EXHIBIT 10.27
THIS AGREEMENT made effective as of the 10th day of February, 1998.
BETWEEN
ABACAN RESOURCE CORPORATION, a body corporate, incorporated under the laws of
the Province of Alberta, Canada (hereinafter called the "Corporation")
-and-
XXXXXXX X. XXXXXXXX, of the City of Houston, Texas (hereinafter called the
"Employee");
EMPLOYMENT SERVICES AGREEMENT
-----------------------------
RECITALS:
A. The Corporation is principally engaged in the business of exploration and
development of oil and gas properties located principally in Nigeria, Africa;
B. The parties desire to enter into this Agreement to set forth the terms
pursuant to which the Employee's services will be provided to the Corporation
and the respective rights and obligations of the parties hereto.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises, the mutual covenants and agreements herein contained and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto mutually covenant and agree as follows:
ARTICLE 1.
CONTRACT FOR SERVICES
---------------------
1.01 Subject to the earlier termination of this Agreement as hereinafter
provided, the Corporation hereby agrees to contract for and engage the services
of the Employee as the President and Chief Executive Officer of the Corporation
(hereafter the "Employment Services") details of which are described herein all
in accordance with the terms and provisions hereof.
1.02 The Employee shall be responsible for and shall have such authority as
is consistent with the position of President and Chief Executive Officer of the
Corporation with the full power and authority to control, supervise, manage and
direct the day to day business and affairs of the Corporation except such
matters and duties as by law must be transacted or performed by the board of
directors and/or the shareholders of the Corporation, all subject to the power,
direction and control of the board of directors of the Corporation (the
"Board").
1.03 Notwithstanding Clause 1.02 hereof, the Employment Services shall
include the services set forth below, and which services shall be provided on
the basis of the following terms and conditions:
(a) the Employee shall control, supervise, manage and direct all of the
business affairs of the Corporation;
(b) in addition to the duties set forth above, the Employee shall assume,
obey, implement and execute such duties, directions, responsibilities,
procedures, policies and lawful orders as may be determined or given by the
Board of the Corporation from time to time and report results of same as may
from time to time be determined by the Board of the Corporation;
(c) the Employee shall perform such duties and may exercise such powers as
may from time to time be assigned to or vested in him by the by-laws of the
Corporation;
(d) the Employee shall faithfully, honestly and diligently serve the
Corporation and cooperate with the Corporation and utilize maximum professional
skill and care to ensure that all services rendered hereunder are to the
satisfaction of the Corporation, acting reasonably, and to provide any other
services not specifically mentioned herein, but which by reason of his
capability he knows or ought to know to be necessary to ensure that the best
interests of the Corporation are maintained;
(e) the Employee's title with the Corporation shall be President and Chief
Executive Officer;
(f) the Employee will, subject to the prior approval of the Board, join in
or participate with organizations, clubs, associations or groups that may
provide good business contacts and learning facilities for the benefit of the
Corporation.
1.04 The Employee agrees to devote all or substantially all of his time,
attention and best efforts necessary to further the business and interests of
the Corporation during the period of this Agreement to the exclusion of any and
all other employment except as may specifically be approved by the directors of
the Corporation. Nothing herein shall prohibit the Employee from being a
shareholder in any corporation whose common shares are traded publicly on a
stock exchange.
1.05 The Employee acknowledges and agrees that the Employment Services are
of such a nature that regular business hours may be impossible. The Employee
understands that he may be required to provide the employment services in excess
of eight (8) hours per day or five days (5) per week and on evenings, weekends
and holidays. The Employee agrees that the consideration to be paid or which is
granted to the Employee as set forth herein shall be in full and complete
satisfaction for his work and Employment Services to be provided hereunder, no
matter when and how performed and the Employee releases the Corporation from any
obligation for pay or other compensation, whatsoever which it might have by
reason of any existing or future legislation or otherwise.
1.06 The Employment Services to be carried out and performed by the Employee
shall be carried out and performed in Houston, Texas, or such other places as
may be mutually agreed between the Employee and the Corporation.
ARTICLE 2.
TERM OF CONTRACT
----------------
2.01 Subject to prior termination pursuant to the terms contained in Article
9, the term of this Agreement for the provision of the Employment Services shall
be for a period of three (3) years from and including February 10, 1998 (the
"Effective Date") up to and including February 9, 2001 (the "Expiry Date").
2.02 This Agreement may be renewed from time to time by the Corporation
prior to the Expiry Date for a further one (1) year term or terms or such other
term as the parties may agree upon the written consent of both parties hereto.
-2-
2.03 Should this Agreement not be renewed by the Corporation on or before
the Expiry Date, the Corporation shall, on the Expiry Date, pay the Employee a
one-time departure fee (the "Departure Fee") equal to one (1) year Employment
Fees. The Departure Fee shall be the only compensation payable to the Employee
in the event of non-renewal of this Agreement by the Corporation, and the
Employee expressly confirms that upon payment of the Departure Fee, he is not
entitled to any other compensation, severance payment, Employment Fees or
termination fees whatsoever arising out of the non-renewal of this Agreement.
Nothing herein shall however prevent the Employee from exercising any or all
stock options that may have vested to him during the term hereof in accordance
with the provisions of the applicable stock option agreement, which shall
provide that Employee will have 90 days from date of termination within which to
exercise such vested options.
ARTICLE 3.
COMPENSATION AND EXPENSES INCURRED BY EMPLOYEE
----------------------------------------------
3.01 The Corporation agrees that commencing the Effective Date, the
Corporation shall pay the following fees (the "Employment Fees") to the Employee
in respect of the provision of the Employment Services:
(a) the sum of United States dollars Two Hundred and Twenty-Five Thousand
($225,000.00) dollars per annum, payable in bi-monthly instalments of $ 9,375
(the "bi-monthly instalment") from the Commencement Date until the Expiry Date
of this Agreement or until the date this Agreement is terminated in accordance
with Article 9.01 herein, provided however that for the month of February 1998,
the monthly payment shall be 18/28 of the monthly instalment;
3.02 In addition to the payment of the Employment Fees, the Employee shall
be entitled to receive 1,000,000 incentive stock options (the "Stock Options")
to purchase common shares of the Corporation. The stock options will be issued
pursuant to and in accordance with the terms of the incentive stock option plan
of the Corporation, shall be at an exercise price per common share of $3.25
(Canadian dollars) which is the closing trading price for the Corporation's
shares on The Toronto Stock Exchange on February 10, 1998. The options shall
vest as follows:
(i) one-third (a) immediately;
(ii) one-third (a) on February 10, 1999; and
(iii) one-third (a) on February 10, 2000.
The issuance and exercise price of the stock options shall at all times be
subject to applicable regulatory and stock exchange approval.
3.03 The Employee shall be responsible for and shall pay any and all foreign
income or related taxes that may become payable by virtue of receiving
compensation for the provision of services contemplated herein.
3.04 The Employee is authorized to incur reasonable expenses in or about the
provision of his services hereunder, including living expenses while absent from
his city of employment and travel and meeting expenses. The Corporation shall
reimburse the Employee for all such business expenses upon provision of
satisfactory proof of such expenses to the Corporation.
3.05 The Employee shall be expected to travel on the Corporation's behalf as
required from time to time. Such travel shall be made in accordance with the
Corporation's domestic and international travel policies. The Corporation
acknowledges that all international travel will be first class or equivalent and
when not available, business class or its equivalent.
-3-
3.06 The Employee may receive a corporate credit card of the Corporation
(the "credit card"). The Employee confirms that the credit card is supplied to
be used exclusively to cover costs of business travel, accommodation and meals
incurred by the Employee while on business for the Corporation outside of the
city or location of his current assignment. All expenditures incurred on the
credit card shall be submitted to the Corporation along with proof of such
expenditures in a form acceptable to the Corporation. The Employee agrees to
surrender the corporate credit card to the Corporation immediately upon request
and in any event, at the Expiry Date or Termination Date of this Agreement.
ARTICLE 4.
REVIEW OF COMPENSATION
----------------------
4.01 Subject to renewal as herein provided, the remuneration payable
pursuant to Article 3.01 hereof may be reviewed annually by the Board of the
Corporation on or before the anniversary date hereof, at which time the Board
shall consider such matters as it may consider relevant and shall determine, in
its absolute discretion, whether to maintain or increase the annual remuneration
payable by the Corporation to the Employee hereunder. The Corporation shall not
be entitled to reduce the annual cash compensation payable hereunder. In the
event the Board elects to amend the Employee's remuneration, such an amendment
shall be in writing and shall not effect the other provisions set forth in this
Agreement.
ARTICLE 5.
INCAPACITY
----------
5.01 The Employee shall be entitled to reasonable time from service:
(a) without loss of compensation, due to sickness or injury or other
incapacity directly associated with the provision of the Employment Services to
the Corporation;
(b) without compensation due to sickness or pre-existing injury or medical
condition on the effective date of this Agreement;
(c) without compensation for a voluntary medical procedure, provided that
the prior consent of the Corporation is obtained.
5.02 Nothing herein shall prohibit the Corporation, during the term of any
such incapacity referred to herein from terminating the services of the Employee
in accordance with Article 9.01 herein.
5.03 Health Benefits
----------------
The Corporation will pay the premiums for a newly created medical plan for
Employee, which
shall provide coverage for medical expenses for Employee and his family, such
plan to include major medical coverage underwritten by a recognized provider in
the United States. Policy documents govern benefit entitlement. Further,
whether self-insured or included as part of the medical coverage, expenses for
Employee and Employee's family dental bills will also be included. If
self-insured, Employee will submit such expenses as part of monthly expense
reports.
-4-
ARTICLE 6.
CONFIDENTIAL INFORMATION
------------------------
6.01 The Employee covenants and agrees that during the term hereof and for a
period of one (1) year thereafter, he will keep in strict confidence all
knowledge, information (whether oral or written) and materials obtained or
acquired during the course of his providing Employment Services hereunder
relating to the Corporation or its business and affairs. Other than information
disclosed or divulged to the Board and duly authorized officers and employees of
the Corporation, the Employee will not disclose, divulge, publish or transfer,
or authorize or permit anyone else to disclose, divulge, publish or transfer or
use to his own advantage any such knowledge, materials, business data or other
information obtained in the course of providing the Employment Services,
pursuant to this Agreement or which relate in any manner to the business and
affairs of the Corporation, without the prior written consent of the
Corporation, which consent shall not be unreasonably withheld.
6.02 The obligation of the Employee as identified in Article 6.01 hereof
shall not apply to such knowledge, information, material or business data
obtained pursuant to this Agreement or relating in any manner to the business
affairs of the Corporation which:
(a) was demonstrably known to the Employee prior to receipt thereof pursuant
to this Agreement;
(b) is available to the public in the form of written publication;
(c) shall have become available to the Employee in good faith from a third
party who has a bona fide right to disclose same; and
(d) that information which is required to be disclosed to any federal,
provincial, state or local government or governmental branch, board, agency or
instrumentality necessary to comply with relevant timely disclosure laws or
regulatory authorities, including stock exchanges having jurisdiction in respect
of securities of the Corporation.
6.03 The Employee covenants and agrees that during the term and any
extensions or renewals hereof, the Employee shall maintain the terms of this
Agreement strictly confidential and shall not disclose the terms of this
Agreement to any other party or entity, except Employee's attorney or legal
counsel.
ARTICLE 7.
VACATION
--------
7.01 The Employee shall be entitled to four (4) weeks paid vacation (the
"Vacation") for each year throughout the term of this Agreement and any and all
renewals thereof. The Vacation shall be taken from time to time at the
discretion of the Employee upon the provision of reasonable notice to the
Corporation.
ARTICLE 8.
NON-ASSIGNABILITY
-----------------
8.01 This Agreement for Employment Services and all other rights, benefits,
and privileges herein conferred are personal to the Employee and accordingly may
not be assigned by the Employee.
-5-
ARTICLE 9.
TERMINATION
-----------
9.01 Notwithstanding the term of this Agreement as set forth in Article 2.01
hereof, this Agreement and the Employment Services being provided shall be
terminable by the Corporation upon the occurrence of any one of the following
events, the date of such termination to be hereafter called the "Termination
Date":
(a) except in the case of termination for Cause under Article 9.01(b) or as
a result of the death of the Employee under Article 9.01(c) hereunder, at any
time prior to the Expiry Date, upon payment to the Employee of the Departure
Fee;
(b) at any time by the Corporation, without notice, or additional
compensation for Cause. For the purposes herein, "Cause" shall, without
limiting its meaning in common law, include the conviction of the Employee for
an indictable criminal offence or the breach by the Employee of any of the
covenants or terms of this Agreement;
(c) immediately upon the death of the Employee provided that the Corporation
agrees to pay the Employee's estate the equivalent of one years' Employment Fees
on the Termination Date;
(d) immediately upon the Employee becoming bankrupt or making an assignment
for the benefit of creditors in general without additional compensation;
(e) immediately upon confirmation of permanent incapacity due to permanent
illness, injury or disability on the part of the Employee. For the purposes
hereof, "permanent incapacity" means illness, injury or disability on the part
of the Employee incurred while performing the Employment Services for the
Corporation that in the opinion of an independent medical expert acceptable to
the Employee (or his legal personal representative) and the Corporation will
prevent the Employee from performing his duties or providing the Employment
Services on behalf of the Employee for a period longer than six (6) consecutive
months. Should the Employee become permanently incapacitated and this agreement
is terminated for this reason, the Corporation shall pay the Employee the
equivalent of one years' Employment Fees on the Termination Date.
9.02 Subject to Article 10.04, in the event this Agreement is terminated in
accordance with the provisions of Article 9.01 hereof, the Employee shall not be
entitled to other payments from the Corporation other than all stock options as
provided for in Section 3.02, from and after the Termination Date except as
specifically provided in Article 9.01 herein.
9.03 Notwithstanding any other provision of this Agreement, Employee may
terminate this Agreement at any time upon giving thirty (30) days written notice
to the Corporation.
ARTICLE 10.
CHANGE OF CONTROL, MERGER, AMALGAMATION, SALE OF ASSETS
-------------------------------------------------------
10.01 In the event of:
(a) a change of control of the Corporation (as such term is customarily used
in the Securities Act, Alberta) through ownership of its common shares including
a "takeover bid", an "exempt takeover bid", "issuer bid" or an "exempt issuer
bid"; or
-6-
(b) a change in a majority of the members of the Board of the Corporation or
the removal of the Employee as an officer or director of the Corporation; or
(c) the Corporation merging, amalgamating or re-organizing with another
corporation that is not an affiliate with the Corporation; or
(d) the sale of all or substantially all of the assets or undertakings of
the Corporation;
the Corporation shall provide the Employee with notice of such events (the
"Change of Control Event").
10.02 Not later than 30 days following the completion of the Change of
Control Event contemplated in Article 10.01(a), (b) or (c), the Corporation or
its successor shall confirm with the Employee whether the Employment Services of
the Employee continue to be required by the Corporation or its successor.
10.03 Should confirmation be provided that the Employment Services continue
to be required after the Change of Control Event, the Employee and the successor
Corporation shall continue to be bound by the terms of this agreement provided
that any change to the title, duties or responsibilities of the Employee with
the Corporation after the Change of Control Event shall, at the option of the
Employee, be deemed to be Termination and subject to Article 10.04 below, with
the Change of Control Event being the Termination Date for the purposes hereof.
All unvested Stock Options shall immediately vest to the Employee effective as
of the date of Change of Control Event.
10.04 Should at the time of the Change of Control Event notice be provided
in accordance with Article 10.02 herein that the Employment Services no longer
be required after the Change of Control Event, this Agreement shall be deemed to
be terminated by the Corporation on the date of the Change of Control Event and
the Employee shall be entitled to compensation equal to the accelerated amount
of all remaining payments under this Agreement. All unvested Stock Options
shall immediately vest to the Employee effective as of the date of Change of
Control Event.
ARTICLE 11.
INDEMNIFICATION
---------------
11.01 The Corporation hereby agrees to indemnify and hold harmless Employee
from and against any and all losses, claims, damages, liabilities (or actions or
other proceedings commenced or threatened in respect thereof), any expenses that
arise out of, result from or in any way relate to this Agreement and Employee's
service as an officer and director of the Corporation, and to reimburse Employee
upon his demand, for any legal or other expenses incurred in connection with any
investigation, defending or participating in any such loss, claim, damage,
liability, action or other proceeding, other than any of the foregoing claimed
to the extent incurred by reason of the gross negligence of willful misconduct
of the Employee.
ARTICLE 12
NOTICES
-------
12.01 All notices required or allowed to be given under this Agreement shall
be made either personally or by mailing same by prepaid registered post,
addressed as hereinafter set forth or to such other address as may be designated
from time to time by such party in writing, and any notice mailed as aforesaid
shall be deemed to have been received by the addressees thereof on the fifth
business day following the day of mailing:
-7-
Corporation: Abacan Resource Corporation
#140, 00000 Xx. Xxxx'x Xxxx
Xxxxxxx, Xxxxx
00000
Fax: (000) 000-0000
Employee: Xxxxxxx X. Xxxxxxxx
0000 Xxxx Xxxxx
Xxxxxxx, Xxxxx
X.X.X.
Fax: (000) 000-0000
Any party may from time to time change its address for service hereunder on
written notice to the other parties. Any notice may be served by hand delivery
or by mailing same by prepaid, registered post, in a properly addressed
envelope, addressed to the party to whom the notice is to be given at its
address for service hereunder.
ARTICLE 13.
SEVERABILITY
------------
13.01 Each provision of this Agreement is declared to constitute a separate
and distinct covenant and to be severable from all other such separate and
distinct covenants. If any covenant or provision herein is determined to be
void or unenforceable in whole or in part, it will not be deemed to affect or
impair the enforceability or validity of any other covenant or provision of this
Agreement or any part thereof.
ARTICLE 14.
RELIEF
------
14.01 The parties to this Agreement recognize that a breach by the Employee
of any of the covenants herein contained would result in damages to the
Corporation and that the Corporation could not adequately be compensated for
such damages by monetary award. Accordingly, the Employee agrees that in the
event of any such breach, in addition to all other remedies available to the
Corporation at law or in equity, the Corporation will be entitled as a matter of
right to apply to a court of competent equitable jurisdiction of such relief by
way of restraining order, injunction, decree or otherwise, as may be appropriate
to ensure compliance with the provisions of this Agreement.
ARTICLE 15.
WAIVER
------
15.01 The parties agree that all restrictions in this Agreement are
necessary and fundamental to the protection of the Corporation and are
reasonable and valid, and all defences to the strict enforcement of Article 6
and Article 11 hereof by the Corporation are hereby waived by the Employee.
-8-
ARTICLE 16.
GENERAL
-------
16.01 The parties hereto agree that they have expressed herein their entire
understanding and agreement concerning the subject matter of this Agreement and
it is expressly agreed that no implied covenant, condition, term or reservation
or prior representation or warranty shall be read into this Agreement relating
to or concerning the subject matter hereof or any matter or operation provided
for herein.
16.02 The provisions of this Agreement will enure to the benefit of and be
binding upon the heirs, executors, administrators and legal personal
representatives of the Employee and the successors and assigns of the
Corporation respectively.
16.03 Wherever the singular or masculine or neuter is used in this
Agreement, the same shall be construed as meaning the plural or feminine or a
body politic or corporate and vice versa where the context of the parties hereto
so require.
16.04 Time is of the essence hereof.
16.05 This Agreement shall be construed and interpreted exclusively in
accordance with the laws of England and each of the parties hereto hereby
irrevocably attorns to the jurisdiction of the courts of such jurisdiction.
IN WITNESS WHEREOF the parties hereto have executed this Agreement
effective as of the date and year first above written.
ABACAN RESOURCE CORPORATION
Per: /s/ Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx
Chief Operating Officer
Witness as to the signature of
Xxxxxxx X. Xxxxxxxx
/s/ /s/ Xxxxxxx X. Xxxxxxxx
------------------------------ ---------------------------
XXXXXXX X. XXXXXXXX
-9-
