Exhibit 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of November 10,
1999, is entered into by and between Texoil, Inc., a Nevada corporation (the
"Company"), and Xxxxx X. Xxxxxxxxx, an individual residing in Houston, Texas
("Employee").
WHEREAS, the Company proposes to sell certain equity securities to Quantum
Energy Partners, LP, EnCap Equity 1996 Limited Partnership, Energy Capital
Investment Company PLC, V&C Energy Limited Partnership, Xxxxxx X. Xxxxx, Xxxx X.
Xxxxx, Xxxxxx X. Xxxxxx and Xxxxx X. Xxxxx (collectively, the "Investors"), and
the Investors propose to purchase certain equity securities of the Company
pursuant to the terms and conditions of that certain Preferred Stock Purchase
Agreement (the "Purchase Agreement") to be entered into by and among the Company
and the Investors (the "Proposed Transaction");
WHEREAS, as a condition to the consummation of the Proposed Transaction,
the Investors have required that Employee enter into an employment agreement on
the terms and conditions hereinafter set forth;
WHEREAS, Employee is presently employed by the Company and, as a material
inducement for the Investors to consummate the Proposed Transaction, is willing
to commit himself to continue to serve on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company and Employee hereby agree as follows:
1. EMPLOYMENT. The Company agrees to continue to employ Employee, and
Employee agrees to remain in the employ of the Company, upon the terms and
subject to conditions herein provided.
2. TERM. The employment of Employee shall be for a period (referred to
herein as the "Employment Term") commencing on the date of this Agreement and
ending on the earliest of (a) the first date on which the Investors cease to own
any Series A Preferred or Conversion Shares (as such terms are defined in the
Purchase Agreement), (b) the effective date of any Sale Transaction (as such
term is defined in the Purchase Agreement), or (c) the date of termination of
Employee's employment pursuant to Section 5 hereof.
3. POSITION AND DUTIES.
(a) POSITION. During the Employment Term, Employee shall serve as Chief
Executive Officer of the Company and in such other capacities as the Board of
Directors of the Company may designate from time to time. In such capacities,
Employee shall have such duties, functions, responsibilities and authority
customarily associated with the position of Chief Executive Officer of a company
comparable to the Company which is engaged in oil and gas exploration and
production; subject, however, to applicable restrictions imposed by the Amended
and Restated Articles of Incorporation, Certificate of Designation or Bylaws of
the Company and the Purchase Agreement and to the directives of the Board of
Directors of the Company.
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(b) DUTIES. During the Employment Term, Employee shall devote
substantially all of his time, skill and attention and his best efforts to the
business and affairs of the Company, and in furtherance of the business and
affairs of the Company and its subsidiaries (collectively the "Related
Parties"), except for usual, ordinary and customary periods of vacation and
absence due to illness or other disability; provided, however, that Employee may
devote reasonable periods of time in connection with other activities, if such
activities do not materially interfere with the performance of Employee's duties
and services hereunder and do not consume more than 10% of Employee's working
hours.
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Employee shall be paid a base salary at the rate of
$120,000 per annum, less statutory payroll deductions, payable in accordance
with the payroll practices adopted by the Company. The base salary may be
reviewed periodically and increases in such base salary may be granted at the
sole discretion of the Board of Directors of the Company.
(b) BENEFITS. Employee shall, during the Employment Term, be eligible to
participate in such insurance, medical and other employee benefit plans of the
Company which may be in effect, from time to time, to the extent such plans are
generally available to other executive employees of the Company. Employee may
elect to forego the Company's medical plan in which case he shall be entitled to
reimbursement for the reasonable cost of a separately maintained comparable
medical plan.
(c) VACATIONS. Employee shall be entitled to take such vacations as he
may desire, with pay, provided that such vacations do not interfere with the
performance of his duties and services hereunder.
(d) EXPENSES. Employee will be reimbursed for reasonable expenses
incurred in the performance of his duties and services hereunder and in
furtherance of the business of the Related Parties upon presentation by Employee
of an itemized account, accompanied by appropriate receipts satisfactory to the
Board of Directors of the Company, in substantiation of such expenses.
5. TERMINATION OF EMPLOYMENT.
(a) Employee's employment hereunder:
(i) shall automatically terminate upon the occurrence of any of the
following: (A) the mental or physical incapacity or inability of Employee
to perform his duties for a consecutive period of one hundred twenty (120)
days or a non-consecutive period of one hundred eighty (180) days during
any twelve-month period; (B) the death of Employee; or (C) the voluntary
resignation or retirement of Employee; and
(ii) may be terminated by the Board of Directors of the Company, at
any time, for "cause", which shall mean by reason of any of the following:
(A) Employee's conviction of, or plea of nolo contendere to, any felony or
to any crime or offense causing substantial harm to any of the Related
Parties (whether or not for personal gain) or involving acts of theft,
fraud, embezzlement, moral turpitude or similar conduct; (B) malfeasance
in the conduct of Employee's duties, including, but not limited to, (1)
willful and intentional misuse or diversion of any of the Related Parties'
funds, (2) embezzlement or (3) fraudulent or willful and material
misrepresentations or concealments on any written reports submitted
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to any of the Related Parties; (C) material failure by Employee to perform
the duties of Employee's employment or material failure to follow or
comply with the reasonable and lawful written directives of the Board of
Directors of the Company, provided, however, that Employee shall have been
informed, in writing, of such material failure and given a period of not
more than 30 days to remedy the failure if the failure is capable of being
remedied without penalty or damage to the Company; or (D) a material
breach by Employee of the provisions of this Agreement (including, without
limitation, any breach of Section 3(b) of this Agreement); provided,
however, that Employee shall have been informed, in writing, of such
material breach and given a period of not more than 30 days to remedy the
breach if the breach is capable of being remedied without penalty or
damage to the Company; or (E) a material breach by Employee of written
policies of the Company concerning employee discrimination or harassment.
(b) Upon any termination of Employee's employment pursuant to this
Section 5, all obligations of the Company under this Agreement shall terminate.
6. BUSINESS OPPORTUNITIES AND INTELLECTUAL PROPERTY; PERSONAL
INVESTMENTS; CONFIDENTIALITY; COVENANT NOT TO COMPETE. Employee acknowledges
that in the course of his employment hereunder and performance of services on
behalf of the Related Parties he will become privy to various business
opportunities, economic and trade secrets and relationships of the Related
Parties. Therefore, in consideration of this Agreement and the consummation of
the Proposed Transaction, Employee hereby agrees as provided below in this
Section 6.
(a) BUSINESS OPPORTUNITIES AND INTELLECTUAL PROPERTY. Employee hereby
assigns and agrees to assign to the Company and its successors, assigns or
designees, all of Employee's right, title and interest in and to all "Business
Opportunities" and "Intellectual Property" (as defined below), and further
acknowledges and agrees that all Business Opportunities and Intellectual
Property constitute the exclusive property of the Company.
For purposes hereof "Business Opportunities" shall mean all business
ideas, prospects, proposals or other opportunities pertaining to the lease,
acquisition, exploration, production, gathering or marketing of hydrocarbons and
related products and the exploration potential of geographical areas on which
hydrocarbon exploration prospects are located, which are developed by Employee
during the Employment Term, or originated by any third party and brought to the
attention of Employee during the Employment Term, together with information
relating thereto (including, without limitation, geological and seismic data and
interpretations thereof, whether in the form of maps, charts, logs,
seismographs, calculations, summaries, memoranda, opinions or other written or
charted means).
For purposes hereof "Intellectual Property" shall mean all ideas,
inventions, discoveries, processes, designs, methods, substances, articles,
computer programs and improvements (including, without limitation, enhancements
to, or further interpretation or processing of, information that was in the
possession of Employee prior to the date of this Agreement), whether or not
patentable or copyrightable, which do not fall within the definition of Business
Opportunities, which the Employee discovers, conceives, invents, creates or
develops, alone or with others, during the Employment Term, if such discovery,
conception, invention, creation or development (A) occurs in the course of the
Employee's employment with the Company, or (B) occurs with the use of any of the
Related Parties' time, materials or facilities, or (C) in the opinion of the
Board of Directors of the Company, relates or pertains in any way to the Related
Parties' purposes, activities or affairs.
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(b) NON-COMPETE OBLIGATIONS DURING EMPLOYMENT TERM. Employee agrees that
during the Employment Term:
(i) Employee will not, other than through the Related Parties,
engage or participate in any manner, whether directly or indirectly, as an
employee, employer, consultant, agent, principal, partner, more than one percent
shareholder, officer, director, licensor, lender, lessor or in any other
individual or representative capacity, in any business or activity which is
engaged in leasing, acquiring, exploring, producing, gathering or marketing
hydrocarbons and related products; and
(ii) all investments made by Employee, directly or indirectly, which
relate to the leasing, acquisition, exploration, production, gathering or
marketing of hydrocarbons and related products shall be made solely through the
Related Parties; and Employee will, not, directly or indirectly, and will not
permit any of his controlled affiliates to: (A) invest or otherwise participate
alongside the Related Parties in any Business Opportunities, or (B) invest or
otherwise participate in any business or activity relating to a Business
Opportunity, regardless of whether any of the Related Parties ultimately
participates in such business or activity; provided that this subsection (b)
shall not preclude Employee from making investments in securities of oil and gas
companies which are publicly traded, if (1) the aggregate owned by Employee and
all affiliates does not exceed 5% of such company's outstanding securities, and
(2) the aggregate amount invested in such investments by Employee and all
affiliates after the date hereof does not exceed $200,000.
(c) CONFIDENTIALITY OBLIGATIONS. Employee hereby acknowledges that all
trade secrets and confidential or proprietary information of the Related Parties
(collectively referred to herein as "Confidential Information") constitute
valuable, special and unique assets of the Related Parties' business and that
access to and knowledge of such Confidential Information is essential to the
performance of Employee's duties hereunder. Employee agrees that during the
Employment Term and during the eighteen month period following the date of
termination of Employee's employment hereunder (the "Termination Date"),
Employee will hold the Confidential Information in strict confidence and will
not publish, disseminate or otherwise disclose, directly or indirectly, to any
person other than the Related Parties and their respective officers, directors
and employees, any Confidential Information or use any Confidential Information
for Employee's own personal benefit or the benefit of anyone other than the
Related Parties.
For purposes of this subsection (c), it is agreed that Confidential
Information includes, without limitation, any information heretofore or
hereafter acquired, developed or used by any of the Related Parties relating to
Business Opportunities or Intellectual Property or other geological,
geophysical, economic, financial or management aspects of the business,
operations, properties or prospects of the Related Parties, whether oral or in
written form in any of "Related Parties' Business Records" (as defined in
Section 7 below), but shall exclude any information which (A) has become part of
common knowledge or understanding in the oil and gas industry or otherwise in
the public domain (other than from disclosure by Employee in violation of this
Agreement), or (B) was rightfully in the possession of Employee, as shown by
Employee's records, prior to the date of the commencement of Employee's
employment with the Company; provided, however, that Employee shall provide to
the Company copies of all information described in clause (B); further provided,
however, that this subsection (c) shall not be applicable to the extent Employee
is required to testify in a judicial or regulatory proceeding pursuant to the
order of a judge or administrative law judge after Employee requests
confidential treatment for such Confidential Information.
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(d) POST EMPLOYMENT NON-COMPETE COVENANT. In the event, and only in the
event, that Employee's employment is terminated under the provisions of Sections
5(a)(i)(C) or 5(a)(ii), Employee agrees as follows:
(i) Employee will not engage or participate in any manner, whether
directly or indirectly through any family member or other person or as an
employee, employer, consultant, agent, principal, partner, more than one
percent shareholder, officer, director, licensor, lender, lessor or in any
other individual or representative capacity:
(A) during the one-year period following the Termination Date,
in any business or activity which is engaged in leasing, acquiring,
exploring, producing, gathering or marketing hydrocarbons and
related products within (1) any county or parish in which the
Company owns any oil and gas interests or conducts operations on the
Termination Date or in which the Company has owned any oil and gas
interests or conducted operations at any time during the six months
immediately preceding the Termination Date or (2) any county or
parish adjacent to any county or parish described in clause (1);
(B) during the eighteen month period following the Termination
Date, in any business or activity which is engaged in the leasing,
acquiring, exploring, producing, gathering or marketing of
hydrocarbons and related products within the boundaries of, or
within a two-mile radius of the boundaries of, any mineral property
interest of any of the Related Parties (including, without
limitation, a mineral lease, overriding royalty interest, production
payment, net profits interest, mineral fee interest or option or
right to acquire any of the foregoing, or an area of mutual interest
as designated pursuant to contractual agreements between the Company
and any third party) or any other property on which any of the
Related Parties has an option, right, license or authority to
conduct or direct exploratory activities, such as three-dimensional
seismic acquisition or other seismic, geophysical and geochemical
activities (but not including any preliminary geological mapping),
as of the Termination Date or during the six month period
immediately preceding the Termination Date; provided that, this
subsection (d) shall not preclude Employee from making investments
in securities of oil and gas companies which are publicly traded, if
(1) the aggregate owned by Employee and all affiliates does not
exceed 5% of such company's outstanding securities, and (2) the
aggregate amount invested in such investments by Employee and all
affiliates after the date hereof does not exceed $200,000.
(ii) Employee will not during the eighteen month period following
the Termination Date, attempt to solicit, entice, persuade or induce,
directly or indirectly, any employee (or person who within the preceding
ninety (90) days was an employee) of any of the Related Parties or any
other person who is under contract with or rendering services to any of
the Related Parties, to (i) terminate his or her employment by, or
contractual relationship with, such person, (ii) refrain from extending or
renewing the same (upon the same or new terms), (iii) refrain from
rendering services to or for such person (iv) become employed by or to
enter into contractual relations with any persons other than such person,
or (v) enter into a relationship with a competitor of any of the Related
Parties.
(iii) Employee will promptly notify the Company if employment (or
any consulting relationship) is accepted with any third party engaged in
business activities similar to those conducted by the Company.
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(e) The invalidity or non-enforceability of this Section 6 in any
respect shall not affect the validity or enforceability of this Section 6 in any
other respect or of any other provisions of this Agreement. In the event that
any provision of this Section 6 shall be held invalid or unenforceable by a
court of competent jurisdiction by reason of the geographic or business scope or
the duration thereof, such invalidity or unenforceability shall attach only to
the scope or duration of such provision and shall not affect or render invalid
or unenforceable any other provision of this Agreement, and, to the fullest
extent permitted by law, this Agreement shall be construed as if the geographic
or business scope or the duration of such provision had been more narrowly
drafted so as not to be invalid or unenforceable.
(f) Employee acknowledges that the Company's remedy at law for any
breach of the provisions of this Section 6 is and will be insufficient and
inadequate and that the Company shall be entitled to equitable relief, including
by way of temporary and permanent injunction, in addition to any remedies the
Company may have at law. The Company acknowledges that if the Company gives
notice of its intention to terminate Employee's employment pursuant to Section
5(a)(ii)(C) and there exists no justification for termination of Employee
thereunder, that Employee's remedy at law for any such improper termination is
and will be insufficient and inadequate and that Employee shall be entitled to
equitable relief, including by way of temporary and permanent injunction, in
addition to any remedies Employee may have at law.
(g) The provisions of this Section 6 shall survive the termination of
this Agreement and the termination of Employee's employment hereunder.
(h) The representations and covenants contained in this Section 6 on the
part of the Employee will be construed as ancillary to and independent of any
other provision of this Agreement, and the existence of any claim or cause of
action of the Employee against the Company or any of the other Related Parties
or any officer, director or shareholder of the Company or any of the other
Related Parties, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of the covenants of
Employee contained in this Section 6.
(i) The parties to this Agreement agree that the limitations contained in
this Section 6 with respect to time, geographical area and scope of activity are
reasonable. However, if any court shall determine that the time, geographical
area or scope of activity of any restriction contained in this Section 6 is
unenforceable, it is the intention of the parties that such restrictive covenant
set forth herein shall not thereby be terminated but shall be deemed amended to
the extent required to render it valid and enforceable.
7. BUSINESS RECORDS.
(a) Employee agrees to deliver promptly to the Company, upon termination
of his employment hereunder, or at any other time when the Company so requests,
all non-public documents relating to the business of the Related Parties,
including, without limitation: all geological and geophysical reports and
related data such as maps, charts, logs, seismographs, seismic records and other
reports and related data, calculations, summaries, memoranda and opinions
relating to the foregoing, production records, electric logs, core data,
pressure data, lease files, well files and records, land files, abstracts, title
opinions, title or curative matters, contract files, notes, records, drawings,
manuals, correspondence, financial and accounting information, customer lists,
statistical data and compilations, patents, copyrights, trademarks, trade names,
inventions, formulae, methods, processes, agreements, contracts, manuals or any
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documents relating to the business of the Related Parties, (collectively, the
"Related Parties' Business Records") and all copies thereof and therefrom.
(b) Employee confirms that all of the Related Parties' Business Records
(and all copies thereof and therefrom) which are required to be delivered to the
Company pursuant to this Section 7 constitute the exclusive property of the
Company and the other Related Parties.
(c) The obligation of confidentiality set forth in Section 6 shall
continue notwithstanding Employee's delivery of such documents to the Company.
(d) The provisions of this Section 7 shall continue in effect
notwithstanding termination of the Employee's employment hereunder for any
reason.
8. DIVISIBILITY OF AGREEMENT. In the event that any term, condition or
provision of this Agreement is for any reason rendered void, all remaining
terms, conditions and provisions shall remain and continue as valid and
enforceable obligations of the parties hereto.
9. NOTICES. Any notices or other communications required or permitted
to be sent hereunder shall be in writing and shall be duly given if personally
delivered or sent postage pre-paid by certified or registered mail, return
receipt requested, as follows:
(a) If to Employee:
Xxxxx X. Xxxxxxxxx
00000 Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000-0000
(b) If to the Company:
Texoil, Inc.
000 Xxxxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Any party may change his or its address for the sending of notice to such party
by written notice to the other parties sent in accordance with the provisions
hereof.
10. COMPLETE AGREEMENT. This Agreement contains the entire understanding
of the parties with respect to the employment of Employee and supersedes all
prior arrangements or understanding with respect thereto and all oral or written
employment agreements or arrangements between the Company (and any its
subsidiaries) and Employee. This Agreement may not be altered or amended except
by a writing, duly executed by the party against whom such alteration or
amendment is sought to be enforced.
11. ASSIGNMENT. This Agreement is personal and non-assignable by
Employee. It may be assigned by the Company to any Related Party or to a
successor created by a reorganization of Related Parties or to any entity with
which the Company may merge or consolidate; provided, however, that immediately
following such merger or consolidation the shareholders of the Company must
retain at least 51% of the combined companies' outstanding securities.
12. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original and all of which together shall constitute
one and the same agreement.
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13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without giving effect to
applicable choice of law principles.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
TEXOIL, INC.
By:______________________________________
Name: Xxxxx X. Xxxxx
Title: Executive Vice President and Secretary
EMPLOYEE:
_________________________________________
Xxxxx X. Xxxxxxxxx
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