EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into effective as of August 1,
1996, by and between Fortune Petroleum Corporation, a Delaware corporation
("Employer") and Xxxx X. Xxxxxxx ("Employee").
WHEREAS, Employee is currently employed in Los Angeles, California as the
vice-president of Xxxxxx, Xxxxxxx & Xxxxxxxxxx, counsel to Employer; and
WHEREAS, Employer desires to engage Employee's exclusive business services in
Houston, Texas and Employee desires to provide such services, on a date to
commence in the near future, on the terms and conditions set forth herein; and
WHEREAS, Employer desires to provide to Employee the incentive necessary to
permit Employee to make the commitments that such a move will entail; and
WHEREAS, the Board of Directors of Employer recognizes Employee's general
importance to the ongoing operations of Employer, and the value of his
continuing participation in these operations, and desires to help assure
continuing dedication by Employee to his duties to demonstrate to Employee that
Employer is concerned with Employee's welfare and fair treatment; and
WHEREAS, the parties desire to demonstrate and provide for those concerns and
to facilitate and finance Employee's move to the greater Houston area by
entering into an Employment Agreement on the following terms and conditions:
In consideration of the foregoing and of the mutual and dependent covenants
herein contained, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES
Employer hereby employs Employee on the terms and conditions hereinafter
set forth as its executive vice-president and general counsel, and
Employee hereby accepts such employment upon such terms and conditions
for the period hereinafter fixed. Employee shall not be required to
spend any extended periods outside the immediate area surrounding
Employer's headquarter's office, except that Employee agrees to make
routine business trips of reasonable duration for the benefit of Employer
and its business and in the discharge of Employee's duties hereunder.
2. PERFORMANCE
Employee agrees to devote substantially all of his business time and
efforts to the performance of his duties as an executive of Employer as
specified from time to time by the Board of Directors of Employer and
further agrees that he will not engage in any activities in competition
with Employer.
3. TERM
The duties and obligations of the parties hereunder shall commence as of
the date hereof. Employee's period of employment hereunder shall
commence on the date on which Employee commences full-time employment
with Employer and shall terminate December 31, 1998, unless extended
pursuant to agreement of the parties hereto.
4. COMPENSATION AND EXPENSES
(A) For all the services to be rendered by Employee hereunder, Employer
agrees to pay Employee the sum of $125,000.00 per year, subject to all
legally required deductions. The amount and payment of said
compensation may be reviewed and increased by appropriate action of
the Board of Directors of Employer. In addition to such annual
compensation, Employee will be eligible to receive annual bonuses or
incentives for such reasons and in such amounts as the Board of
Directors of Employer shall determine from time to time. Employee
shall also be entitled to participate in other bonus and option plans
which may be awarded from time to time in the absolute discretion of
the Board of Directors and to cost of living adjustments given to the
employees of Employer. Employee shall also be reimbursed for
reasonable expenses incurred on behalf of Employer upon presentation
to Employer of a reasonably detailed statement of expenses for which
reimbursement is claimed.
(B) Employer shall grant, or otherwise cause to be granted, to Employee
20,000 warrants to purchase one (1) share each of the common stock of
Employer at the price listed for such stock on the American Stock
Exchange at the close of business on the first day of Employee's full-
time employment with Employer. Such warrants shall be issued for a
term of five (5) years but shall not be exercisable by Employee for
the first year after issuance.
5. VACATION
Employee shall have the right to a maximum of four (4) weeks of vacation
each year from his duties as herein described. During such vacation
period, the compensation payable to Employee pursuant to Section 4 hereof
shall continue. Employee's exercise of his rights under this paragraph 5
shall be consistent with all policies of Employer relating to the use of
vacation time.
6. BENEFITS
In addition to the compensation provided for in Section 4, Employee will
also be entitled to participate in all benefits of employment generally
available to all other executives of Employer on a commensurate basis as
may be offered from time to time by Employer to its other employees
similarly situated in experience, including, without limitation, club
membership, group health, disability, and life insurance benefits and
participation in any incentive compensation, bonus, pension, profit
sharing, and stock option plans established by Employer.
Employee shall be provided with an automobile appropriate for his
executive capacity with Employer. Employer shall pay all costs and
expenses of maintaining said automobile, including upkeep and insurance.
Employer shall also pay the reasonable costs of moving Employee and
Employee's personal household and office effects from Los Angeles,
California to Houston, Texas.
7. PROPRIETARY INFORMATION
(A) Employee will not at any time disclose or use, except in the pursuit
of the business of Employer and any subsidiary thereof, and
proprietary information of Employer without regard to whether such
information is embodied in writing or some other physical form. For
purposes of this Agreement, the phrase "proprietary information of
Employer" means all information which is known only to employees of
Employer or its subsidiaries or others in a confidential relationship
with Employer and relates to specific technical matters or specific
business matters of Employer.
(B) Employee will not at any time remove from the premises of Employer,
except in the pursuit of the business of Employer, any document,
component, device, record, or other information of Employer, such
documents, components, devices, records, or other information, whether
developed by Employee or other employees of Employer, being the
exclusive property of Employer.
8. TERMINATION AND DISABILITY
(A) Employer reserves the right, at its option, to terminate this
Agreement on written notice to Employee for cause or for the breach of
any of the provisions hereof where said breach has not been cured
within thirty (30) days from the date of written notice of such
breach.
(B) This Agreement shall terminate upon the occurrence of (i) completion
of the initial period of this Agreement or any extension thereof; (ii)
Employee's death; (iii) the conditions specified in Section 8(A),
above; or (iv) inability of Employee, because of physical or mental
disability, to perform efficiently all of the duties of his employment
hereunder for an aggregate of six (6) months during any twelve (12)
month period.
(C) During the period of any such disability as referred to in Section
8(B)(iv), and until employment hereunder is terminated pursuant to its
provisions, Employee shall be entitled to all compensation and other
benefits to which he would otherwise be entitled hereunder had such
disability not occurred, less the aggregate amount of any payments
under either disability insurance policies maintained by Employer or
programs of federal or state governments. Employee agrees to apply
for all payments to which he is entitled under said policies or
programs. Employee shall give Employer notice of any disability
hereunder and the receipt of all payments received from said policies
or programs.
(D) Upon termination of Employee's employment hereunder, Employer shall
have no further obligation to Employee.
(E) In the event that, during the term of this Agreement or any extension
thereof and following a change in control, this Agreement is
terminated by either Employer or Employee for any reason, either
voluntary or involuntary, other than for the reasons set forth in
Section 8(B), above, Employee shall be entitled to receive a single
payment equal to two (2) years' compensation at the rate provided for
in Section 4 hereof, as amended from time to time by the Board of
Directors, and in effect on the date of termination. For the purposes
of this Agreement, a change in control shall be deemed to have
occurred if, as the result of a tender offer, exchange offer, merger,
consolidation, sale of assets, acquisition of assets, or contested
election of directors or any combination of the foregoing (a
"Transaction"), the persons who were directors of Employer immediately
prior to the Transaction shall cease to constitute at least two-thirds
of the membership of the Board of Directors of Employer or of any
parent of, or successor to, Employer within two years after the
Transaction. In addition, in the event of such termination, the
rights of Employee under any applicable retirement, profit sharing, or
stock option plan of Employer shall continue to be governed by the
terms of such plans in existence as of the date of termination, except
that the exercise price of all shares covered by options which are
vested in Employee as of the date of termination shall be reduced to
the par value of Employer's stock, and Employee shall be entitled to
participate in Employer's group health plans or arrangements on a
basis commensurate with Employer's employees similarly situated in
experience until Employee shall reach age 65.
In the event of termination of this Agreement under the circumstances
described in this Section 8(E), the arrangements provided for by this
Agreement, by any stock option or other agreement between Employer or
any of its subsidiaries and Employee in effect at the time and by any
other applicable plan of Employer or any of its subsidiaries,
including participation in Employer's group health plans or
arrangements as specified in this Section 8(E), will constitute the
entire obligation of Employer to Employee and performance thereof will
constitute full settlement of any claim that Employee might otherwise
assert against Employer on account of such termination.
9. INDEMNITY
To the extent permitted by applicable law, Employer agrees to indemnify
Employee and hold him harmless for any acts or decisions made by him in
good faith while performing services for Employer, and shall maintain
coverage for him under liability insurance policies now in effect or
hereafter obtained during the term of this Agreement covering the other
officers and directors of Employer. Employer shall pay all expenses,
including reasonable attorney's fees and the amounts of court approved
settlements, actually incurred by Employee in connection with the defense
of any action, suit, or proceeding, and in connection with any appeal
thereon, which has been or which may be brought against Employee by
reason of Employee's services as an officer or agent of Employer or
subsidiary thereof.
10. NOTICE
Unless otherwise directed in writing, any and all notices to Employer
referred to herein shall be sufficient if furnished in writing, sent by
certified mail to the following address:
Fortune Petroleum Corporation
000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
and to Employee:
Xxxx X. Xxxxxxx
00000 Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
11. ASSIGNMENT
The rights and benefits of Employer under this Agreement shall only be
transferable by Employer to successors of Employer pursuant to a
corporate reorganization such as a merger or sale of substantially all of
the assets of Employer, and all covenants and agreements hereunder shall
inure to the benefit of, and be enforceable by or against, said
successors-in-interest; provided, however, that Employer shall not enter
into a merger or consolidation with and into another corporation which
results in the termination of Employer's separate corporate existence
unless effective provisions shall have been made with the surviving
corporation for the continued employment of Employee generally upon the
same terms and conditions set forth in this Agreement. Notwithstanding
any such provision, Employee shall be entitled to the rights set forth in
Section 8(E), above.
This Agreement is personal to Employee and cannot be assigned nor may
duties of Employee hereunder be delegated. Any attempted assignment or
delegation by Employee shall render this Agreement null and void at the
option of Employer.
12. BINDING EFFECT
The terms, conditions, covenants, and agreements set forth herein shall
inure to the benefit of, and be binding upon, the heirs, administrators,
successors, and assigns of each of the parties hereto and upon any
corporation, entity, or person with which any of the parties hereto may
become merged, consolidate, combined, or otherwise affiliated.
13. WAIVER
The waiver of either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as the
waiver of any subsequent breach of such other party.
14. ATTORNEY'S FEES
In the event that any action is brought to enforce the terms of this
Agreement, the prevailing party shall be entitled to an award of
reasonable attorney's fees and costs.
15. ENTIRE AGREEMENT
This Agreement represents the entire agreement between the parties
hereto, and other or prior understandings, agreements, and contracts are
hereby cancelled without further liability whatsoever as to either party.
16. AMENDMENT
This Agreement shall not be altered or modified except by further
written agreement between the parties.
17. CHOICE OF LAW
This Agreement shall be interpreted, construed, and applied according to
the laws of the State of Texas applicable to contracts made and performed
within such State.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the date first above written.
FORTUNE PETROLEUM CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
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XXXXXX X. XXXXXXXXX
President and Chief Executive Officer
/s/ Xxxx X. Xxxxxxx
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XXXX X. XXXXXXX
