EXHIBIT 10.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made by and between W-H
Energy Services, Inc., a Texas corporation ("Company"), and Xxxxxx X. Xxxx
("Executive").
W I T N E S S E T H:
WHEREAS, Executive is currently employed by Company; and
WHEREAS, Company is desirous of continuing to employ Executive in an
executive capacity on the terms and conditions, and for the consideration,
hereinafter set forth and Executive is desirous of continuing to be employed by
Company on such terms and conditions and for such consideration;
NOW, THEREFORE, for and in consideration of the mutual promises, covenants
and obligations contained herein, Company and Executive agree as follows:
ARTICLE 1: EMPLOYMENT AND DUTIES
1.1 EMPLOYMENT; EFFECTIVE DATE. Effective as of January 1, 2004 (the
"Effective Date"), and continuing for the period of time set forth in Article 2
of this Agreement, Executive's employment by Company shall be subject to the
terms and conditions of this Agreement.
1.2 POSITIONS. From and after the Effective Date, Company shall employ
Executive in the positions of Vice President and Intellectual Property Counsel
of Company, or in such other positions as the parties mutually may agree.
1.3 DUTIES AND SERVICES. Executive agrees to serve in the positions
referred to in paragraph 1.2 and to perform diligently and to the best of his
abilities the duties and services appertaining to such offices, as well as such
additional duties and services appropriate to such offices which the parties
mutually may agree upon from time to time. Executive's employment shall also be
subject to the policies maintained and established by Company that are of
general applicability to Company's executive employees, as such policies may be
amended from time to time.
1.4 OTHER INTERESTS. Executive agrees, during the period of his employment
by Company, to devote his primary business time, energy and best efforts to the
business and affairs of Company and its affiliates and not to engage, directly
or indirectly, in any other business or businesses, whether or not similar to
that of Company, except with the consent of the Board of Directors. The
foregoing notwithstanding, the parties recognize and agree that Executive may
engage in other business activities that do not conflict with the business and
affairs of Company or interfere with Executive's performance of his duties
hereunder, which shall be at the sole determination of the Company's President
and Chief Executive Officer.
1.5 DUTY OF LOYALTY. Executive acknowledges and agrees that Executive owes
a fiduciary duty of loyalty to act at all times in the best interests of
Company. In keeping with such duty, Executive shall make full disclosure to
Company of all business opportunities pertaining to Company's business and shall
not appropriate for Executive's own benefit business opportunities concerning
Company's business.
ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT
2.1 TERM. Unless sooner terminated pursuant to other provisions hereof,
Company agrees to employ Executive for the period beginning on the Effective
Date and ending on February 27, 2006 (the "Initial Expiration Date"); provided,
however, that beginning on the Initial Expiration Date, if this Agreement has
not been terminated pursuant to paragraph 2.2 or 2.3, then said term of
employment shall automatically be extended for an additional four-year period
unless on or before the date that is 90 days prior to the first day of any such
extension period either party shall give written notice to the other that no
such automatic extension shall occur.
2.2 COMPANY'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Company shall have the right to terminate Executive's employment
under this Agreement at any time for any of the following reasons:
(i) upon Executive's death;
(ii) upon Executive's becoming incapacitated by accident, sickness
or other circumstance which, in the opinion of a physician selected by
Company, renders him mentally or physically incapable of performing the
duties and services required of him hereunder;
(iii) for cause, which for purposes of this Agreement shall mean
Executive (A) has willfully breached any of his duties and obligations
hereunder resulting in materially adverse consequences to Company or any
of its affiliates, (B) has misappropriated funds or property of Company or
any of its affiliates, or (C) has engaged in conduct that is materially
adverse to the interest of Company or any of its affiliates; or
(iv) for any other reason whatsoever, in the sole discretion of
the Board of Directors.
2.3 EXECUTIVE'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment under
this Agreement for any of the following reasons:
(i) within 60 days of and in connection with or based upon (A) a
material breach by Company of any material provision of this Agreement,
(B) a significant reduction in the nature or scope of Executive's duties
and responsibilities, (C) the assignment to Executive of duties and
responsibilities that are materially inconsistent with the positions
referred to in paragraph 1.2, or (D) any requirement that Executive
relocate to a site more than 25 miles from his present business address;
provided, however, that, prior to Executive's termination of employment
under this paragraph
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2.3(i), Executive must give written notice to Company of any such breach,
reduction, assignment or requirement and such breach, reduction,
assignment or requirement must remain uncorrected for 10 days following
such written notice;
(ii) at any time after there is a Change in Control (as such
term is defined in paragraph 6.1); or
(iii) at any time for any other reason whatsoever, in the sole
discretion of Executive.
2.4 NOTICE OF TERMINATION. If Company or Executive desires to terminate
Executive's employment hereunder at any time prior to expiration of the term of
employment as provided in paragraph 2.1, it or he shall do so by giving written
notice to the other party that it or he has elected to terminate Executive's
employment hereunder and stating the effective date and reason for such
termination, provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder.
ARTICLE 3: COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the period of this Agreement, Executive shall
receive a minimum annual base salary of $205,000. Executive's annual base salary
shall be reviewed by the Board of Directors (or a committee thereof) on an
annual basis, and, in the sole discretion of the Board of Directors (or such
committee), such annual base salary may be increased, but not decreased,
effective as of January 1 of each year. Executive's annual base salary shall be
paid in equal installments in accordance with the Company's standard policy
regarding payment of compensation to executives but no less frequently than
monthly.
3.2 INCENTIVE COMPENSATION. Executive shall be eligible to receive
incentive compensation up to a maximum of 100% of his annual base salary each
calendar year as shall be determined in the sole discretion of the Board of
Directors.
3.3 OTHER PERQUISITES. During his employment hereunder, Executive shall be
afforded the following benefits as incidences of his employment:
(i) BUSINESS AND ENTERTAINMENT EXPENSES - Subject to Company's
standard policies and procedures with respect to expense reimbursement as
applied to its executive employees generally, Company shall reimburse
Executive for, or pay on behalf of Executive, reasonable and appropriate
expenses incurred by Executive for business related purposes, including
dues and fees to industry and professional organizations and costs of
entertainment and business development.
(ii) CAR ALLOWANCE - Company shall provide to Executive an
automobile or automobile allowance as approved by the President and Chief
Executive Officer.
(iii) OTHER COMPANY BENEFITS - Executive and, to the extent
applicable, Executive's spouse, dependents and beneficiaries, shall be
allowed to participate in all benefits, plans and programs, including
improvements or modifications of the same, which are now, or may hereafter
be, available to other executive employees of Company.
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Such benefits, plans and programs shall include, without limitation, any
profit sharing plan, thrift plan, health insurance or health care plan,
life insurance, disability insurance, pension plan, supplemental
retirement plan, vacation and sick leave plan, and the like which may be
maintained by Company. Company shall not, however, by reason of this
paragraph be obligated to institute, maintain, or refrain from changing,
amending, or discontinuing, any such benefit plan or program, so long as
such changes are similarly applicable to executive employees generally.
ARTICLE 4: PROTECTION OF INFORMATION
4.1 DISCLOSURE TO EXECUTIVE. Company shall disclose to Executive, or place
Executive in a position to have access to or develop, trade secrets or
confidential information of Company or its affiliates; and/or shall entrust
Executive with business opportunities of Company or its affiliates; and/or shall
place Executive in a position to develop business good will on behalf of Company
or its affiliates.
4.2 PROPERTY OF COMPANY. All documents, drawings, memoranda, notes,
records, files, correspondence, manuals, models, specifications, computer
programs, e-mail, voice mail, electronic databases, maps, and all other writings
or materials of any type embodying any information relating to Company or its
business are and shall be the sole and exclusive property of Company. Upon
termination of Executive's employment by Company, for any reason, Executive
promptly shall deliver the same, and all copies thereof, to Company.
4.3 NO UNAUTHORIZED USE OR DISCLOSURE. Executive will not, at any time
during or after Executive's employment by Company, make any unauthorized
disclosure of any confidential business information or trade secrets of Company
or its affiliates, or make any use thereof, except in the carrying out of
Executive's employment responsibilities hereunder. Affiliates of the Company
shall be third party beneficiaries of Executive's obligations under this
paragraph. As a result of Executive's employment by Company, Executive may also
from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Company and its affiliates.
Executive also agrees to preserve and protect the confidentiality of such third
party confidential information and trade secrets to the same extent, and on the
same basis, as Company's confidential business information and trade secrets.
4.4 REMEDIES. Executive acknowledges that money damages would not be
sufficient remedy for any breach of this Article by Executive, and Company shall
be entitled to specific performance and injunctive relief as remedies for such
breach or any threatened breach. Such remedies shall not be deemed the exclusive
remedies for a breach of this Article, but shall be in addition to all remedies
available at law or in equity to Company, including the recovery of damages from
Executive.
ARTICLE 5: NONCOMPETITION OBLIGATIONS
5.1 IN GENERAL. Nothing in this Agreement shall be construed to prevent or
restrain Executive from practicing law upon termination or expiration of this
Agreement for any reason; provided, however, that Executive shall, for the term
of employment by Company and thereafter,
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avoid conflicts of interest with the Company and its Affiliates according to the
obligations and duties of loyalty to Company placed upon Executive by law.
5.2 ENFORCEMENT AND REMEDIES. Executive acknowledges that money damages
would not be sufficient remedy for any breach of this Article by Executive, and
Company shall be entitled to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article, but shall be in
addition to all remedies available at law or in equity to Company, including
without limitation, the recovery of damages from Executive.
ARTICLE 6: EFFECT OF TERMINATION ON COMPENSATION; ADDITIONAL PAYMENTS
6.1 DEFINED TERMS. For purposes of this Article 6, the following terms
shall have the meanings indicated:
"Change in Control" means (i) a merger of Company with another
entity, a consolidation involving Company, or the sale of all or
substantially all of the assets of Company to another entity if, in any
such case, (A) the holders of equity securities of Company immediately
prior to such transaction or event do not beneficially own immediately
after such transaction or event equity securities of the resulting entity
entitled to 60% or more of the votes then eligible to be cast in the
election of directors generally (or comparable governing body) of the
resulting entity in substantially the same proportions that they owned the
equity securities of Company immediately prior to such transaction or
event or (B) the persons who were members of the Board of Directors
immediately prior to such transaction or event shall not constitute at
least a majority of the board of directors of the resulting entity
immediately after such transaction or event, (ii) the dissolution or
liquidation of Company, (iii) when any person or entity, including a
"group" as contemplated by Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended, acquires or gains ownership or control (including,
without limitation, power to vote) of more than 50% of the combined voting
power of the outstanding securities of, (A) if Company has not engaged in
a merger or consolidation, Company, or (B) if Company has engaged in a
merger or consolidation, the resulting entity, or (iv) as a result of or
in connection with a contested election of directors, the persons who were
members of the Board of Directors immediately before such election shall
cease to constitute a majority of the Board of Directors. For purposes of
the preceding sentence, (1) "resulting entity" in the context of a
transaction or event that is a merger, consolidation or sale of all or
substantially all assets shall mean the surviving entity (or acquiring
entity in the case of an asset sale) unless the surviving entity (or
acquiring entity in the case of an asset sale) is a subsidiary of another
entity and the holders of common stock of Company receive capital stock of
such other entity in such transaction or event, in which event the
resulting entity shall be such other entity, and (2) subsequent to the
consummation of a merger or consolidation that does not constitute a
Change in Control, the term "Company" shall refer to the resulting entity
and the term "Board of Directors" shall refer to the board of directors
(or comparable governing body) of the resulting entity.
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"Termination Benefits" means (i) a lump sum cash payment equal to
200% of the sum of (A) Executive's annual base salary at the rate in
effect under paragraph 3.1 on the date of termination of Executive's
employment and (B) the highest annual incentive compensation payment paid
to Executive by Company (pursuant to paragraph 3.2 or otherwise) during
the three years prior to the date of termination of Executive's
employment, and (ii) all of the outstanding stock options, restricted
awards and other equity based awards granted by Company to Executive shall
become fully vested and immediately exercisable in full on the date of
termination of Executive's employment.
6.2 BY EXPIRATION. If Executive's employment hereunder shall terminate
upon expiration of the term provided in paragraph 2.1 hereof because Executive
has provided the notice contemplated in such paragraph to Company, then all
compensation and all benefits to Executive hereunder shall continue to be
provided until the expiration of such term and such compensation and benefits
shall terminate contemporaneously with termination of his employment. If
Executive's employment hereunder shall terminate upon expiration of the term
provided in paragraph 2.1 hereof because Company has provided the notice
contemplated in such paragraph to Executive, then (i) all compensation and all
benefits to Executive hereunder shall continue to be provided until the
expiration of such term, (ii) such compensation and benefits shall terminate
contemporaneously with termination of his employment, and (iii) Company shall
provide Executive with the Termination Benefits. Any lump sum cash payment due
to Executive pursuant to clause (iii) of the preceding sentence shall be paid to
Executive within five business days of the date of Executive's termination of
employment with Company.
6.3 BY COMPANY. If Executive's employment hereunder shall be terminated by
Company prior to expiration of the term provided in paragraph 2.1, then, upon
such termination, regardless of the reason therefor, all compensation and
benefits to Executive hereunder shall terminate contemporaneously with the
termination of such employment; provided, however, that:
(i) if such termination shall be for a reason encompassed by
paragraph 2.2(i), then, for a period of 6 months beginning on the date of
such termination, Company shall pay to Executive's designated beneficiary
(or his estate if Executive does not have a beneficiary designation on
file with Company for this purpose) his base salary at the rate in effect
under paragraph 3.1 on the date of such termination;
(ii) if such termination shall be for a reason encompassed by
paragraph 2.2(ii), then, for a period of 6 months beginning on the date of
such termination, Company shall pay to Executive (or, in the event of
Executive's death, his designated beneficiary (or his estate if Executive
does not have a beneficiary designation on file with Company for this
purpose)) his base salary at the rate in effect under paragraph 3.1 on the
date of such termination; and
(iii) if such termination shall be for any reason other than those
encompassed by paragraphs 2.2(i), (ii), or (iii), then Company shall
provide Executive with the Termination Benefits. Any lump sum cash payment
due to Executive pursuant to the preceding sentence shall be paid to
Executive within
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five business days of the date of Executive's termination of employment
with Company.
6.4 BY EXECUTIVE. If Executive's employment hereunder shall be terminated
by Executive prior to expiration of the term provided in paragraph 2.1, then,
upon such termination, regardless of the reason therefor, all compensation and
benefits to Executive hereunder shall terminate contemporaneously with the
termination of such employment; provided, however, that:
(i) if such termination occurs for a reason encompassed by paragraph
2.3(i), then Company shall provide Executive with the Termination
Benefits; and
(ii) if such termination shall occur within the 180-day period
beginning on the date upon which a Change in Control occurs, then Company
shall provide Executive with the Termination Benefits.
If Executive is entitled to Termination Benefits under either clause (i) or
clause (ii) of the preceding sentence, then Executive shall not also be entitled
to additional Termination Benefits under the other clause. Any lump sum cash
payment due to Executive pursuant to this paragraph shall be paid to Executive
within five business days of the date of Executive's termination of employment
with Company.
6.5 ADDITIONAL PAYMENTS BY COMPANY. Notwithstanding anything to the
contrary in this Agreement, in the event that any payment or distribution by
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest or penalties, are hereinafter collectively referred to as the
"Excise Tax"), Company shall pay to Executive an additional payment (a "Gross-up
Payment") in an amount such that after payment by Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed on any Gross-up Payment, Executive retains an
amount of the Gross-up Payment equal to the Excise Tax imposed upon the
Payments. Company and Executive shall make an initial determination as to
whether a Gross-up Payment is required and the amount of any such Gross-up
Payment. Executive shall notify Company in writing of any claim by the Internal
Revenue Service which, if successful, would require Company to make a Gross-up
Payment (or a Gross-up Payment in excess of that, if any, initially determined
by Company and Executive) within 10 days of the receipt of such claim. Company
shall notify Executive in writing at least 10 days prior to the due date of any
response required with respect to such claim if it plans to contest the claim.
If Company decides to contest such claim, Executive shall cooperate fully with
Company in such action; provided, however, Company shall bear and pay directly
or indirectly all costs and expenses (including additional interest and
penalties) incurred in connection with such action and shall indemnify and hold
Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of
Company's action. If, as a result of Company's action with respect to a claim,
Executive receives a refund of any amount paid by Company with respect to such
claim, Executive shall promptly pay such refund to Company. If Company fails to
timely notify Executive whether it will contest such claim or Company determines
not to contest such claim,
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then Company shall immediately pay to Executive the portion of such claim, if
any, which it has not previously paid to Executive.
6.6 NO DUTY TO MITIGATE LOSSES. Executive shall have no duty to find new
employment following the termination of his employment under circumstances which
require Company to pay any amount to Executive pursuant to this Article 6. Any
salary or remuneration received by Executive from a third party for the
providing of personal services (whether by employment or by functioning as an
independent contractor) following the termination of his employment under
circumstances pursuant to which this Article 6 apply shall not reduce Company's
obligation to make a payment to Executive (or the amount of such payment)
pursuant to the terms of this Article 6.
6.7 LIQUIDATED DAMAGES. In light of the difficulties in estimating the
damages for an early termination of this Agreement, Company and Executive hereby
agree that the payments, if any, to be received by Executive pursuant to this
Article 6 shall be received by Executive as liquidated damages.
6.8 OTHER BENEFITS. This Agreement governs the rights and obligations of
Executive and Company with respect to Executive's base salary and certain
perquisites of employment. Except as expressly provided herein, Executive's
rights and obligations both during the term of his employment and thereafter
with respect to stock options, restricted stock, incentive and deferred
compensation, life insurance policies insuring the life of Executive, and other
benefits under the plans and programs maintained by Company shall be governed by
the separate agreements, plans and other documents and instruments governing
such matters.
ARTICLE 7: MISCELLANEOUS
7.1 NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
IF TO COMPANY TO: W-H Energy Services, Inc.
00000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
IF TO EXECUTIVE TO: 18706 Autumn Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be
effective only upon receipt.
7.2 APPLICABLE LAW. This Agreement is entered into under, and shall be
governed for all purposes by, the laws of the State of Texas.
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7.3 NO WAIVER. No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
7.4 SEVERABILITY. If a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
7.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
7.6 WITHHOLDING OF TAXES AND OTHER EMPLOYEE DEDUCTIONS. Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law or
governmental regulation or ruling and all other normal employee deductions made
with respect to Company's employees generally.
7.7 HEADINGS. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.
7.8 GENDER AND PLURALS. Wherever the context so requires, the masculine
gender includes the feminine or neuter, and the singular number includes the
plural and conversely.
7.9 AFFILIATE. As used in this Agreement, the term "affiliate" shall mean
any entity which owns or controls, is owned or controlled by, or is under common
ownership or control with, Company.
7.10 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of Company and any successor of Company, by merger or otherwise. Except
as provided in the preceding sentence, this Agreement, and the rights and
obligations of the parties hereunder, are personal and neither this Agreement,
nor any right, benefit, or obligation of either party hereto, shall be subject
to voluntary or involuntary assignment, alienation or transfer, whether by
operation of law or otherwise, without the prior written consent of the other
party.
7.11 TERM. This Agreement has a term co-extensive with the term of
employment provided in paragraph 2.1. Termination shall not affect any right or
obligation of any party which is accrued or vested prior to such termination.
7.12 ENTIRE AGREEMENT. Except as provided in (i) the written benefit plans
and programs referenced in paragraph 3.3(iv) (and any agreements between Company
and Executive that have been executed under such plans and programs) and (ii)
any signed written agreement contemporaneously or hereafter executed by Company
and Executive, this Agreement constitutes the entire agreement of the parties
with regard to the subject matter hereof, and contains all the covenants,
promises, representations, warranties and agreements between the parties with
respect to employment of Executive by Company. Without limiting the scope of the
preceding sentence, all understandings and agreements preceding the date of
execution of this
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Agreement and relating to the subject matter hereof (other than the agreements
described in clause (i) of the preceding sentence) are hereby null and void and
of no further force and effect. Any modification of this Agreement will be
effective only if it is in writing and signed by the party to be charged.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
5th day of May, 2004, to be effective as of the Effective Date.
W-H ENERGY SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Chairman & Chief Executive Officer
"COMPANY"
/s/ Xxxxxx X. Xxxx
----------------------------------------
Xxxxxx X. Xxxx
"EXECUTIVE"
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