FOUNDER’S RETIREMENT AGREEMENT
Exhibit 10.1
FOUNDER’S RETIREMENT AGREEMENT
THIS FOUNDER’S RETIREMENT AGREEMENT (“Agreement”) is entered into by and between Denbury Resources
Inc., a Delaware corporation (the “Company”), and Xxxxxx Xxxxxxx (“Xxxxxxx”) effective June 30,
2009.
W I T N E S S E T H:
WHEREAS, Xxxxxxx founded the Company in 1990 and since that time has served as its President
and Chief Executive Officer; and
WHEREAS, as part of a management succession plan for the Company approved by the Company’s
Board of Directors (the “Board”) on February 5, 2009, the Company and Xxxxxxx have reached certain
agreements as to the terms and conditions of Xxxxxxx’x retirement as Chief Executive Officer and
President of the Company and his continued employment in the non-officer’s role of Chief Strategist
of the Company;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the
Company and Xxxxxxx agree as follows:
1. Resignation as Officer and Chief Executive Officer. Xxxxxxx and the Company agree that
effective June 30, 2009, he shall resign as (a) President and Chief Executive Officer of the
Company and (b) an officer and director of all other Company subsidiaries (including Genesis
Energy, LLC), and shall not thereafter serve the Company or its subsidiaries in an officer’s
capacity, as a member of the Company’s Investment Committee, or as a director of any Company
subsidiary.
2. Retirement Consideration. In consideration of Xxxxxxx’ outstanding service in founding the
Company and leading its growth over the past 19 years, the Company hereby agrees that, subject to
appropriate withholding as provided in Section 2(c) below, on June 30, 2009 it will:
(a) pay Xxxxxxx $3.650 million in cash;
(b) as authorized by a unanimous consent of the Board effective as of June 30,
2009, issue $6.350 million principal amount of the Company’s 9 3/4% Senior
Subordinated Notes due 2016 (the “Senior Subordinated Notes”) under the Indenture
(the “Indenture”) among the Company, certain of its subsidiaries which are
guarantors thereof, and The Bank of New York Mellon Trust Company, N.A., as trustee,
dated February 13, 2009, all pursuant to Section 4.08(a)(2) of the Indenture.
Xxxxxxx agrees that the Senior Subordinated Notes shall not be transferable prior to
July 1, 2011 without the Company’s consent, other than to members of his family or
entities controlled by them for estate or other planning
purposes, and in the event of any such transfer, the transferee shall agree to
such transfer restriction (unless waived by the Company); and
(c) On or immediately prior to the date on which payments and/or issuances of
Senior Subordinated Notes are to be made to Xxxxxxx hereunder or, if earlier, the
date on which an amount is required to be included in the income of Xxxxxxx as a
result of such payments and/or issuances, Xxxxxxx shall be required to pay to the
Company in cash the amount which the Company reasonably determines to be necessary
in order for the Company to comply with applicable federal or state tax withholding
requirements and the collection of employment taxes.
3. Equity Awards. Those equity awards held by Xxxxxxx immediately prior to June 30, 2009
shall be treated according to the terms of such awards and of the Company’s equity compensation
plans under which they have been issued, including the vesting provisions thereof, and in a manner
which accommodates both Xxxxxxx’ transition from a full-time employee to a part-time employee under
the terms of Section 4 below, and under the terms of Section 1 above, his no longer being a member
of the Company’s Investment Committee nor an officer of the Company or any of its subsidiaries.
4. Employment as Chief Strategist. Xxxxxxx shall be employed by the Company as its Chief
Strategist for the period commencing June 30, 2009 and ending December 31, 2012 (the “Employment
Period”), and in lieu of and in replacement of Xxxxxxx’ current salary, during the Employment
Period Xxxxxxx shall be paid a yearly salary at the rate of $250,000 per year in accordance with,
and subject to, the Company’s payroll policies that apply to other employees of the Company.
Xxxxxxx’ employment as the Company’s Chief Strategist shall not require him to render services to
the Company on a full-time basis, but on a basis as requested from time to time by the Chairman of
the Company’s Board, or by the Company’s Chief Executive Officer, at such places as may reasonably
be agreed upon.
In connection with Xxxxxxx serving as the Company’s Chief Strategist, during the Employment
Period the Company will provide Xxxxxxx with an office and secretarial assistance at the Company’s
headquarters in Plano, Texas. Additionally, Xxxxxxx shall be entitled to reimbursement for
reasonable and necessary expenses incurred in furtherance of the Company’s business in accordance
with the Company policies, and upon presentation of documentation in accordance with the expense
reimbursement policies of the Company as they may exist from time to time, and submission to the
Company of adequate documentation in accordance with federal income tax regulations. Xxxxxxx shall
be entitled to participate in the Company’s medical and dental insurance, life insurance,
accidental death and dismemberment insurance, and disability benefits, to the extent such insurance
or benefits are made available to other employees of the Company, with Xxxxxxx to bear the same
proportion of the cost of such insurance or benefits as borne by the other employees of the
Company. On June 30, 2009, the Company will also transfer to Xxxxxxx the title to the Jaguar which
has served as Xxxxxxx’ Company-provided automobile.
In the event of a “Change in Control” (as defined in the Company’s Severance Protection Plan)
or Xxxxxxx’ death or disability (as defined in the Company’s 2004 Omnibus
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Stock and Incentive Plan), in each case prior to the end of the Employment Period, Xxxxxxx (or
his estate) shall be entitled to receive in a lump sum (within 30 days of such event), the salary
otherwise payable to him under the provisions of this Section 4 during the remainder of the
Employment Period.
5. Continuing Service as Director. Commencing June 30, 2009, in accordance with the
unanimous consent of the Board adopted effective June 30, 2009, as part of Xxxxxxx’ continuation of
service as a member of the Board of the Company, Xxxxxxx will become Co-Chairman of the Board, it
being agreed by the parties hereto that his compensation for serving on the Board through the end
of calendar year 2012 shall be $250,000 per year, in addition to reimbursement of expenses of
attending meetings of the Board or its committees. Commencing June 30, 2009, Xxxxxxx will also be
entitled to participate in the Company’s Director Compensation Plan which provides for issuance of
shares to directors in lieu of directors’ cash compensation.
6. Non-Eligibility for Company Plans. Other than as set out above, after June 30, 2009,
Xxxxxxx will not be eligible to receive awards under the Company’s equity compensation plans made
available to employees or directors, nor will he be eligible to receive a “Severance Benefit” under
the terms of the Company’s Severance Protection Plan.
7. Non-Competition Agreement. In consideration of the agreements contained herein, to which
Xxxxxxx acknowledges he is not otherwise entitled, Xxxxxxx agrees to the following covenants as
reasonable and necessary for the protection of the Company’s business interests:
(a) Definitions:
“Competing Business” means any person or entity that competes with or would
compete with or displace any of the activities of the Company in those geographic
areas where the Company (i) currently has activities as of June 30, 2009 or (ii)
anticipates doing future business as part of the Company’s business plan disclosed
to or developed by Xxxxxxx prior to December 31, 2013, or engages in any other
activities so similar in nature or purpose to those of the Company so as to compete
with, or displace or attempt to compete with or displace, any of such activities of
the Company. This definition is expressly understood to encompass the purchase,
ownership or development of CO2 reserves, oil fields with remaining oil potentially
recoverable through CO2 enhanced oil recovery operations, CO2 pipelines, or carbon
capture and storage facilities in the geographic areas designated above, and the
injection of CO2 into previously producing oil fields for the purpose of tertiary
recovery of remaining oil reserves in such geographic areas.
“Covered Persons” means any person employed by the Company either as an
employee, consultant or advisor, as of June 30, 2009, or hired by the Company prior
to December 31, 2013.
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(b) No Unfair Competition. Xxxxxxx agrees that for a period extending until
December 31, 2013 or an earlier date, if any, on which there is or is deemed to be
either a “change in control” as defined under the Company’s Omnibus Stock and
Incentive Plan (“Non-Competition Termination Date”), Xxxxxxx will not (i) work for,
supervise, assist or participate in, a Competing Business in any capacity (as owner,
employee, consultant, advisor, contractor, officer, director, lender, investor,
agent, or otherwise) or otherwise engage in any Competing Business, or (ii) induce
or attempt to induce or solicit any Covered Person to diminish, curtail, divert, or
cancel its or their business relationship with, or employment by, the Company. This
Section creates a narrowly tailored restraint in order to avoid unfair competition
and irreparable harm to the Company and is not intended or to be construed as a
general restraint from engaging in a lawful profession or a general covenant against
competition in the oil and gas industry through December 31, 2013. To this end,
within the constraints of the first sentence of this Section 7(b), the Company
agrees that Section 7(a) will not prohibit Xxxxxxx’ work, engagement, or investment
in the oil and gas industry (the “Activities”) so long as (i) the Activities do not
involve Xxxxxxx or entities, persons or groups for whom Xxxxxxx works, consults or
invests (x) competing with or displacing the activities of the Company in those
geographic areas where the Company has Activities, or (y) using the Company’s data
or non-public business plan disclosed or known to Xxxxxxx during his employment by
the Company, and (ii) Xxxxxxx obtains the prior unanimous approval of the Company’s
Investment Committee. If Xxxxxxx wishes to pursue the Activities prior to December
31, 2013 (or any earlier Non-Competition Termination Date), he will present to Xxxx
Xxxxxxx, or his successor as Chief Executive Officer of the Company, a written
description of any such proposed Activities. It is expected that any such proposal
shall include, among other things, (i) the geographical area within which Xxxxxxx
desires to pursue the Activities, (ii) the terms of any proposed acquisition of
properties or leases, and (iii) if necessary, a complete geological review of the
proposal. The Company agrees to respond in writing to Xxxxxxx’x request within 10
business days of receipt of such written description, at the address provided in
Section 9 below, stating the Company’s approval (which can only be provided by the
unanimous approval of its Investment Committee) or disapproval of such Activities
and the specific reasons for any disapproval to the extent the Company can do so
without disclosing to Xxxxxxx otherwise non-public information. The Company agrees
not to unreasonably withhold consent to Xxxxxxx’x request to engage in future
Activities. In the event that approval is granted to Xxxxxxx, a preferential right
to purchase the property involved in such Activities will be granted to Denbury if
Xxxxxxx proposes to sell, convey or transfer such approved Activities. Further,
nothing herein will prohibit ownership of less than 10% of the publicly traded
capital stock of an entity so long as this is not a controlling interest, or
prohibit ownership of mutual fund investments.
(c) No Personal Use of Company Oil and Gas Resources. Xxxxxxx agrees that in
conjunction with his continuing employment by the Company and his continuing service
on the Company’s Board, he will not utilize Company oil and gas resources,
including, but not limited to, maps, seismic information,
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feasibility studies, personnel, computers, software, books and records, or any
other corporate assets, in connection with the Activities for his own account or the
account of any entity, persons or groups for whom he works or consults or in which
he invests, unless the Company’s Investment Committee provides its prior express
written consent.
8. Governing Law. This Agreement shall be governed by and construed under the laws of the
State of Texas.
9. Notice. Any notice, payment, demand or communication required or permitted to be given by
this Agreement shall be deemed to have been sufficiently given or served for all purposes if
delivered personally to and signed for by the party or to any officer of the party to whom the same
is directed or if sent by registered or certified mail, return receipt requested, postage and
charges prepaid, addressed to such party at the address set forth below or to such other address as
shall have been furnished in writing by such party for whom the communication is intended. Any
such notice shall be deemed to be given on the date so delivered.
Xxxxxx Xxxxxxx
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxx, XX 00000
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxx, XX 00000
10. Severability. In the event any provisions hereof shall be modified or held ineffective by
any court, such adjudication shall not invalidate or render ineffective the balance of the
provisions hereof.
11. Entire Agreement. This Agreement constitutes the sole agreement between the parties and
supersedes any and all other agreements, oral or written, relating to the subject matter covered by
the Agreement, with the exception of (i) any indemnity agreement which may exist between the
Company and Xxxxxxx, and which indemnity agreement shall remain in force independent of this
Agreement, and (ii) the terms of the Company’s equity compensation plans which are not otherwise
specifically addressed in this Agreement.
12. Waiver. Any waiver or breach of any of the terms of this Agreement shall not operate as a
waiver of any other breach of such terms or conditions, or any other terms or conditions, nor shall
any failure to enforce any provisions hereof operate as a waiver of such provision or any other
provision hereof.
13. Assignment. This Agreement is personal to Xxxxxxx and the rights and interests of Xxxxxxx
hereunder may not be sold, transferred, assigned or pledged.
14. Successors. This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, representatives, successors (including specifically any
successor to the Company by merger, reorganization or otherwise).
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15. Disputes.
(a) If a dispute arises under this Agreement arising out of, related to or in
connection with, the payment of amounts provided hereunder to be paid by the Company
to Xxxxxxx, the timing of such payments or their calculation or, questions regarding
the breach of the terms hereof or the issue of arbitrability (a “Dispute”), and the
dispute cannot be settled through direct discussions by the parties within a
reasonable amount of time, the Company and Xxxxxxx agree that such disputes shall be
referred to and finally resolved by, binding arbitration in accordance with the
provisions of Exhibit A hereto. The Company will pay the actual fees and expenses
of the arbitrators, and the parties shall bear equally all other expenses of such
arbitration, unless the arbitrators determine that a different allocation would be
more equitable. The award of the arbitrators will be the exclusive remedy of the
parties for such disputes.
(b) Jurisdiction and venue of any action relating to this Agreement or
Xxxxxxx’x employment by the Company (subject to the provisions of Section 15(a)
hereof), shall be in the state courts of Plano, Collin County, Texas.
IN WITNESS WHEREOF, the parties hereto affixed their signatures hereunder as of the date first
above written.
| DENBURY RESOURCES INC. | ||||||
| By: Name: |
/s/ Xxxxxxx Xxxxxxxxx
|
|||||
| Title: | Chairman of the Board of Directors | |||||
| XXXXXX XXXXXXX | ||||||
| /s/ Xxxxxx Xxxxxxx | ||||||
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EXHIBIT A
DISPUTE RESOLUTION PROCEDURES
1. Applicable Law/Arbitration. Venue for the arbitration provided under Section 15(b) of the
Agreement shall be in Plano, Collin County, Texas. Except for the limited rights described in
Paragraph 9 below, the parties waive their right to file a lawsuit in a court of law to prosecute
any Dispute.
2. Negotiation. When a Dispute has arisen and negotiations have reached an impasse, either
party may give the other party written notice of the Dispute. In the event such notice is given,
the parties shall attempt to resolve the Dispute promptly by negotiation. Within ten (10) days
after delivery of the notice, the receiving party shall submit to the other a written response.
Thereafter, the parties shall promptly attempt to resolve the Dispute. All reasonable requests for
information made by one party to the other will be honored.
3. Confidentiality of Settlement Negotiations. All negotiations and proceedings pursuant to
Paragraph 2 above are confidential and shall be treated as compromise and settlement negotiations
for purposes of applicable rules of evidence and any additional confidentiality protections
provided by applicable law.
4. Commencement of Arbitration. If the Dispute has not been resolved by negotiation within
fifteen (15) days of the disputing party’s notice, or if the parties have failed to confer within
fifteen (15) days after delivery of the notice, either party may then initiate arbitration by
providing written notice of arbitration to the other party. In order to be valid, the notice shall
contain a precise and complete statement of the Dispute. Within fifteen (15) days of receipt of the
notice initiating arbitration, the receiving party shall respond by providing a written response
which shall include its precise and complete response to the Dispute, and which includes any
counter Dispute that the responding party may have.
5. Selection of Arbitrator(s). The arbitration may be conducted and decided by a single
person that is mutually agreeable to the parties and knowledgeable and experienced in the type of
matter that is the subject of the Dispute if a single arbitrator can be agreed upon by the parties.
If the parties cannot agree on a single arbitrator within ten (10) days of the date of the
response to the notice of arbitration, then the arbitration shall be determined by a panel of three
(3) arbitrators. To select the three arbitrators, each party shall, within ten (10) days of the
expiration of the foregoing ten day period, select a person that it believes has the qualifications
set forth above as its designated arbitrator, and such arbitrators so designated shall mutually
agree upon a similarly qualified third person to complete the arbitration panel and serve as its
chairman. In the event that the persons selected by the parties are unable to agree upon a third
member of the arbitration panel within ten (10) days after the selection of the latter of the two
arbitrators, then he/she shall be selected from the CPR (as defined below) panel using the CPR
rules. Once selected, no arbitrator shall have any ex parte communications with either party.
6. Arbitration Process. The arbitration hearing shall commence within a reasonable time after
the selection of the arbitrator(s), as set by the arbitrator(s). The
arbitrator(s), shall allow the parties to engage in pre-hearing discovery, to include
exchanging (i) requests for and production of relevant documents, (ii) up to fifteen (15)
interrogatories, (iii) up to fifteen (15) requests for admissions, and producing for deposition and
at the arbitration hearing, up to four (4) persons within each parties’ control. Any additional
discovery shall only occur by agreement of the parties or as ordered by the arbitrator(s) upon a
finding of good cause. The arbitration shall be conducted under the rules of the CPR International
Institute for Conflict Prevention & Resolution (“CPR”) in effect on the date of notice of the
Dispute for dispute resolution rules for non-administered arbitration of business disputes. The
parties may agree on such other rules to govern the arbitration that are not set out in this
provision as they may mutually deem necessary.
7. Arbitration Decision. The arbitrator(s) shall have the power to award interim relief, and
to grant specific performance. The arbitrator(s) may award interest at the Default Interest Rate.
The arbitrator’s decision
may be based on such factors and evidence as the arbitrator(s) deems fit. The arbitrator(s) shall
be required to render a written decision to the parties no later than fifteen (15) days after the
completion of the hearing.
8. Arbitration Award. The award of a majority of the arbitrator(s) shall be final, conclusive
and binding. The award rendered by the arbitrator(s) may be entered in any court having
jurisdiction in respect thereof, including any court in which an injunction may have been sought.
9. Injunctive Relief. With respect to the Dispute, controversy or claim between the parties,
nothing in this Exhibit A shall prevent a party from immediately seeking injunctive relief in a
court to maintain the status quo during the arbitration.
