EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") entered into effective as of
June 1, 1998, by and between X. Xxxxx Sere (the "Executive"), and Bellwether
Exploration Company, a Delaware corporation having its principal place of
business at 0000 Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000 (the "Company");
W I T N E S S E T H:
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WHEREAS, the Company wishes to employ the Executive as the President and
Chief Executive Officer and to perform services incident to such position for
the Company, and the Executive wishes to be so employed by the Company, all upon
the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and mutual covenants and
obligations herein set forth and for other good and valuable consideration, the
receipt, sufficiency and adequacy of which is hereby acknowledged, accepted and
agreed to, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Employment and Term. The Company hereby employs the Executive to
serve as the President and Chief Executive Officer of the Company. The term of
this Agreement (the "term of this Agreement") shall be effective as of the date
first above written and shall terminate thirty-six (36) months from the date
hereof (the "Termination Date"), unless earlier terminated by either party
hereto in accordance with the provisions of Section 5 hereof; provided, however,
that upon the occurrence of a Change of Control (as such term is defined in
Section 5(g) hereof ), the Termination Date shall automatically extend to a date
36 months following the date of such Change in Control without any further
action by the Company or the Executive. During the term of this Agreement, the
terms of employment shall be as set forth herein unless modified by the
Executive and the Company in accordance with the provisions of Section 11
hereof. The Executive hereby agrees to accept such employment and to perform the
services specified herein, all upon the terms and conditions hereinafter set
forth.
2. Position and Responsibilities. The Executive shall serve as the
President and Chief Executive Officer of the Company and shall report to, and be
subject to the general direction and control of, the Board of Directors of the
Company. The Executive shall have other obligations, duties, authority and
power to do all acts and things as are customarily done by a person holding the
same or equivalent position or performing duties similar to those to be
performed by executives in corporations of similar size to the Company and shall
perform such managerial duties and responsibilities for the Company as may
reasonably be assigned to him by the Board of Directors of the Company and, at
no additional remuneration, shall serve in such other comparable positions with
any subsidiary corporation of the Company, or any partnership, limited liability
company or other entity in which the Company has an interest (herein
collectively called "affiliates"), as the Board of Directors of the Company may
from time to time determine. Unless otherwise agreed to by the
Executive, the Executive shall be based at the Company's principal executive
offices located in the greater Houston, Texas metropolitan area.
3. Extent of Service. The Executive shall devote his full business time
and attention to the business of the Company, and, except as may be specifically
permitted by the Company, shall not be engaged in any other business activity
during the term of this Agreement. The foregoing shall not be construed as
preventing the Executive from making passive investments in other businesses or
enterprises, provided, however, that such investments will not require services
on the part of the Executive which would in any way impair the performance of
his duties under this Agreement.
4. Compensation.
(a) In consideration of the services to be rendered by the Executive
to the Company, the Company will pay the Executive a salary ("Salary") of
$228,000 per year during the Term of this Agreement. Such Salary shall be
payable in conformity with the Company's prevailing practice for executives'
compensation as such practice shall be established or modified from time to
time. Salary payments shall be subject to all applicable federal and state
withholding, payroll and other taxes. From time to time during the Term of this
Agreement, the amount of the Executive's Salary may be increased by, and at the
sole discretion of, the Compensation Committee of the Company's Board of
Directors, which shall review the Executive's Salary no less regularly than
annually.
(b) Any cash or stock bonuses paid to the Executive shall be based on
performance and be at the sole discretion of the Compensation Committee of the
Company's Board of Directors.
(c) The Company agrees to reimburse the Executive for the monthly dues
incurred by him in maintaining a membership in the following clubs: The
Petroleum Club of Houston, and The Houston Metropolitan Racquet Club/Houston
Society.
(d) During the term of this Agreement, the Company shall pay or
reimburse the Executive for all reasonable out-of-pocket expenses for travel,
meals, hotel accommodations, entertainment and the like incurred by him in
connection with the business of the Company upon submission by him of an
appropriate statement documenting such expenses as required by the Internal
Revenue Code of 1986, as amended (the "Code").
(e) The Executive shall be entitled to five weeks of paid vacation
during each calendar year during the term of this Agreement. Vacation shall
accrue on the first day of each calendar year. The Company shall pay the
Executive for any unused portion of vacation and any such unused portion of
vacation shall not be carried forward to the next year.
(f) During the term of this Agreement, the Company shall continue to
furnish the Executive with his current company car or furnish the Executive with
a lease car equivalent to the
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car presently owned by the Company and used by the Executive. The Company
shall pay the cost of insurance for such car and reimburse the Executive for the
reasonable costs and expenses incurred in connection with the operation or
maintenance of such automobile.
(g) During the term of this Agreement, the Company shall continue to
maintain and pay its share of the cost of the split dollar life insurance policy
currently provided to the Executive and shall continue, at its sole cost and
expense, the individual disability insurance currently provided to the
Executive. In addition, the Executive shall be entitled to participate in and to
receive all rights and benefits under any life, disability, medical and dental,
health and accident and profit sharing or deferred compensation plans and such
other plan or plans as may be implemented by the Company during the term of this
Agreement. The Executive shall also be entitled to participate in and to receive
all rights and benefits under any plan or program adopted by the Company for any
other or group of other executive employees of the Company, including without
limitation, the rights and benefits under the directors' and officers' liability
insurance currently in place under the Company's insurance program for the
directors and officers of the Company.
5. Termination.
(a) Termination by Company; Discharge for Cause. The Company shall be
entitled to terminate this Agreement and the Executive's employment with the
Company at any time and for whatever reason; or at any time for "Cause" (as
defined below) by written notice to the Executive. Termination of the
Executive's employment by the Company shall constitute a termination for "Cause"
if such termination is for one or more of the following reasons: (i) the willful
failure or refusal of the Executive to render services to the Company in
accordance with his obligations under this Agreement, including, without
limitation, the failure or refusal of the Executive to comply with the work
rules, policies, procedures, and directives as established by the Board of
Directors and consistent with this Agreement; such failure or refusal to be
uncured and continuing for a period of not less than fifteen (15) days after
notice outlining the situation is given by the Company to the Executive; (ii)
the commission by the Executive of an act of fraud or embezzlement; (iii) the
commission by the Executive of any other action with the intent to injure the
Company; (iv) the Executive having been convicted of a felony or a crime
involving moral turpitude; (v) the Executive having misappropriated the property
of the Company; (vi) the Executive having engaged in personal misconduct which
materially injures the Company; or (vii) the Executive having wilfully violated
any law or regulation relating to the business of the Company which results in
material injury to the Company. In the event of the Executive's termination by
the Company for Cause hereunder, the Executive shall be entitled to no severance
or other termination benefits except for any unpaid Salary accrued through the
date of termination. A termination of this Agreement by the Company without
Cause pursuant to this Section 5(a) shall entitle the Executive to the Severance
Payment and other benefits specified in Section 5(f) hereof.
(b) Death. If the Executive dies during the term of this Agreement
and while in the employ of the Company, this Agreement shall automatically
terminate and the Company shall
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have no further obligation to the Executive or his estate except that the
Company shall pay to the Executive's estate that portion of his Salary and
benefits accrued through the date of death. All such payments to the Executive's
estate shall be made in the same manner and at the same time as the Executive's
Salary.
(c) Disability. If during the term of this Agreement, the Executive
shall be prevented from performing his duties hereunder by reason of disability,
then the Company, on 30 days' prior notice to the Executive, may terminate this
Agreement. For purposes of this Agreement, the Executive shall be deemed to have
become disabled when the Board of Directors of the Company, upon verification by
a physician designated by the Company, shall have determined that the Executive
has become physically or mentally unable (excluding infrequent and temporary
absences due to ordinary illness) to perform the essential functions of his
duties under this Agreement with reasonable accommodation. In the event of a
termination pursuant to this paragraph (c), the Company shall be relieved of all
its obligations under this Agreement, except that the Company shall pay to the
Executive or his estate in the event of his subsequent death, that portion of
the Executive's Salary and benefits accrued through the date of such
termination. All such payments to the Executive or his estate shall be made in
the same manner and at the same time as his Salary and would have been paid to
him had he not become disabled.
(d) Termination for Good Reason. The Executive shall be entitled to
terminate this Agreement and his employment with the Company at any time upon
thirty (30) days written notice to the Company for "Good Reason" (as defined
below). The Executive's termination of employment shall be for "Good Reason" if
such termination is a result of any of the following events:
(i) the Executive is assigned any responsibilities or duties
materially and adversely inconsistent with his position, duties,
responsibilities and status with the Company as in effect at the date of this
Agreement or as may be assigned to the Executive pursuant to Section 2 hereof,
or his title or offices as in effect at the date of this Agreement or as the
Executive may be appointed or elected to in accordance with Section 2 are
materially and adversely changed;
(ii) there is a Change in Control of the Company;
(iii) there is a reduction in the Salary (as such Salary shall
have been increased from time to time) payable to the Executive pursuant to
Section 4(a) hereof;
(iv) failure by the Company or any successor to the Company or its
assets to continue to provide to the Executive any material benefit, bonus,
profit sharing, incentive, remuneration or compensation plan, stock ownership or
purchase plan, stock option plan, life insurance, disability plan, pension plan
or retirement plan in which the Executive was entitled to participate in as at
the date of this Agreement or subsequent thereto, or the taking by the Company
of any action that materially and adversely affects the Executive's
participation in or materially reduces his rights or benefits under or pursuant
to any such plan or the failure by the Company to
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increase or improve such rights or benefits on a basis consistent with practices
in effect prior to the date of this Agreement or with practices implemented and
subsequent to the date of this Agreement with respect to the executive employees
of the Company generally, whichever is more favorable to the Executive, but
excluding such action that is required by law;
(v) without Executive's consent, the Company requires the
Executive to relocate to any city or community other than one within the greater
Houston, Texas metropolitan area, except for required travel on the Company's
business to an extent substantially consistent with the Executive's business
obligations under this Agreement; or
(vi) there is any material breach by the Company of any provision
of this Agreement.
Upon the Executive's termination of this Agreement for Good
Reason, the Executive shall be entitled to the Severance Payment and other
benefits specified in Section 5(f) hereof.
(e) Voluntary Termination. Notwithstanding anything to the contrary
herein, the Executive shall be entitled to voluntarily terminate this Agreement
and his employment with the Company at his pleasure upon sixty (60) days written
notice to such effect. In such event, the Executive shall not be entitled to any
further compensation other than any unpaid Salary and benefits accrued through
the date of termination. At the Company's option, the Company may pay to the
Executive the salary and benefits that the Executive would have received during
such sixty (60) day period in lieu of requiring the Executive to remain in the
employment of the Company for such sixty (60) day period.
(f) Termination Benefits Upon Involuntary Termination or Termination
for Good Reason. In the event that (i) the Company terminates this Agreement
and the Executive's employment with the Company for any reason other than for
Cause (as defined in Section 5(a) hereof) or the death or disability of the
Executive, or (ii) the Executive terminates this Agreement and his employment
with the Company for Good Reason (as set forth in Section 5(d) hereof), then the
Company shall pay the Executive, within thirty (30) days after the date of
termination, an amount (the "Severance Payment") equal to one and one-half (1-
1/2) times the sum of (x) the Executive's highest annual Salary during the last
two (2) years of employment immediately preceding the date of termination, plus
(y) the highest annual bonus paid to the Executive during such two-year period
(the "Severance Payment"). In addition, following other such termination, the
Executive shall be entitled to the following benefits (collectively, the
"Additional Benefits"):
(i) immediate vesting of any of the Executive's options to
purchase securities of the Company which were not vested by their own terms on
the date of termination and the extension of the Executive's right to exercise
all the Executive's options to purchase securities of the Company for a period
equal to the lesser of (A) one year following the date of termination or (B) the
remaining term of the applicable option;
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(ii) immediate vesting and lapse of restrictions on any restricted
stock grants outstanding at the time of such termination;
(iii) continued coverage, at the Company's cost, under the
Company's medical, dental and health benefits (but not life or disability
insurance) set forth in Section 3(g) hereof for a period of eighteen (18) months
from the date of termination;
(iv) outplacement assistance in an amount not to exceed (15%) of
the Executive's annual Salary in effect on the date of a Change in Control;
(v) within 30 days following the date of termination and to the
extent permitted by law, the Company shall contribute to the Executive's 401(k)
or substitute equivalent plan an amount equal to the aggregate amount
contributed by the Executive to such plan during the year in which the
termination occurs plus any profit sharing contribution in a proportionate
amount to the amount paid in the year prior to termination, and shall contribute
to the deferred compensation plan any matching contributions to which Executive
would have been entitled through the date of termination; and
(vi) an amount, in cash, equal to the sum of (A) any unreimbursed
expenses incurred by the Executive in the performance of his duties hereunder
through the date of termination, plus (B) any accrued and unused vacation time
or other unpaid benefits as of the date of termination.
The parties agree that, because there can be no exact measure of
the damages which would occur to the Executive as a result of termination of
employment, such payments contemplated in this Section 5(f) shall be deemed to
constitute liquidated damages and not a penalty and the Company agrees that the
Executive shall not be required to mitigate his damages. The termination
compensation in this Section 5(f) shall be paid only if the Executive executes a
termination agreement releasing all legally waivable claims arising from the
Executive's employment.
(g) Termination and Benefits upon a Change in Control. In the event
that (i) the Company terminates this Agreement and the Executive's employment
with the Company for any reason other than for Cause (as defined in Section 5(a)
hereof) or the death or disability of the Executive or (ii) the Executive
terminates this Agreement and his employment with the Company for Good Reason
(as defined in Section 5(d) hereof), within twenty four months following a
Change in Control (as defined in this Section 5(g)), then in lieu of the
Severance Payment contained in Section 5(f) hereof, the Company shall pay to the
Executive an amount equal to three (3) times the sum of: (x) the Executive's
highest annual Salary during the last two (2) years immediately preceding the
termination, plus (y) the highest annual bonus paid to the Executive in such
period. In the event that the excise tax relating to "parachute payments" under
Section 280G of the Code applies to the Severance Payment, then the Company
shall pay the Executive an additional payment in an amount such that, after
payment of federal income taxes (but not the excise tax) on such additional
payment, the Executive retains an amount equal to the excise tax originally
imposed on
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the Severance Payment. The Executive shall also be entitled to receive the
Additional Benefits. "Change of Control" means or shall be deemed to have
occurred if and when: (a) the acquisition, by whatever means (including without
limitation, amalgamation, consolidation, liquidation, arrangement or merger), by
a person (or two or more persons who in such acquisition have acted jointly or
in concert or intend to exercise jointly or in concert any voting rights
attaching to the securities acquired), directly or indirectly, of the beneficial
ownership of such number of voting securities or rights to voting securities of
the Company, which together with such person's then owned voting securities and
rights to voting securities, if any, represent (assuming the full exercise of
such rights to voting securities) more than 20% of the combined voting power of
the Company's then outstanding voting securities, together with the voting
securities that would be outstanding on the full exercise of the rights to
voting securities acquired and such person's previously owned rights to voting
securities; provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control: (A) any
acquisition directly from the Company, (B) any acquisition by the Company, or
(C) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company; or (b) individuals who were members of the board of
directors of the Company immediately prior to a meeting of the shareholders of
the Company involving a contest for or on an item of business relating to the
election of directors shall not constitute a majority of the board of directors
following such election.
(h) Survival. Notwithstanding the termination of this Agreement under
this Section 5, the provisions of Sections 7 and 8 of this Agreement, and all
other provisions hereof which by their terms are to be performed following the
termination hereof shall survive such termination and be continuing obligations.
6. Consent and Waiver by Third Parties. The Executive hereby represents
and warrants that he has obtained all necessary waivers and/or consents from
third parties as to enable him to accept employment with the Company on the
terms and conditions set forth herein and to execute and perform this Agreement
without being in conflict with any other agreement, obligations or understanding
with any such third party.
7. Confidential Information. The Executive acknowledges that in the
course of his employment with the Company, he has received and will receive
access to confidential information of a special and unique value concerning the
Company and its business, including, without limitation, trade secrets, know-
how, lists of customers, employee records, books and records relating to
operations, costs of providing service and equipment, operating and maintenance
costs, pricing criteria and other confidential information and knowledge
concerning the business of the Company and its affiliates (hereinafter
collectively referred to as "information") which the Company desires to protect.
The Executive acknowledges that such information is confidential and the
protection of such confidential information against unauthorized use or
disclosure is of critical importance to the Company. The Executive agrees that
he will not reveal such information to anyone outside the Company. The Executive
further agrees that during the term of this Agreement and thereafter he will not
use or disclose such information. Upon termination of his employment hereunder,
the Executive shall surrender to the Company all papers, documents, writings and
other property produced by him
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or coming into his possession by or through his employment hereunder and
relating to the information referred to in this Section 7, and the Executive
agrees that all such materials will at all times remain the property of the
Company. The obligation of confidentiality, non-use and non-disclosure of know-
how set forth in this Section 7 shall not extend to know-how (i) which was in
the public domain prior to disclosure by the disclosing party, (ii) which comes
into the public domain other than through a breach of this Agreement, (iii)
which is disclosed to the Executive after the termination of this Agreement by a
third party having legitimate possession thereof and the unrestricted right to
make such disclosure, or (iv) which is necessarily disclosed in the course of
the Executive's performance of his duties to the Company as contemplated in this
Agreement. The agreements in this Section 7 shall survive the termination of
this Agreement.
8. No Solicitation.
To support the agreements contained in Section 7 hereof, from the date
hereof and for a period of twelve (12) months after the Executive's employment
with the Company is terminated for any reason, the Executive shall not, either
directly or indirectly, through any person, firm, association or corporation
with which the Executive is now or may hereafter become associated, (i) hire,
employ, solicit or engage any then current employee of the Company or its
affiliates, or (ii) use in any competition, solicitation or marketing effort any
information as to which the Executive has a duty of confidential treatment under
paragraph 7 above.
9. Notices. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date personally delivered or on the date mailed, postage
prepaid, by certified mail, return receipt requested, or telegraphed and
confirmed if addressed to the respective parties as follows:
If to the Executive: X. Xxxxx Sere
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
If to the Company: Bellwether Exploration Company
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Chairman, Compensation Committee
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.
10. Specific Performance. The Executive acknowledges that a remedy at law
for any breach or attempted breach of Section 7 or 8 of this Agreement will be
inadequate, agrees that the Company shall be entitled to specific performance
and injunctive and other equitable relief in case of any such breach or
attempted breach, and further agrees to waive any requirement for the securing
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or posting of any bond in connection with the obtaining of any such injunctive
or any other equitable relief.
11. Waivers and Modifications. This Agreement may be modified, and the
rights and remedies of any provision hereof may be waived, only in accordance
with this Section 11. No modification or waiver by the Company shall be
effective without the consent of at least a majority of the Compensation
Committee of the Board of Directors then in office at the time of such
modification or waiver. No waiver by either party of any breach by the other or
any provision hereof shall be deemed to be a waiver of any later or other breach
thereof or as a waiver of any other provision of this Agreement. This Agreement
sets forth all of the terms of the understandings between the parties with
reference to the subject matter set forth herein and may not be waived, changed,
discharged or terminated orally or by any course of dealing between the parties,
but only by an instrument in writing signed by the party against whom any
waiver, change, discharge or termination is sought.
12. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Texas.
13. Severability. In case of one or more of the provisions contained in
this Agreement for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had never
been contained herein.
14. Arbitration. In the event that a dispute or controversy should arise
between the Executive and the Company as to the meaning or application of any
provision, term or condition of this Agreement, such dispute or controversy
shall be settled by binding arbitration in Houston, Texas and for said purpose
each of the parties hereto hereby expressly consents to such arbitration in such
place. Such arbitration shall be conducted in accordance with the then existing
rules and regulations of the American Arbitration Association governing
commercial transactions. The expense of the arbitrator shall be borne by the
Company.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date and year first above written.
BELLWETHER EXPLORATION COMPANY
By: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
Title: Director--Chairman,
Compensation Committee
EXECUTIVE:
/s/ X. XXXXX SERE
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X. Xxxxx Sere
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