Exhibit 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made and entered into this 9th day of September, 1997
(the "Effective Date") by and between Petro Union, Inc., a Colorado
corporation ("Employer"), and Xxxxxxx X. Xxxxx ("Executive").
1. Employment. Employer hereby employs Executive and Executive hereby
accepts such employment, subject to the terms and conditions of this
Agreement. Executive shall serve in the capacity of Vice Chairman and Chief
Operating Officer of Employer reporting solely to the Board of Directors and
shall perform such functions as the Board of Directors of Employer shall
reasonably determine from time to time, provided however that Executive's
duties shall be consistent with the foregoing capacity and with the training,
talent and ability of Executive.
2. Time Dedicated. Executive shall devote the time and attention
reasonable to run a drilling company and shall at all times perform all of his
obligations hereunder to the best of his ability, experience and talent.
3. Term and Termination. The term of this Agreement shall commence on
the Effective Date and shall continue uninterrupted for a period of five years
thereafter unless sooner terminated or extended by mutual agreement.
Executive's employment hereunder may be terminated as follows:
(a) Death. In the event the Executive dies prior to the expiration
of this Agreement, the Company shall pay to the beneficiary of the Executive
an amount equal to the Executive's total compensation for 270 days (the
"Severance Period"), such amount payable in a lump sum to the designated
beneficiary hereunder within sixty (60) days of the Executive's Death. In
addition, the Company shall pay to the beneficiary of the Executive, in a lump
sum within sixty (60) days of the end of the Company's fiscal year, an amount
(to the extent such amount is positive number) equal to the value of all
Company stock and stock options, as of the date of the Executive's death, in
accordance with the terms of any benefits to which the Executive would be
entitled in any plan in which he is a participant. The Executive's
beneficiary shall be designated in the manner provided in such benefit
program.
(b) Disability. If the Board of Directors of the Company
determines, in the reasonable exercise of its discretion, that the Executive,
through physical or mental illness or disability, whether or not connected to
his employment hereunder, has become incapacitated and is unable for a period
of six months during any continuous period of twelve (12) months, to discharge
the duties and responsibilities of his employment hereunder, the Board of
Directors of the Company shall have the right by written notice to the
Executive to place him on a disability status. In such event, the Company
shall pay to the Executive (or to his beneficiary if the Executive is no
longer alive) his Base Salary and all benefits for the Severance Period as
defined herein.
(c) Cause. The Company may terminate the Executive's employment for
"Cause". For purposes of this Agreement, "Cause" means:
(i) an act or acts of personal dishonesty taken by the Executive
and intended to result in substantial personal enrichment of the Executive at
the expense of the Company;
(ii) repeated failure to perform the duties assigned to the
Executive under Section 1 of this Agreement which are demonstrably willful and
deliberate on the Executive's part and which are not remedied in a reasonable
period of time after receipt of written notice from the Company;
(iii) the conviction of the Executive of a felony; or
(iv)failure to perform duties and meet goals mutually agreed
upon by the Executive and the Board of Directors to the reasonable
satisfaction of the Board of Directors.
(d) Good Reason. The Executive's employment may be terminated by
the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
means any of the following:
(i)the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Sections 7, 8 and 9 of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than Evansville, Indiana except for travel reasonably
required in the performance of the Executive's responsibilities;
(iv)any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy the
successor obligations of this Agreement.
For purposes of this section, any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(e) Notice of Termination. Any termination by the Company for Cause
or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
fifteen (15) days after the giving of such notice). The failure by the
Executive to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.
4. Obligations of the Company upon Termination.
(a) Death. If the Executive's employment is terminated by reason of
the Executive's death, this Agreement shall not terminate without fulfillment
of the obligations to the Executive's legal representatives under this
Agreement, including those obligations that would have been accrued or earned
by the Executive hereunder through the date of the Severance Period, including
any compensation previously deferred by the Executive (together with any
accrued interest thereon) and not yet paid by the Company and any accrued
vacation pay not yet paid by the Company and any other amounts or benefits
owing to or accrued or vested for the account of the Executive under the then
applicable employee benefit plans or policies of the Company (such amounts are
hereinafter referred to as "Accrued Obligations"). All such Accrued
Obligations shall be paid to the Executive in a lump sum in immediately
available federal funds within thirty (30) days of the Date of Termination.
Anything in this Agreement to the contrary notwithstanding, the Executive's
family shall be entitled to receive benefits at least equal to the most
favorable benefits provided by the Company to surviving families of executives
of the Company under such plans, programs and policies relating to family
death benefits, if any, in accordance with the most favorable policies of the
Company in effect, or, if more favorable to the Executive and/or the
Executive's family, as if effect on the date of the Executive's death with
respect to other key executives and their families.
(b) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability, this Agreement shall terminate without
further obligations to the Executive, other than those compensation and
benefit obligations accrued or to be earned by the Executive hereunder through
the date of the Severance Period. All such Accrued Obligations shall be paid
to the Executive in a lump sum in immediately available federal funds within
thirty (30) days of the Date of Termination. Anything in this Agreement to
the contrary notwithstanding, the Executive shall be entitled after the
Disability Effective Date to receive disability and other benefits at least
equal to the most favorable of those provided by the Company to disabled
employees and/or other families accordance with such plans, programs and
policies relating to disability, if any, in accordance with the most favorable
policies of the Company in effect at any time during the ninety (90) day
period immediately preceding the Disability Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in effect at any
time thereafter with respect to other key executives and their families.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause, this Agreement shall terminate
without further obligations to the Executive other than the obligation to pay
to the Executive the Highest Base Salary through the Date of Termination plus
the amount of any compensation previously deferred by the Executive (together
with accrued interest thereon). If the Executive terminates employment other
than for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than those obligations accrued or earned
by the Executive through the Date of Termination, including for this purpose,
all Accrued Obligations.
(d) Good Reason; Other than for Cause or Disability of Death. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause, Disability, or death or the Executive shall
terminate his employment for Good Reason:
(i) the Company shall pay to the executive in a lump sum in
immediately available federal funds within thirty (30) days after the Date of
Termination the aggregate of the following amounts:
A. to the extent not theretofore paid, the Executive's Base
Salary through the date of the Severance Period; and
B. the Executive's base salary for the balance of the term of
this Agreement if the Date of Termination is within the first three (3) years
of the Employment Agreement. The Base Salary rate shall be the rate in effect
at the Date of Termination.
C. the Annual Bonus paid to the Executive for the last full
fiscal year during the Employment Period; and
D. in the case of compensation previously deferred by the
Executive, all amounts previously deferred (together with any accrued interest
thereon) and not yet paid by the Company; and
E. all other amounts accrued and earned by the Executive
through the Severance Period and amounts otherwise owing under the then
existing plans and policies at the Company; and
F. Executive or his legal representative shall be entitled to
receive a lump sum distribution on any and all Company stock and/or Company
stock options, and for remainder of the Severance Period, or such longer
period as any plan, program or policy may provide, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs and policies described in this Agreement if the Executive's
employment had not been terminated, including health insurance and life
insurance, in accordance with the most favorable plans, programs or policies
of the Company, or , if more favorable to the Executive, as in effect at any
time thereafter with respect to other key executives and their families and
for purposes of eligibility for retiree benefits pursuant to such plans,
programs and policies, the Executive shall be considered to have remained
employed until the end of the Severance Period and to have retired on the last
day of such period.
5. Non-exclusivity of Rights.Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any stock option or other
agreements with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan or program of the Company (including company stock and stock
options) at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.
6. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement. The
Company agrees to pay, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of outcome thereof) by the Company of others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to any Section of this
Agreement), plus in each case interest at the applicable Federal rate provided
for in Section 7872 (f) (2) of the Code.
7. Salary and Bonus. In consideration for his services, Employer shall
pay Executive a salary at the rate of $90,000 per annum. Such salary shall be
reviewed and increased not less than 15% annually in the good faith sole
discretion of the Board of Directors based upon Employer's and Executive's
performance during the prior year. Executive's salary hereunder shall be
payable in bi-monthly installments or on such other payment schedule as is
used to pay senior executives of Employer. Additionally, Executive shall
receive an assignment of 2% overriding royalty of all oil and gas production
received by the Employer.
8. Stock Grants. Upon the Effective Date, Executive shall be issued
30,000 shares of the Employer's Common Stock, no par value per share. These
shares shall be fully vested and non-forfeitable three years from the date of
their issuance.
9. Executive Benefits.
(a) Annual Bonus. In addition to Base Salary, the Executive shall
be awarded, for each fiscal year during the Employment Period, an annual bonus
(an "Annual Bonus") (either pursuant to the incentive compensation plan of the
Company or otherwise) in cash at least equal to the average bonus received by
the executive officers of the Company in respect of the fiscal year for which
the bonus is awarded.
(b) Stock Option, Incentive, Savings and Retirement Plans. In
addition to Base Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment Period in all
stock option plans, incentive, savings and retirement plans and programs
applicable to other key executives of the Company and its affiliates
(including Company's employee benefit plans, in each case comparable to those
in effect or as subsequently amended). Such plans and programs, in the
aggregate, shall provide the Executive with compensation, benefits and reward
opportunities at least as favorable as the most favorable of such
compensation, benefits and reward opportunities provided by the Company for
the Executive under such plans and programs.
(c) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, shall receive benefits under the
welfare benefit plans provided by the Company and its affiliates (including,
without limitation, medical, prescription, dental, disability, salary
continuance, executive life, group life, accidental death and travel accident
insurance plans and programs.)
(d) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for reasonable expenses incurred by
the Executive in accordance with the most favorable policies and procedures
of the Company and its affiliates.
(e) Fringe Benefits. During the Employment Period the Executive
shall be entitle to fringe benefits, including payment of an automobile
allowance of $350.00 per month for payment of related expenses.
(f) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance,
at least equal to the other executive officers of the Company.
(g) Vacation. Upon the Effective Date, Executive is entitled to
three weeks of paid vacation per year. Paid vacation shall increased by one
week per year of service up to a maximum of seven weeks. Vacation time may be
accrued up to a maximum of six weeks or 240 hours. Once vacation accrual
meets this maximum, vacation accruals will cease until the vacation balance
falls below the maximum.
10. Corporate Opportunity. For the purpose of determining the
Executive's responsibility for presenting corporate opportunities to the Board
of Directors, the business in which the Employer is engaged shall be defined
as the horizontal oil and gas well drilling service business. The Executive
shall be permitted on his own time to engage in other businesses and can be
rewarded for presenting opportunities to the Board of Directors of the
Employer outside of the current corporate opportunities which are approved by
and acted upon by the Employer.
11. Confidentiality and Proprietary Information. The Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior written consent
of the Company, communicate or divulge any such information or data to anyone
other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
12. Board Membership. Executive shall be appointed to the Board of
Directors of Employer and shall subsequently be included for re-election on
management's proposed election slate, with such Board membership to terminate
when Executive's employment with Employer is terminated.
13. Arbitration. Any controversy or claim arising out of or relating to
any provision of this Agreement or the breach thereof, shall be settled by
binding arbitration in accordance with the rules then in effect of the
American Arbitration Association, to the extent consistent with the laws of
the State of New York. The award may include an award of costs and attorneys'
fees for the prevailing party. It is agreed that any party to any award
rendered in any such arbitration proceedings may seek a judgment upon the
award and that judgment may be entered thereon by any court having
jurisdiction.
14. Miscellaneous.
(a) Entire Agreement. This Agreement contains the complete
agreement between the parties with respect to the subject matter hereof and
supersedes any prior agreements or understandings, written or oral. No waiver
under this Agreement shall be valid unless it is in writing and duly executed
by the party to be charged therewith. This Agreement may be amended at any
time, provided that such amendment is in writing and is signed by each of the
parties hereto.
(b) Binding Effect. This Agreement may not be assigned by
Executive. Subject to that limitation, this Agreement shall be binding upon
and shall inure to the benefit of Executive, his heirs and personal
representatives, and shall be binding upon and shall inure to the benefit of
Employer, its successors and assigns.
(c) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE: EMPLOYER:
PETRO UNION, INC.
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
Xxxxxxx X. Xxxxx Title: Chairman
