EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS IS AN EMPLOYMENT AGREEMENT (the "Agreement") between XXXXXX
EXPLORATION COMPANY, a Delaware corporation, ("Company"), and ____________
_____________________ ("Employee"). The parties agree as follows:
1. EFFECTIVE DATE AND TERM. This Agreement will take effect as of
___________, 1997. The initial term of this Agreement will be three (3)
years following its effective date. On each anniversary of the effective
date, the term of this Agreement will automatically be extended one year,
to restore the unexpired term to three years, unless either party gives
notice to the other party before such anniversary date, stating that the
Agreement will not be so extended, in which case the term of this Agreement
will not be extended and will expire on the third anniversary date
following the notice. If the Employment terminates at any time before
expiration of this Agreement, then notwithstanding such expiration the
parties will remain obligated to comply with their respective obligations
under Paragraph 5. The Employee's obligations and the Company's rights
under Paragraphs 8, 9 and 10 shall survive expiration of this Agreement,
and shall continue in full force and effect.
2. EMPLOYMENT. The Employee will serve as ________________________
of the Company, or in other executive positions assigned by the Company
(the "Employment"). The Employee's duties will be those assigned
by the Company's Board of Directors and will be consistent with the
Employee's position. The Employment will be full time, and the Employee's
entire business time and efforts will be devoted to the performance of
Employee's duties for the Company during the term of the Employment,
provided that nothing in this Paragraph shall prevent the Employee from
engaging in additional activities in connection with personal investments
and community affairs that are not inconsistent with the Employee's duties
under this Agreement.
3. TERMINATION OF EMPLOYMENT. During the term of this Agreement,
the Employment may be terminated as provided in Paragraph 5. After
expiration of this Agreement, either party may terminate the Employment at
will.
4. COMPENSATION. The Employee will be compensated during the
Employment as follows:
a. SALARY. The Employee will be paid an annual salary of
$_____________, subject to adjustment as provided below, which
will be payable in equal periodic installments according to the
Company's customary payroll practices, but no less frequently
than monthly. The Employee's salary will be reviewed by the
Board of Directors not less frequently than annually, and may be
adjusted upward or downward in the sole discretion of the Board
of Directors, but in no event will the salary be less than
$______________ per year.
b. BENEFITS. The Employee will, during the term of
Employment, be permitted to participate in such pension, 401(k),
profit sharing, bonus, life insurance of $__ million,
hospitalization, major medical, and other employee benefit plans
of the Company that may be in effect from time to time, to the
extent the Employee is eligible under the terms of those plans
(collectively, the "Benefits").
c. BUSINESS EXPENSES. The Company will reimburse the
Employee for reasonable ordinary and necessary business expenses
incurred in the performance of duties on behalf of the Company,
subject to Employee's prompt submission of proper documentation
for tax and accounting purposes.
5. TERMINATION OF EMPLOYMENT. During the term of this Agreement,
Employee's Employment may be terminated in the following circumstances:
a. DEATH. The Employment will terminate automatically in
the event of Employee's death.
b. DISABILITY. If Employee becomes "disabled", the
Company may elect to terminate Employee's Employment due to such
disability. For the purposes of this Agreement, the Employee
will be deemed to be "disabled" if, for physical or mental
reasons, the Employee is unable to perform the essential
functions of the Employee's duties under this Agreement for 120
consecutive days, or 180 days during any twelvemonth period, as
determined in accordance with this Paragraph. The disability of
the Employee will be determined by a medical doctor selected by
written agreement of the Company and the Employee upon the
request of either party by notice to the other. If the Company
and the Employee cannot agree on the selection of a medical
doctor, each of them will select a medical doctor and the two
medical doctors will select a third medical doctor who will
determine whether the Employee has a disability. The
determination of the medical doctor selected under this Paragraph
will be binding on both parties.
c. TERMINATION BY COMPANY FOR CAUSE. The Company may
terminate Employee's Employment for Cause only if the Employee:
i. engages in wilful misconduct detrimental to the
interests of Company; or
ii. refuses to perform services that he is required to
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perform under this Agreement after explicit instructions
from the Board of Directors ordering Employee to perform
such services.
Employee will not be deemed to have engaged in conduct
constituting Cause for termination if he acted in the reasonable
good faith belief that the actions in question were not against
the interests of Company, unless the actions in question were
contrary to specific instructions of the Board of Directors.
Employee's Employment may not be terminated for Cause unless
Employee first has the opportunity to make a presentation at a
meeting of the Board of Directors, and is given, at least ten
(10) days before such meeting, a written description of the basis
for the possible termination of Employee's Employment for Cause.
If the Company becomes aware after termination of Employee's
Employment other than for Cause that Employee engaged prior to
the termination of Employment in wilful misconduct constituting
Cause, the Company may recharacterize such termination as having
been for Cause, after providing Employee with the notice and
opportunity for hearing provided above.
d. TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may
terminate the Employment for Good Reason if:
i. the Company materially breaches its obligations to
Employee under this Agreement; and
ii. Employee notifies the Board of Directors in
writing, within 60 days after the act or omission in
question, asserting that the act or omission in question
constitutes Good Reason and explaining why such act or
omission constitutes a material breach; and
iii. the Company fails, within 45 days after such
notification, to take reasonable steps to cure the breach;
and
iv. Employee resigns by written notice within 30 days
after expiration of the 45 day period under (iii) above.
If Employee terminates the Employment for Good Reason, Employee
will be paid Severance Pay as provided in Paragraph 6.
Employee's failure to object to a material breach as provided
above will not waive Employee's right to resign with Good Reason
after following the above procedure with regard to any future
material breach.
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e. DISCRETIONARY TERMINATION BY EMPLOYEE. Employee may
terminate the Employment at will, with at least 60 days advance
written notice, and Employee agrees not to prepare to leave the
Employment with Company without giving such notice.
f. DISCRETIONARY TERMINATION BY COMPANY. Company may
terminate the Employee's Employment at will, but if it does so it
will pay Employee Severance Pay as provided in Paragraph 6.
Upon termination of Employee's Employment, Employee shall not be entitled
to any further compensation from Company or any Affiliate, except: (i)
unpaid salary installments through the end of the week in which the
Employment terminates; and (ii) any vested benefits accrued prior to the
date the Employment terminates under the terms of any written benefit
program; and (iii) Severance Pay (if any) becoming due under Paragraph 6.
6. SEVERANCE PAY. The Company will pay Employee the Severance Pay
described in this Paragraph if the Company terminates the Employee's
Employment during the term of this Agreement other than under Paragraph
5(b) ("Disability") or Paragraph 5(c) ("Cause"). A purported termination
of the Employment under Paragraph 5(b) ("Disability") or (c) ("Termination
by Company for Cause") that is ultimately found to have been improper shall
be deemed to have been a termination under Paragraph 5(f) ("Discretionary
Termination by Employee"). The Company will also pay Employee the
Severance Pay described in this Paragraph if the Employee terminates his
Employment during the term of this Agreement for Good Reason, as provided
in Paragraph 5(d) (Termination by Employee for Good Reason").
a. AMOUNT AND DURATION OF SEVERANCE PAY. Subject to the
other provisions of this Paragraph 6, the Severance Pay will
consist of:
i. continuation of Employee's weekly salary for _____
weeks (the "Severance Pay Period"); and
ii. continuation during the Severance Pay Period, at
Company's expense, of Employee's employee and dependent
health, dental and prescription drug coverage for the
remaining term of this Agreement (without affecting
Employee's right to elect COBRA continuation coverage
beginning on the expiration date of this Agreement), subject
to Employee's continuing payment of the normal employee
contribution.
Severance Pay will end in the event of Employee's death.
b. CONDITIONS TO SEVERANCE PAY. In order to be eligible
for the Severance Pay, Employee must meet the following
conditions:
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i. Employee must comply with Employee's obligations
under Paragraphs 8, 9 and 10 of this Agreement;
ii. Employee must not claim unemployment compensation
for any week for which Employee receives Severance Pay;
iii. Employee must promptly sign and continue to honor
a general release, in form acceptable to Company, of any and all claims
against Company, its affiliates (defined for purposes of this Agreement
as subsidiaries and other entities in which the Company has an ownership
interest), and all of their officers, directors, employees and agents,
to the extent that such claims relate in any way to Employee's
Employment or its termination. The release will not waive the Employee's
right to any payments due under this Paragraph 6, or Employee's rights
to any vested benefits accrued prior to the date of Employment
termination under the terms of any written benefit plan;
iv. Employee must resign, upon written request by Company, from all
positions with or representing Company or any Affiliate, including but
not limited to membership on boards of directors; and
v. Employee must provide Company during the term of
this Agreement with consulting services regarding matters
within the scope of Employee's former duties, upon request
by the Board of Directors, provided that Employee will only
be required to provide such services by telephone at
Employee's reasonable convenience, and not for more than
five (5) hours in any month.
c. OFFSETS TO SEVERANCE PAY. The Severance Pay due to
Employee for any week will be reduced by:
i. any earnings from other employment or self-employment received or
accrued for Employee's benefit during such week, with any excess of such
other earnings over the Severance Pay for any week to be carried forward
and applied to reduce Severance Pay for subsequent weeks;
ii. any disability benefits received by Employee; and
iii. if Severance Pay continues after the date of
Employee's death, the death benefit under any life insurance
policy provided to Employee by Company as a fringe benefit.
7. CONFLICTS OF INTEREST. During the Employment, the Employee will not
acquire any financial interest in, accept gifts or favors from, or
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establish any relationship other than on behalf of the Company with, any
customer, supplier, distributor, or other person who does or seeks to do
business with the Company, unless Employee has disclosed the financial
interest, gift, favor, or relationship to the Company's Board of Directors
and has received the written approval of Board of Directors for such
activity or transaction. If any member of Employee's family engages or
proposes to engage in any relationship or activity which would be covered
by the preceding sentence if engaged in by Employee, Employee will
immediately report such proposed or actual relationship or activity to the
Board of Directors in writing.
8. LOYALTY AND CONFIDENTIALITY; COMPANY PROPERTY. The Employee will
be loyal to the Company during the Employment and will forever hold in
strictest confidence and will not use or disclose any information regarding
the Company's techniques, processes, developmental or experimental work,
trade secrets, customer or prospect names or information, or proprietary or
confidential information relating to the current or planned products,
services, sales, employees or business of the Company, except as such
disclosure or use may be required in connection with the Employee's work
for the Company. Upon termination of the Employment, the Employee will
deliver to the Company any and all materials relating to the Company's
business, including without limitation all customer lists and information,
keys, financial information, business notes, business plans, Company
provided autos or other equipment, credit cards, memoranda, specifications
and documents. All Company property will be returned promptly and in good
condition except for normal wear. The Employee agrees not to retain any
copies, reproductions or summaries of any such materials. This covenant
will continue in effect after termination of the Employment and shall
survive expiration of this Agreement. The parties agree that any breach
or threatened breach of the Employee's covenants in this Paragraph 8 would
cause the Company irreparable harm, and that injunctive relief would be
appropriate.
9. IDEAS, CONCEPTS AND INVENTIONS RELATING TO COMPANY'S BUSINESS.
All business ideas and concepts and all inventions, improvements and
developments made or conceived by the Employee, either solely or in
collaboration with others, during the Employment, whether or not during
working hours, and relating to the Company's business or any aspect
thereof, or to any business or product the Company is considering entering
or developing, shall become and remain the exclusive property of the
Company, its successors and assigns. The Employee shall disclose promptly
in writing to the Company all such inventions, improvements and
developments, and will cooperate in confirming, protecting and obtaining
legal protection of the Company's ownership rights. This provision shall
continue in effect after termination of the Employment and shall survive
expiration of this Agreement as to ideas, concepts, inventions,
improvements and developments made or conceived in whole or in part prior
to the date the Employment terminates. The parties agree that any breach
of the Employee's covenants in this Paragraph 9 would cause the Company
irreparable harm, and that injunctive relief would be appropriate.
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The Employee represents and warrants that all ideas, concepts,
inventions, improvements and developments which the Employee invented or
conceived prior to becoming employed by the Company, to which the Employee,
or any assignee of the Employee, now claims title, and which are to be
excluded from this Agreement, are completely described on an exhibit signed
by the parties and attached to this Agreement. If no such exhibit is
attached, then Employee represents and warrants that there are no such
inventions, improvements or developments.
10. COVENANT NOT TO COMPETE. During the Employment, and for three
(3) months after termination of the Employment, the Employee will not (i)
engage in the oil and gas exploration or development business or any other
business in which the Company is engaged or planning to engage on the date
the Employment terminates; or (ii) directly or indirectly compete with the
Company; or (iii) perform services for, advise, be financially interested
in, or own any interest in or loan money to, any other business engaged (or
seeking the Employee's services with a view to becoming engaged) in any
business in which the Company is engaged or planning to engage on the date
the Employment terminates; or (iv) solicit or suggest, or provide
assistance to anyone else seeking to solicit or suggest, that any person
having or contemplating a Covered Relationship with Company or an affiliate
refrain from entering into or terminate such relationship, or enter into
any similar relationship with anyone else instead of Company or such
affiliate (as used in this Paragraph 10, a "Covered Relationship includes a
customer relationship, a vendor relationship, or any other contractual or
independent contractor relationship). The Employee's commitments in this
paragraph will continue in effect after termination of the Employment for
the three (3) month period provided above, but will only be in effect
during that period in the following geographic area: each county or parish
in which the Company does business (provided that any activity directed
towards customers with facilities inside the covered area will be covered
even if the Employee is located or the activities undertaken outside the
covered area). The parties agree that any breach or threatened breach of
the Employee's commitments in this Paragraph 10 would cause the Company
irreparable harm, and that injunctive relief would be appropriate.
It is agreed that the decision of the Company's Board of
Directors as to whether a post-employment activity by Employee violates
this Paragraph 10 will be conclusive, if reasonable.
11. ENTIRE AGREEMENT. No agreements or representations, oral or
otherwise, express or implied, with respect to the Employee's Employment
with the Company or any of the subjects covered by this Agreement have been
made by either party which are not set forth expressly in this Agreement,
and this Agreement supersedes any pre-existing employment agreements and
any other agreements on the subjects covered by this Agreement.
12. AMENDMENT AND WAIVER. This Agreement has been authorized by the
Company's Board of Directors. No employee, officer or agent of the Company
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has authority to offer Employment other than employment terminable at will,
or to limit the Company's ability to terminate Employment at will in any
way; employment on any other terms may only be authorized by a written
resolution of the Board of Directors. No provisions of this Agreement may
be amended, modified, waived or discharged unless such waiver, modification
or discharge is agreed to in a writing specifically authorized by a written
Board resolution, and signed by the Employee and by such officer as may be
specifically designated by the Board of Directors of the Company in such
resolution. No waiver by either party at any time of any breach or non-
performance of this Agreement by the other party shall be deemed a waiver
of any prior or subsequent breach or non-performance.
13. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement will not affect the validity or enforceability
of any other provision of this Agreement, which will remain in full force
and effect. If a court of competent jurisdiction ever determines that any
provision of this Agreement (including but not limited to all or any part
of the non-competition covenant in Paragraph 10) is unenforceable as
written, it is the intent of the parties that such provision shall be
deemed narrowed or revised in such jurisdiction (as to geographic scope,
duration, or any other matter) to the extent necessary to allow its
enforcement. Such revision shall thereafter govern in such jurisdiction,
subject only to any allowable appeals of such court decision.
14. ASSIGNABILITY. This Agreement contemplates personal services by
the Employee, and Employee may not transfer or assign Employee's rights or
obligations under this Agreement. This Agreement may be assigned by the
Company to any subsidiary or parent corporation or a division of such
corporation, or to any entity which succeeds to all or substantially all of
the Company's businesses. The Company is not required to assign this
Agreement, but if it is assigned as provided above, the Employee will be
given notice and this Agreement and the Employee's Employment hereunder
will continue in effect.
15. NOTICES. Notices to a party under this Agreement must be
personally delivered or sent by certified mail (return receipt requested)
and will be deemed given upon post office delivery or attempted delivery to
the recipient's last known address. Notices to the Company must be sent to
the attention of the Company's Chief Executive Officer.
16. ARBITRATION. The Company and the Employee agree that the sole and
exclusive method for resolving any dispute between them regarding this
Agreement or its interpretation application or any other dispute or claim
relating to the employment relationship between them or its termination
shall be arbitration under the procedures set forth in this Paragraph;
provided, however, that nothing in this Paragraph prohibits a party from
seeking preliminary or permanent injunctive relief, or from seeking
judicial enforcement of the arbitration award. The arbitrator(s) for
determining any dispute covered by this Paragraph shall be selected by
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mutual agreement of the Company and the Employee. If either party demands
arbitration of a dispute covered by this Paragraph, an arbitrator shall be
selected, and the arbitrator shall hold a hearing at which both parties may
appear, with or without counsel, and present evidence and argument. Pre-hearing
discovery shall be allowed in the discretion of and to the extent
deemed appropriate by the arbitrator, and the arbitrator shall have
subpoena power. The procedural rules for an arbitration hearing under this
Paragraph shall be the rules of the American Arbitration Association for
Commercial Arbitration Hearings and such rules as the arbitrator may
determine. The hearing shall be held in Traverse City, Michigan. The award
of the arbitrator(s) shall be final and binding and may be enforced by and
certified as a judgment of any court of competent jurisdiction. The fees
and expenses of the arbitrator shall be paid by equally by the Company and
the Employee.
17. GOVERNING LAW. The validity, interpretation, and construction of
this Agreement are to be governed by the laws of the State of Michigan,
without regard to principles of conflicts of law.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first above written.
_____________________________________
"Employee"
XXXXXX EXPLORATION COMPANY
By __________________________________
Its ______________________________
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