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exhibit 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as of
__________________ (the "Effective Date"), by and between Ocean Energy, Inc., a
Texas corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx ("Employee").
WHEREAS, the Company employs Employee and desires to continue such
employment relationship and Employee desires to continue such employment; and
WHEREAS, the Company and Employee entered into a Severance Agreement
effective as of March 17, 1997, which has been previously amended in certain
respects and is currently in effect (the "Severance Agreement"); and
WHEREAS, the Company and Employee desire to enter into an agreement
reflecting the terms of the employment relationship, including the termination
thereof, that replaces the Severance Agreement;
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. Effect of Agreement. Effective as of the Effective Date, this
Agreement supersedes and replaces the Severance Agreement in its entirety and
the Severance Agreement shall be null and void and of no further force and
effect.
2. Employment. The Company hereby employs Employee, and Employee hereby
accepts employment by the Company, on the terms and conditions set forth in this
Agreement.
3. Term of Employment. Subject to the provisions for earlier
termination provided in this Agreement, the term of this Agreement (the "Term")
shall be five (5) years commencing on the Effective Date.
4. Employee's Duties. During the Term of this Agreement, Employee shall
serve as Executive Vice President and Chief Financial Officer of the Company,
with such duties and responsibilities as may from time to time be assigned to
him by the board of directors of the Company (the "Board"), provided that such
duties are consistent with the customary duties of such position.
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 his duties and
responsibilities. Employee shall not, either directly or indirectly, enter into
any business or employment with or for any person, firm, association or
corporation other than the Company during the Term of this Agreement; provided,
however, that Employee shall not be prohibited from making financial investments
in any other company or business or from
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serving on the board of directors of any other company. Employee shall at all
times observe and comply with all lawful directions and instructions of the
Board.
5. Base Compensation. For services rendered by Employee under this
Agreement, the Company shall pay to Employee a base salary ("Base Compensation")
of $350,000 per annum payable in accordance with the Company's customary pay
periods and subject to customary withholdings. The amount of Base Compensation
shall be reviewed by the Board on an annual basis as of the close of each fiscal
year of the Company and may be increased as the Board may deem appropriate. In
the event the Board deems it appropriate to increase Employee's annual base
salary, said increased amount shall thereafter be the "Base Compensation."
Employee's Base Compensation, as increased from time to time, may not thereafter
be decreased unless agreed to by Employee. Nothing contained herein shall
prevent the Board from paying additional compensation to Employee in the form of
bonuses or otherwise during the Term of this Agreement.
6. Additional Benefits. In addition to the Base Compensation provided
for in Section 5 herein, Employee shall be entitled to the following:
(a) Expenses. The Company shall, in accordance with any rules
and policies that it may establish from time to time for executive
officers, reimburse Employee for business expenses reasonably incurred
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) Vacation. Employee shall be entitled to five (5) weeks of
vacation per year, without any loss of compensation or benefits.
Employee shall not be entitled to compensation for, or to carry
forward, any unused vacation time.
(c) General Benefits. Employee shall be entitled to
participate in the various employee benefit plans or programs provided
to the employees of the company in general, including but not limited
to, health, dental, disability and life insurance plans, subject to the
eligibility requirements with respect to each of such benefit plans or
programs, and such other benefits or perquisites as may be approved by
the Board during the Term of this Agreement. Nothing in this paragraph
shall be deemed to prohibit the Company from making any changes in any
of the plans, programs or benefits described in this Section 6,
provided the change similarly affects all executive officers of the
Company similarly situated.
(d) Options. Upon the occurrence of a "Corporate Change" as
hereinafter defined, Employee shall be considered as immediately and
totally vested in any and all
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stock options or other similar awards previously made to Employee by
the Company or its subsidiaries under a "Long Term Incentive Plan" duly
adopted by the Board (such options or similar awards are hereinafter
collectively referred to as "Options"). For purposes of this Agreement,
a "Corporate Change" shall occur if (i) the Company (A) shall not be
the surviving entity in any merger, consolidation or other
reorganization (or survives only as a subsidiary of an entity other
than a previously wholly-owned subsidiary of the Company) or (B) is to
be dissolved and liquidated, and as a result of or in connection with
such transaction, the persons who were directors of the Company before
such transaction shall cease to constitute a majority of the Board,
(ii) any person or entity, including a "group" as contemplated by
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
acquires or gains ownership or control (including, without limitation,
power to vote) of 20% or more of the outstanding shares of the
Company's voting stock (based upon voting power), and as a result of or
in connection with such transaction, the persons who were directors of
the Company before such transaction shall cease to constitute a
majority of the Board, or (iii) the Company sells all or substantially
all of the assets of the Company to any other person or entity (other
than a wholly-owned subsidiary of the Company) in a transaction that
requires shareholder approval pursuant to the Texas Business
Corporation Act.
7. Confidential Information. Employee, during the Term, may have access
to and become familiar with confidential information, secrets and proprietary
information concerning the business and affairs of the Company. As to such
confidential information, Employee agrees as follows:
(a) During the employment of Employee with the Company and
thereafter Employee will not, either directly or indirectly, disclose
to any third party without the written permission of the Company, nor
use in any way (except as required in the course of his employment with
the Company) any confidential information, secret or proprietary
information of the Company. In the event of a breach or threatened
breach of the provisions of this Section 7(a), the Company shall be
entitled, in addition to any other remedies available to the Company,
to an injunction restraining Employee from disclosing such confidential
information.
(b) Upon termination of employment of Employee, for whatever
reason, Employee shall surrender to the Company any and all documents,
manuals, correspondence, reports, records and similar items then or
thereafter coming into the possession of Employee which contain any
confidential, secret or proprietary information of the Company.
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8. Termination. This Agreement may be terminated prior to the
end of its Term as set forth below:
(a) Resignation (other than for Good Reason). Employee may
resign, including by reason of retirement, his position at any time by
providing written notice of resignation to the Company in accordance
with Section 11 hereof. In the event of such resignation, except in the
case of resignation for Good Reason (as defined below), this Agreement
shall terminate and Employee shall not be entitled to further
compensation pursuant to this Agreement other than the payment of any
unpaid Base Compensation accrued hereunder as of the date of Employee's
resignation.
(b) Death. If Employee's employment is terminated due to his
death, this Agreement shall terminate and the Company shall have no
obligations to Employee or his legal representatives with respect to
this Agreement other than the payment of any unpaid Base Compensation
previously accrued hereunder.
(c) Discharge.
(i) The Company may terminate Employee's employment
for any reason at any time upon written notice thereof
delivered to Employee in accordance with Section 11 hereof. In
the event that Employee's employment is terminated during the
Term by the Company for any reason other than his Misconduct
or Disability (both as defined below), then (A) the Company
shall pay in lump sum in cash to Employee, within fifteen (15)
days following the date of termination, an amount equal to the
product of (i) Employee's Base Compensation as in effect
immediately prior to Employee's termination, multiplied by
(ii) three, (B) for three years following the date of
termination, the Company, at its cost, shall provide or
arrange to provide Employee (and, as applicable, Employee's
dependents) with accident and group health insurance benefits
substantially similar to those which Employee (and Employee's
dependents) were receiving immediately prior to Employee's
termination; however, the welfare benefits otherwise
receivable by Employee pursuant to this clause (B) shall be
reduced to the extent comparable welfare benefits are actually
received by Employee (and/or Employee's dependents) during
such period under any other employer's welfare plan(s) or
program(s), with Employee being obligated to promptly disclose
to the Company any such comparable welfare benefits, (C) in
addition to the aforementioned compensation and benefits, the
Company shall pay in lump sum in cash to Employee within
fifteen (15) days following the date of termination an amount
equal to the product of (i) Employee's average bonus paid by
the Company during the most recent two (2)
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years immediately prior to the date of termination, multiplied
by (ii) three and(D) Employee shall be considered as
immediately and totally vested in any and all Options
previously made to Employee by Company or its subsidiaries.
(ii) Notwithstanding the foregoing provisions of this
Section 8, in the event Employee is terminated because of
Misconduct, the Company shall have no obligations pursuant to
this Agreement after the Date of Termination other than the
payment of any unpaid Base Compensation accrued through the
Date of Termination. As used herein, "Misconduct" means (A)
the 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, (B) the engaging by
Employee in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise (other than
such conduct resulting from Employee's incapacity due to
physical or mental illness or any such actual or anticipated
conduct after the issuance of a Notice of Termination by
Employee for Good Reason), or (C) Employee's conviction for
the commission of a felony. Anything contained in this
Agreement to the contrary notwithstanding, the Chief Executive
Officer of the Company shall have the sole power and authority
to terminate the employment of Employee on behalf of the
Company.
(d) Disability. If Employee shall have been absent from the
full-time performance of Employee's duties with the Company for ninety
(90) consecutive calendar days as a result of Employee's incapacity due
to physical or mental illness, Employee's employment may be terminated
by the Company for "Disability" and Employee shall not be entitled to
further compensation pursuant to this Agreement, except that Employee
shall be considered as immediately and totally vested in any and all
Options previously granted to Employee by Company or its subsidiaries.
(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 he shall be entitled to the
compensation and benefits provided in Paragraph 8(c)(i) hereof. "Good
Reason" shall mean the occurrence of any of the following circumstances
without Employee's express written consent unless such breach
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or circumstances are fully corrected prior to the Date of Termination
specified in the Notice of Termination given in respect hereof:
(i) the material breach of any of the Company's
obligations under this Agreement without Employee's express
written consent;
(ii) the continued assignment to Employee of any
duties inconsistent with the office of Executive Vice
President and Chief Financial Officer;
(iii) the failure by the Company to pay to Employee
any portion of Employee's compensation on the date such
compensation is due;
(iv) the failure by the Company to continue to
provide Employee with benefits substantially similar to those
enjoyed by other executive officers who have entered into
similar employment agreements with Employer under any of the
Company's medical, health, accident, and/or disability plans
in which Employee was participating immediately prior to such
time;
(v) a change in the location of Employee's principal
place of employment by the Company by more than 50 miles from
the location where he was principally employed immediately
prior to the date of such change; or
(vi) 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 13
hereof.
In addition, the occurrence of a Corporate Change
other than as described in Section 6(d)(i)(A), shall
constitute "Good Reason" hereunder, but only if Employee
terminates his employment within ninety (90) days following
the effective date of such Corporate Change.
(f) Notice of Termination. Any purported termination of
Employee's employment by the Company under Sections 8(c)(ii) or 8(d),
or by Employee under Section 8(e), shall be communicated by written
Notice of Termination to the other party hereto in accordance with
Section 11 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which, if by the Company and is for
Misconduct or Disability, shall set forth in reasonable detail the
reason for such termination of Employee's employment, or in the case of
resignation by Employee for Good Reason, said notice must specify in
reasonable detail the basis for such resignation. A Notice of
Termination given by Employee pursuant to Section 8(e) shall be
effective even if given after the receipt by Employee of notice that
the Board has set a meeting to consider terminating Employee for
Misconduct. Any purported termination for which a Notice of Termination
is required which is not effected pursuant to this Section 8(f) shall
not be effective.
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(g) Date of Termination. "Date of Termination" shall mean the
date specified in the Notice of Termination, provided that the Date of
Termination shall be at least 15 days following the date the Notice of
Termination is given. Notwithstanding the foregoing, in the event
Employee is terminated for Misconduct, the Company may refuse to allow
Employee access to the Company's offices (other than to allow Employee
to collect his personal belongings under the Company's supervision)
prior to the Date of Termination.
(h) Mitigation. Employee shall not be required to mitigate the
amount of any payment provided for in this Section 8 by seeking other
employment or otherwise, nor shall the amount of any payment provided
for in this Agreement be reduced by any compensation earned by Employee
as a result of employment by another employer, except that any
severance amounts payable to Employee pursuant to the Company's
severance plan or policy for employees in general shall reduce the
amount otherwise payable pursuant to Sections 8(c)(i) or 8(e).
(i) Excess Parachute Payments. Notwithstanding anything in
this Agreement to the contrary, to the extent that any payment or
benefit received or to be received by Employee hereunder in connection
with the termination of Employee's employment would, as determined by
tax counsel selected by the Company, constitute an "Excess Parachute
Payment" (as defined in Section 280G of the Internal Revenue Code), the
Company shall fully "gross-up" such payment so that Employee is in the
same "net" after-tax position he would have been if such payment and
gross-up payments had not constituted Excess Parachute Payments.
(j) Resignation from Board. In the event Employee is a member
of the board of directors of the Company or any of its subsidiaries,
and Employee's employment by the Company is terminated for any reason
(other than Employee's death), Employee shall immediately resign as a
member of such board of directors upon the written request of the
Chairman of the Board. Nothing herein shall be deemed to limit the
power of the shareholders of the Company to at any time remove any
director, including, without limitation, Employee, in accordance with
applicable law.
9. 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 Options with the Company or any of its affiliated companies.
10. 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
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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, so long as the obligations of the Company under this Agreement remain
the obligations of the Company.
11. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
Company at its principal office address, directed to the attention of the Board
with a copy to the Secretary of the Company, and to Employee at Employee's
residence address 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.
12. 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.
13. 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/or assets of the Company 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. Failure of the Company to obtain
such agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle Employee to
compensation 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 becomes effective
shall be deemed the Date of Termination. As used herein, the term
"Company" shall include any successor to its business and/or assets as
aforesaid which executes and delivers the Agreement provided for in
this Section 13 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. If Employee should die while any
amounts would be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the
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terms of this Agreement to Employee's devisee, legatee, or other
designee or, if there be no such designee, to Employee's estate.
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, except those which are 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. Either party may elect that any dispute or controversy
arising under or in connection with this Agreement be settled by arbitration in
Houston, Texas in accordance with the rules of the American Arbitration
Association then in effect. If the parties cannot mutually agree on an
arbitrator, then the arbitration shall be conducted by a three arbitrator panel,
with each party selecting one arbitrator and the two arbitrators so selected
selecting a third arbitrator. The findings of the arbitrator(s) shall be final
and binding, and judgment may be entered thereon in any court having
jurisdiction. The findings of the arbitrator(s) shall not be subject to appeal
to any court, except as otherwise provided by applicable law. The arbitrator(s)
may, in his or her (or their) own discretion, award legal fees and costs to the
prevailing party.
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IN WITNESS WHEREOF, the parties have executed this Agreement on
_____________, effective for all purposes as provided above.
OCEAN ENERGY, INC.
By:
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Name:
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Title:
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EMPLOYEE:
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