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EXHIBIT 10.10
EMPLOYMENT AND UNITED STATES OF AMERICA
STOCK OWNERSHIP
AGREEMENT STATE OF LOUISIANA
BY AND BETWEEN PARISH OF ORLEANS
ENERGY PARTNERS, LTD.
AND
XXXXXXX X. XXXXXXXX
THIS EMPLOYMENT AND STOCK OWNERSHIP AGREEMENT (the
"Agreement"), entered into in New Orleans, Louisiana on this 5th day of June,
1998, by and between Xxxxxxx X. Xxxxxxxx, an individual of the full age of
majority domiciled in the Parish of Orleans, State of Louisiana (hereinafter
called "Employee") and Energy Partners, Ltd., a corporation organized and
existing under the laws of the State of Delaware (hereinafter called "Company"),
represented herein by its duly authorized President, Xxxxxxx X. Xxxxxxxx.
1. Terms and Conditions of Employment.
1.1. Length of Employment. In consideration for the compensation
set forth in Subparagraph 1.2, Employee shall be employed as
Company's President and Chief Executive Officer for a period
of five (5) years (or for such lesser time period as mandated
by law) from the date of execution of this Agreement (the
"Term"). Company may terminate employment at any time for
"Cause" in which case Employee shall not be entitled to the
balance of compensation for the remainder of the Term. "Cause"
as used herein shall consist of the following: (a) willful
refusal to perform assigned functions; (b) insubordination;
(c) embezzlement; (d) intoxication or drug abuse which
interferes with job performance; (e) wrongful disclosure of
confidential company information; (f) conflict of interest
which is undisclosed and not Board approved; (g) conviction of
a felony; (h) engaging, directly or indirectly, in a business
which is competitive to the business of the Company, as an
employee, officer, director, shareholder, partner, agent or
independent contractor which is undisclosed and not Board
approved; and (i) incompetence. Within thirty (30) days of
execution of this Agreement, Employee shall prepare a written
disclosure statement of all business relationships in which he
may continue to be an
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employee, officer, director, shareholder, partner, agent or
independent contractor. A Cause determination shall be in the
Company's sole discretion. Company may terminate employment
upon ninety (90) days' written notice for any reason
whatsoever in which case Employee shall not be entitled to the
balance of compensation for the remainder of the Term
following such ninety (90) day notice. Employee shall not be
entitled to the balance of compensation due for the remainder
of the Term following termination of employment due to death
or permanent disability.
1.2. Consideration. As compensation, Employee shall receive the
monthly compensation as set forth on Exhibit "A" attached
hereto and made a part hereof, less social security and
withholding taxes. The Company shall offer group health care
coverage as determined by the Board of Directors. By mutual
written agreement between the parties, Exhibit "A" may be
modified, substituted or replaced from time to time so as to
reflect adjustments to compensation or other benefits as
determined by the Board of Directors. Only the President of
the Company shall have the authority on the Company's behalf
to modify, substitute or replace Exhibit "A."
1.3. Vacation Time. Employee shall accrue vacation days during each
month worked during the Term as set forth in Exhibit "A",
which shall be taken at times mutually agreeable to Employee
and Company. The Company, in its discretion, may advance
vacation days as requested by Employee. Months "worked" are
those months during which Employee was actively engaged in
employment on Company's behalf for more than ten (10) business
days. The accrued vacation time must be used in the calendar
year that it is accrued and will not be carried forward to
succeeding years.
1.4. Liability. Company shall indemnify and hold harmless Employee
from and against any and all claims and liabilities to which
Employee may be or become subject by reason of Employee now or
hereafter being or having heretofore been an employee of
Company and/or by reason of Employee's alleged acts or
omissions as such employee, whether or not Employee continues
to be such employee at the time when any such claim or
liability is asserted, and shall reimburse Employee for all
legal and other expenses reasonably incurred by Employee in
connection with defending any or all such claims or
liabilities, including amounts paid or agreed to be paid in
connection with reasonable settlements made before final
adjudication with the approval of the Board of Directors,
whether or not Employee continues to be an employee at the
time such
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expenses are incurred; provided, however, that Employee shall
not be indemnified against any claim or liability to the
extent that it arises out of Employee's own gross negligence
or willful misconduct finally determined by a court of
competent jurisdiction, and shall not be indemnified against
or reimbursed for any expenses incurred in defending any or
all such claims or liability or in settling the same.
1.5. Non-Competition Agreement. Company and Employee acknowledge
that Company is engaged in the business of owning, operating,
producing and exploring for mineral interests, and other
related activities. For a period of two (2) years following
termination of employment (the last day on which Employee is
actively engaged in employment on Company's behalf), Employee
will not compete directly or indirectly with the Company as to
any existing contract to which Company is a party, and/or as
to any business of the Company evidenced by contracts,
agreements, letters of intent, confidentially agreements, or
written proposals in existence on the date of termination of
employment in those Parishes in Louisiana set forth in Exhibit
"B", and in the states and subdivisions of those states as
provided in Exhibit "B". The parties acknowledge that the
remedy at law for any breach, whether jointly or severally, of
this non-competition clause of this Agreement, all of which is
deemed material, will be inadequate and the parties hereby
agree that the Company shall be entitled to injunctive relief
by a court of competent jurisdiction enjoining and restraining
him from the continuance of any such act which constitutes a
breach hereof. In addition to injunctive relief, Company
reserves the right to seek any damages to which it may be
entitled as consequence of employee's breach of this
Agreement.
1.6. Wages. Should Employee Resign (as defined in Subparagraph 2.7
below), and if Employee does not have any just cause of
complaint against the Company, Employee shall then forfeit all
of the future wages that may be due and payable to Employee.
However, Employee shall not be compelled to repay any monies
Employee has received as wages, whether in advance of the
current year or at the time of Employee's engagement.
2. Shareholder's Agreement.
2.1. Purchase of Shares. Subject to the terms and conditions of
this Agreement, Employee shall purchase from Company 1,650
shares of no par value common stock of the Company
(hereinafter, the "Shares") at the price of one dollar
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($1.00) per share upon execution of this Agreement, receipt
and sufficiency of which is hereby acknowledged.
2.2. Transfer of Shares. No Shares may be sold, assigned, pledged,
transferred or otherwise alienated (each, "Transferred")
except in accordance with and pursuant to the terms and
conditions of this Agreement and that certain Stockholders'
Agreement dated June 5, 1998, by and between the Company,
Employee, and others identified therein (the "Stockholders'
Agreement"). Additionally, as a condition precedent to any
Transfer, the transferee must validly execute the
Stockholders' Agreement. Unless otherwise prohibited in the
Stockholders' Agreement, the Shares may be pledged with the
Company's consent, provided that any lender's recourse for
liquidation on debt repayment shall be limited to selling the
pledged Shares under the same terms and conditions as though
it was an Employee. The lender shall agree to the foregoing
provisions as terms of the pledge.
2.3. Restrictions on Transfer. Any Transfer or attempted Transfer
by Employee in violation of this Agreement shall be null and
void and of no force or effect whatever. Any purported
transferee shall not be deemed to be a shareholder of the
Company and shall not be entitled to receive a new certificate
or any distributions on or with respect to the Shares.
Employee hereby acknowledges the reasonableness of the
restrictions on Transfer imposed by this Agreement in view of
the Company's purposes and the relationship of the Employee
with the Company. Accordingly, the restrictions on Transfer
contained herein shall be specifically enforceable.
Employee hereby further agrees to hold the Company and each
other shareholder (each shareholder's successors and assigns)
wholly and completely harmless from any cost, liability or
damage (including, without limitation, liabilities for income
taxes and costs of enforcing this indemnity) incurred by any
of such indemnified persons as a result of a Transfer or
attempted Transfer in violation of this Agreement.
2.4. Subsequently Issued Shares. All Shares hereinafter issued to
Employee or to Employee's beneficiaries, heirs, successors in
interest, representatives or assigns with respect to any
Shares subject to this Agreement, whether by stock split,
stock dividend or otherwise, shall bear the same endorsement
and be subject to all the terms and conditions hereof.
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2.5. Legend. In addition to other legends required under the
Stockholders' Agreement and applicable securities laws, the
Shares which are subject to this Agreement shall contain the
following legend:
"The shares represented by this certificate are
subject to repurchase by Energy Partners, Ltd. and
such shares may not be sold or otherwise transferred
except pursuant to the Employment and Stock Ownership
Agreement, dated ______________, 1998, by and between
the shareholder to whom this certificate was issued,
the shareholder's spouse and Energy Partners, Ltd., a
copy of which is on file in the office of the
Corporate Secretary of the Company."
2.6. Internal Revenue Code Section 83(b) Election. The Employee
shall execute a valid election under Internal Revenue Code
Section 83(b), in accordance with the procedures prescribed in
the regulations thereunder and the form attached hereto and
made hereof as Exhibit "C".
2.7. Shareholder Rights Upon Employee Resignation or Termination
for Cause. If Employee voluntarily terminates employment with
the Company by resignation ("Resign") before the expiration of
the Term or if Employee is terminated by the Company for
"Cause" (as defined in Subparagraph 1.1 above) prior to the
expiration of the Term, all of Employee's rights to the Shares
may be acquired as set forth in Section 2.12 hereof at a price
equal to the greater of $0.00 or the book value of the Shares
as set forth on the Company's financial statements as of
December 31 of the year prior to termination.
2.8. Shareholder Rights Upon Judgment of Separation or Divorce. In
the event of a judgment of separation or divorce involving
Employee in which a portion of Employee's Shares are
transferred to Employee's spouse/ex-spouse, Employee shall
have sixty (60) days from the date of such transfer to
purchase said Shares from the spouse/ex-spouse. If Employee
does not purchase said Shares within the sixty (60) day time
period, then within four (4) months of said transfer, all of
Employee's rights to the Shares transferred to Employee's
spouse/ex-spouse may be acquired as set forth in Section 2.12
hereof. If the Shares are owned as community property or in
joint ownership, Employee's spouse shall execute this
Agreement in acknowledgment and agreement to such sale of
Shares. The spouse, by executing this Agreement, shall also
acknowledge and agree that following such sale of their
Shares, the spouse will have no further interest
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whatsoever in this Agreement or any claims under it. This
provision shall be inapplicable to any Employee whose
spouse/ex-spouse is also an employee of the Company and holds
Shares in their own name.
2.9. Purchase Price upon Judgment of Separation or Divorce. (a) If
Employee purchases the spouse/ex-spouse's Shares, the purchase
price shall be based upon the "fair market value" of the
Shares as of the end of the fiscal year of the Company
immediately preceding the date of said judgment and payment
shall be made in cash. "Fair market value" shall be determined
by both Employee and the spouse/ex-spouse by obtaining two (2)
appraisals. However, if no agreement can be reached within
five (5) business days of the date of the latest appraisal,
the Company will obtain a third appraisal, with costs split
evenly between Employee and the spouse/ex-spouse, and the fair
market value will be the average of the three (3) appraisals.
(b) If Employee does not purchase the Shares from the
spouse/ex-spouse, then the Shares may be acquired as set forth
in Section 2.12 hereof for the fair market value established
based upon the average of an appraisal obtained by Company and
an appraisal obtained by Employee determined as of the end of
the fiscal year of Company immediately preceding the date of
said judgment within four (4) months of the transfer to the
spouse/ex-spouse.
2.10. Shareholder Rights upon Death, Permanent Disability or
Involuntary Termination by Company for Other than Cause.
Should employment of Employee by Company cease due to
Employee's death, permanent disability or involuntary
termination of Employee by Company for a reason other than
"Cause" as defined in Subparagraph 1.1 above, Employee's
Shares shall continue to be held in Employee's name (or
Employee's designated beneficiary or trustee, as applicable).
For purposes hereof, permanent disability shall be Employee's
complete and total inability, by reason of illness, accident
or otherwise, to perform the duties of the occupation for
which Employee was employed when such disability commenced for
a period of twenty-six (26) weeks. All determinations as to
the date and the extent of disability of Employee shall be
made by the Company's President or his designee based upon
such information as deemed reasonable and appropriate.
2.11. Interests of Employee Spouse upon Death. By executing this
Agreement, the spouse of Employee agrees to execute within
sixty (60) days hereof, a valid last will and testament
containing a legacy to Employee consisting of all interests in
the Shares that the spouse owns jointly or through a community
property regime. The last will and testament shall also
contain a provision that should such
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disposition impinge upon the legitime of the spouse's forced
heirs, that Employee shall have the right within six (6)
months of the spouse's death to purchase such Shares at a
price based upon an independent appraisal determined as of the
December thirty-first (31st) immediately prior to the date of
the spouse's death. Should Employee fail to purchase such
Shares, the Shares may be acquired as set forth in Section
2.12 hereof at the fair market value as determined using the
procedure set forth in Subparagraph 2.9(b) above, within four
(4) months of the spouse's death.
2.12. Option to Purchase. As more fully described in Section 4 of
the Stockholders' Agreement, any right or option to purchase
any shares pursuant to this Agreement shall first be
exercisable by Xxxxxxx X. Xxxxxxxx, or his designee, who shall
first have the option to purchase all of the Shares under the
applicable terms and conditions. Company shall have the option
to purchase or redeem the Shares if not purchased by Xxxxxxx
X. Xxxxxxxx under the same applicable terms and conditions,
and so long as the Stockholders' Agreement is in effect,
Energy Income Fund, L.P., or its designee, shall have the
option to purchase all of the Shares not purchased by Xxxxxxx
X. Xxxxxxxx or Company under the same applicable terms and
conditions.
2.13. Mandatory Sale of Shares. Notwithstanding anything to the
contrary set forth herein and as more fully described in
Section 5 of the Stockholders' Agreement, if a bona fide offer
to purchase eighty-five percent (85%) of the Shares of the
Company is received by the Company from an independent third
party at a price per Share which is supported by appraisals,
and if the holders of eighty-five percent (85%) of the Shares
then outstanding have agreed to tender their Shares pursuant
to such offer, Employee agrees to sell all Shares that
Employee holds on the terms and conditions set forth in such
offer.
2.14. Restriction on Sale of Shares. Except as provided elsewhere in
this Section 2.0, after (i) a Qualified Public Offering, (ii)
transfer of more than seventy-five (75) percent of the
authorized, issued, and outstanding stock of the Company by
sale, merger, or otherwise, or (iii) by written agreement of
all parties to this Agreement, for a period of one (1) year
prior to the termination of this Agreement as defined in
Section 3.7 hereof, Employee shall not sell such number of
Shares in excess of the lesser of: (A) the number of Shares
permitted to be sold by Employee pursuant to any underwriting
and/or subscription agreement or (B) fifty (50%) percent of
the Shares held by Employee. If Employee desires to sell more
Shares than set forth above, Employee, may at the option of
the
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Company, sell such Shares to the Company at the lesser of book
value as of the preceding December 31, or the then market
value of the stock as traded on a recognized stock exchange.
2.15. Exception to Restriction on Transfer of Shares.
Notwithstanding the restriction on sale, transfer or
alienation of the Shares provided herein, Employee shall have
the right to transfer a portion of the Shares held by him to
an individual or individuals who are, or will become, an
employee of the company (each an "Employee Transferee");
provided, however, that any such Employee Transferee must
validly execute a Shareholders' Agreement and an Employment
and Stock Ownership Agreement as a condition precedent to
receiving any Shares.
3. Miscellaneous
3.1. Entire Agreement. The parties to this Agreement acknowledge
that they have concurrently executed that certain
Stockholders' Agreement dated on even date by and among Energy
Partners, Ltd., and Energy Income Fund, L.P., and The
Individual Stockholders ("Stockholders' Agreement"). In any
circumstances where there is a conflict between the provisions
of the Stockholders' Agreement and this Agreement, except as
provided in Section 3.7 below, the provisions of the
Stockholders' Agreement shall prevail, but only so long as the
Stockholders' Agreement is in force and effect. Capitalized
terms not defined herein shall have the meaning set forth in
the Stockholders' Agreement. Without limiting the generality
of the foregoing, this Agreement embodies the entire agreement
between the parties hereto regarding to the subject matter
hereof, and shall supersede any and all prior agreements
whether written or oral relating to employment and/or Shares
of the Company owned by Employee, and shall be binding upon
Employee and Employee's heirs, legatees, legal
representatives, successors, donees, transferees and assigns,
and Employee does hereby authorize and obligate Employee's
executors, heirs and legatees to comply with the terms of this
Agreement. The parties shall not be bound by or be liable for
any statement, representation, promise, inducement or
understanding of any kind or nature regarding the subject
matter hereof which is not set forth herein. No changes,
amendments or modifications of any of the terms or conditions
of this document shall be valid unless reduced to writing and
signed by all parties hereto, Company being represented by its
President or his designee.
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3.2. Severability. If any provision of this Agreement shall be
declared unlawful or incapable of execution or in conflict
with the Stockholders' Agreement, such facts shall in no way
affect the validity of any other portion hereof which can be
given reasonable effect without the provision declared invalid
or incapable of execution; nor shall such fact operate to
nullify or rescind this Agreement, but shall only serve to
render ineffective the provisions declared invalid of the
remainder, or the intent of the Agreement as a whole.
3.3. Applicable Law. This document shall be construed for all
purposes as a Louisiana document and shall be interpreted and
enforced in accordance with the laws of the State of
Louisiana; provided however, that the non-compete provisions
set forth in Subparagraph 1.5 hereof shall be governed by the
law of the state where the alleged competition occurs, whether
in Louisiana or some other state.
3.4. Number and Gender. As used herein, the singular shall include
the plural and vice versa and words used in one gender shall
include all others as appropriate.
3.5. Additional Documents. The parties hereto agree to execute
whatever documents or instruments and to perform whatever acts
may be reasonably required to fulfill the requirements and/or
intents hereof.
3.6. Legal Assistance. The parties hereto have each consulted with
legal counsel or have had the opportunity to consult with
legal counsel regarding the terms and conditions of this
Agreement.
3.7. Termination. The Terms and Conditions of this Agreement shall
terminate at the earlier of (i) one year following the
completion of a Qualified Public Offering, (ii) one year
following transfer of more than seventy-five (75) percent of
the authorized, issued, and outstanding stock of the Company
by sale, merger, or otherwise, (iii) or by written agreement
of all parties to this Agreement. If none of the three (3)
events referred to immediately herein above have occurred, the
terms and conditions of the Employment portion of this
Agreement (Sections 1.0 to 1.6) shall terminate five (5) years
from the date hereof.
IN WITNESS WHEREOF, the parties hereto have set forth their
hand and seal on the day, month and year first above written in multiple
originals, each of which shall have the same force and effect as if it were the
same original.
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WITNESSES: ENERGY PARTNERS, LTD.
---------------------------- By:
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Xxxxxxx X. Xxxxxxxx, President
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ACKNOWLEDGED AND AGREED TO THE
TERMS HEREOF:
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Spouse
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