CHANGE OF CONTROL AGREEMENT
Exhibit
99.1
This
Change of Control Agreement ("Agreement") executed by and between BOIS D'ARC
ENERGY, INC., a Nevada corporation (the "Company") with principal offices in
Houston, Texas, and M. XXX XXXXXXX ("Chairman").
1. Term
of Agreement.
This
Agreement shall be effective commencing on June 1, 2007 (the effective date
of
this Agreement) and shall have a term of one (1) year. This Agreement shall,
as
of its first anniversary, and on each annual anniversary thereof, be extended
automatically, without further action by the Chairman or the Company, for an
additional one (1) year, so that there shall, as of January 1 of each year,
be
one (1) year remaining in the term of this Agreement (the "Term"), subject
to
earlier termination as hereinafter provided. This Agreement shall terminate
upon
the liquidation or dissolution of the Company.
2. Position
and Duties.
Unless
otherwise agreed by the Company and Chairman, during the Term, Chairman shall
serve as the Chairman of the Board of Directors of the Company. The Chairman
shall perform his duties at the headquarters offices of Xxxxxxxx Resources,
Inc.
3. Performance
of Services.
Chairman shall devote adequate time to the performance of his duties to the
Company in his role as Chairman; provided,
however, Chairman may serve as chief executive officer and a member of the
Board
of Directors of Xxxxxxxx Resources, Inc., a Nevada corporation, or its
successors, provided that such service shall not interfere with the performance
of his duties hereunder.
4. Continuing
Obligations.
In
order to induce the Company to enter into this Agreement, the Chairman hereby
agrees that all documents, records, techniques, business secrets and other
information which have come into his possession from time to time during his
service on the Board of Directors of the Company or which may come into his
possession during the Term, shall be deemed to be confidential and proprietary
to the Company and the Chairman further agrees to retain in confidence any
confidential information known to him concerning the Company and it's
subsidiaries and their respective businesses so long as such information is
not
publicly disclosed. In the event of a breach or threatened breach by the
Chairman of the provisions of this Paragraph 4, the Company shall, in addition
to any other available remedies, be entitled to an injunction restraining
Chairman from disclosing, in whole or in part, any such information or from
rendering any services to any person, firm or corporation to whom any of such
information may have been disclosed or is threatened to be disclosed.
5. Property
of Company.
All
data, drawings, computer programs, spreadsheets, and other records and written
material prepared or compiled by Chairman or furnished to Chairman during the
Term shall be the sole and exclusive property of the Company, and none of such
data, drawings or other records, or copies thereof, shall be retained by
Chairman upon termination of his service as Chairman. Notwithstanding the
foregoing, Chairman shall be under no obligation to return public information.
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6. Surviving
Provisions.
The
provisions of Paragraphs 4 and 5 of this Agreement shall continue to be binding
upon Chairman in accordance with their terms, notwithstanding termination of
Chairman's service as a member of the Board of Directors for any reason.
7. Termination
Events.
The
Chairman's service on the Board of Directors shall terminate automatically
upon
the Chairman's death or disability during the Term. In addition, the Chairman
may terminate his service at any time. Upon termination, the Company shall
have
no further obligations to the Chairman other than as set forth in paragraph
9
hereof, if applicable.
8. Change
in Control.
For the
purposes of this Agreement, a "Change in Control" shall mean:
| (a) |
during
any period of two consecutive years, individuals who at the beginning
of
such period constituted the Board cease for any reason to constitute
a
majority thereof (unless the election, or nomination for election
by
stockholders of the Company, of such member of the Board was approved
by a
vote of at least two-thirds (2/3) of the members of the Board then
still
in office who either were members of the Board at the beginning of
such
period or whose election or nomination for election was previously
so
approved);
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| (b) |
a
person, other than an “Excluded Person” as defined herein, including a
"group" as defined in Paragraph 13(d)(3) of the Securities Exchange
Act of
1934, becomes the beneficial owner of shares of any class of stock
of the
Company having 25% or more of the total number of votes that may
be cast
for the election of members of the Board ; or
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| (c) |
consummation
of a merger or other business combination of the Company with or
into
another corporation pursuant to which the Company does not survive
or
survives only as a subsidiary of another entity, the sale or other
disposition of all or substantially all of the assets of the Company
to
another person or entity, or any combination of the foregoing;
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provided,
however, that a Change in Control will not include (A) any reorganization,
merger, consolidation, sale, lease, exchange or similar transaction which
involves solely the Company and one or more entities wholly-owned, directly
or
indirectly, by the Company immediately prior to such event, or (B) the
consummation of any transaction or series of integrated transactions immediately
following which the record holders of the voting common stock of the Company
immediately prior to such transaction or series of transactions continue to
hold
50% or more of the voting securities of (i) any entity that owns, directly
or
indirectly, all of the Company's common stock, (ii) any entity with which the
Company has merged, or (iii) any entity that owns an entity with which the
Company has merged. For purposes hereof, (i) an "Excluded Person" shall mean
an
original member of Bois d'Arc Energy, LLC or their affiliates, and (ii) a person
will be deemed to be the beneficial owner of any voting securities of the
Company which it would be considered to beneficially own under Securities and
Exchange Commission Rule 13d-3 (or any similar or superseding statute or rule
from time to time in effect).
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9. Certain
Additional Payments by the Company.
| (a) |
Anything
in this Agreement to the contrary notwithstanding and except as set
forth
below, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Chairman
(whether
paid or payable or distributed or distributable pursuant to the terms
of
this Agreement or otherwise, but determined without regard to any
additional payments required under this Paragraph 9) (a "Payment")
would
be subject to the excise tax imposed by Section 4999 of the Code
or any
interest or penalties are incurred by the Chairman with respect to
such
excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise
Tax"),
then the Chairman shall be entitled to receive an additional payment
(a
"Gross-Up Payment") in an amount such that after payment by the Chairman
of all taxes (including any interest or penalties imposed with respect
to
such taxes), including, without limitation, any income taxes (and
any
interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Chairman retains an amount
of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
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| (b) |
Subject
to the provisions of Paragraph 9(c), all determinations required
to be
made under this Paragraph 9, including whether and when a Gross-Up
Payment
is required and the amount of such Gross-Up Payment and the assumptions
to
be utilized in arriving at such determination, shall be made by Ernst
& Young LLP or such other certified public accounting firm as may be
designated by the Chairman (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Chairman
within 15 business days of the receipt of notice from the Chairman
that
there has been a Payment, or such earlier time as is requested by
the
Company. In the event that the Accounting Firm is serving as accountant
or
auditor for the individual, entity or group effecting the Change
in
Control, the Chairman shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be
borne
solely by the Company. Any Gross-Up Payment, as determined pursuant
to
this Paragraph 9 shall be paid by the Company to the Chairman within
five
days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company
and
the Chairman. As a result of the uncertainty in the application of
Section
4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments
which
will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be
made
hereunder. In the event that the Company exhausts its remedies pursuant
to
Paragraph 9(c) and the Chairman thereafter is required to make a
payment
of any Excise Tax, the Accounting Firm shall determine the amount
of the
Underpayment that has occurred and any such Underpayment shall be
promptly
paid by the Company to or for the benefit of the Chairman.
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| (c) |
The
Chairman shall notify the Company in writing of any claim by the
Internal
Revenue Service that, if successful, would require the payment by
the
Company of the Gross-Up Payment. Such notification shall be given
as soon
as practicable but no later than ten business days after the Chairman
is
informed in writing of such claim and shall apprise the Company of
the
nature of such claim and the date on which such claim is requested
to be
paid. The Chairman shall not pay such claim prior to the expiration
of the
30-day period following the date on which it gives such notice to
the
Company (or such shorter period ending on the date that any payment
of
taxes with respect to such claim is due). If the Company notifies
the
Chairman in writing prior to the expiration of such period that it
desires
to contest such claim, the Chairman shall:
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| (1) |
give
the Company any information reasonably requested by the Company relating
to such claim,
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| (2) |
take
such action in connection with contesting such claim as the Company
shall
reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim
by
an attorney reasonably selected by the Company,
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| (3) |
cooperate
with the Company in good faith in order effectively to contest such
claim,
and
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| (4) |
permit
the Company to participate in any proceedings relating to such
claim;
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provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Chairman 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 such representation and payment of
costs
and expenses. Without limitation of the foregoing provisions of this Paragraph
9(c), the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Chairman
to
pay the tax claimed and xxx for a refund or contest the claim in any permissible
manner, and the Chairman agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and
in
one or more appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Chairman to pay such claim and xxx for a refund,
the Company shall advance the amount of such payment to the Chairman, on an
interest-free basis and shall indemnify and hold the Chairman harmless, on
an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Chairman with respect to which such contested amount
is claimed to be due is limited solely to such contested amount. Furthermore,
the Company's control of the contest shall be limited to issues with respect
to
which a Gross-Up Payment would be payable hereunder and the Chairman shall
be
entitled to settle or contest, as the case may be, any other issue raised by
the
Internal Revenue Service or any other taxing authority.
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| (d) |
If,
after the receipt by the Chairman of an amount advanced by the Company
pursuant to Paragraph 9(c), the Chairman becomes entitled to receive
any
refund with respect to such claim, the Chairman shall (subject to
the
Company's complying with the requirements of Paragraph 9(c)) promptly
pay
to the Company the amount of such refund (together with any interest
paid
or credited thereon after taxes applicable thereto). If, after the
receipt
by the Chairman of an amount advanced by the Company pursuant to
Paragraph
9(c), a determination is made that the Chairman shall not be entitled
to
any refund with respect to such claim and the Company does not notify
the
Chairman in writing of its intent to contest such denial of refund
prior
to the expiration of 30 days after such determination, then such
advance
shall be forgiven and shall not be required to be repaid and the
amount of
such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
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10. Payment
of Certain Costs of Chairman.
If a
dispute arises regarding the interpretation or enforcement of this Agreement,
all legal fees and expenses incurred by the Chairman in seeking to obtain or
enforce any right or benefit provided for in this Agreement or in otherwise
pursuing his claim will be paid by the Company, to the extent permitted by
law.
The Company further agrees to pay prejudgment interest on any money judgment
obtained by the Chairman calculated at the First National Bank of Chicago N.A.
prime interest rate in effect from time to time from the date that payment(s)
to
him should have been made under this Agreement.
11. Indemnification;
Directors, Managers and Officers Insurance.
The
Company shall (a) during the Term and thereafter without limitation of time,
indemnify and advance expenses to the Chairman to the fullest extent permitted
by the laws of the State of Nevada from time to time in effect and (b) during
the Term, acquire and maintain directors, managers and officers liability
insurance covering the Chairman (and to the extent the Company desires, other
directors and officers of the Company and its affiliated companies) to the
extent it is available at commercially reasonable rates as determined by the
Board; provided, however, that in no event shall the Chairman be entitled to
indemnification or advancement of expenses under this Paragraph 11 with respect
to any proceeding, or matter therein, brought or made by the Chairman against
the Company other than one initiated by the Chairman to enforce the Chairman's
advancement of expenses as provided in this Paragraph 11 shall not be deemed
exclusive of any other rights to which the Chairman may at any time be entitled
under applicable law, the articles of incorporation or bylaws of the Company,
any agreement, a vote of security holders, a resolution of the Board, or
otherwise. The provisions of this Paragraph 11 shall continue in effect
notwithstanding termination of the Chairman's service as a member of the Board
of Directors for any reason. In furtherance thereof, and not by way of
limitation, the Company shall reimburse Chairman for all reasonable legal fees
and expenses incurred by Chairman in connection with Chairman's obtaining and
enforcing any right or benefit provided by this Agreement. The reimbursement
of
such legal fees and expenses shall be made within 30 days after Chairman's
request for payment accompanied by evidence of the fees and expenses incurred.
For a period of ten (10) years after the termination, for any reason, of
Chairman's service as a member of the Board of Directors, the Company shall
indemnify, hold harmless and defend Chairman, to the fullest extent permitted
by
applicable law, from and against any loss, cost or expense related to or arising
out of any action or claim with respect to (i) the Company or its affiliated
companies or (ii) any action taken or omitted by the Chairman (INCLUDING, BUT
NOT LIMITED TO, MATTERS THAT CONSTITUTE NEGLIGENCE OF THE CHAIRMAN) for or
on
behalf of the Company or its affiliated companies, whether, in either case,
such
action or claim, or the facts and circumstances giving rise thereto, occurred
or
accrued before or after such termination of service.
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12. Successors.
| (a) |
Except
as may otherwise be provided under any other written agreement between
the
Company and the Chairman with respect to the terms of Chairman's
service
in the event of a Change of Control of the Company, the Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and substance
satisfactory to the Chairman, 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 it if no such succession had taken place.
As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined, any successor to its business and/or assets as aforesaid
which
executes and delivers the agreement provided for in this Paragraph
12 or
which otherwise becomes bound by all the terms and provisions of
this
Agreement by operation of law.
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| (b) |
This
Agreement shall inure to the benefit of and be enforceable by the
Chairman's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
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13. No
Inconsistent Obligations.
Chairman represents and warrants that he has not previously assumed any
obligations inconsistent with those of this Agreement except as otherwise
permitted pursuant to Paragraph 3 above.
14. Modification.
This
Agreement shall be in addition to all previous agreements, written or oral,
relating to Chairman's service as a member of the Board of Directors of the
Company, and shall not be changed orally, but only by a written instrument
to
which the Company and the Chairman are both parties.
15. Binding
Effect.
This
Agreement and the rights and obligations hereunder shall be binding upon
and
inure to the benefit of the parties hereto and their respective legal
representatives, and shall also bind and inure to the benefit of any successor
of the Company by merger or consolidation or any assignee of all or
substantially all of its properties.
16. Bankruptcy.
Notwithstanding anything in this Agreement to the contrary, the insolvency
or
adjudication of bankruptcy of the Company, whether voluntary or involuntary,
shall terminate this Agreement and the rights and obligations of Company
and
Chairman hereunder shall be of no further force or effect.
17. Law
Governing.
This
Agreement made, accepted and delivered in Collin County, Texas, is performable
in Collin County, Texas, and it shall be construed and enforced according
to the
laws of the State of Texas. Venue shall lie in Collin County, Texas for the
purpose of resolving and enforcing any dispute which may arise under this
Agreement and the parties agree that they will submit themselves to the
jurisdiction of the competent State or Federal Court situated in Collin County,
Texas.
18. Invalid
Provision.
In case
any one or more of the provisions contained in this Agreement shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in
any way
be impaired thereby.
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19. 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
delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If
to the
Chairman:
M.
Xxx
Xxxxxxx
0000
Xxxx
xxx Xxxxxxx Xxxx., Xxxxx 000
Xxxxxx,
XX 00000
If
to the
Company:
BOIS
D'ARC ENERGY, INC.
000
Xxxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
With a copy to:
Xxxxxxxx
Resources, Inc.
Attention:
Chief Financial Officer
0000
Xxxx
xxx Xxxxxxx Xxxx., Xxxxx 000
Xxxxxx,
Xxxxx 00000
or
to
such other address as either party may have furnished to the other in writing
in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
EXECUTED
and effective as of the 1st
day of
June, 2007.
BOIS
D'ARC ENERGY, INC.
By:
/s/
XXXXX X. XXXXXX
Name:
XXXXX
X. XXXXXX
Xxxxx
X.
Xxxxxx
Chief
Executive Officer
CHAIRMAN:
/s/
M.
XXX XXXXXXX
M.
Xxx
Xxxxxxx
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