Exhibit 10.9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this 27th day of August,
1999 (the "Effective Date"), by and between MIDDLE BAY OIL COMPANY, INC., an
Alabama corporation (hereinafter referred to as the "Company") and XXXXX X.
XXXXXX (hereinafter referred to as "Employee").
WITNESSETH:
WHEREAS, the Company is engaged in the oil and gas business;
WHEREAS, the Company desires to employ Employee as President and Chief
Executive Officer of the Company and Employee desires to be employed by the
Company in that capacity; and
WHEREAS, the Company and Employee desire to set forth in writing the terms
and conditions of their agreements and understandings;
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
herein contained, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, agree as follows:
1. TERM OF EMPLOYMENT. The Company shall employ Employee in the capacity
set forth herein for a term commencing on the Effective Date and ending on
November 25, 2000 (the "Employment Period"). Within the period commencing one
hundred twenty (120) days prior to the end of the Employment Period, the
Employee and the Company shall review the terms of this Employment Agreement in
light of the circumstances existing at that time and, if the parties in good
xxxxx xxxx it necessary or advisable, agree to extend the term of this
Employment Agreement or negotiate and enter into a new employment agreement.
Notwithstanding the foregoing, Employee's employment hereunder may be terminated
earlier in accordance with the provisions of Section 8 hereof.
2. RESPONSIBILITIES OF EMPLOYEE.
(a) In accepting employment by the Company, Employee shall undertake
and assume the responsibility of performing for and on behalf of the Company any
and all duties of the Chief Executive Officer and President as set forth in the
Company's Bylaws, as they may be amended from time to time, and shall have such
other duties, functions, responsibilities and authority commensurate with such
offices from time to time delegated to the Employee by the Board of Directors
provided that such duties, functions, responsibilities and authority are
customarily associated with the position of President and Chief Executive
Officer.
(b) Employee agrees to devote his full time and effort to his duties
as an employee of the Company. Employee may devote a reasonable amount of his
time to civic and community affairs, and subject to the provisions of Section 7,
to the business and financial interests described on EXHIBIT A attached hereto;
provided that such other activities do not materially interfere with the
performance of Employee's responsibility as President and Chief Executive
Officer; and provided further that no additional outside business activities
shall be undertaken without the prior written consent of the Board of Directors.
3. COMPENSATION. As compensation for the services to be rendered by
Employee for the Company under this Agreement, Employee shall be entitled to the
following:
(a) The Company shall pay Employee during the Employment Period an
annual salary of not less than Two Hundred Thousand Dollars ($200,000). The
amount of such annual salary may be amended by the Company's Board of Directors
(the "Board") from time to time (but in no event shall such annual salary be
less than Two Hundred Thousand Dollars ($200,000)). Such annual salary shall be
payable periodically for such periods as may be established by the Company for
payment of its employees under its normal payroll practices.
(b) Employee may receive a bonus and fringe benefits each year in
amounts to be determined by the Board. Such bonus may, in the discretion of the
Board, be based, in part, upon the Company meeting certain financial goals,
which goals may be agreed upon by the Board and Employee.
4. EXPENSES. Employee shall be reimbursed for all reasonable business
expenses incurred by him in connection with or incident to the performance of
his duties and responsibilities hereunder upon the Employee's submission to the
Company of vouchers or expense statements evidencing such expenses in such form
or format as the Company may reasonably require.
5. VACATION AND OTHER BENEFITS.
(a) VACATION. Employee shall be entitled to four (4) weeks of paid
vacation per year during the Employment Period. In addition, Employee shall be
entitled to participate in all other present and future benefit plans provided
by the Company to its employees and for which Employee meets the eligibility
requirements thereof.
(b) MEDICAL INSURANCE. The Company shall provide Employee and his
dependents with medical insurance coverage under the Company's medical insurance
plan, which plan shall be reasonably acceptable to Employee.
6. BUSINESS OPPORTUNITIES AND INTELLECTUAL PROPERTY.
(a) During the period in which Employee is employed by the Company,
Employee shall promptly disclose to the Company all "Business Opportunities" and
"Intellectual Property" (each as defined below).
(b) Employee hereby assigns and agrees to assign to the Company, its
successors, assigns or designees, all of Employee's right, title and interest in
and to all "Business Opportunities" and "Intellectual Property," and further
acknowledges and agrees that all Business Opportunities and Intellectual
Property constitute the exclusive property of the Company.
(c) For purposes hereof, "Business Opportunities" shall mean all
business ideas, prospects, proposals or other opportunities pertaining to the
lease, acquisition, exploration, production, gathering or marketing of
hydrocarbons and related products and the exploration potential of geographical
areas on which hydrocarbon exploration prospects are located, which are:
(i) developed by Employee (A) during the period in which Employee is
employed by the Company, or (B) before the period in which Employee is
employed by the Company, but only to the extent of Employee's
rights thereto during such period, or
(ii) originated by any third party and brought to the attention of
Employee (A) during the period in which Employee is employed by the
Company, or (B) before the period in which Employee is employed
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by the Company, but only to the extent of Employee's rights thereto during
such period,
together with information relating thereto, including, without limitation, any
"Business Records" (as defined below).
(d) For purposes hereof "Intellectual Property" shall mean all ideas,
inventions, discoveries, processes, designs, methods, substances, articles,
computer programs and improvements (including, without limitation, enhancements
to, or further interpretation or processing of, information that was in the
possession of Employee prior to the date of this Agreement), whether or not
patentable or copyrightable, which do not fall within the definition of Business
Opportunities, which are discovered, conceived, invented, created or developed
by Employee, alone or with others: (i) during the period in which Employee is
employed by the Company if such discovery, conception, invention, creation, or
development (A) occurs in the course of the Employee's employment with the
Company, or (B) occurs with the use of any of the Company's time, materials or
facilities, or (C) in the opinion of the Board of Directors of the Company,
relates or pertains in any way to the Company's purposes, activities or affairs,
or (ii) before the period in which Employee is employed by the Company, but only
to the extent of Employee's rights thereto during such period.
7. NON-COMPETITION AND NON-DISCLOSURE; INJUNCTIVE RELIEF. Employee
acknowledges that the services he is to render in the course of his employment
by the Company are of a special and unusual character with unique value to the
Company. In view of the value to the Company of the services of Employee during
the course of his employment by the Company, because of the Business
Opportunities, Intellectual Property and "Confidential Information" (as defined
below) to be obtained by or disclosed to Employee, and as a inducement to the
Company to enter into this Agreement and to pay to Employee the compensation
stated herein, Employee covenants and agrees as follows:
(a) During the period in which Employee is employed by the Company,
unless otherwise extended pursuant to the terms of this Section 7, Employee
shall not directly or indirectly be employed by or render advisory, consulting
or other services in connection with any business enterprise or person that is
engaged in leasing, acquiring, exploring, producing, gathering or marketing
hydrocarbons and related products.
(b) During the period in which Employee is employed by the Company,
unless otherwise extended pursuant to the terms of this Section 7, Employee
shall not, directly or indirectly, in any capacity (including, without
limitation, as a proprietor, investor, director or officer or in any other
individual or representative capacity), be financially interested in or engage
in any business that is engaged in leasing, acquiring, exploring, producing,
gathering or marketing hydrocarbons and related products; however, it is
specifically agreed between the parties that Employee may continue to be
financially interested in and engage in any business similar to or related to
the Company's business that is described on EXHIBIT A attached hereto, provided,
that such activities do not materially detract from the Employee's performance
of his responsibilities as President and Chief Executive Officer, provided,
further that, nothing contained in this paragraph 7(b) shall relieve the
Employee of his obligations contained in paragraph 7(a) above.
(c) During the period in which Employee is employed by the Company,
unless otherwise extended pursuant to the terms of this Section 7, all
investments made by Employee (whether in his own name or in the name of any
family members or made by Employee's controlled affiliates), which relate to the
lease, acquisition, exploration, production, gathering or marketing or
hydrocarbons and related products shall be made solely through the Company; and
Employee will not (directly or indirectly through any family members), and will
not permit any of his controlled affiliates to (i) invest or otherwise
participate alongside the Company in any Business Opportunities, or (ii) invest
or otherwise participate in any business or activity relating to a Business
Opportunity, regardless of whether the Company ultimately participates in such
business or activity.
(d) During the period in which Employee is employed by the Company
and thereafter, Employee
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will not disclose to any third party or directly or indirectly make use of, in a
way materially detrimental to the Company, any and all trade secrets and
confidential or proprietary information pertaining to the Company (collectively
referred to as "Confidential Information"). For purposes of this Section 7, it
is agreed that Confidential Information includes, without limitation, any
information heretofore or hereafter acquired, developed or used by the Company
relating to Business Opportunities or Intellectual Property or other geological,
geophysical, economic, financial or management aspects of the business,
operations, properties or prospects of the Company whether oral or in written
form in a "Business Records" (as defined in paragraph 7(g) below).
Notwithstanding the foregoing, no information of the Company will be deemed
confidential for the purposes of this paragraph 7(d) if such information is or
becomes public knowledge through no act of Employee or was previously known by
Employee prior to entering into this Agreement.
(e) During the Employment Period or the period in which Employee is
employed by the Company, whichever is longer, and for a six-month period
commencing upon the termination of such longer period, unless otherwise extended
pursuant to the terms of this Section 7, Employee may not solicit, raid, entice
or induce, directly or indirectly, any employee (or person who within the
preceding ninety (90) days was an employee) of the Company or any other person
who is under contract with or rendering services to the Company, to (i)
terminate his employment by, or contractual relationship with, the Company, (ii)
refrain from extending or renewing the same (upon the same or new terms), (iii)
refrain from rendering services to or for the Company, (iv) become employed by
or to enter into contractual relations with any persons other than the Company,
or (v) enter into a relationship with a competitor of the Company; provided that
during the six-month period commencing upon the termination of the Employment
Period or the period in which the Employee is employed by the Company, whichever
is longer, nothing in this paragraph 7(e) shall prohibit Employee from entering
into contractual relations to obtain capital as long as the Board of Directors
of the Company in good faith determines that such relations are not detrimental
to the Company.
(f) Employee acknowledges and agrees that the services to be rendered
by him are of a special, unique and extraordinary character and, in connection
with such services, he will have access to Business Opportunities, Intellectual
Property and Confidential Information vital to the Company's businesses. By
reason of this, the Employee consents and agrees that if he violates any of the
provisions of this Section 7, the Company would sustain irreparable harm and,
therefore, in addition to any other remedies which the Company may have under
this Agreement or otherwise, the Company shall be entitled to an injunction
restraining the Employee from committing or continuing any such violation of
this Agreement. Such right to an injunction shall be cumulative and in addition
to, and not in lieu of, any other remedies to which the Company may show itself
justly entitled. Further, during any period in which the Employee is in breach
of the covenants set forth in this Section 7, the time period of this covenant
shall be extended for an amount of time that the Employee is in breach.
(g) The Employee agrees to promptly deliver to the Company, upon
termination of Employee's employment with the Company, or at any other time when
the Company so requests, all documents relating to the business of the Company,
including, without limitation: all geological and geophysical reports and
related data such as maps, charts, logs, seismographs, seismic records and other
reports and related data, calculations, summaries, memoranda and opinions
relating to the foregoing, production records, electric logs, core data,
pressure data, lease files, well files and records, land files, abstracts, title
opinions, title or curative matters, contract files, notes, records, drawings,
manuals, correspondence, financial and accounting information, customer lists,
statistical data and compilations, patents, copyrights, trademarks, trade names,
inventions, formulae, methods, processes, agreements, contracts, manuals or any
other documents relating to the business of the Company (collectively, the
"Business Records"), and all copies thereof and therefrom. The Employee confirms
that all of the Business Records (and all copies thereof and therefrom) that are
required to be delivered to the Company pursuant to this paragraph 7(g)
constitute the exclusive property of the Company. The obligation of
confidentiality set forth in this Section 7 shall continue notwithstanding the
Employee's delivery of any such documents to the Company. Notwithstanding the
foregoing provisions of this Section 7 or any other provision of this Agreement,
the Employee shall be entitled to retain any written materials which, as shown
by
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the Employee's records, were in Employee's possession on or prior to the date
hereof, subject to the Company's right to receive a copy of all such materials.
(h) The representations and covenants contained in this Section 7 on
the part of the Employee will be construed as ancillary to and independent of
any other provision of this Agreement, and the existence of any claim or cause
of action of the Employee against the Company or any officer, director, or
shareholder of the Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of the
covenants of the Employee contained in this Section 7. In addition, the
provisions of this Section 7 shall continue to be binding upon the Employee in
accordance with their terms, notwithstanding the termination of the Employee's
employment hereunder for any reason.
(i) The parties to this Agreement agree that the limitations
contained in this Section 7 with respect to time, geographical area, and scope
of activity are reasonable. However, if any court shall determine that the time,
geographical area, or scope of activity of any restriction contained in this
Section 7 is unenforceable, it is the intention of the parties that such
restrictive covenants set forth herein shall not thereby be terminated but shall
be deemed amended to the extent required to render it valid and enforceable.
8. TERMINATION BY THE COMPANY FOR CAUSE.
(a) The Company may terminate Employee's employment under this
Agreement for Cause. The termination shall be evidenced by written notice
thereof to the Employee and shall specify the Cause for termination. For
purposes hereof, the term "Cause" shall mean (i) the inability of Employee,
despite any reasonable accommodation required by law, due to bodily injury or
disease or any other physical or mental incapacity, to perform the services
provided for hereunder for a period of 120 days in the aggregate, within any
given period of 180 consecutive days during the term of this Agreement, in
addition to any statutorily required leave of absence, (ii) conduct of the
Employee that constitutes fraud, dishonesty, theft, or a criminal act involving
moral turpitude, in each case only if it materially affects his ability to
perform the duties and responsibilities of his position or has a material
adverse effect on the Company, (iii) commission of a material act of fraud
against the Company, (iv) embezzlement of funds or misappropriation of other
property by the Employee from the Company; or (v) failure of Employee to observe
or perform his material duties and obligations as an employee of the Company or
a material breach of this Agreement, after thirty (30) days advance written
notice of such failure or breach which has not been cured.
(b) Upon Employee's death or if Employee's employment with the
Company is terminated for Cause, Employee shall be paid his salary through the
month of his death or termination.
9. TERMINATION BY THE COMPANY WITHOUT CAUSE.
(a) The Company may terminate Employee's employment under this
Agreement without Cause. The termination shall be evidenced by written
notice thereof to the Employee and shall specify that the termination was
without Cause.
(b) If Employee's employment with the Company is terminated without
Cause during any period in which Employee is employed by the Company,
Employee shall be entitled to receive, within ten (10) days of such
termination, the amount of compensation Employee would have earned if his
employment had continued through the remainder of the Employment Period.
Notwithstanding the foregoing, if the payment referred to above is not made
within ten (10) days of Employee's termination, all unpaid amounts shall
bear interest at a rate equal to the New York Prime (as published
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in the Wall Street Journal) on the date of such termination.
10. BURDEN AND BENEFIT. This Agreement shall be binding upon, and shall
inure to the benefit of, the Company and Employee, and their respective heirs,
personal and legal representatives, successors and permitted assigns.
11. GOVERNING LAW. It is understood and agreed that the construction and
interpretation of this Agreement shall at all times and in all respects be
governed by the laws of the State of Texas. The parties hereto hereby
irrevocably submit to the exclusive jurisdiction of the courts of the State of
Texas and the federal courts of the United States of America located in Texas,
and appropriate appellate courts therefrom, over any dispute arising out of or
relating to this Agreement or any of the transactions contemplated hereby, and
each party hereby irrevocably agrees that all claims in respect of such dispute
or proceeding may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
dispute arising out of or relating to this Agreement or any of the transactions
contemplated hereby brought in such court or any defense of inconvenient forum
for the maintenance of such dispute. Each of the parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. This consent to
jurisdiction is being given solely for purposes of this Agreement and is not
intended to, and shall not, confer consent to jurisdiction with respect to any
other dispute in which a party to this Agreement may become involved. Each of
the parties hereto hereby consents to process being served by any party to this
Agreement in any suit, action, or proceeding of the nature specified above by
the mailing of a copy thereof in the manner specified by the provisions of
Section 13.
12. SEVERABILITY. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any one or more of the
provisions of this Agreement shall not affect the validity and enforceability of
the other provisions.
13. NOTICE. Any notice required to be given shall be sufficient if it is in
writing and sent by certified or registered mail, return receipt requested,
first-class postage prepaid, to his last know residence in the case of Employee,
and to its principal office in the State of Texas in the case of the Company.
14. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding by and between the Company and Employee with respect to the
employment of Employee, and no representations, promises, agreements, or
understandings, written or oral, not contained herein shall be of any force or
effect. No waiver of any provision of this Agreement shall be valid unless it is
in writing and signed by the party against whom the waiver is sought to be
enforced. No valid waiver of any provision of this Agreement at any time shall
be deemed a waiver of any other provision of this Agreement at such time or any
other time.
15. MODIFICATION. No amendment, alteration or modification to any of the
provisions of this Agreement shall be valid unless made in writing and signed by
both parties.
16. PARAGRAPH HEADINGS. The paragraph headings have been inserted for
convenience only and are not to be considered when construing the provisions of
this Agreement.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the Company and Employee have executed this Agreement
on the day and year first above written.
"COMPANY" "EMPLOYEE"
MIDDLE BAY OIL COMPANY, INC.
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX
By: /s/ Xxxx X. Basset
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Name: Xxxx X. Xxxxxxx
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Title: President
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EXHIBIT A
ENERGY RELATED INVESTMENTS
1. Employee owns a 50% interest in Encorp Inc., a privately held energy and
production company which hold oil and gas properties valued at less than $2
million.
2. Employee owns or controls two Kansas corporations FCW Energy Corporation
and FCW Holding Corporation. The assets of these two corporations consist of a
net operating loss and non-operated, non-managed working interests and
overriding royalty interests of nominal value located in Kansas, Oklahoma and
Texas.
3. Employee holds non-operated, non-managed working interests in oil and gas
properties alongside the following entities: (1) RAK Energy Corp.; (2) Javelin
Exploration Company; and (3) JAVEX Inc. Employee is also a limited partner in
certain limited partnerships related to the foregoing entities. The aggregate
value of Employee's working interests and partnership interests is less than $2
million.
4. Employee owns approximately 2,500,000 shares of common stock of Chesapeake
Energy Corporation (NYSE:CHK).
5. Employee owns shares of capital stock of various publicly-traded energy and
production companies. The aggregate number of shares Employee owns in each
entity does not exceed 1% of the outstanding shares of capital stock of such
entity.
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