EXHIBIT 10.2.2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, effective as of this 1st day of January, 1999, by and
between GOTHIC ENERGY CORPORATION and GOTHIC PRODUCTION CORPORATION, both
Oklahoma corporations, with their principal place of business at 0000 Xxxxx
Xxxxx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxxx, 00000-0000 (collectively the
"Company"), and XXXXXX X. XXXX (the "Executive").
WHEREAS, the Executive is the Vice President and Chief Financial Officer of
the Company, the Company desires to continue to employ the Executive as the Vice
President and Chief Financial Officer of the Company and the parties hereto wish
to set forth the terms of the Executive's employment with the Company.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Executive, and the
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Executive hereby accepts such employment, as Vice President and Chief Financial
Officer of the Company upon terms and subject to the conditions contained
herein.
2. Duties.
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(a) The Executive shall perform all duties of the position of Vice
President and Chief Financial Officer of the Company consistent with the powers
and duties of such office set forth in the Company's By-Laws, as well as any
other duties, commensurate with the Executive's position that are assigned by
the Chairman of the Board ("Chairman"), the Board of Directors ("Board") or the
President.
(b) Throughout his employment hereunder, Executive shall devote his
full time, attention, knowledge and skills during regular business hours in
furtherance of the business of the Company and will faithfully, diligently and
to the best of his ability perform the duties described above in furtherance of
the Company's best interests. During his employment, the Executive shall not
engage, and shall not solicit any employees of the Company or affiliates to
engage in any commercial activities which are in any way in competition with the
activities of the Company, or which may in any way interfere with the
performance of his duties or responsibilities to the Company.
(c) The Executive shall at all times be subject to, observe and carry
out such rules, regulations, policies, directions and restrictions as the
Company, consistent with the Executive's rights and duties under his Agreement,
may from time to time establish and those imposed by law.
3. Executive Covenants. In order to induce the Company to enter into this
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Employment Agreement, the Executive hereby agrees as follows:
(a) Except when disclosure is in the best interest of the Company or is
compelled by law, or disclosure is consented to or directed by the Chairman of
the Board, the Executive shall keep confidential and shall not divulge to any
other person or entity, during the term of the Executive's employment or
thereafter, any of the business secrets or other confidential information
regarding the Company or the Company's other subsidiaries which have not
otherwise become public knowledge.
(b) All papers, books and records of every kind and description
relating to the business and affairs of the Company, whether or not prepared by
the Executive, shall be the sole and exclusive property of the Company, and the
Executive shall surrender them to the Company at any time upon request by the
Chairman or the Board.
4. Base Salary and Bonuses. As full compensation for Executive's services
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hereunder and in exchange for his promises contained herein, the Company shall
compensate the Executive in the following manner (subject to Paragraph 4 (c)):
(a) Base Salary. The Company shall compensate Executive at the base
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salary rate of One Hundred Fifty-Seven Thousand Five Hundred Dollars ($157,500)
per annum, payable in equal installments on the same basis as other senior
salaried officers of the Company. Such annual salary may be increased in the
future by such amounts and at such times as the Board or the Compensation
Committee thereof shall deem appropriate in its sole discretion.
(b) Annual Bonuses. Beginning with the calendar year 1999 and in each
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year or portion thereof thereafter during the term of his Agreement, the Board
or Compensation Committee thereof shall consider the Executive for a cash
performance bonus in accordance with the following terms: The actual amount and
timing of such bonus, if any, shall be determined in good faith based on
criteria reasonably deemed to be relevant to such determination including,
without limitation, transactions effected for the benefit of the Company that
are outside of the ordinary course of business and directly or indirectly
accomplished through the efforts of the Executive (e.g., business combinations,
corporate partnerings and other similar transactions).
(c) The amounts set forth in subparagraphs (a) and (b) above shall be
subject to appropriate payroll withholding and any similar deductions required
by law.
5. Long-term Incentive Plan. The Executive shall be entitled to
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participate, to the extent he is eligible under the terms and conditions
thereof, any stock option plan, stock award plan, omnibus stock plan, or similar
incentive plan currently in existence or hereafter established by the Company.
Awards to the Executive under any such plan shall be made as provided in such
plans and at such times and in such amounts as shall be determined in the sole
discretion reasonably exercised of the Board or the Compensation Committee
thereof. Executive's right to receive a bonus shall be exclusively determined
by the provisions of Paragraph 4(b) hereof.
6. Benefit Plans. During the term of his employment, the Executive shall
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be entitled to participate in the Company management employment benefits and
retirement plans (including any health and life insurance plans), as they are in
existence on the date of this Agreement, or as they may be amended or added
hereafter. Neither shall the Company be under any obligation solely as a result
of the Agreement to institute or continue the existence of any employee benefit
plan.
7. Other Benefits. The Executive shall be provided the following
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additional benefits:
(a) Club Membership. Reimbursement to the Executive for the cost of his
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and his immediate family's membership in one country club or his membership in
one business club, and for his business-related use thereof.
(b) Business Expense. Reimbursement to the Executive, upon proper
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accounting, for reasonable expenses and disbursements incurred by him in the
course of the performance of his duties hereunder.
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(c) Vacation. The Executive shall be entitled to four (4) weeks of
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vacation each year of the Agreement or such longer period as shall be provided
to senior executives of the Company, without reduction in salary.
(d) Automobile. The Executive shall be entitled to the use of an
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automobile, and upon proper accounting shall be reimbursed for reasonable
expenses incurred by him relating to the performance of his duties hereunder.
8. Duration and Termination.
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(a) Duration. The effective date of this Agreement shall be January 1,
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1999, and it shall continue for a term of three (3) years. At the end of the
first year and at the end of each succeeding year this agreement shall be
automatically extended for one year such that at the end of each year there will
automatically be three years remaining on the term of this Agreement, provided
that the Executive shall have the right to terminate this Agreement at the end
of the initial term or any succeeding term on not less than six (6) months prior
written notice to the Company (in which event all rights and benefits of
Executive hereunder shall cease upon such termination's effective date).
(b) Termination at Any Time by Company. This Agreement shall be
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terminable by the Company at any time for any reason, including death or
Disability (as hereinafter defined) of the Executive, upon not less than 45 days
prior written notice to the Executive and all rights and benefits of the
Executive hereunder (other than those arising under Section 9 hereof) shall
cease, except that the Executive will have the right to receive from the Company
(i) a payment representing all salary due under the remaining full term of this
Agreement, and (ii) the continuation of all medical insurance and other benefits
provided to the Executive as contemplated by Sections 6 and 7 hereof for a
period of one (1) year following the termination date. Notwithstanding the
foregoing, if the Company terminated this Agreement "for cause," then no
Termination Payment shall be made to the Executive and all rights, benefits and
obligations of the Executive under this Agreement, except the Executive's rights
under Section 9 hereof, shall cease. "For cause" shall include: (i) the
Executive's willful and material breach in respect of his duties under this
Agreement if such breach continues unremedied for thirty (30) days after written
notice thereof from the Board to the Executive specifying the acts constituting
the breach and requesting that they be remedied; or (ii) the Executive is
convicted or pleads guilty to a felony, during the employment period other than
for conduct undertaken in good faith in furtherance of the interests of the
Company. "Disability" shall mean that due to illness, accident or other physical
or mental incapacity, the Board has in good faith determined that the Executive
is unable to substantially perform his usual and customary duties under this
Agreement for more than four (4) consecutive months or six (6) months in any
calendar year.
(c) Rights of Termination by Executive. The Executive shall have the
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right, by written notice to the Company, to elect to terminate this Agreement
within sixty (60) days following a Change in Control (as defined below). In the
event that Executive makes such election, the Executive shall be entitled to
receive from the Company a payment equal to three years current base salary as
set forth herein or as hereafter increased by the Board or Compensation
Committee, plus a lump sum payment of Two Hundred Thousand Dollars ($200,000).
Payment is to be made within sixty (60) days of receipt by the Company of a
written notice of Executive's election.
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(d) Change in Control. For the purpose of this Agreement, a "Change in
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Control" means (i) the direct or indirect sale, lease, exchange or other
transfer of all or substantially all (50% or more) of the assets of the Company
to any person or entity (in either case, a "Person") or group of Persons acting
in concert as a partnership or other group (a "Group of Persons"), other than
an Affiliate (as defined below) of the Company, (ii) the merger, consolidation
or other business combination of the Company with or into another corporation
with the effect that the shareholders of the Company immediately prior to the
business combination hold 50% or less of the combined voting power of the then
outstanding securities of the surviving corporation of such merger ordinarily
(and apart from rights accruing under special circumstances) having the right to
vote in the election of directors, (iii) the replacement of a majority of the
Board, over any period of two (2) years or less, from the directors who
constituted the Board at the beginning of such period, and such replacement
shall not have been approved by the Board (or replacements approved by the
Board) as constituted at the beginning of such period, (iv) a Person or Group of
Persons shall as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, have become the beneficial owner
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of the securities of the Company representing 50% or more of the
combined voting power of the then outstanding securities of the Company
ordinarily (and apart from rights accruing under special circumstances) having
the right to vote in the election of directors, or (v) a material change in the
duties and/or responsibilities of the Executive hereunder which change has been
approved by the Board or Chairman. As used in this Section 8, (a) the term
"Affiliate" means, with respect to any designated Person, any other Person that
has a relationship with the designated Person whereby either of such Persons
directly or indirectly controls or is controlled by or is under common control
with the other of such Persons, or holds or beneficially owns 10% or more of the
equity interest on the other Person or 10% or more of any class of voting
securities of the other Person and (b) the term "control" means the possession,
directly or indirectly, of the power, whether exercised or not exercised, to
direct or cause the direction of the management or policies of any Person,
whether through the ownership of voting securities, by contract or otherwise.
9. Indemnification. The Company shall defend and hold the Executive
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harmless to the fullest extent permitted by applicable law, the Company's By-
Laws and the Company's Charter in connection with any claim, action, suit,
investigation or proceeding arising out of or relating to performance by the
Executive of services for, or action of the Executive is or was, a director,
officer, employee or agent of the Company or any parent, subsidiary or affiliate
of the Company, or of any other person or enterprise at the Company's request.
Expenses incurred by the Executive in defending a claim, action, suit or
investigation or proceeding shall be paid by the Company in advance of the final
disposition thereof upon the receipt by the Company of any undertaking by or on
behalf of the Executive to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified hereunder; provided
however, that this Paragraph 9 shall not apply to a non-derivative action
commenced by the Company against the Executive. The foregoing rights are not
exclusive and do not limit any rights accruing to the Executive under any other
agreement or contract or under applicable law.
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10. Successors and Assigns. The rights of the Company hereunder shall run
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in favor of the Company, its successors, assigns, nominees or other legal
representatives. The rights of the Executives hereunder shall inure to the
benefit of the Executive's legal representatives, executors, heirs and
beneficiaries. Termination of Executive's employment shall not operate to
relieve him of any remaining obligations under Section 3 hereof, and all such
obligations are binding upon his heirs, executors, administrators or other legal
representatives. The Company shall require any successor (whether direct or
indirect, by purchase, merger, reorganization, consolidation, acquisition of
property or stock, liquidation or otherwise) to all or a significant portion of
the assets of the Company, by agreement in form and substance satisfactory to
the Executive, to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
if no such succession had taken place. Regardless of whether such agreement is
executed by a successor, this Agreement shall be binding upon any successor in
accordance with the operation of law and such successor shall be deemed the
"Company" for the purpose of this Agreement.
11. Arbitration of All Disputes.
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(a) Any controversy or claim arising out of or relating to this
Agreement or the breach thereof (including the arbitrability of any controversy
or claim), shall be settled by arbitration in the city of Tulsa in the State of
Oklahoma, by three (3) arbitrators, one of whom shall be appointed by the
Company, one by the Executive and the third of whom shall be appointed by the
first two arbitrators. If the first two arbitrators cannot agree on the
appointment of the third arbitrator, then the third arbitrator shall be
appointed by the American Arbitration Association. The arbitration shall be
conducted in accordance with the rules of the American Arbitration Association,
except with respect to the selection of the arbitrators which shall be as
provided in this Section. The cost of any arbitration process hereunder shall be
borne equally by the Company and Executive. The award of the arbitrators shall
be binding upon the parties. Judgment upon the award rendered by three
arbitrators may be entered in any court having jurisdiction thereof.
(b) In the event that it shall be necessary or desirable for the
Executive to retain legal counsel and/or incur other costs and expenses in
connection with the enforcement of any or all of his rights under this
Agreement, and provided that the Executive substantially prevails in the
enforcement of such rights, the Company shall pay (or the Executive shall be
entitled to recover from the Company, as the case may be) the Executive's
reasonable attorney's fees and costs and expenses in connection with the
enforcement of his rights, including the enforcement of any arbitration award,
up to $50,000 in the aggregate.
12. Notices. All notices, requests, demands and other communications
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hereunder must be in writing and shall be deemed to have been duly given upon
receipt if delivered by hand, sent by telecopier or courier, and three (3) days
after such communication is mailed within the continental United States by first
class certified mail, return receipt requested, postage prepaid, to the other
party, in each case addressed as follows:
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(a) if to the Company:
Gothic Energy Corporation
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
(b) if to the Executive:
Xxxxxx X. Xxxx
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
Addresses may be changed by written notice sent to the other party at the last
recorded address of that party.
13. Severability. If any provisions of this Agreement shall be adjudged
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by any court of competent jurisdiction to be invalid or unenforceable for any
reason, such judgment shall not affect, impair or invalidate the remainder of
this Agreement.
14. Prior Understanding. This Agreement embodies the entire understanding
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of the parties hereto, and supersedes all other oral or written agreements or
understandings between them regarding the subject matter hereof. No change,
alteration or modification hereof may be made except in writing, signed by both
parties hereto. The headings in this Agreement are for convenience and
reference only and shall not be construed as part of this Agreement or to limit
or otherwise affect the meaning hereof.
15. Execution in Counterparts. This Agreement may be executed by the
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parties hereto in counterparts, each of which shall be deemed to be original,
but all such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
16. Choices of Laws. Subject to the provisions of Paragraph 11 and
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without regard to the effect of principles of conflict of laws thereto,
jurisdiction over disputes with regard to this Agreement shall be exclusively in
the courts of the State of Oklahoma, and this Agreement shall be construed in
accordance with and governed by the laws of the State of Oklahoma.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
GOTHIC ENERGY CORPORATION
By:
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ATTEST:
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GOTHIC PRODUCTION CORPORATION
By:
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ATTEST:
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XXXXXX X. XXXX
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