AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
Exhibit 10.3
This Amendment No. 1 (the “Amendment”) to the Employment Agreement (the “Agreement”), dated
January 18, 2006, by and between The Houston Exploration Company, a Delaware corporation (the
“Company”) and Xxxxxx X. Xxx (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 amend the
Agreement to add 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 his 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 his 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/ Xxxxxx X. Xxx | ||||||
| Xxxxxx X. Xxx | ||||||
