THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.32
THIRD
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Third Amended and Restated
Employment Agreement (this “Agreement”), effective as of December 31, 2008 (the “Third
Amendment Date”), is between Rosetta Resources Inc., a Delaware
corporation (“Employer”), and Xxxxxxx X. Xxxxxxxx (“Executive”), and supersedes
and replaces that certain Second Amended and Restated Employment Agreement
between Executive and Employer which became effective on July 1,
2007.
WHEREAS, Executive has been employed as
Executive Vice President, Chief Financial Officer, Secretary and Treasurer of
Employer pursuant to the Second Amended and Restated Employment Agreement dated
July 1, 2007 between Executive and Employer; and
WHEREAS,
the parties desire to amend and restate the Second Amended and Restated
Employment Agreement dated as of July 1, 2007, all as herein
provided;
NOW, THEREFORE, the parties hereto
agree as follows:
1.
Definitions. As
used in this Agreement, the following terms have the following
meanings:
(a) “Affiliate”
means, with respect to any entity, any other corporation, organization,
association, partnership, sole proprietorship or other type of entity, whether
incorporated or unincorporated, directly or indirectly controlling or controlled
by or under direct or indirect common control with such entity.
(b) “Annual
Period” means the time period of each year beginning on the first day of the
Employment Term and ending on the day before the anniversary of that
date.
(c) “Board”
means the Board of Directors of Employer.
(d) “Cause”
means a finding by the Board of acts or omissions, whether occurring during or
before the Employment Term, constituting, in the Board’s reasonable judgment,
(i) a breach of duty by Executive in the course of his employment involving
fraud, acts of dishonesty (other than inadvertent acts or omissions), disloyalty
to Employer or its Affiliates, or moral turpitude constituting criminal felony;
(ii) conduct by Executive that is materially detrimental to Employer, monetarily
or otherwise, or reflects unfavorably on Employer or Executive to such an extent
that Employer’s best interests reasonably require the termination of Executive’s
employment; (iii) acts or omissions of Executive materially in violation of his
obligations under this Agreement or at law; (iv) Executive’s failure to comply
with or enforce Employer’s policies concerning equal employment opportunity,
including engaging in sexually or otherwise harassing conduct; (v) Executive’s
repeated insubordination; (vi) Executive’s failure to comply with or enforce, in
any material respect, all other personnel policies of Employer or its
Affiliates; (vii) Executive’s failure to devote his full working time and best
efforts to the performance of his responsibilities to Employer or its
Affiliates; (viii) Executive’s conviction of, or entry of a plea agreement or
consent decree or similar arrangement with respect to a felony or any violation
of federal or state securities laws; or (ix) Executive’s failure to cooperate
with any investigation or inquiry authorized by the Board or conducted by a
governmental authority related to the business or Executive’s
conduct.
(e) “Corporate
Change” means (i) the dissolution or liquidation of Employer; (ii) a
reorganization, merger or consolidation of Employer with one or more
corporations (other than a merger or consolidation effecting a reincorporation
of Employer in another state or any other merger or consolidation in which the
shareholders of the surviving corporation and their proportionate interests
therein immediately after the merger or consolidation are substantially
identical to the shareholders of Employer and their proportionate interests
therein immediately prior to the merger or consolidation) (collectively, a
“Corporate Change Merger”); (iii) the sale of all or substantially all of the
assets of Employer or an affiliate as defined in the Rosetta Resources Inc. 2005
Long-Term Incentive Plan; or (iv) the occurrence of a Change in
Control. A “Change in Control” shall be deemed to have occurred if
(x) individuals who were directors of Employer immediately prior to a Control
Transaction shall cease, within two years of such Control Transaction to
constitute a majority of the Board of Directors of Employer (or of the Board of
Directors of any successor to Employer or to a company which has acquired all or
substantially all its assets) other than by reason of an increase in the size of
the membership of the applicable Board that is approved by at least a majority
of the individuals who were directors of Employer immediately prior to such
Control Transaction or (y) any entity, person or Group acquires shares of
Employer in a transaction or series of transactions that result in such entity,
person or Group directly or indirectly owning beneficially 50% or more of the
outstanding shares of Common Stock. As used herein, “Control
Transaction” means (A) any tender offer for or acquisition of capital stock of
Employer pursuant to which any person, entity, or Group directly or indirectly
acquires beneficial ownership of 20% or more of the outstanding shares of Common
Stock; (B) any Corporate Change Merger of Employer; (C) any contested election
of directors of Employer; or (D) any combination of the foregoing, any one of
which results in a change in voting power sufficient to elect a majority of the
Board of Directors of Employer. As used herein, “Group” means persons
who act “in concert” as described in Sections 13(d)(3) and/or 14(d)(2) of the
Securities Exchange Act of 1934, as amended. Notwithstanding the
foregoing, “Corporate Change” shall not include the Acquisition, the Offering or
any public offering of equity of Employer pursuant to a registration that is
effective under the Securities Act of 1933, as amended. As used
herein, “Acquisition” and “Offering” shall have the same meaning given to those
terms in the Rosetta Resources Inc. 2005
Long-Term Incentive Plan.
(f) “Competitor”
means any person or entity that is engaged in the acquisition, exploration,
development and production of oil and gas properties in competition with the
activities of Employer or an Affiliate.
(g) “Confidential
Information” means, without limitation, all documents or information, in
whatever form or medium, concerning or evidencing sales; costs; pricing;
strategies; forecasts and long range plans; financial and tax information;
personnel information; business, marketing and operational projections, plans
and opportunities; customer, vendor, and supplier information; geological and
geophysical maps, data, interpretations, and analyses; project and prospect
locations and leads; well logs, interpretations, and analyses; and production
information; but excluding any such information that is or becomes generally
available to the public other than as a result of any breach of this Agreement
or other unauthorized disclosure by Executive.
(h) “Employment
Termination Date” means the effective date of termination of Executive’s
employment as established under Paragraph 6(g).
(i)
“Good Reason” means any of the
following actions if taken without Executive’s prior written consent: (i) any
demotion of Executive as evidenced by a material diminution in Executive’s
responsibilities or duties; (ii) a material diminution in Executive’s base
compensation; (iii) any permanent relocation of Executive’s place of business to
a location 50 miles or more from the then-current location, provided such
relocation is a material change in geographic location at which Executive must
provide services for purposes of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and the regulations thereunder; or (iv) any other
action or inaction by Employer that constitutes a material breach by Employer of
its obligations under Paragraphs 12 or 20 of this Agreement. Neither
a transfer of employment among Employer and any of its Affiliates, a change in
the co-employment relationship, nor a mere change in job title constitutes “Good
Reason.”
(j)
“Inability to Perform” means and shall be
deemed to have occurred if Executive has been determined under Employer’s
long-term disability plan to be eligible for long-term disability
benefits. In the absence of Executive’s participation in, application
for benefits under, or existence of such a plan, “Inability to Perform” means a
finding by the Board in its sole judgment that Executive is, despite any
reasonable accommodation required by law, unable to perform the essential
functions of his position because of an illness or injury for (i) 60% or
more of the normal working days during six consecutive calendar months or (ii)
40% or more of the normal working days during twelve consecutive calendar
months.
(k)
“Work Product” means all ideas, works of
authorship, inventions, and other creations, whether or not patentable,
copyrightable, or subject to other intellectual-property protection, that are
made, conceived, developed or worked on in whole or in part by Executive while
employed by Employer and/or any of its Affiliates, that relate in any manner
whatsoever to the business, existing or proposed, of Employer and/or any of its
Affiliates, or any other business or research or development effort in which
Employer and/or any of its Affiliates engages during Executive’s
employment. Work Product includes any material previously conceived,
made, developed, or worked on during Executive’s employment with Calpine and any
Affiliate.
2.
Employment. Employer
agrees to employ Executive (directly or through an Affiliate), and Executive
agrees to be employed, for the period set forth in Paragraph
3. Executive will be employed in the position and with the duties and
responsibilities set forth in Paragraph 4(a) and upon the other terms and
conditions set out in this Agreement. Employer and Executive agree
that such employment may be through a co-employment relationship with a
professional employer organization.
3.
Term. Executive’s
employment under this Agreement shall commence on July 7, 2005 and shall be for
an initial term of two consecutive Annual Periods (the “Employment Term”),
unless sooner terminated as provided in this Agreement. Subject to
earlier termination as provided in this Agreement, the Employment Term shall be
automatically extended for an additional Annual Period unless either Executive
or Employer gives written notice to the other six months or more prior to the
end of the initial term or, if the Agreement has been automatically extended
beyond the initial term, six months or more prior to the end of the additional
Annual Period. In the event of such an automatic extension, each
additional Annual Period shall be part of the “Employment Term.” Upon
such timely written notice, Executive’s employment and this Agreement will end
upon the expiration of the Employment Term. The ending of Executive’s
employment as a result of the expiration of the Employment Term shall not
constitute a termination of employment by either party under this
Agreement.
4.
Position and
Duties.
(a) Executive
shall be employed as Executive Vice President, Chief Financial Officer and
Treasurer. In such capacity, Executive, subject to the ultimate
control and direction of the Chief Executive Officer of Employer, shall have
such duties, functions, responsibilities, and authority as are from time to time
delegated to Executive by the Chief Executive Officer of Employer; provided,
however, that such duties, functions, responsibilities, and authority are
reasonable and customary for a person serving in the same or similar capacity of
an enterprise comparable to Employer.
(b) During
the Employment Term, Executive shall devote his full time, skill, and attention
and his best efforts to the business and affairs of Employer to the extent
necessary to discharge fully, faithfully, and efficiently the duties and
responsibilities delegated and assigned to Executive in or pursuant to this
Agreement, except for usual, ordinary, and customary periods of vacation and
absence due to illness or other disability.
(c) In
connection with Executive’s employment under this Agreement, Executive shall be
based in Houston, Texas, or at any other place where the principal executive
offices of Employer may be located during the Employment
Term. Executive also will engage in such travel as the performance of
Executive’s duties in the business of Employer may require.
(d) All
services that Executive may render to Employer or any of its Affiliates in any
capacity during the Employment Term shall be deemed to be services required by
this Agreement and the consideration for such services is that provided for in
this Agreement.
(e) Executive
hereby acknowledges that he has read and is familiar with Employer’s policies,
including but not limited to those regarding business ethics and conduct and
securities trading, and will comply with all such policies, and any amendments
thereto, during the Employment Term.
5.
Compensation and Related
Matters.
(a)
Base Salary; Temporary Supplemental
Compensation. During each Annual Period of the Employment
Term, Employer shall pay to Executive for his services under this Agreement an
annual base salary (“Base Salary”). The Base Salary shall be $260,000
effective as of the Third Amendment Date. The Base Salary is subject
to annual adjustments at the discretion of the Board, but in no event shall
Employer pay Executive a Base Salary less than that set forth above without the
consent of Executive. The Base Salary shall be payable in
installments in accordance with the general payroll practices of Employer, or as
otherwise mutually agreed upon.
(b) Annual
Incentives. During the Employment Term, Executive will
participate in any incentive compensation plan (ICP) applicable to Executive’s
position, as may be adopted by Employer from time to time and in accordance with
the terms of such plan(s). Executive’s target award opportunity for
the year ending on December 31, 2007, will be based upon 75% of Executive’s Base
Salary paid to Executive by Employer prorated for the number of months in such
period as compared to a full year and shall be subject to such other terms,
conditions and restrictions as may be established by the Board or the ICP
committee.
(c) Long-Term
Incentives. During the Employment Term, Executive will
participate in Employer’s long-term incentive (LTI) plan applicable to
Executive’s position, in accordance with the terms of such
plan(s). Except as provided in Paragraph 5(d), Executive will
participate in such LTI plan award opportunities as may be determined by the
Board or the LTI committee, as applicable.
(d) Employee
Benefits. During the Employment Term, Executive shall be
entitled to participate in all employee benefit plans, programs, and
arrangements that are generally made available by Employer to its similarly
situated employees, including without limitation Employer’s life insurance,
long-term disability, and health plans. Executive agrees to cooperate
and participate in any medical or physical examinations as may be required by
any insurance company in connection with the applications for such life and/or
disability insurance policies.
(e) Expenses. Executive
shall be entitled to receive reimbursement for all reasonable expenses incurred
by Executive during the Employment Term in performing his duties and
responsibilities under this Agreement, consistent with Employer’s policies or
practices for reimbursement of expenses incurred by other senior executives of
Employer (“Business Expenses”). Notwithstanding the foregoing, (i)
the amount of expenses eligible for reimbursement during a calendar year may not
affect the expenses eligible for reimbursement in any other calendar year, (ii)
the reimbursement must be made on or before the last day of the calendar year
following the calendar year in which the expense was incurred and (iii) the
right to reimbursement shall not be subject to liquidation or exchange for any
other benefit.
(f) Vacations. During
each Annual Period of the Employment Term, Executive shall be eligible for four
weeks’ paid vacation, as well as sick pay and other paid and unpaid time off in
accordance with the policies and practices of Employer. Executive
agrees to use his vacation and other paid time off at such times that are (i)
consistent with the proper performance of his duties and responsibilities and
(ii) mutually convenient for Employer and Executive.
(g) Fringe
Benefits. During the Employment Term, Executive shall be
entitled to the perquisites and other fringe benefits that are made available by
Employer to its senior executives generally and to such perquisites and fringe
benefits that are made available by Employer to Executive in particular, subject
to any applicable terms and conditions of any specific perquisite or other
fringe benefit.
6.
Termination of Employment
and Agreement.
(a) Death. Executive’s
employment and this Agreement shall terminate automatically upon his
death.
(b) Inability to
Perform. Employer may terminate this Agreement or this
Agreement and Executive’s employment for Inability to Perform.
(c) Termination by Employer for
Cause. Employer may terminate Executive’s employment and this
Agreement for Cause by providing Executive with a Notice of Termination as set
out in Paragraph 6(f). Before terminating Executive’s employment and
this Agreement for Cause, Employer must provide Executive with written notice of
its intent to do so, which notice must specify the particular circumstances or
events that Employer contends gives rise to the existence of Cause; provided,
however, that if Employer intends to exercise its right to terminate Executive’s
employment and this Agreement in whole or part under provisions (v) or (vi) of
the definition of Cause, Employer must first provide Executive with a reasonable
period of time to correct those circumstances or events Employer contends give
rise to the existence of Cause under such provision(s) (the “Correction
Period”), but only to the extent Employer determines that they may reasonably be
corrected. A 30-day Correction Period shall be presumptively
reasonable. Executive will be given the opportunity within 30
calendar days of his receipt of Employer’s written notice of its intent to
terminate Executive’s employment and this Agreement for Cause to defend himself
with respect to the circumstances or events specified in such notice and in a
manner and under such procedures as the Chief Executive Officer of Employer may
establish. Nothing in this Paragraph 6(c) precludes informal
discussions between Executive and Employer regarding such circumstances or
events.
(d) Termination by Executive for
Good Reason. Executive may terminate his employment and this
Agreement for Good Reason. To exercise his right to terminate for
Good Reason, Executive must provide written notice to Employer of his belief
that Good Reason exists within 60 days of the initial existence of the Good
Reason condition, and that notice shall describe the condition(s) believed to
constitute Good Reason. Employer shall have 30 days to remedy the
Good Reason condition(s). If not remedied within that 30-day period,
Executive may submit a Notice of Termination; provided, however, that the Notice
of Termination invoking Executive’s right to terminate his employment for Good
Reason must be given no later than 100 days after the date the Good Reason
condition first arose; otherwise, Executive is deemed to have accepted the
condition(s), or the Employer’s correction of such condition(s), that may have
given rise to the existence of Good Reason.
(e) Termination by Either Party
Without Cause or Without Good Reason. Either Employer or
Executive may terminate Executive’s employment and this Agreement without Cause
or Good Reason upon at least 60 days’ prior written notice to the other
party.
(f)
Notice of
Termination. Any termination of Executive’s employment or,
pursuant to Paragraph 6(b), a termination of this Agreement alone, by Employer
or by Executive (other than a termination pursuant to Paragraph 6(a)) shall be
communicated by a Notice of Termination. A “Notice of Termination” is
a written notice that must (i) indicate the specific termination provision in
this Agreement relied upon; (ii) in the case of a termination for Inability to
Perform, Cause, or Good Reason, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s
employment under the provision invoked; and (iii) if the termination is by
Executive under Paragraph 6(e), or by Employer for any reason, specify the
Employment Termination Date or, pursuant to Paragraph 6(b), the date of
termination of this Agreement. The failure by Employer or Executive
to set forth in the Notice of Termination any fact or circumstance that
contributes to a showing of Cause or Good Reason shall not waive any right of
Employer or Executive or preclude either of them from asserting such fact or
circumstance in enforcing or defending their rights.
(g) Employment Termination
Date. The Employment Termination Date, whether occurring
before or after a Corporate Change, shall be as follows: (i) if Executive’s
employment is terminated by his death, the date of his death; (ii) if
Executive’s employment is terminated by Employer because of his Inability to
Perform or for Cause, the date specified in the Notice of Termination, which
date shall be no earlier than the date such notice is given; (iii) if
Executive’s employment is terminated by Executive for Good Reason, the date on
which the Notice of Termination is given; or (iv) if the termination is under
Paragraph 6(e), the date specified in the Notice of Termination, which date
shall be no earlier than 60 days after the date such notice is
given.
(h) Deemed
Resignation. In the event of termination of Executive’s
employment or the expiration of the Employment Term, Executive agrees that if at
such time he is a member of the Board or is an officer of Employer or a director
or officer of any of its Affiliates, he shall be deemed to have resigned from
such position(s) effective on the Employment Termination Date or the expiration
of the Employment Term, unless the Board notifies Executive prior to the
Employment Termination Date or the expiration of the Employment Term of the
Board’s desire that Executive remain a member of the Board, in which case
Executive shall not be deemed to have resigned his position as a member of the
Board merely by virtue of the termination of his employment or the expiration of
the Employment Term. Executive agrees to execute and deliver any
documents evidencing his resignation from such positions that Employer may
reasonably request.
(i)
Investigation;
Suspension. Employer may suspend Executive with pay pending an
investigation authorized by the Board or a governmental authority or a
determination by the Board whether Executive has engaged in acts or omissions
constituting Cause, and such paid suspension shall not constitute a termination
of this Agreement or Executive’s employment, or Good
Reason. Executive agrees to cooperate with Employer in connection
with any such investigation.
7. Compensation Upon
Termination of Employment or Expiration of Employment Term.
(a) Death. If
Executive’s employment is terminated by reason of Executive’s death, Employer
shall pay to such person as Executive shall designate in a written notice to
Employer (or, if no such person is designated, to his estate) any unpaid portion
of Executive’s Base Salary through the Employment Termination Date (the
“Compensation Payment”), any earned but unused vacation (the “Vacation
Payment”), and any unreimbursed Business Expenses, at the time and in the manner
required by applicable law.
(b) Inability to
Perform. If Executive’s employment and this Agreement is
terminated by reason of Executive’s Inability to Perform, Employer shall pay to
Executive the Compensation Payment, the Vacation Payment, and any unreimbursed
Business Expenses at the time and in the manner required by applicable
law.
(c) Termination by Executive
Without Good Reason. If Executive’s employment is terminated
by Executive pursuant to and in compliance with Paragraph 6(e), Employer shall
pay to Executive the Compensation Payment, the Vacation Payment, and any
unreimbursed Business Expenses, at the time and in the manner required by
applicable law.
(d) Termination for
Cause. If Executive’s employment is terminated by Employer for
Cause, Employer shall pay to Executive the Compensation Payment, the Vacation
Payment, and any unreimbursed Business Expenses, at the time and in the manner
required by applicable law.
(e) Termination Without Cause or
With Good Reason; Expiration of Employment Term.
(i) If
Executive’s employment is terminated by Employer for any reason other than
death, Inability to Perform, or Cause, or is terminated by Executive for Good
Reason, during the Employment Term, or if either Employer or Executive gives
timely notice pursuant to Paragraph 3 and Executive’s employment and this
Agreement therefore ends upon the expiration of the Employment Term, Employer
shall pay to Executive the Compensation Payment, the Vacation Payment, and any
unreimbursed Business Expenses, at the time and in the manner required by
applicable law.
(ii) In
addition, if Executive’s employment is terminated by Employer for any reason
other than death, Inability to Perform, or Cause, or is terminated by Executive
for Good Reason, during the Employment Term, or if Employer gives timely notice
pursuant to Paragraph 3 and Executive’s employment and this Agreement therefore
ends upon the expiration of the Employment Term, Employer shall pay or provide
to Executive in lieu of any other severance or separation benefits, at the time
and in the manner provided in Paragraph 7(e)(iii), the following if, within 45
days after the Employment Termination Date or the expiration of the Employment
Term, as applicable, Executive has signed a general release agreement in a form
acceptable to Employer and Executive does not revoke such release:
(A) Executive’s
Base Salary as in effect on the Employment Termination Date or the expiration of
the Employment Term, as applicable, multiplied by two;
(B) ICP
award at the target level for two years, based on the ICP award for the
performance period in effect on the Employment Termination Date or the
expiration of the Employment Term, as applicable;
(C) Full
and immediate vesting of all Employer stock options and restricted stock awards
held by Executive as of the Employment Termination Date or the expiration of the
Employment Term, as applicable;
(D) With
respect to Employer stock options that are vested prior to the Employment
Termination Date or the expiration of the Employment Term, as applicable,
Executive will have twelve months after the Employment Termination Date or the
expiration of the Employment Term, as applicable, to exercise such stock
options.
Notwithstanding
the foregoing, Employer’s obligation under this Paragraph 7(e)(ii) is limited as
follows:
(X) If,
in the reasonable judgment of Employer, Executive engages in any conduct that
materially violates
Paragraph 8 or engages in any of the Restricted Activities described in
Paragraph 9, Employer’s obligation to make payments to Executive under this
Paragraph 7(e)(ii), if any such obligation remains, shall end as of the date
Employer so notifies Executive in writing; and
(Y) If
Executive is found guilty or enters into a plea agreement, consent decree, or
similar arrangement with respect to any felony criminal offense or any violation
of federal or state securities laws, or has any civil enforcement action brought
against him by any regulatory agency, for actions or omissions related to his
employment with Employer or any of its Affiliates or if Employer reasonably
believes that Executive has committed any act or omission that would have
entitled Employer to terminate his employment for Cause, whether such act or
omission was committed during his employment with Employer or any of its
Affiliates or thereafter, (1) Employer’s obligation to make payments to
Executive under this Paragraph 7(e)(ii) shall immediately end, and (2) Executive
shall repay to Employer any amounts paid to him pursuant to this Paragraph
7(e)(ii) within 30 days after a written request to do so by
Employer.
(iii) The
amounts provided for under Paragraphs 7(e)(ii)(A) and 7(e)(ii)(B) shall be paid
as follows:
(A)
An amount equal to (1) 25% of the amount provided for
under Paragraph 7(e)(ii)(A) plus (2) the sum (to the extent that such sum
exceeds zero) of the amounts provided for under Paragraphs 7(e)(ii)(A) and
7(e)(ii)(B) less the payment under Paragraph 7(e)(iii)(A)(1) less the Section
000X Xxxxxx Xxxxxx, shall be paid in a single lump sum no later than 60 days
after the Employment Termination Date or the expiration of the Employment Term,
as applicable, provided that the Employment Termination Date or the expiration
of the Employment Term, as applicable, constitutes a separation from service for
purposes of Code Section 409A and the regulations thereunder. For
purposes of this Agreement, the “Section 409A Exempt Amount” is two times the
lesser of (x) Executive’s annualized compensation based upon the annual rate of
pay for services provided to Employer for the calendar year preceding the
calendar year in which Executive has a separation from service (as defined in
Code Section 409A and the regulations thereunder) with Employer (adjusted for
any increase during that year that was expected to continue indefinitely if the
service provider had not separated from service) or (y) the maximum amount that
may be taken into account under a qualified plan pursuant to Section 401(a)(17)
of the Code for the year in which Executive has a separation from
service.
(B) The
Section 409A Exempt Amount or, if less, the excess of the amount provided for
under Paragraphs 7(e)(ii)(A) and 7(e)(ii)(B) over the amount paid under
Paragraph 7(e)(iii)(A), shall be paid in equal monthly installments over a
period of 18 months commencing on the first day of the sixth month following the
Employment Termination Date or the expiration of the Employment Term, as
applicable, provided that the Employment Termination Date or the expiration of
the Employment Term, as applicable, constitutes a separation from service for
purposes of Code Section 409A and the regulations thereunder.
(f)
Termination or Expiration of
Employment Term Following Corporate Change.
(i)
If, within the two-year period following a
Corporate Change, Executive’s employment with Employer or an Affiliate or
successor of Employer is terminated by Employer or an Affiliate for any reason
other than death, Inability to Perform, or Cause, is terminated by Executive for
Good Reason, or if Employer or an Affiliate or successor of Employer gives
timely notice pursuant to Paragraph 3 and Executive’s employment and this
Agreement therefore ends upon the expiration of the Employment Term, Executive
will be paid the Compensation Payment, the Vacation Payment and any unreimbursed
Business Expenses, at the time and in the manner required by applicable
law. In addition, if, within 45 days after the Employment Termination
Date or the expiration of the Employment Term, as applicable, Executive has
signed a general release agreement in a form acceptable to Employer and
Executive does not revoke such release, in lieu of any other payments under
Paragraph 7(e)(ii), (A) Executive shall be paid a lump-sum amount equivalent to
(x) 2 times the sum of Executive’s then-current Base Salary, and (y) 2 times the
target ICP award for the performance period in which the Corporate Change
occurs, and (B) any unvested Employer stock options and restricted stock will be
immediately vested and Executive will have twelve months following the
Employment Termination Date or expiration of the Employment Term, as applicable,
to exercise the Employer stock options, provided that in no event may such stock
options be exercised after the earlier of the latest date upon which the options
could have expired by their original terms or the 10th
anniversary of the original date of grant of the options.
(ii)
The additional payments provided for in Paragraph
7(f)(i)(A) shall be paid in a single lump sum payment no later than 60 days
after the Employment Termination Date or the expiration of the Employment Term,
as applicable.
(iii)
In the event that it is determined that any payment (other than the
Gross-Up payment provided for in this Paragraph 7(f)(iii)) or distribution
by Employer or any of its Affiliates to or for the benefit of Executive, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any stock option or
similar right, or the lapse or termination of any restriction on or the vesting
or exercisability of any of the foregoing (a “Payment”), would be subject to the
excise tax imposed by Section 4999 of the Code (or any successor provision
thereto) by reason of being considered “contingent on a change in ownership or
control” of Employer, within the meaning of Section 280G of the Code or any
successor provision thereto (such tax being hereafter referred to as the “Excise
Tax”), then Executive will be entitled to receive an additional payment or
payments (a “Gross-Up Payment”). The Gross-Up Payment will be in an
amount such that, after payment by Executive of all taxes, including any Excise
Tax imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the
Payment. The determination of whether an Excise Tax would be imposed,
the amount of such Excise Tax, and the calculation of the amounts referred to in
this Paragraph 7(f)(iii) will be made at the expense of Employer by
Employer’s regular independent accounting firm (the “Accounting Firm”), which
shall provide detailed supporting calculations, and shall be based on the
Executive’s actual taxes paid and tax rates applied, determined by reference to
the Executive’s tax returns as filed for the relevant year(s), copies of which
shall be provided to the Accounting Firm. Any determination by the
Accounting Firm will be binding upon Employer and Executive. The
Gross-Up Payment will be paid to Executive as soon as administratively
practicable, but in no event later than the end of the Executive’s taxable year
next following the Executive’s taxable year in which Executive remits the
related taxes.
(g) Health
Insurance. In addition, if Executive’s employment with
Employer or an Affiliate or successor of Employer is terminated or ends under
the circumstances set forth in Paragraph 7(f), Executive will receive, in
addition to any other payments due under this Agreement, the following benefit:
if, at the time of the Employment Termination Date or the expiration of the
Employment Term, as applicable, Executive participates in one or more health
plans offered or made available by Employer and Executive is eligible for and
elects to receive continued coverage under such plans in accordance with the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or any
successor law, Employer will reimburse Executive during 12-month period
following the Employment Termination Date or the expiration of the Employment
Term, as applicable, for the difference between the total amount of the monthly
COBRA premiums for the same coverage as in effect on the Employment Termination
Date or the expiration of the Employment Term, as applicable, that are actually
paid by Executive for such continued health plan benefits and the total monthly
amount of the same premiums charged to active senior executives of Employer for
health insurance coverage. Such reimbursement shall be made within
the 90-day period following Executive’s payment of each monthly COBRA
premium. Provided, however, that Employer’s reimbursement obligation
under this Paragraph 7(g) shall terminate upon the earlier of (i) the expiration
of the time period described above or (ii) the date Executive becomes eligible
for health insurance coverage under a subsequent employer’s plan without being
subject to any preexisting-condition exclusion under that plan, which occurrence
Executive shall promptly report to Employer. Provided further,
however, the amount of COBRA reimbursement during a calendar year may not affect
the COBRA expenses eligible for reimbursement in any other calendar
year.
(h) Exclusive Compensation and
Benefits. The compensation and benefits described in this
Paragraph 7, along with the associated terms for payment, constitute all of
Employer’s obligations to Executive with respect to the termination of
Executive’s employment with Employer and/or its Affiliates. However, nothing in
this Agreement is intended to limit any earned, vested benefits (other than any
entitlement to severance or separation pay, if any) that Executive may have
under the applicable provisions of any benefit plan of Employer in which
Executive is participating at the time of the termination of
employment.
(i) Compliance
with Code Section 409A. If
Employer determines that Executive is a “specified employee” on the date of
Executive’s “separation from service,” as those terms are defined in and
pursuant to Code Section 409A and related Treasury guidance thereunder, then,
notwithstanding any provision of this Agreement to the contrary, no payment of
compensation under this Agreement shall be made to Executive during the period
lasting six months from the date of Executive’s separation unless Employer
determines that there is no reasonable basis for believing that making such
payment would cause Executive to suffer adverse tax consequences pursuant to
Code Section 409A. If any payment to Executive is delayed pursuant to
the foregoing sentence, such payment instead shall be paid, without interest, on
the first day of the month following the expiration of the six-month period
referred to in the prior sentence. Each aforementioned payment is a
separate “payment” within the meaning of Treasury Regulation section
1.409A-2(b)(2)(iii).
(j)
Payment after Executive’s
Death. In the event of Executive’s death after he becomes
entitled to a payment or payments pursuant to this Paragraph 7, any remaining
unpaid amounts shall be paid, at the time and in
the manner such payments otherwise would have been paid to Executive, to such person as Executive
shall designate in a written notice to Employer (or, if no such person is
designated, to his estate).
(k) Offset. The
Executive agrees that Employer may set off against, and Executive authorizes
Employer to deduct from, any payments due to the Executive, or to his heirs,
legal representatives, or successors, as a result of the termination of the
Executive’s employment any amounts which may be due and owing to Employer or any
of its Affiliates by the Executive, whether arising under this Agreement or
otherwise; provided, however, that any such set off and deduction shall be made
in a manner that complies with Section 409A of the Code and the regulations
thereunder to the extent applicable.
8. Confidential
Information.
(a) Executive
acknowledges and agrees that (i) Employer and its Affiliates are engaged in a
highly competitive business; (ii) Employer and its Affiliates have expended
considerable time and resources to develop goodwill with their customers,
vendors, and others, and to create, protect, and exploit Confidential
Information; (iii) Employer must continue to prevent the dilution of its and its
Affiliates’ goodwill and unauthorized use or disclosure of its Confidential
Information to avoid irreparable harm to its legitimate business interests; (iv)
in the oil and gas acquisition, exploration, development and production
business, his participation in or direction of Employer’s or its Affiliates’
day-to-day operations and strategic planning are an integral part of Employer’s
continued success and goodwill; (v) given his position and responsibilities, he
necessarily will be creating Confidential Information that belongs to Employer
and enhances Employer’s goodwill, and in carrying out his responsibilities he in
turn will be relying on Employer’s goodwill and the disclosure by Employer to
him of Confidential Information; (vi) he will have access to Confidential
Information that could be used by any Competitor of Employer in a manner that
would irreparably harm Employer’s competitive position in the marketplace and
dilute its goodwill; and (vii) he necessarily would use or disclose Confidential
Information if he were to engage in competition with Employer.
(b) Employer
acknowledges and agrees that Executive must have and continue to have throughout
his employment the benefits and use of its and its Affiliates’ goodwill and
Confidential Information in order to properly carry out his
responsibilities. Employer accordingly promises upon execution and
delivery of this Agreement to provide Executive immediate and continuing access
to Confidential Information and to authorize him to engage in activities that
will create new and additional Confidential Information.
(c) Employer
and Executive thus acknowledge and agree that during Executive’s employment with
Employer, and upon execution and delivery of this Agreement, he (i) has
received, will receive, and will continue to receive Confidential Information
that is unique, proprietary, and valuable to Employer and/or its Affiliates;
(ii) has created and will continue to create Confidential Information that is
unique, proprietary, and valuable to Employer and/or its Affiliates; and (iii)
has benefited and will continue to benefit, including without limitation by way
of increased earnings and earning capacity, from the goodwill Employer and its
Affiliates have generated and from the Confidential Information.
(d) Accordingly,
Executive acknowledges and agrees that at all times during his employment by
Employer and/or any of its Affiliates and thereafter:
(i)
all Confidential Information shall remain and be the sole and
exclusive property of Employer and/or its Affiliates;
(ii)
he will protect and safeguard all Confidential
Information;
(iii) he
will hold all Confidential Information in strictest confidence and not, directly
or indirectly, disclose or divulge any Confidential Information to any person
other than an officer, director, or employee of, or legal counsel for, Employer
or its Affiliates, to the extent necessary for the proper performance of his
responsibilities unless authorized to do so by Employer or compelled to do so by
law or valid legal process;
(iv) if
he believes he is compelled by law or valid legal process to disclose or divulge
any Confidential Information, he will notify Employer in writing sufficiently in
advance of any such disclosure to allow Employer the opportunity to defend,
limit, or otherwise protect its interests against such
disclosure;
(v) at
the end of his employment with Employer for any reason or at the request of
Employer at any time, he will return to Employer all Confidential Information
and all copies thereof, in whatever tangible form or medium, including
electronic; and
(vi) absent
the promises and representations of Executive in this Paragraph 8 and in
Paragraph 9, Employer would require him immediately to return any tangible
Confidential Information in his possession, would not provide Executive with new
and additional Confidential Information, would not authorize Executive to engage
in activities that will create new and additional Confidential Information, and
would not enter or have entered into this Agreement.
9. Nondisparagement and
Nonsolicitation Obligations. In consideration of Employer’s
promises to provide Executive with Confidential Information and to authorize him
to engage in activities that will create new and additional Confidential
Information upon execution and delivery of this Agreement, and the other
promises and undertakings of Employer in this Agreement, Executive agrees that,
while he is employed by Employer and/or any of its Affiliates and for a 2-year
period following the end of that employment for any reason, he shall not engage
in any of the following activities (the “Restricted Activities”):
(a) He
will not directly or indirectly disparage Employer or its Affiliates, any
products, services, or operations of Employer or its Affiliates, or any of the
former, current, or future officers, directors, or employees of Employer or its
Affiliates;
(b) He
will not, whether on his own behalf or on behalf of any other individual,
partnership, firm, corporation or business organization, either directly or
indirectly solicit, induce, persuade, or entice, or endeavor to solicit, induce,
persuade, or entice, any person who is then employed by or otherwise engaged to
perform services for Employer or its Affiliates to leave that employment or
cease performing those services; and
(c) He
will not, whether on his own behalf or on behalf of any other individual,
partnership, firm, corporation or business organization, either directly or
indirectly solicit, induce, persuade, or entice, or endeavor to solicit, induce,
persuade, or entice, any person who is then a customer, supplier, or vendor of
Employer or any of its Affiliates to cease being a customer, supplier, or vendor
of Employer or any of its Affiliates or to divert all or any part of such
person’s or entity’s business from Employer or any of its
Affiliates.
Executive acknowledges and agrees that
the restrictions contained in this Paragraph 9 are ancillary to an otherwise
enforceable agreement, including without limitation the mutual promises and
undertakings set forth in Paragraph 8; that Employer’s promises and undertakings
set forth in Paragraph 8 and Executive’s position and responsibilities with
Employer give rise to Employer’s interest in restricting Executive’s
post-employment activities; that such restrictions are designed to enforce
Executive’s promises and undertakings set forth in this Paragraph 9 and his
common-law obligations and duties owed to Employer and its Affiliates; that the
restrictions are reasonable and necessary, are valid and enforceable under Texas
law, and do not impose a greater restraint than necessary to protect Employer’s
goodwill, Confidential Information, and other legitimate business interests;
that he will immediately notify Employer in writing should he believe or be
advised that the restrictions are not, or likely are not, valid or enforceable
under Texas law or the law of any other state that he contends or is advised is
applicable; that the mutual promises and undertakings of Employer and Executive
under Paragraphs 8 and 9 are not contingent on the duration of Executive’s
employment with Employer; that absent the promises and representations made by
Executive in this Paragraph 9 and Paragraph 8, Employer would require him to
return any Confidential Information in his possession, would not provide
Executive with new and additional Confidential Information, would not authorize
Executive to engage in activities that will create new and additional
Confidential Information, and would not enter or have entered into this
Agreement; and that his obligations under Paragraphs 8 and 9 supplement, rather
than supplant, his common-law duties of confidentiality and loyalty owed to
Employer.
10. Intellectual
Property.
(a) In
consideration of Employer’s promises and undertakings in this Agreement,
Executive agrees that all Work Product will be disclosed promptly by Executive
to Employer, shall be the sole and exclusive property of Employer, and is hereby
assigned to Employer, regardless of whether (i) such Work Product was conceived,
made, developed or worked on during regular hours of his employment or his time
away from his employment, (ii) the Work Product was made at the suggestion of
Employer; or (iii) the Work Product was reduced to drawing, written description,
documentation, models or other tangible form. Without limiting the
foregoing, Executive acknowledges that all original works of authorship that are
made by Executive, solely or jointly with others, within the scope of his
employment and that are protectable by copyright are “works made for hire,” as
that term is defined in the United States Copyright Act (17 U.S.C., Section
101), and are therefore owned by Employer from the time of
creation.
(b) Executive
agrees to assign, transfer, and set over, and Executive does hereby assign,
transfer, and set over to Employer, all of his right, title and interest in and
to all Work Product, without the necessity of any further compensation, and
agrees that Employer is entitled to obtain and hold in its own name all patents,
copyrights, and other rights in respect of all Work
Product. Executive agrees to (i) cooperate with Employer during and
after his employment with Employer in obtaining patents or copyrights or other
intellectual-property protection for all Work Product; (ii) execute,
acknowledge, seal, and deliver all documents tendered by Employer to evidence
its ownership thereof throughout the world; and (iii) cooperate with Employer in
obtaining, defending, and enforcing its rights therein.
(c) Executive
represents that there are no other contracts to assign inventions or other
intellectual property that are now in existence between Executive and any other
person or entity. Executive further represents that he has no other
employment or undertakings that might restrict or impair his performance of this
Agreement. Executive will not in connection with his employment by
Employer, use or disclose to Employer any confidential, trade secret, or other
proprietary information of any previous employer or other person that Executive
is not lawfully entitled to disclose.
11. Reformation. If
the provisions of Paragraphs 8, 9, or 10 are ever deemed by a court to exceed
the limitations permitted by applicable law, Executive and Employer agree that
such provisions shall be, and are, automatically reformed to the maximum
limitations permitted by such law.
12. Indemnification and
Insurance. Employer shall indemnify Executive to the fullest
extent permitted by the laws of the State of Delaware. In addition,
Employer shall indemnify Executive in accordance with Employer’s certificate of
incorporation and bylaws and pursuant to Employer’s standard indemnification
agreement, and shall provide him with coverage under any directors’ and
officers’ liability insurance policies, in each case on terms not less favorable
than those provided to any of its other directors and officers as in effect from
time to time.
13. Assistance in
Litigation. During the Employment Term and thereafter for the
lifetime of Executive, Executive shall, upon reasonable notice, furnish such
information and proper assistance to Employer or any of its Affiliates as may
reasonably be required by Employer in connection with any litigation,
investigations, arbitrations, and/or any other fact-finding or adjudicative
proceedings involving Employer or any of its Affiliates. This
obligation shall include, without limitation, to promptly upon request meet with
counsel for Employer or any of its Affiliates and provide truthful testimony at
the request of Employer or as otherwise required by law or valid legal
process. Following the Employment Term, Employer shall
reimburse Executive for all reasonable out-of-pocket expenses incurred by
Executive and approved in advance by Employer in rendering such assistance (such
as travel, parking, and meals but not attorney’s fees), but shall have no
obligation to compensate Executive for his time in providing information and
assistance in accordance with this Paragraph 13, provided that such
reimbursement shall be made on or before the last day of the calendar year
following the calendar year in which the expense is incurred.
14. No Obligation to
Pay. With regard to any payment due to Executive under this
Agreement, it shall not be a breach of any provision of this Agreement for
Employer to fail to make such payment to Executive if (i) Employer is legally
prohibited from making the payment; (ii) Employer would be legally
obligated to recover the payment if it was made; or (iii) Executive would be
legally obligated to repay the payment if it was made.
15. Deductions and
Withholdings. With respect to any payment to be made to the
Executive, Employer shall deduct, where applicable, any amounts authorized by
Employee, and shall withhold and report all amounts required to be withheld and
reported by applicable law.
16. Notices. All
notices, requests, demands, and other communications required or permitted to be
given or made by either party shall be in writing and shall be deemed to have
been duly given or made (a) when delivered personally, or (b) when deposited in
the United States mail, first class registered or certified mail, postage
prepaid, return receipt requested, to the party for which intended at the
following addresses (or at such other addresses as shall be specified by the
parties by like notice, except that notices of change of address shall be
effective only upon receipt):
(i) If
to Employer, at:
Attn: General Counsel
000
Xxxxx
Xxxxx
0000
Xxxxxxx,
Xxxxx 00000
(ii) If to
Executive, at Executive’s then-current home address on file with
Employer.
17. Injunctive
Relief. Executive acknowledges and agrees that Employer would
not have an adequate remedy at law and would be irreparably harmed in the event
that any of the provisions of Paragraphs 8, 9, and 10 were not performed in
accordance with their specific terms or were otherwise
breached. Accordingly, Executive agrees that Employer shall be
entitled to equitable relief, including preliminary and permanent injunctions
and specific performance, in the event Executive breaches or threatens to breach
any of the provisions of such Paragraphs, without the necessity of posting any
bond or proving special damages or irreparable injury. Such remedies
shall not be deemed to be the exclusive remedies for a breach or threatened
breach of this Agreement by Executive, but shall be in addition to all other
remedies available to Employer at law or equity.
18. Mitigation. Executive
shall not be required to mitigate the amount of any payment provided for in this
Agreement 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
Executive as the result of employment by another employer after the date of
termination of Executive’s employment with Employer, or otherwise.
19. Binding Effect; No
Assignment by Executive; No Third Party Benefit. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective heirs, legal representatives, successors, and assigns;
provided, however, that Executive shall not assign or otherwise transfer this
Agreement or any of his rights or obligations under this
Agreement. Employer is authorized to assign or otherwise transfer
this Agreement or any of its rights or obligations under this Agreement to an
Affiliate of Employer. Executive shall not have any right to pledge,
hypothecate, anticipate, or in any way create a lien upon any payments or other
benefits provided under this Agreement; and no benefits payable under this
Agreement shall be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law, except by will or pursuant to the laws
of descent and distribution. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any person other than the parties,
and their respective heirs, legal representatives, successors, and permitted
assigns, any rights, benefits, or remedies of any nature whatsoever under or by
reason of this Agreement.
20. Assumption by
Successor. Employer shall ensure that any successor or
assignee (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all the business and/or assets of the
Employer or the oil
and gas acquisition, exploration, development and production business of the
Employer, either by operation of law or written agreement, assumes the
obligations of this Agreement (the “Assumption Obligation”). If
Employer fails to fulfill the Assumption Obligation, such failure shall be
considered Good Reason; provided, however, that the compensation to which
Executive would be entitled to upon a termination for Good Reason pursuant to
Paragraph 7(e) shall be the sole remedy of Executive for any failure by Employer
to fulfill the Assumption Obligation. As used in this Agreement,
“Employer” shall include any successor or assignee (whether direct or indirect,
by purchase, merger, consolidation, or otherwise) to all or substantially all
the business and/or assets of Employer or the oil and gas exploration,
development and production business of the Employer that executes and
delivers the agreement provided for in this Paragraph 20 or that otherwise
becomes obligated under this Agreement by operation of law.
21. Legal Fees and
Expenses. Employer will reimburse the Executive for all
reasonable legal fees and expenses incurred by the Executive in connection with
the preparation, review, and negotiation of this Agreement on or after January
1, 2007 and prior to its execution, provided that any such reimbursement shall
be made within the same calendar year in which falls the Second Amendment
Date.
22. Governing Law;
Venue. This Agreement and the employment of Executive shall be
governed by the laws of the State of Texas except for its laws with respect to
conflict of laws. The exclusive forum for any lawsuit arising from or
related to Executive’s employment or this Agreement shall be a state or federal
court in Xxxxxx County, Texas. This provision does not prevent
Employer from removing to an appropriate federal court any action brought in
state court. EXECUTIVE HEREBY CONSENTS TO, AND
WAIVES ANY OBJECTIONS TO, REMOVAL TO FEDERAL COURT BY EMPLOYER OF ANY ACTION
BROUGHT AGAINST IT BY EXECUTIVE.
23. JURY TRIAL
WAIVER. IN THE EVENT THAT ANY DISPUTE ARISING FROM OR RELATED
TO THIS AGREEMENT OR EXECUTIVE’S EMPLOYMENT WITH EMPLOYER RESULTS IN A LAWSUIT,
BOTH EMPLOYER AND EXECUTIVE MUTUALLY WAIVE ANY RIGHT THEY MAY OTHERWISE HAVE FOR
A JURY TO DECIDE THE ISSUES IN THE LAWSUIT, REGARDLESS OF THE PARTY OR PARTIES
ASSERTING CLAIMS IN THE LAWSUIT OR THE NATURE OF SUCH
CLAIMS. EMPLOYER AND EXECUTIVE IRREVOCABLY AGREE THAT ALL ISSUES IN
SUCH A LAWSUIT SHALL BE DECIDED BY A JUDGE RATHER THAN A JURY.
24. Entire
Agreement. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes all
prior agreements and understandings, written and oral, between the parties with
respect to the subject matter of this Agreement.
25. Modification;
Waiver. No person, other than pursuant to a resolution duly
adopted by the members of the Board, shall have authority on behalf of Employer
to agree to modify, amend, or waive any provision of this
Agreement. Further, this Agreement may not be changed orally, but
only by a written agreement signed by the party against whom any waiver, change,
amendment, modification or discharge is sought to be
enforced. Executive acknowledges and agrees that no breach by
Employer of this Agreement or failure to enforce or insist on its rights under
this Agreement shall constitute a waiver or abandonment of any such rights or
defense to enforcement of such rights.
26. Construction. This
Agreement is to be construed as a whole, according to its fair meaning, and not
strictly for or against any of the parties.
27. Severability. If
any provision of this Agreement shall be determined by a court to be invalid or
unenforceable, the remaining provisions of this Agreement shall not be affected
thereby, shall remain in full force and effect, and shall be enforceable to the
fullest extent permitted by applicable law.
28. Counterparts. This
Agreement may be executed by the parties in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same agreement.
IN WITNESS WHEREOF, Employer has caused
this Agreement to be executed on its behalf by its duly authorized officer, and
Executive has executed this Agreement, effective as of the Second Amendment Date
first set forth above.
|
EMPLOYER
|
EXECUTIVE
|
||
|
XXXXXXX
X. XXXXXXXX
|
|||
|
By:
|
|
||
|
XXXXX
X. XXXXXXXXX
|
|||
|
PRESIDENT
& CHIEF EXECUTIVE
OFFICER
|
|||
