Exhibit 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as of
March 27, 1998 (the "Effective Date") by and between Ocean Energy, Inc., a
Delaware corporation ("Company"), and Xxxxx X. Xxxxxx ("Employee").
WHEREAS, the Company employs Employee and desires to continue such
employment relationship and Employee desires to continue such employment;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, and agreements contained herein, and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs Employee, and Employee hereby
accepts employment by the Company, on the terms and conditions set forth in this
Agreement.
2. Term of Employment. Subject to the provisions for earlier
termination provided in the Agreement, the term of this Agreement (the "Term")
shall commence on the Effective Date and shall terminate on the third
anniversary of the Effective Date; provided, however, commencing on the
Effective Date and on each day thereafter, the Term shall automatically be
extended one additional day unless the Board of Directors of the Company (the
"Board") shall give written notice to Employee that the Term shall cease to be
so extended as of a specified future date, in which event the Agreement shall
terminate on the third anniversary of the specified future date. Notwithstanding
any provision of this Agreement to the contrary, termination of this Agreement
shall not alter or impair any rights or benefits of Employee (or Employee's
estate or beneficiaries) that have arisen under this Agreement on or prior to
such termination.
3. Employee's Duties. During the Term, Employee shall serve as the
Chief Executive Officer and President of the Company, with such customary duties
and responsibilities as may from time to time be assigned to him by the Board,
provided that such duties are at all times consistent with the duties of such
positions. Employee shall report directly to the Board. All other employees of
the Company shall report to Employee.
Employee agrees to devote his full attention and time during normal
business hours to the business and affairs of the Company and to use reasonable
best efforts to perform faithfully and efficiently such duties and
responsibilities. Notwithstanding the foregoing, during the Term Employee may
engage in the following activities so long as they do not interfere in any
material respect with the performance of Employee's duties and responsibilities
hereunder: (i) serve on corporate, civic or charitable boards or committees,
(ii) deliver lectures, fulfill speaking engagements or teach on a part-time
basis at educational institutions, and (iii) manage his personal investments;
provided, however, in no event shall the conduct of any of such activities by
Employee be deemed to materially interfere with Employee's duties hereunder
until Employee has been notified in writing thereof by the Board and given a
reasonable period in which to cure such interference.
-1-
The Company agrees to use its reasonable best efforts to cause
Employee to be elected or appointed, or re-elected or re-appointed, as a
director of the Company at all times during the Term.
4. Base Compensation. For services rendered by Employee under this
Agreement the Company shall pay to Employee a base salary ("Base Compensation")
of $600,000 per annum payable in accordance with the Company's customary payroll
practice for its senior executive officers. The amount of Base Compensation
shall be reviewed periodically by the Board and may be increased from time to
time as the Board may deem appropriate. Base Compensation, as in effect at any
time, may not be decreased.
5. Annual Bonus. In addition to his Base Compensation, Employee shall
be eligible to receive each year during the Term, a cash incentive payment in an
amount equal to 200% of Employee's Base Compensation (the "Target Bonus"). The
amount of the Target Bonus earned for any year shall be determined by the
Compensation Committee of the Board based on Employee's individual performance
and the performance by the Company.
6. Other Benefits. Employee shall be entitled to participate in all
incentive compensation plans and to receive all fringe benefits and perquisites
offered by the Company to any of its senior executive officers, including,
without limitation, participation in the various employee benefit plans or
programs provided to the employees of the Company in general, subject to the
regular eligibility requirements with respect to each of such benefit plans or
programs, and such other benefits or prerequisites as may be approved by the
Board during the Term, all on a basis at least as favorable to Employee as may
be provided or offered to any other senior executive officer of the Company.
In addition, and not in limitation of the foregoing, Employee
shall be entitled to the following:
(a) Business Expenses. The Company shall reimburse Employee
for all business expenses reasonably incurred by Employee in the
performance of his duties. It is understood that Employee is authorized
to incur reasonable business expenses for promoting the business of the
Company, including reasonable expenditures for travel, lodging, meals
and client or business associate entertainment. Request for
reimbursement for such expenses must be accompanied by appropriate
documentation.
(b) Automobile. The Company shall either provide Employee with
an automobile of a make and model selected by Employee or promptly
reimburse Employee in full for his cost of leasing or purchasing an
automobile. In addition, the Company shall pay or reimburse Employee
for all reasonable costs and expenses associated with the use,
maintenance, insurance and repair of such automobile.
-2-
(c) Clubs. The Company shall reimburse Employee for the cost
and expenses (including initiation fees, assessments and annual dues)
of such social clubs and business clubs as Employee determines, in his
good faith opinion, to be helpful or appropriate to the performance of
his duties.
(d) Relocation Expenses. In conjunction with Employee's
relocation of his principal residence to the greater Houston, Texas
metropolitan area, the Company shall reimburse Employee for all
out-of-pocket expenses involved in such move, including, without
limitation, packing and transport of personal, family, and household
goods and vehicles by suitable service providers, for any brokerage
fees for the sale or purchase of any residences, of any loss of
economic value occasioned by the timing of the sale or by Employee's
inability to recover monies invested in any personal residence sold,
temporary housing costs in suitable alternative housing, all utility
severance and hook-up costs, and any other relocation expenses, all
such sums to be grossed-up for the impact of any federal, state or
local taxes levied against Employee for such portions of such
reimbursement as shall be taxable and non-deductible to Employee.
7. Termination. This Agreement may be terminated prior to the end of
its Term as set forth below. (a) Resignation. Employee may resign his position
at any time.
In the event of such resignation, except in the case of resignation for
Good Reason (as defined below), Employee shall not be entitled to
further compensation pursuant to this Agreement.
(b) Death. If Employee's employment is terminated due to his
death, this Agreement shall terminate and the Company shall have no
obligations to his legal representatives with respect to this Agreement
other than the payment of any compensation which had accrued hereunder
at the date of Employee's death.
(c) Discharge.
(i) The Company may terminate this Agreement and
Employee's employment for any reason deemed sufficient by the
Company upon notice as provided in Section 10. However, in the
event that Employee's employment is terminated during the Term
by the Company for any reason other than his Misconduct or
Disability (as such terms are defined below), then, subject to
Section 7(h) below: (A) within five business days of the Date
of Termination, the Company shall pay to Employee a lump sum
amount in cash equal to three times the sum of (1) Employee's
Base Compensation and (2) Employee's Target Bonus; (B) for the
36- month period after such Date of Termination the Company,
at its sole expense, shall continue to provide or arrange to
provide Employee (and Employee's dependents) with health
insurance benefits no less favorable than the health plan
benefits provided by the Company (or any successor) during
such 36-month period to any senior
-3-
executive officer of the Company; provided, further, to the
extent the coverage or benefits received are taxable to
Employee, the Company shall make Employee "whole" on a net
after tax basis; and (C) on the Date of Termination all then
outstanding Company stock-based awards of Employee, whether
under this Agreement, a Company stock plan or otherwise, shall
become immediately exercisable and payable in full, as the
case may be, with any performance goals associated therewith
being deemed to have been achieved at the maximum levels.
Notwithstanding anything in this Agreement to the contrary, if
any payment to Employee in respect of a Company stock-based
award would give rise to a short-swing profit liability to
Employee under Section 16(b) of the Securities Exchange Act of
1934, then both the payment and the entitlement to payment
thereof shall automatically be deferred until the earliest
date at which the payment of such benefit would not result in
a short-swing profit liability to Employee.
(ii) Notwithstanding the foregoing provisions of this
Section 7, in the event Employee is terminated because of
Misconduct, the Company shall have no obligations pursuant to
this Agreement after the Date of Termination. As used herein,
"Misconduct" means (a) the willful and continued failure by
Employee to substantially perform his duties with the Company
(other than any such failure resulting from Employee's
incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance of a Notice
of Termination by Employee for Good Reason), after a written
demand for substantial performance is delivered to Employee by
the Board, which demand specifically identifies the manner in
which the Board believes that Employee has not substantially
performed his duties, or (b) the willful engaging by Employee
in conduct which is demonstrably and materially injurious to
the Company, monetarily or otherwise. For purposes hereof, no
act, or failure to act, on Employee's part shall be deemed
"willful" unless done, or omitted to be done, by Employee not
in good faith and without reasonable belief that Employee's
action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Employee shall not be deemed to
have been terminated for Misconduct unless and until there
shall have been delivered to Employee a copy of a resolution
duly adopted by the affirmative vote of not less than
two-thirds of the entire membership of the Board at a meeting
of the Board called and held for such purpose, finding that in
the good faith opinion of the Board Employee was guilty of
conduct set forth above and specifying the particulars thereof
in detail.
(d) Disability.
(i) If Employee shall have been absent from the
full-time performance of Employee's duties with the Company
for six consecutive months as a result of Employee's
incapacity due to physical or mental illness, as determined by
Employee's physician, and within 30 days after written Notice
of Termination is
-4-
given by the Company Employee shall not have returned to the
full-time performance of Employee's duties, Employee's
employment may be terminated by the Company for "Disability",
provided Employee is entitled to and receiving benefits under
an insured long term disability plan of the Company.
Thereafter, Employee shall not be entitled to further
compensation pursuant to this Agreement.
(ii) If Employee fails during any period during the
Term to perform Employee's full-time duties with the Company
as a result of incapacity due to physical or mental illness,
as determined by Employee's physician, Employee shall continue
to receive his Base Compensation, less any amount payable to
Employee under a Company disability plan, and all other
compensation and benefits during such period until this
Agreement is terminated.
(e) Resignation for Good Reason. Employee shall be entitled to
terminate his employment for Good Reason as defined herein. If Employee
terminates his employment for Good Reason, Employee shall be entitled
to the compensation and benefits provided in Paragraph 7(c)(i) hereof.
"Good Reason" shall mean (1) the breach of any of the Company's
obligations under this Agreement without Employee's express written
consent or (2) the occurrence of any of the following circumstances, as
the case may be, without Employee's express written consent unless such
breach or circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination pursuant to
Subsection 7(f) given in respect thereof:
(i) the assignment by the Board to Employee of any
duties that, in the good faith opinion of Employee, are
inconsistent with Employee's positions with the Company, or an
adverse alteration (as determined in good faith by Employee)
in the nature or status of Employee's office, title,
responsibilities, including reporting responsibilities, or the
conditions of Employee's employment from those in effect
immediately prior to such alteration;
(ii) the failure by the Company to continue in effect
any compensation plan in which Employee participates that is
material to Employee's total compensation unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the failure
by the Company to continue Employee's participation therein
(or in such substitute or alternative plan) on a basis not
materially less favorable to Employee, both in terms of the
amount of benefits provided and the level of Employee's
participation relative to other participants;
(iii) the taking of any action by the Company which
would directly or indirectly materially reduce or deprive
Employee of any material fringe benefit then enjoyed by
Employee;
-5-
(iv) the failure of the Company to obtain a
satisfactory agreement from any successor to assume and agree
to perform this Agreement, as contemplated in Section 12
hereof;
(v) the relocation of the Company's principal
executive offices outside the greater Houston, Texas
metropolitan area, or the Company's requiring Employee to
relocate anywhere other than the location of the Company's
principal executive offices, except for required travel on the
Company's business to an extent substantially consistent with
Employee's past business travel obligations; or
(vi) any purported termination of Employee's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Subsection (f)
hereof, which purported termination shall not be effective for
purposes of this Agreement.
Employee's right to terminate employment pursuant to this
subsection shall not be affected by Employee's incapacity due to
physical or mental illness. In addition, Employee's continued
employment following any event, act or omission, regardless of the
length of such continued employment, shall not constitute Employee's
consent to, or a waiver of Employee's rights with respect to, such
event, act or omission constituting a Good Reason circumstance
hereunder.
(f) Notice of Termination. Any purported termination of
Employee's employment by the Company or by Employee shall be
communicated by written Notice of Termination to the other party hereto
in accordance with Section 10 hereof. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall set forth in
reasonable detail the reason for termination of Employee's employment,
or in the case of resignation for Good Reason, said notice must specify
in reasonable detail the basis for such resignation. No purported
termination which is not effected pursuant to this Section 7(f) shall
be effective.
(g) Date of Termination, Etc. "Date of Termination" shall mean
the date specified in the Notice of Termination. Either party may,
within 15 days after any Notice of Termination is given, provide notice
to the other party pursuant to Section 10 hereof that a dispute exists
concerning the termination. Notwithstanding the pendency of any such
dispute, the Company will continue to pay Employee his full Base
Compensation in effect when the notice giving rise to the dispute was
given (including, but not limited to, Base Compensation) and continue
Employee as a participant in all compensation, benefit and insurance
plans in which Employee was participating when the notice giving rise
to the dispute was given, until the dispute is finally resolved in
accordance with Section 16 hereof, but in no event past the expiration
date of this Agreement. Any payments and benefits provided during such
period of dispute shall not reduce any other payments or benefits due
Employee under this Agreement nor shall Employee be liable to repay the
Company for such
-6-
payments and benefits if it is finally determined the Employee is not
entitled to payments under the other provisions of this Agreement
following Employee's termination of employment.
(h) Mitigation. Employee shall not be required to mitigate the
amount of any payment or benefit provided for in this Section 7 by
seeking other employment or otherwise, nor shall the amount of any
payment or benefit provided for in this Agreement be reduced by any
compensation or benefit earned by Employee as a result of employment by
another employer, self-employment earnings, by retirement benefits, by
offset against any amount claimed to be owing by Employee to the
Company, or otherwise, except that any cash severance amount payable to
Employee pursuant to a Company maintained severance plan or policy for
employees in general shall reduce the amount otherwise payable to
Employee pursuant to Section 7(c)(i)(A).
(i) Gross-Up of Parachute Payments. If, during the Term, any
payment, including without limitation any imputed income, made or
benefit provided to or on behalf of Employee, including any accelerated
vesting or any deferred compensation or other award, in connection with
a "change in control" of the Company, whether or not made or provided
pursuant to this Agreement, results in Employee being subject to the
excise tax imposed by section 4999 of the Internal Revenue Code of
1986, as amended (or any successor or similar provision), the Company
shall pay Employee an additional amount of cash (the "Additional
Amount") such that the net amount of all payments and benefits received
by Employee after paying all applicable taxes thereon, including on
such Additional Amount, shall be equal to the net after-tax amount of
payments and benefits that Employee would have received if section 4999
were not applicable.
8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Employee's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
affiliated companies and for which Employee may qualify, nor shall anything
herein limit or otherwise adversely affect such rights as Employee may have
under any stock option or other agreements with the Company or any of its
affiliated companies.
9. Assignability. The obligations of Employee hereunder are personal
and may not be assigned or delegated by him or transferred in any manner
whatsoever, nor are such obligations subject to involuntary alienation,
assignment or transfer. The Company shall have the right to assign this
Agreement and to delegate all rights, duties and obligations hereunder, either
in whole or in part, to any parent, affiliate, successor or subsidiary
organization or company of the Company, provided that no such assignment or
delegation shall relieve the Company of its duties and obligations hereunder nor
affect the rights of Employee hereunder.
10. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when
-7-
personally delivered, sent by overnight courier or by facsimile with
confirmation of receipt or on the third business day after being mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed to the Company at its principal office address and facsimile number,
directed to the attention of the Board with a copy to the Secretary of the
Company, and to Employee at Employee's residence address and facsimile number on
the records of the Company or to such other address as either party may have
furnished to the other in writing in accordance herewith except that notice of
change of address shall be effective only upon receipt.
11. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
12. Successors; Binding Agreement.
(a) 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 assets of the Company ("Successor") or any corporation which
becomes the ultimate parent corporation of the Company or any such Successor
("Ultimate Parent") to expressly assume and agree in writing satisfactory to the
Employee 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. Failure of the Company to obtain such written agreement prior to the
effectiveness of any such succession or creation of the parent corporation
relationship shall be a breach of this Agreement and shall entitle Employee to
compensation and benefits from the Company in the same amount and on the same
terms as he would be entitled to hereunder if he terminated his employment for
Good Reason, except that for purposes of implementing the foregoing, the date on
which any such succession (or creation of the parent corporation relationship)
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, including, without limitation, in Section 3, the term "Company" shall
include any Successor and Ultimate Parent which executes and delivers the
Agreement as provided for in this Section 12 or which otherwise becomes bound by
all terms and provisions of this Agreement by operation of law.
(b) This Agreement and all rights of Employee hereunder shall inure to
the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
13. Indemnification. During the Term and for a period of six years
thereafter, the Company shall cause Employee to be covered by and named as an
insured under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Company or service in
other capacities at the request of the Company. The coverage provided to
Employee pursuant to this Section 8 shall be of a scope and on terms and
conditions at least as favorable as the most favorable coverage provided to any
other officer or director of the Company (or any successor).
-8-
In addition, to the maximum extent permitted under applicable
law, during the Term and for a period of six years thereafter, the Company shall
indemnify Employee against and hold Employee harmless from any costs,
liabilities, losses and exposures for Employee's services as an employee,
officer and director of the Company (or any successor).
14. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by Employee and such officer as may be specifically
authorized by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or in compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. This Agreement is an integration of the parties
agreement; no agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Texas.
15. 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 instrument.
16. Arbitration. Employee shall be permitted (but not required) to
elect that any dispute or controversy arising under or in connection with this
Agreement be settled by arbitration in the city in which Employee resides at
such time in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction. All legal fees and costs incurred by Employee in connection
with the resolution of any dispute or controversy under or in connection with
this Agreement shall be paid by the Company as bills for such services are
presented by Employee to the Company.
17. Prior Employment Agreement. This Agreement supersedes and replaces
in full any existing employment agreement (written or oral) between the parties.
-9-
IN WITNESS WHEREOF, the parties have executed this Agreement on March
27, 1998, effective for all purposes as provided above.
OCEAN ENERGY, INC.
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Executive Vice President,
General Counsel
and Secretary
EMPLOYEE
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
-10-
