of more than fifty percent (50%) of the voting capital stock of the Company in one or more related transactions.
In the event that the Company challenges Employee’s determination of Good Reason, the Company shall continue to make the payments and provide the benefits to Employee as set forth in Section 6. If it is finally determined pursuant to the procedures set forth in this Agreement that Employee’s resignation was not for Good Reason, Employee shall reimburse the Company the amounts to which it is finally determined to be entitled.
(c) On termination of employment, Employee (or if terminated by Disability, his authorized agent) shall deliver all trade secrets, confidential information, records, notes, data, memoranda, and equipment of any nature that are in Employee’s (or his estate’s) possession or under his control and that are the property of the Company or relate to the business of the Company, and Employee (or his estate) shall pay to the Company any amounts due and owning from Employee to the Company as specified in this Agreement.
(d) The obligations of Section 4 through Section 9 of this Agreement shall survive the expiration or termination of this Agreement.
Section 7. Representations and Warranties.
(a) No Conflicts. Employee represents and warrants to the Company that Employee is under no duty (whether contractual, fiduciary, or otherwise) that would prevent, restrict, or limit Employee from fully performing all duties and services for the Company, and the performance of such duties and services shall not conflict with any other agreement or obligation to which Employee is bound.
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(b) No Hardship. Employee represents and acknowledges that Employee’s experience and/or abilities are such that observance of the covenants contained in this Agreement will not cause Employee any undue hardship nor will they unreasonably interfere with Employee’s ability to earn a livelihood.
Section 8. Alternative Dispute Resolution.
(a) Mediation. Employee and the Company agree to submit, prior to arbitration, all unsettled claims, disputes, controversies, and other matters in question between them arising out of or relating to this Agreement (including but not limited to any claim that the Agreement or any of its provisions is invalid, illegal, or otherwise voidable or void) or the dealings or relationship between Employee and the Company (“Disputes”) to mediation in Midland, Texas, and in accordance with the Commercial Mediation Rules of the American Arbitration Association currently in effect. The mediation shall be private, confidential, voluntary, and nonbinding. Any party may withdraw from the mediation at any time before signing a settlement agreement upon written notice to each other party and to the mediator. The mediator shall be mutually selected by and agreed upon by both Employee and the Company and shall be neutral and impartial. The mediator shall be disqualified as a witness, consultant, expert, or counsel for either party with respect to the matters in Dispute and any related matters. The Company and Employee shall pay their respective attorneys’ fee and other costs associated with the mediation, and the Company and Employee shall equally bear the costs and fees of the mediator. If a Dispute cannot be resolved through mediation within ninety (90) days of being submitted to mediation, the parties agree to submit the Dispute to arbitration.
(b) Arbitration. Subject to Section 8(a), all Disputes will be submitted for binding arbitration to the American Arbitration Association on demand of either party. Such arbitration proceeding will be conducted in Midland, Texas, and, except as otherwise provided in this Agreement, will be heard by one (1) arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. All matters relating to arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et. seq.) and not by any state arbitration law. The arbitrator will have the right to award or include in his award any relief which he deems proper under the circumstances, including, without limitation, money damages (with interest on unpaid amounts from the date due), specific performance, injunctive relief, and of this Agreement, reasonable attorneys’ fees and costs, provided that the arbitrator will not have the right to amend or modify the terms of this Agreement. The award and decision of the arbitrator will be conclusive and binding upon all parties hereto, and judgment upon the award may be entered in any court of competent jurisdiction. Except as specified above, the Company and Employee shall pay their respective attorneys’ fee and other costs associated with the arbitration, and the Company and Employee shall equally bear the costs and fees of the arbitrator.
(c) Confidentiality. Employee and the Company agree that they will not disclose, or permit those acting on their behalf to disclose, any aspect of the proceedings under Section 8(a) and Section 8(b), including but not limited to the resolution or the existence or amount of any award, to any person, firm, organization, or entity of any character or nature, unless divulged (i) to an agency of the federal or state government, (ii) pursuant to a court order, (iii) pursuant to a requirement of law, (iv) pursuant to prior written consent of the Company or Employee, or (v)
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(d) Injunctions. Notwithstanding anything to the contrary contained in this Section 8, the Company and Employee shall have the right in a proper case to obtain temporary restraining orders and temporary or preliminary injunctive relief from a court of competent jurisdiction; provided, however, that the moving party, Company or Employee, must contemporaneously submit the Dispute(s) for non-binding mediation under Section 8(a) and then for arbitration under Section 8(b) on the merits as provided herein if such Disputes cannot be resolved through mediation.
Section 9. General.
(a) Notices. All notices required or permitted under this Agreement shall be in writing, may be made by personal delivery or facsimile transmission, effective on the day of such delivery or receipt of such transmission, or may be mailed by registered or certified mail, effective two (2) days after the date of mailing, addressed as follows:
To the Company:
0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
with a copy to:
Xxxxx Xxxxxxxx Xxxxxxx Xxxxxxxx & Xxxxxxxxx, PC
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx Grindon
or such other person or address as designated in writing to Employee.
To Employee:
J. Xxxxxx Person
2006 Xxxxxxxx
Xxxxxxx, XX 00000
at his last known residence address or to such other address as designated by him in writing to the Company.
(b) Successors. This Agreement shall be assignable or transferable (whether by pledge, grant of a security interest, sales contract or otherwise) by Employer. This Agreement
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shall be binding upon and shall inure to the benefit of the Company, its successors and assigns, and also to Employee. If Employee dies during the term of this Agreement, the obligation to pay salary and provide benefits shall immediately cease; and, absent actual notice of any probate proceeding, the Company shall pay any compensation due for the period preceding Employee’s death to the following person(s) in order of preference: (i) spouse of Employee; (ii) children of Employee eighteen years of age and over, in equal shares; (iii) brothers, in equal shares; or (d) the person to whom funeral expenses are due. Upon payment of such sum, the Company shall be relieved of all further obligations hereunder.
(c) Waiver, Modification, and Interpretation. No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in a writing signed by Employee and an appropriate officer of the Company empowered to sign the same by the Board. No waiver by either party at any time of any breach by the party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior to subsequent time. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Texas. Except as provided in Section 8, any action brought to enforce or interpret this Agreement shall be maintained exclusively in the state and federal courts located in Midland, Texas.
(d) Interpretation. The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement. No provision of this Agreement shall be interpreted for or against any party hereto on the basis that such party was the draftsman of such provision; and no presumption or burden of proof shall arise disfavoring or favoring any party by virtue of the authorship of any of the provisions of this Agreement.
(e) Counterparts. The Company and Employee may execute this Agreement in any number of counterparts, each of which shall be deemed to be an original but all of which shall constitute but one instrument. In proving this Agreement, it shall not be necessary to produce or account for more than one such counterpart.
(f) Invalidity of Provisions. If a court of competent jurisdiction shall declare that any provision of this Agreement is invalid, illegal, or unenforceable in any respect, and if the rights and obligations of the Parties to this Agreement will not be materially and adversely affected thereby, in lieu of such illegal, invalid, or unenforceable provision the court may add as a part of this Agreement a legal, valid, and enforceable provision as similar in terms to such illegal, invalid, or unenforceable provision as is possible. If such court cannot so substitute or declines to so substitute for such invalid, illegal, or unenforceable provision, (i) such provision will be fully severable; (ii) this Agreement will be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof; and (iii) the remaining provisions of this Agreement will remain in full force and effect and not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom. The covenants contained in this Agreement shall each be construed to be a separate agreement independent of any other provision of this Agreement, and the existence of any claim or cause of action of Employee against the Company, predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of any of said covenants.
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(g) Entire Agreement. This Agreement (together with the documents expressly referenced herein) constitutes the entire agreement between the parties, supersedes in all respects any prior agreement between the Company and Employee and may not be changed except by a writing duly executed and delivered by the Company and Employee in the same manner as this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date and year first written above.
By: __________________________________
Name: ________________________________
Title: _________________________________
EMPLOYEE
_____________________________________
J. Xxxxxx Person
